"After two straight down days, we saw a slight bounce today, as
earnings across the board came in better than expected," reported
Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. The
Dow Jones Industrial Average (DJI)
enjoyed positive territory throughout the session, reaching as high
as 13,416.55 before ultimately settling about 0.5% higher.
Meanwhile, the
CBOE Market Volatility Index (VIX)
broke its losing streak.
Continue reading for more on today's market, including
:
- Why shares of this
natural gas firm
could be pressured lower, according to research from Senior
Options Strategist Tony Venosa, CMT.
- Could a market top be here? Senior Trading Analyst Bryan Sapp
reviews the significance of a
bull flag formation
.
- Schaeffer's contributor Adam Warner explains how a rapidly
falling VIX can only have
"two possible explanations."
plus...
- A new leader for the U.S. Treasury, high hopes for Ford Motor
(F), and some Tweet-of-the-day advice that extends to all areas
of life.
The bulls took the reins once again, as the
Dow Jones Industrial Average (DJI)
muscled higher, closing up 0.5%, or 62 points. Eighteen of the 30
Dow components traded higher on the day, led by Boeing (
BA
), which bounced back from yesterday's drubbing to gain 3.6%.
Bringing up the rear, meanwhile, was Bank of America (
BAC
), which pulled back 4.6%.
The
S&P 500 Index (SPX)
added 3.9 points, or 0.3%, on the day, while the
Nasdaq Composite (COMP)
kept pace with its index peers, rising 14 points, or 0.5%.
The
CBOE Market Volatility Index (VIX)
broke its six-session losing streak with a modest gain of 0.2
point, or 1.4%. Earlier in the session, however, the index recorded
a new multi-year low of 13.22.
A Trader's Take
:
"Alcoa (
AA
) got the headlines today, but I'm more impressed by what was going
on under the surface. Danaher (DHR) is a company three times the
size of AA, and they upped their fourth-quarter guidance," Detrick
noted. "At the same time, Seagate Technology (
STX
), Constellation Brands (
STZ
), and Stryker (SYK) all had positive things to say about earnings.
When you consider just how low some of the overall expectations are
as we begin this earnings season," he added, "one has to wonder if
the analysts have once again become too bearish. This will make it
much easier for companies to clear the lowered earnings bar."
3 Things to Know About Today's Market
:
- President Barack Obama reportedly plans to nominate current
White House Chief of Staff Jack Lew to the U.S. Treasury
secretary role currently held by Timothy Geithner, who wishes to
exit the position by mid-month. An anonymous source broke this
news today ahead of the official nomination, which is expected to
come as soon as tomorrow. Mr. Lew, 57, has a long history in
Washington, serving as aide to Democratic House Speaker Tip
O'Neill in the 1980s and budget advisor to President Clinton in
the 1990s.
- As quickly as they started, reports that American
International Group (AIG) would latch on to a shareholder lawsuit
against the U.S. government were laid to rest. The board met
today and decided against taking part in the $25-billion suit,
which was originally filed by former AIG CEO Maurice "Hank"
Greenberg.
- Morgan Stanley (MS) said it will reduce its staff by 6%,
eliminating 1,600 jobs due to current "market conditions." While
all divisions of the investment banking firm will be impacted,
the more senior ranks will suffer a larger collective hit. Once
these reductions have been implemented, the MS workforce will be
10% smaller than it was in September 2011.
Plus
... a cryptic invitation from Facebook Inc (FB) has ignited the
rumor mills. A
media invite
to "Come and see what we're building" has led to speculation about
a FB phone, despite CEO Mark Zuckerberg's assertions to the
contrary. Other theories are a new search function or an updated
privacy policy. All will be revealed next Tuesday morning at the
company's Menlo Park, Calif. campus.
Today's Top Tweet
:
"Confidence comes not from always being right but from not
fearing to be wrong."
@idillionaire,
(idil), 7:40 a.m.
5 Stocks We Were Watching Today
:
- Ford Motor (F) option bulls expect the stock to hit a
new annual high
within the next six months.
- Speculators opened both
calls and puts
on EMC Corporation (EMC).
- J.C. Penney (JCP) was swatted with a
brokerage downgrade
this morning.
- In the wake of its disappointing earnings report, Apollo
Group (APOL) saw increased demand for
put options
.
- Bullish option buyers were
not deterred
by Nokia Corporation's (NOK) recent move lower.
Question of the Day
:
Q
: What does
arbitrage
mean?
A
: Arbitrage is a trader's attempt to take advantage of minor price
differences between markets in order to generate a profit. For
example, due to fluctuations in the foreign exchange rate, a stock
could trade at a slightly different price overseas than it does at
home. To create an arbitrage (or "arb") opportunity, the trader
could buy shares at the lower price, then quickly turn around and
sell them at the higher price. Fast-moving markets create a risk
for even the most seasoned arbitrage traders, however, as prospects
can quickly vanish before both parts of the trade are executed.
For a look at today's options movers and commodities
activity, head to page 2.
Commodities
:
Oil futures continued to edge lower today, with the February
contract shedding 5 cents, or 0.05%, to $93.10 per barrel. Gold
futures were in the red as well; February-dated gold surrendered
$6.70, or 0.4%, to settle at $1,655.50 an ounce.
At the end of every market day, the staff at Schaeffer's
Investment Research reviews the trading day in detail, covering
major events and key market developments. Don't miss this
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