Dow Battles Back from 112-Point Deficit, But the Losing Streak Drags On
"The earnings season continues to unfold and we just haven't
seen good performances thus far," observed Schaeffer's Senior
Equities Analyst Joe Bell. "Throw in the negative momentum of late
and the market is struggling to post any type of gains. With
continued discussion about whether QE3 will ever come, most traders
are looking toward the slew of earnings reports during the next
several weeks for guidance." The
Dow Jones Industrial Average (DJI)
found itself in a deep hole early in the day, but repaired most of
its losses by the closing bell.
Keep reading to see what else was on our radar today:
- 3 potential contrarian plays using Bernie Schaeffer's unique methodology .
- Adapt or Die : A mantra for Wall Street.
- Could the recent dip in short interest spark a bullish upturn ?
At its intra-day low of 12,492.25, the Dow Jones Industrial Average (DJI - 12,573.27) was down by 112 points. Although the Dow inched across breakeven several times after midday, the blue-chip barometer finally gave into the bears and settled with a 31.3-point, or 0.3%, decline on the day. All but eight components finished in the red, as Intel Corporation ( INTC ) and Cisco Systems, Inc. ( CSCO ) paved the way with losses of 2.6% and 2.4%, respectively. Merck & Co., Inc.'s ( MRK ) analyst-inspired 4% jump led the outperforming issues.
The S&P 500 Index (SPX - 1,334.76) tumbled as well, dropping 6.7 points, or 0.5%. Meanwhile, turning in the worst performance of its peers, the Nasdaq Composite (COMP - 2,866.19) sawed off 21.8 points, or 0.8%.
The CBOE Market Volatility Index (VIX - 18.33) climbed 2.1% today, but settled well below its session peak of 19.51.
Today's highlight : "We experienced a strong push into negative territory early on, but once again, the major indices rallied late in the day to finish near breakeven," noted Bell. "It wasn't enough to break the SPX's losing streak though, which posted its sixth daily loss in a row."
Turning to today's major market stories...
- Will the SPX see a frightful return this Friday the 13th ?
- The recent slip in short interest on all optionable stocks could be a bullish omen for the market .
- AOL, Inc. ( AOL ) was targeted for a bearish long straddle .
- Analysts at Piper Jaffray adjusted their positions on solar stocks SunPower Corporation ( SPWR ) and LDK Solar Co., Ltd. (LDK) .
- An options strategist used puts for a bullisih-to-neutral play on Deere & Company (DE).
- Zagg Inc (ZAGG) , NIKE, Inc. (NKE) , and Best Buy Co., Inc. (BBY) saw a surge in put activity.
- Following their earnings reports, Texas Industries, Inc. (TXI) and SUPERVALU INC. (SVU) were among the standouts in today's action.
- Trading Ideas on Underloved Outperformers : Lululemon Athletica inc. (LULU), American Express Company (AXP), and PulteGroup, Inc. (PHM).
- Schaeffer's Senior Technical Strategist Ryan Detrick shared an invaluable insight into the correlation between experience and successful trading .
For today's activity in commodities, options, and more, head to page 2.
After spending most of the session in the red, oil futures staged a late-day rally and leapt to a second consecutive win. By the close, crude for August delivery added 27 cents, or 0.3%, to settle at $86.08 a barrel.
Make it three down days in a row for gold futures, as the malleable metal took a hit on the Federal Reserve's uncertain stance on whether or when it will implement another round of quantitative easing. Also, the commodity took a hit as the euro dipped to a two-year low, which buoyed the dollar. By the time the dust cleared, August-dated gold fell $10.40, or 0.7%, to land at $1,565.30 an ounce -- its lowest settlement in two weeks.
Levels to watch in trading...
Dow Jones Industrial Average (DJI - 12,573.27)
- support at 11,500; resistance at 14,000
S&P 500 Index (SPX - 1,334.76)
- support at 1,100; resistance at 1,500
- Nasdaq Composite (COMP - 2,866.19) - 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.