Fiscal-cliff anxiety and muted news on the housing front spurred
some selling pressure today, as the
Dow Jones Industrial Average (DJI)
narrowly avoided a triple-digit loss. "After a strong rally during
the past couple of days, a stall in price action wasn't much of a
surprise," reasoned Schaeffer's Senior Equity Analyst Joe Bell.
Continue reading for more on today's market, including
VIX options expiration
hold the market back? Senior VP of Research Todd Salamone
- Eleventh-hour call traders
Apple Inc. (
), as the stock trades atop double-barreled support.
- Schaeffer's contributor Adam Warner offers a good reminder of
how to read volatility
ahead of earnings
- John Boehner gets serious, Nokia (
) bears stay hopeful, and our Tweet of the day, featuring our own
Adam Warner's thoughts on brevity.
Dow Jones Industrial Average (DJIA)
spent most of the day south of breakeven, with selling accelerating
in the latter half of the afternoon. The blue-chip index closed
with a loss of 99 points (0.7%), and finished a fraction off its
intraday low but solidly above its 10-day moving average. Just
three of the index's 30 names finished higher on the day, led by
United Technologies (
), which gained 1%. At the back of the pack was General Electric (
), down 3.1% amid buzz that the conglomerate plans to purchase
Italian aerospace concern Avio for an estimated $4 billion.
Finishing one penny off its intraday nadir, the
S&P 500 Index (SPX)
gave back 11 points, or 0.8%. Elsewhere, the
Nasdaq Composite (COMP)
dropped 10 points, or 0.3%, settling at its intraday low.
As its December options expired, the CBOE Market Volatility
Index (VIX) powered higher, closing up 11.5%, or 1.8 points.
A Trader's Take
"There weren't many earnings reports to digest today," Bell
observed, "but Oracle (
) reacted well to its better-than-expected results, and the tech
sector held its own after underperforming the past several weeks."
Bell added, "I continue to be impressed with the housing sector.
After mixed data this morning, several participants sold their
homebuilding stocks, but the selloff didn't last long. Many of the
names churned higher throughout the day and finished near their
highs. This has been a very resilient sector during 2012," Bell
asserted, "and continues to prove the doubters wrong."
3 Things to Know About Today's Market
- Fiscal-cliff discussions turned slightly more combative, as
House Speaker John Boehner, R-Ohio, asserted that any rising
taxes -- in fact, the "largest tax increase in American history"
-- would be the direct result of President Obama's refusal to
compromise. Earlier, the commander in chief warned he would veto
the House's proposed "Plan B," but remarked that the two sides
were separated by "probably a few hundred billion dollars,"
adding that, "[w]e should be able to get this done." "Plan B"
would extend tax cuts for those making up to $1 million annually
-- the White House is willing to extend the cuts for those at the
$400,000 level and below.
- Meanwhile, Fitch ratings service warned that a step over said
cliff would likely result in a downgrade of U.S. credit from its
current AAA rating. In its bi-annual report, the agency predicted
that prolonged budget negotiations could result in "adverse
implications for the [U.S.] economy and financial
- Housing starts declined 3.0% last month to a seasonally
adjusted annual rate of 861,000, the Commerce Department noted
this morning. The figure was just short of expectations, but
marked a 21.6% improvement on a year-over-year basis. Building
permits, conversely, rose by 3.6% to an annualized 899,000,
topping expectations by 21,000.
... a McDonald's (MCD) worker in Wales -- who was reportedly
heavy-handed with the McFlurry chocolate sprinkles -- was
handed a pink slip
for "stealing food." The 19-year-old employee cried unfair
dismissal, and settled out of court for more than 3,000 pounds
(roughly $4,900), which amounts to nearly 17 weeks' pay.
Today's Top Tweet
"Steven Wright once had a whole show that was shorter than
[House Speaker John] Boehner's speech. 'In England, do they call
Miles Davis "Kilometers" Davis'"
5 Stocks We Were Watching Today
- Nokia (
) bears continued to try and
- Citigroup (C)
scored an upgrade
to "overweight" from Morgan Stanley.
- Research in Motion (RIMM) saw some out-of-the-money
today ahead of its earnings release
- As it stared down technical resistance this morning, Baidu
initiated with a "sell" rating
at Maxim Group.
- Bullish Chipotle Mexican Grill (CMG) traders
a quick pop higher.
Question of the Day
: What happens to the put holders and sellers when a company files
: If you bought a put contract on a company that declares
bankruptcy, you're in luck -- you can still profit from your short
position, even if trading is halted on the stock. That's because
the delivery and settlement of stock options is guaranteed in the
U.S. by the Options Clearing Corporation (OCC). Although opening
transactions will no longer be allowed, you can still sell to close
your put option for cash.
will still have the obligation to deliver shares of the security,
if they're available via Pink Sheets. If a bankruptcy court rules
the company's stock certificates are null and void -- and the share
price drops to zero -- put options can only be settled for cash, or
the difference between the original strike price of the option and
the stock price.
For a look at today's options movers and commodities
activity, head to page 2.
Oil futures extended their winning streak to a fourth session,
rising $1.58, or 1.8%, to settle the day at $89.51 per barrel. Gold
futures backpedaled, however, moving down $3, or 0.2%, to a
three-month low of $1,667.70.
At the end of every market day, the staff at Schaeffer's
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