Strong Domestic Data Helps Stocks Fight Back

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"After selling off sharply over the past several days, the market finally rebounded a bit," summed up Schaeffer's Senior Equity Analyst Joe Bell, CMT. "Stocks initially paused in response to this morning's economic data, but rebounded in late-afternoon trading to finish near their intraday highs." The Dow Jones Industrial Average (DJI) traded in positive territory the entire session, closing with a gain of 101 points.

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

  • Schaeffer's Senior Trading Analyst Bryan Sapp explains why we could be " ready to bounce " -- with one caveat.
  • 9 reasons to consider Pandora Media ( P ) for a long stock trade , courtesy of Schaeffer's Senior Options Strategist Tony Venosa, CMT.
  • Facebook ( FB ) call sellers don't foresee a move above $28 anytime soon.
plus...
    China saves the day -- along with consumer confidence -- and bearish speculators swoop in ahead of Research In Motion ( BBRY ) earnings.

The Dow Jones Industrial Average (DJI - 14,760.31) gapped 10 points higher out of the gate and never looked back, continuing to trek through positive territory until closing up 100.8 points, or 0.7%. In late-afternoon action, the index peaked at 14,812.03, just south of its 80-day moving average. Of the Dow's 30 members, 26 moved higher today, led by Bank of America ( BAC ), which rallied 3%. Pacing the four losers was UnitedHealth Group ( UNH ), which surrendered 1.4%.

Also spending the entire day in the green was the S&P 500 Index (SPX - 1,588.03) , ultimately closing up 14.9 points, or nearly 1%. The Nasdaq Composite (COMP - 3,347.89) fought back from early sluggishness to end with a gain of 27.1 points, or 0.8%. Unlike its index peers, the COMP managed to muscle back above its 80-day trendline.


On the flip side, the CBOE Market Volatility Index (VIX - 18.47) gapped down to 18.65 at the open and trended solidly lower throughout the session. By the closing bell, the VIX had given back 1.6 points, or 8.2%. At its intraday low of 17.82, the index slipped a notch below its 10-day trendline.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The best thing about today's market? We stopped going down," quipped Bell. "This morning, the market was greeted with a very good consumer confidence number -- its highest since January 2008 -- and better-than-expected housing data. By the close, most major sectors were in the green."

3 Things to Know About Today's Market :

  • China was in focus again today, as the nation's central bank tried to calm global market fears . Specifically, the People's Bank of China confirmed it would supply cash to those institutions in need, in order to "maintain overall stability in the money market." These remarks allowed the Shanghai Index to recover from steep intraday losses and close just south of breakeven. (Reuters)
  • Consumer confidence rose to 81.4 this month , the highest reading in five years and the third straight monthly increase. This was a surprise to economists, who expected a more modest increase, according to a Bloomberg survey. (USA Today)
  • On the housing front, home prices rose 12.1% in April from the previous year, according to the S&P/Case-Shiller index. This was the sharpest year-over-year gain since March 2006, and edged past economists' expectations. Elsewhere, the Commerce Department noted that new home sales rose 2.1% in May to a seasonally adjusted annual rate of 476,000, which approached a five-year high. The median price for new homes dropped 2.8% from the previous month, however, to $263,900. (Bloomberg, Los Angeles Times)

5 Stocks We Were Watching Today :

  1. With earnings looming later this week, Research In Motion ( BBRY ) was targeted by put buyers betting against the stock.
  2. Short-term bearish speculators wagered on a hasty retreat in Tesla Motors Inc (TSLA) .
  3. Hewlett-Packard Company (HPQ) remains popular among the put-trading crowd.
  4. Netflix (NFLX) was downgraded by Bernstein today (but the firm also boosted its price target by $55).
  5. Call volume has swelled in Zynga (ZNGA) option pits during the last five days.

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 :

With the weekly inventory number due out tomorrow, crude futures closed marginally higher following a choppy session. August-dated futures gained 14 cents, or 0.1%, to settle at $95.32 per barrel.

Gold started higher out of the gate, but ended in the red following upbeat economic data, which boosted the U.S. dollar. Gold for August delivery closed off $2, or 0.1%, at $1,275.10 an ounce. Yesterday, Goldman Sachs lowered its forecast for gold prices by more than 17% to $1,050 an ounce by the end of 2014.

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: BAC , BBRY , FB , P , UNH

Schaeffer's Investment Research

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