Stocks Skyrocket to Fresh Highs on Fed's QE3

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The Dow Jones Industrial Average (DJI) soared to a near five-year peak today, following the Fed's widely anticipated announcement of another round of quantitative easing. "Can you say new highs across the board? Say what you want about the Fed or a Fed-induced rally, but the reality is that we've been seeing leadership from small-caps and housing lately, and that was a big sign that the overall market was probably going to break out," said Schaeffer's Senior Technical Strategist Ryan Detrick. "When you couple the leadership from the right sectors with just how much negativity is still out there, that's a pretty bullish cocktail. The new highs today shouldn't come as much of a surprise."

Keep reading to see what else was on our radar today:

And now, a look at the numbers...

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

The Dow Jones Industrial Average (DJI - 13,539.86) jumped to an intraday high of 13,573.33 following the Fed's quantitative easing announcement. By the end of the session, the blue-chip barometer was 207 points, or 1.6%, higher, closing at yet another multi-year peak. All 30 Dow components finished in the black today, led by Bank of America Corp ( BAC ), which gained 4.8%.

The S&P 500 Index (SPX - 1,459.99) marched all the way up to 1,463.76 today, hitting its highest peak since January 2008. By the time the dust settled, the SPX finished 23 points, or 1.6%, higher, to conquer 1,450 for the first time in more than four years. Meanwhile, the Nasdaq Composite (COMP - 3,155.83) claimed a decade-plus high of 3,167.63, adding 42 points, or 1.3%, by the close -- and finishing north of 3,100 for a fifth consecutive day.

The CBOE Market Volatility Index (VIX - 14.05) declined 1.8 points, or 11.1%, marking its lowest settlement since Aug. 20.

Today's highlight : "I'm pretty sure there's an old saying, 'Don't fight the Fed,' and that played out perfectly today," commented Ryan. "It was the best of both worlds, as Bernanke gave the market the QE3 it wanted, and at the same time upped his economic forecasts for 2013 and 2014."

Turning to today's major market stories...

For today's activity in commodities, options, and more, head to page 2.

Oil futures vaulted to a four-month closing high today, with the contract getting a shot in the arm from the Fed's latest stimulus endeavor. Traders also kept a wary eye trained on the Middle East, as geopolitical unrest spread to Yemen. As the U.S. dollar weakened, crude for October delivery gained $1.30, or 1.3%, to end at $98.31 per barrel -- its highest settlement since May 4.

Thanks to the precious metal's status as a currency hedge, gold futures also capitalized on a fresh round of policy easing. While the Fed's midday announcement pressured the dollar, gold for December delivery rallied $38.40, or 2.2%, to finish at a new six-month peak of $1,772.10 per ounce.

Levels to watch in trading...

  • Dow Jones Industrial Average (DJI - 13,539.86) - support at 11,500; resistance at 14,000
  • S&P 500 Index (SPX - 1,459.99) - support at 1,100; resistance at 1,500
  • Nasdaq Composite (COMP - 3,155.83) - support at 2,400; resistance at 3,400

OUTPERFORMING AND UNDERPERFORMING SECTORS

STOCKS - MOVERS

STOCKS - EARNINGS

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

SCHAEFFER'S MARKET POSTURE

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 critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.



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: AAPL , BAC , DIS , DTV , F

Schaeffer's Investment Research

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