Stocks Manage Solid Gains Despite Trading Glitch

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"Another wild session," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "The story of the day was the Nasdaq being closed for most of the afternoon. This is yet another computer mistake that does little to help the average investor have any confidence in the stock market. Still, after a six-day losing streak for the Dow Jones Industrial Average (DJI) , it was very nice to see a bounce. The big question is, can it stick?" Despite the aforementioned outage, all three of the major indexes notched respectable gains.

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp recaps the market's reaction to today's Nasdaq glitch , and continues to focus on a key area for the S&P 500.
  • As LDK Solar ( LDK ) prepares to report second-quarter earnings next Tuesday morning, sentiment has been mixed toward the alternative energy issue.
  • In case you missed it: Schaeffer's contributor Adam Warner gives an overview of VIX expiration and offers some advice regarding VIX futures/options.
plus...
    Weekly jobless claims climbed more than expected, the Conference Board's Index of Leading Economic Indicators advanced in July, and American Eagle Outfitters ( AEO ) was hit with a round of earnings-induced price-target cuts.

The Dow Jones Industrial Average (DJI - 14,963.74) spent the entire session in positive territory courtesy of some encouraging economic data, and touched an intraday high of 14,989.12 in the final hour of trading. By the closing bell, the blue-chip barometer was up 66.2 points, or 0.4%, effectively ending its six-day losing streak. Microsoft's ( MSFT ) 2.5% gain led the 24 advancers, while Hewlett-Packard's ( HPQ ) earnings-induced drop of 12.5% paced the six laggards.

The S&P 500 Index (SPX - 1,656.96) notched a full day in the black, as well, and finished 14.2 points, or 0.9%, higher. Meanwhile, despite a trading cessation of more than three hours, the Nasdaq Composite (COMP - 3,638.71) climbed 38.9 points, or 1.1%.

Conversely, the CBOE Market Volatility Index (VIX - 14.76) fell south right out of the gate and stayed there, losing 1.2 points, or 7.4%, on the day.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"In the end, the bulls came back nicely," Detrick continued. "Banks and small caps led the way, which is always a good sign. Sentiment has gotten very cautious if you look at some of the recent sentiment polls. September is historically a weak month, but it is actually up on average over the past 10 years. Things will probably be slow for the rest of August, and then the big traders will come back. Stay tuned."

3 Things to Know About Today's Market :

  • An unexplained outage halted trading on the Nasdaq today at 12:14 p.m. ET. The technical snafu froze prices of all stocks, exchange-traded funds, and options listed on the exchange, and caused other venues to halt trading activity for those securities, as well. Per data from BATS Global Markets Inc., "Tape C" issues had comprised about 28% of all stocks traded in August thus far. (MarketWatch)
  • The Labor Department said first-time jobless claims rose by 13,000 last week to 336,000, which was slightly above the consensus view. Meanwhile, the four-week moving average for initial unemployment filings dropped about 5% to 330,500, marking its lowest level since November 2007. (CNBC)
  • The Conference Board's Index of Leading Economic Indicators climbed by 0.6% to 96.0 in July, after remaining flat in the month prior. The latest reading surpassed economists' forecast for a rise of 0.5%, and signaled improvement in economic growth. (Reuters)

5 Stocks We Were Watching Today :

  1. Microsoft ( MSFT ) received an upgrade at Nomura, despite the stock's lackluster year-over-year price action.
  2. Disappointing earnings from American Eagle Outfitters ( AEO ) prompted a slew of brokerage firms to lower their price targets.
  3. Call buyers ignored J.C. Penney's ( JCP ) latest investor-related headlines, and bet on a rebound by week's end.
  4. Speculators remained bearish toward Bank of America (BAC) by predicting a downturn ahead of January expiration.
  5. DreamWorks Animation's (DWA) new multi-year high lured September and October option bulls to the trading table.

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 oil futures finished in the black today, thanks to some promising manufacturing data out of China. By the time the dust settled, October-dated oil gained $1.18, or 1.1%, to close at $105.03 per barrel.

Meanwhile, the same overseas news pushed gold futures higher, although gains were modest due to strength in the greenback. The December-dated contract tacked on 70 cents, or less than 0.1%, to end at $1,370.80 an ounce.

SCHAEFFER'S MARKET POSTURE



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

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


This article appears in: Investing , Options

Referenced Stocks: AEO , HPQ , JCP , LDK , MSFT

Schaeffer's Investment Research

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