Stocks Ease Lower as Profit Taking Continues


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"Although today may have seemed like a typical profit-taking day, there was continued apprehension following last week's news of the first corporate bond default in China, as well as the continued drop in copper," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "There appear to be a decent number of market participants looking to take some positions off the table." After closing Monday with a minor loss, the Dow Jones Industrial Average (DJI) moved lower again today, and other major indexes followed suit.

Continue reading for more on today's market, including :

  • Schaeffer's Trading Analyst Peter Bryans shares six charts that illustrate current market technicals.
  • The latest development in the merger dance between Jos. A. Bank Clothiers Inc ( JOSB ) and The Men's Wearhouse, Inc. ( MW ) inspired plenty of activity in the retailers' options pits.
  • And in case you missed it , contributor Adam Warner reflects back on the five-year bull run we've seen since the market bottomed on March 9, 2009.
  • Plus ... Wholesale inventories data surprises the Street, Apple Inc. ( AAPL ) traders focus on the short term, and Starbucks Corporation ( SBUX ) suffers an early morning blow.
Trading Topic of the Week -- How to Interpret Short Interest: Weigh the short interest ratio . This handy little indicator tells you approximately how much future buying power is pent up among the short-selling crowd.

The Dow Jones Industrial Average (DJI - 16,351.25) spent some time in positive territory this morning, but sellers took control by midday, sending the blue-chip index decidedly into the red. By the close, the Dow was off 67.4 points, or 0.4%. Ten of the Dow's 30 components finished higher on the day, with McDonald's Corporation ( MCD ) leading the pack, up 3.8%. Pacing the 20 decliners was Goldman Sachs Group Inc (GS), which declined 2.1%.

The S&P 500 Index (SPX - 1,867.63) followed a similar path on the day, and closed near its intraday low, off 9.5 points, or 0.5%. The Nasdaq Composite (COMP - 4,307.19) shed 27.3 points, or 0.6%, to finish the day south of its 10-day moving average.

The CBOE Volatility Index (VIX - 14.80) muscled higher amid the weakness in stocks. By the closing bell, the "fear barometer" had gained 0.6 point, or 4.2%.



A Trader's Take :

"We continue to see uncertainty surrounding Ukraine, although markets seem to be taking the focus off the situation for the time being," added Bell. "After a strong rally during the past few weeks, today's action should not have been a big surprise. In a logical rotation, buyers were putting a little more money into gold and bonds today as well."

5 Items on Our Radar Today :

  1. Wholesale inventories topped expectations in January, rising by 0.6%, which was more than expected. Sales at wholesalers slid 1.9% during the month, however, the largest decline since March 2009. Economists were expecting sales to edge higher. (Reuters)
  2. After months of escalating buyout offers, Jos. A. Bank Clothiers Inc ( JOSB ) and The Men's Wearhouse, Inc. ( MW ) have finally come to an agreement , where the latter will buy the former for $1.8 billion ($65 per share). Where does this leave Eddie Bauer, which JOSB agreed to purchase last month? Probably out in the cold, but collecting a termination fee of up to $48 million. (USA Today)
  3. On the heels of touching a new year-plus high, Zynga Inc (ZNGA) was targeted by short-term call buyers.
  4. Apple Inc. ( AAPL ) traders eyed soon-to-expire calls and puts, placing wagers on the stock's near-term outlook.
  5. Starbucks Corporation ( SBUX ) was hit with a price-target reduction this morning (and could soon endure additional negative brokerage attention).


For a look at today's options movers and commodities activity, head to page 2.



Commodities :

Continued concerns about China's economy sent crude futures lower today. By the close, April-dated futures had dropped $1.09, or 1.1%, to $100.03 per barrel. This marked the lowest settlement price for a most-active contract in a month.

Gold futures, however, moved higher in Tuesday's trading, as investors were attracted to the precious metal's safe-haven appeal. The April contract rose $5.20, or 0.4%, to close at $1,346.70 per ounce. High-grade copper, meanwhile, continued Monday's retreat, with May-dated futures shedding 8 cents, or 2.6%, to $2.95 per pound.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

This article appears in: Investing Options
Referenced Stocks: JOSB , MW , AAPL , SBUX , MCD

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