Stocks Fight Back After Early Losses

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"Disappointing trade data out of China was what had traders talking today," observed Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "As a result, Asian markets were hit hard, and the materials group took a big dip also. In the end, after solid gains last week, U.S. markets held up rather well, all things considered." In fact, although the Dow Jones Industrial Average (DJI) was off nearly 119 points at its low-water mark today, it settled with a loss of just 34 points.

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

  • Our CEO and founder Bernie Schaeffer offers an important lesson about year-to-date returns for broad-market indexes and precious metals.
  • Why Applied Materials, Inc. ( AMAT ) could end up benefiting from an unwinding of skepticism.
  • With the most recent jobs report behind us, Schaeffer's contributor Adam Warner wonders about volatility's next move .
  • Plus ... Chinese trade data sparks global concern, winter weather weighs on jobs numbers (and hamburger sales), and Bank of America Corp ( BAC ) options traders get active.
Trading Topic of the Week -- How to Interpret Short Interest: Consider the short-to-float ratio . By checking out a stock's short-to-float ratio, you can quickly gauge how many traders are betting on the shares to drop.

The Dow Jones Industrial Average (DJI - 16,418.68) moved sharply lower out of the gate and bottomed at 16,334.20 around 11 a.m. ET. Buyers began to emerge in the afternoon hours, however, and the blue-chip index closed with a loss of 34 points, or 0.2%. Intel Corporation ( INTC ) rose 0.8% today, to lead the eight advancers on the Dow. The Boeing Company's ( BA ) 1.3% decline paced the index's 22 decliners.

The S&P 500 Index (SPX - 1,877.17) slumped into midday along with the Dow, but came within a chip shot of a positive finish. By the closing bell, the index was off just 0.9 point, or close to 0.1%. The Nasdaq Composite (COMP - 4,334.45) also moved slightly lower, giving back 1.8 points, or less than 0.1%.

The CBOE Volatility Index (VIX - 14.20) edged higher, as the major market indexes explored negative territory. By the closing bell, the market's "fear gauge" had added 0.1 point, or 0.6%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Interestingly, once again financials held tough," noted Detrick. "The first two months of the year this sector lagged, but all of a sudden they are holding up well here. We like to see that, as leaders tend to take turns, versus seeing the whole market dump. Right now, financials holding tough might be a sign that any weakness could be shallow. Overall, the U.S. bucked some of the weakness out of Asia. I hate to say it was just 'profit taking,' as that sounds so cliché, but in the end the bears had a major chance today and couldn't do much with it. Something else to consider is that historically, the middle of March is a very strong time for stocks. This is a rather light week on the economic front, so could we see a continued moved higher? I sure wouldn't want to bet against it."

5 Items on Our Radar Today :

  1. Disappointing trade data out of China stoked concerns about an impending pullback in the world's second-largest economy. Specifically, exports in the country dropped 18.1% in February on a year-over-year basis. Some of the backslide was attributed to the recent Lunar New Year holidays. (Reuters)
  2. Charles Plosser, president of the Philadelphia Fed, opined today that jobs numbers from the past three months were likely impacted by "the unusually severe winter weather." As such, any perceived struggles in the labor market should be fleeting. (Reuters, via CNBC)
  3. McDonald's Corporation ( MCD ) dragged on the Dow today, after the fast-food giant reported that same-store sales dropped 1.4% domestically last month, due in large part to the harsh winter weather. Worldwide sales edged 0.3% lower, which could have repercussions for the chain's first-quarter profit numbers. (USA Today)
  4. Facebook Inc (FB) earned another price-target hike on Wall Street today, but options players have been growing increasingly skeptical.
  5. Options traders were out in full force in the Bank of America Corp ( BAC ) pits today, as a number of strikes were targeted by buyers and sellers.

EARNINGS

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

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures were negatively impacted by the economic news out of China, which sparked concerns about future energy demand. The April-dated contract slipped $1.46, or 1.4%, to settle at $101.12.

Gold futures bounced from an early morning loss as investors digested the weaker-than-forecast Chinese export numbers. Gold for April delivery rose $3.30, or 0.2%, to end the session at $1,341.50 an ounce.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: AMAT , BAC , INTC , BA , MCD

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