"We bounced today after yesterday's huge sell-off, but to say
we're out of the woods is anything but true," reported Schaeffer's
Senior Technical Strategist Ryan Detrick, CMT. The
Dow Jones Industrial Average (DJI)
made modest headway today and held above breakeven for most of the
session. "Later this week, we'll hear an interest-rate decision
from the European Central Bank, and the monthly jobs data from
January is due here at home. So the recent volatility could be here
to stay for the next few days."
Trading Topic of the Week
Continue reading for more on today's market, including
-- Reasons to Dodge Directional Risk:
Lower the risk of a 100% loss
. When you're playing straddles, at least one of your options will
typically expire with some intrinsic value remaining.
Dow Jones Industrial Average (DJI - 15,445.24)
recovered some of yesterday's losses, adding 72.4 points, or 0.5%,
by the close. Two pharmaceutical heavyweights -- Merck & Co,
) and Pfizer Inc. (
) -- led the 19 Dow advancers, each posting a 2.8% gain. The 11
laggards were paced by United Technologies Corporation's (
) 1% loss.
S&P 500 Index (SPX - 1,755.20)
also fought back, jumping 13.3 points, or 0.8%. Elsewhere, the
Nasdaq Composite (COMP - 4,031.52)
eased back above the 4,000 level to settle with a gain of 34.6
points, or 0.9%.
CBOE Volatility Index (VIX - 19.11)
collapsed after Monday's spike higher, shedding 2.3 points, or
10.9%, and putting in an intraday low of 18.44.
A Trader's Take
"Recent action in the VIX has been very interesting," Detrick
noted. "As we know, spikes in the VIX can mark market bottoms --
they can show a good deal of fear, as option players are willing to
pay up for the price of protection. Yesterday, the VIX spiked past
21, before selling off today and closing beneath the 20 mark. This
is significant because the past few VIX spikes all went up to about
21, then sold off hard. Today is just one day, but if you were
looking for a bullish point to help you sleep tonight, that is
5 Items on Our Radar Today
- Factory orders dipped 1.5% in December, primarily due to
shifts in the volatile transportation sector. This was slightly
better than the drop economists were expecting. Excluding
new orders ticked 0.2% higher
- Change is in the air at Microsoft Corporation (
), which appointed
Satya Nadella as its new CEO
, effective immediately. Also, company founder Bill Gates will
relinquish his role as board chairman, but will remain a board
member, as will outgoing CEO Steve Ballmer.
- A move higher in
Apple Inc. (
shares spurred speculation among short-term call buyers.
- Skepticism is rather heavy toward
Twitter Inc (TWTR)
, as the company prepares for its first earnings report.
Oracle Corporation (ORCL)
earned a tepid mention on the Street this morning.
For a look at today's options movers and commodities
activity, head to page 2.
Oil futures gained ground in anticipation of tomorrow's weekly
inventory report. Oil for March delivery rose 76 cents, or 0.8%, to
close at $97.19 per barrel.
Gold futures moved lower as stocks regained a modest portion of
Monday's losses and the dollar gained ground. By the closing bell,
April-dated gold was off $8.70, or 0.7%, at $1,251.20 an ounce.
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