Stocks Notch Daily Gains as Shutdown Becomes a Reality

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"Well, the dreaded government shutdown finally came, and the market seemed like it barely shrugged," observed Schaeffer's Senior Equity Analyst Joe Bell, CMT. "After a lot of early panic selling yesterday, many buyers have come to the table and bid this market up a bit. Although a resolution to this issue would benefit all parties, the market seems to be remaining patient for a solution to come forward soon." Meanwhile, the Dow Jones Industrial Average (DJI) spent most of the session in positive territory, and managed to finish north of breakeven.

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

  • Our founder and CEO reflects on why the market moved higher despite news of a government shutdown in Bernie Schaeffer on Charts .
  • In light of today's shutdown headlines, Schaeffer's Senior Trading Analyst Bryan Sapp opines that the market's "path of least resistance" is to the upside.
  • Today's edition of Option Trends highlights recent options activity for a satellite radio concern, as well as two electronics retailers.
plus...
    The president offered his thoughts on the government shutdown, the ISM's purchasing managers index (PMI) hit its highest level in over two years, and Cree's ( CREE ) analyst-induced price spike attracted near-term call buyers.

For the most part, the Dow Jones Industrial Average (DJI - 15,191.70) trended higher today, touching a session high of 15,208.40 shortly after noon. By the closing bell, the Dow was up 62 points, or 0.4%. The blue-chip barometer's 21 gainers were led by Merck's ( MRK ) 2.4% advance, while Wal-Mart ( WMT ) paced the nine decliners with a loss of 0.5%.

The S&P 500 Index (SPX - 1,695.00) was parked in the green for the entire session, cruising to a session peak of 1,696.55 around midday. By the end, the index was 13.5 points, or 0.8%, higher. Meanwhile, the Nasdaq Composite (COMP - 3,817.98) gained 46.5 points, or 1.2%, and tagged a new 13-year high in intraday trading.

Conversely, the CBOE Market Volatility Index (VIX - 15.54) fell right out of the gate, and remained in negative territory for the rest of the day. At the close, the "fear gauge" was 1.1 points, or 6.4%, lower.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The rally has really been broad-based," noted Bell. "As the fourth quarter begins, almost every major sector showed strength today."

3 Things to Know About Today's Market :

  • On the heels of the much-discussed government shutdown -- which went into effect at the stroke of 12 last night and is the first in 17 years -- President Barack Obama admonished House tea party members for fixating on health-care reform rather than the bigger picture. Congress voted against a proposed funding bill to delay the Affordable Care Act, which was still implemented today, despite the latest developments. Obama also stated that if Congress does not raise the debt ceiling ahead of Oct. 17, it could possibly result in an economic shutdown. Elsewhere, the monthly jobs report -- originally scheduled for Friday morning -- will be delayed amid the shutdown , due to the scarce number of Labor Department officials reporting for duty. (CNBC; USA Today)
  • The Institute for Supply Management (ISM) said its purchasing managers index rose to 56.2 in September from the previous month's reading of 55.7. The latest figure not only marked the index's highest level since April 2011, but also managed to exceed consensus estimates for a reading of 55.0. (MarketWatch)
  • Automaker Ford ( F ) reported a 5.8% year-over-year increase in September sales today -- notching its best September in seven years to top analysts' estimates. Meanwhile, General Motors ( GM ) said auto sales dropped 11% from the year-ago period, falling short of consensus expectations. (Reuters)

5 Stocks We Were Watching Today :

  1. Nokia (NOK) received some bullish attention at Societe Generale and BofA-Merrill-Lynch in pre-market action.
  2. Near-term bulls rolled the dice on Zynga (ZNGA) once again by purchasing weekly call options.
  3. Call volume ramped up on Green Mountain Coffee Roasters (GMCR) , as traders bet on extended gains by week's end.
  4. Cree's ( CREE ) analyst-induced rally triggered some front-month call-buying activity in the options pits.
  5. Put players converged on General Motors ( GM ) after the auto giant's aforementioned domestic sales news.

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 finished slightly lower today, having eased earlier losses triggered by the government shutdown. By the closing bell, November-dated oil was off 29 cents, or 0.3%, to settle at $102.04 per barrel.

Meanwhile, gold futures suffered their worst close since Aug. 7, as expectations for a short-lived shutdown did nothing to boost the precious metal's "safe-haven" appeal. Gold for December delivery declined $40.90, or 3.1% -- the largest dollar drop for a front-month contract since late June -- to end at $1,286.10 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: CREE , F , GM , MRK , WMT

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