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Bullish Sentiment Lifts Global Markets, Dow Marches to a 211-Point Win
By: Schaeffer's Investment Research
"Today was all about Mario and I'm not talking about the video
game," said Schaeffer's Senior Equities Analyst Joe Bell. "Mario
Draghi, the European Central Bank (ECB) president, dominated
headlines early in the morning when his comments reassured
investors that the ECB is 'ready to do whatever it takes to
preserve the euro.'" With that vote of confidence, the
Dow Jones Industrial Average (DJI)
rocketed some 255 points just one hour after the open.
Keep reading to see what else was on our radar today:
- 1 sign to support the bullish case for a broad-market upswing... and 1 word of caution .
- With corporate earnings season in high gear, the options pits are jam-packed with action.
The Dow Jones Industrial Average (DJI - 12,887.93) maintained nearly all of its upbeat momentum today, finishing the day just a stone's throw from its intraday best of 12,931.22. By the time the closing bell rang, the Dow marked its best daily performance in July, closing 211.9 points, or 1.7%, higher. While Cisco Systems, Inc. ( CSCO ) was the single losing blue chip, off 0.3%, the 29 outperforming issues were led by The Home Depot, Inc's ( HD ) 3.6% rise.
The S&P 500 Index (SPX - 1,360.02) and Nasdaq Composite (COMP - 2,893.25) also turned in impressive rallies on the day. By the time the dust settled, the SPX jumped 22.1 points, or 1.7%, while the tech-rich COMP leapt 39 points, or 1.4%.
The CBOE Market Volatility Index (VIX - 17.53) took a tumble today, backpedaling 9.4% and closing just above its session low of 17.07, breaching its 20-day moving average in the process.
Today's highlight : " Although Mario stole the headlines , we actually had some nice economic reports this morning," acknowledged Bell. "The initial jobless claims and durable goods orders came in much better than expected, and home building stocks rebounded nicely after a tough day yesterday." Bell also noted that "the energy sector led the way, while retail sectors lagged the broad market."
Turning to today's major market stories...
- Schaeffer's Senior Technical Strategist Ryan Detrick highlighted the recent surge in weekly buying climaxes as something for bulls to be mindful of, but cited the continuing pullback in short interest as a potentially bullish sign.
- Plus, check out Ryan's discussion about the VIX with Matt Nesto, host of Yahoo! Finance's "Breakout."
- Near-term option bulls converged on J.C. Penney Company, Inc. ( JCP ) after a upbeat tweet touting the retailer's new store designs.
- Ahead of earnings, Chevron Corporation ( CVX ) saw an uptick in weekly call buying, while put players tuned into CBS Corporation ( CBS ) .
- Back-month put buyers think a pullback is possible for Chesapeake Energy Corporation (CHK) .
- Tech issues Citrix Systems, Inc. (CTXS) and Western Digital Corp. (WDC) received after-earnings analyst adjustments today.
- Following their turn in the earnings spotlight, The Cheesecake Factory Incorporated (CAKE) and Las Vegas Sands Corp. (LVS) made record-breaking runs.
- An options speculator limited his risk with a bear put spread on Michael Kors Holdings Ltd (KORS) .
- Weekly Contrarian : McDonald's (MCD) Bulls Should be Wary.
For today's activity in commodities, options, and more, head to page 2.
Crude futures notched their third consecutive daily gain today, as European Central Bank (ECB) President Mario Draghi claimed he would stop at nothing to save the euro from collapse. Plus, first-time jobless claims fell sharply, which when coupled with the new hopes for the euro zone, pulled the dollar lower. Against this backdrop, September-dated oil added 42 cents, or 0.5%, to finish at $89.39 a barrel.
Likewise, Draghi's comments supported gold futures, sending the commodity to its second straight win. As the greenback suffered at the hands of the euro -- which reached its best price since July 10 -- gold for August delivery tacked on $7, or 0.4%, to end at $1,615.10 an ounce. Today marked the precious metal's highest close since July 3.
Levels to watch in trading...
Dow Jones Industrial Average (DJI - 12,887.93)
- support at 11,500; resistance at 14,000
S&P 500 Index (SPX - 1,360.02)
- support at 1,100; resistance at 1,500
- Nasdaq Composite (COMP - 2,893.25) - support at 2,400; resistance at 3,400
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.