The Dow Challenges Record High Before Pre-Sequester Sell-Off

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"After four straight 100-plus-point moves in the Dow, it was nice to have a catch-your-breath type of day" said Schaeffer's Senior Technical Strategist Ryan Detrick, CMT, as the Dow Jones Industrial Average closed with modest losses after notching yet another multi-year peak. "With the series of automatic spending cuts set to go into effect tomorrow, we saw very light volume -- it was clear no one was making any big bets ahead of the sequester."

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

plus...
  • The Dow stops short of making history, the U.S. economy grows -- barely -- and some Nokia ( NOK ) option bulls are in for the long haul.

It was almost an historic day for the Dow Jones Industrial Average , which got within 50 points of its all-time intraday high of 14,198.10, which was tagged in October 2007. The blue-chip index came back to earth in the last two hours of trading, however, ending down 21 points, or 0.2%, at 14,054.49, just shy of its intraday low. For the month, the Dow added 1.4%. Just a dozen of the 30 Dow members were higher on the day, led by Hewlett-Packard ( HPQ ), which gained 1.9%. Bringing up the rear was Wal-Mart Stores ( WMT ), down 1.2% on the day.

The S&P 500 Index (SPX) was lower as well, albeit by a slight margin, off 1.3 points, or 0.1%, at 1,514.68. The Nasdaq Composite (COMP) dropped 2.1 points, or 0.1%, to settle at 3,160.19. In February, the SPX advanced 1.1% while the COMP rose 0.6%.

The CBOE Market Volatility Index (VIX) went on a wild ride, dipping to an intraday low of 14.16 before finishing atop the 15 level, at 15.51. On the day, the VIX added 0.8 points, or 5.3%, while on the month, the fear barometer expanded by 8.6%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"With all of the concerns and worries out there, February ended up being a pretty impressive month," observed Detrick. "The Dow is just a good day away from new all-time highs, and it looks to be just a matter of time before that happens. Still," he continued, "we've talked a lot on our trading floor about how the more defensive Dow is leading and the more aggressive tech and small-cap areas have been lagging. We'd feel much better about things if the more aggressive sectors took charge."

3 Things to Know About Today's Market :

  • The Commerce Department announced the preliminary fourth-quarter GDP , revealing meager growth of 0.1%. While revised from the advanced reading that showed a 0.1% contraction, the figure was short of economists' expectations and the slowest growth rate in nearly two years. (CNBC)
  • In "sequester" news, a Republican-led bill to avoid the $85 billion in spending cuts scheduled to descend tomorrow (and continue through September) was defeated in the Senate. (MarketWatch)
  • The fun continues at Herbalife ( HLF ), which gained more than 7% today after billionaire investor (and prominent HLF shareholder) Carl Icahn handpicked two new board members for the supplements company. (Bloomberg Businessweek)

5 Stocks We Were Watching Today :

  1. Short-term option bulls pounced on Netflix (NFLX) as the stock muscled higher.
  2. A conservative Apple Inc. (AAPL) bear sold an out-of-the-money call spread .
  3. Bullish Nokia ( NOK ) option traders bet on a months-long uptrend in the stock.
  4. Groupon (GRPN) was swatted with downgrades after its disappointing earnings report Wednesday evening.
  5. Molycorp (MCP) saw mixed option activity after postponing its fourth-quarter and full-year earnings results.

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 :

A strong dollar felled oil today, which dropped to a new year-to-date low. The April contract gave back 71 cents, or 0.8%, to $92.05 per barrel. Based on the most-active contract prices, black gold surrendered 5.6% in February.

The rising greenback also took its toll on gold, which was impacted further by continued strength on the equity front. April-dated gold dropped $17.60, or 1.1%, to settle at $1,578.10 per ounce. The precious metal dropped just over 5% for the month, its worst month since May 2012 and its fifth losing month in a row.

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.

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This article appears in: Investing , Options

Referenced Stocks: HLF , HPQ , JCP , NOK , WMT

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