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Dow Plunges 243 Amid Poor Earnings Reports, Global Anxiety
By: Schaeffer's Investment Research
In a hard-hitting session, the
Dow Jones Industrial Average (DJI)
spiraled more than 262 points at its intraday low, and retreated to
its lowest settlement in more than a month. "Earnings season
continues to be the main focus for the market and, unfortunately,
it hasn't been that great," remarked Schaeffer's Senior Equity
Analyst Joe Bell. "Throw in some bad news from Moody's concerning
Spain and their economic problems, and you had one of the worst
daily losses in months. Stocks in the basic-materials sector are
definitely getting hit the hardest."
Click through to see what else was on our radar today:
- Is an end to the sell-off in sight? Examining potential support levels for the SPDR S&P 500 ETF (SPY).
- Pre-earnings speculation surged on Apple ( AAPL ), while Schaeffer's Trading Team examined the tech giant's technical and sentiment backdrop .
- A potential contrarian play ? Pessimism continues to mount against these 16 uptrending issues.
The Dow Jones Industrial Average (DJI - 13,102.53) was off 262.6 points at its session bottom of 13,083.28, and ended trading within a stone's throw of this marker. By the time the dust cleared, the blue-chip barometer burned off 243.4 points, or 1.8% -- its worst single-session drop since June, and its lowest close since Sept. 5. Only a pair of the Dow's 30 components saw positive territory, as Intel Corporation ( INTC ) and Microsoft Corporation ( MSFT ) added 0.6% and 0.2%, respectively. On the other end of the spectrum, the losing issues were led by E I Du Pont De Nemours And Co's ( DD ) earnings-induced deficit of 9.1%.
The S&P 500 Index (SPX - 1,413.11) and Nasdaq Composite (COMP - 2,990.46) suffered similar fates as the Dow, and were mired in the red for the entire day. The SPX dropped to its lowest level since Sept. 5, buckling 20.7 points, or 1.4%, by the closing bell. Meanwhile, the COMP marked its first settlement under the 3,000 mark since Aug. 6, peeling back 26.5 points, or 0.9%. The tech-rich benchmark also landed below its 160-day trendline for the first time since July 25.
The CBOE Market Volatility Index (VIX - 18.83) rallied 2.2 points, or 13.3%, to notch its first daily settlement atop its 200-day moving average since June 4. Earlier in the day, the VIX tagged an intraday high of 19.65 -- its loftiest price since late July.
Today's highlight : "If you were looking for a positive, the big news today was all Apple ( AAPL ). The popular tech giant finally released its iPad mini, and the stock's initial reaction hasn't been all that positive," noted Bell. "Overall, tech stocks were able to show some relative strength for the second day in a row, which is a nice change of pace after weeks of underperformance."
Noteworthy stats at the close:
- The equity put/call volume ratio across all 10 options exchanges ended at 1.05, with roughly 7.46 million calls and 7.86 million puts traded.
- The put/call volume ratio on the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX - 37.26) checked in at 1.34, with puts rising above calls.
- The New York Stock Exchange (NYSE) showed an advance/decline ratio of 0.36, as the number of downward movers outpaced upwardly tilted stocks. In similar fashion, the advance/decline ratio on the Nasdaq stood at 0.56.
- Take a pre-earnings look at Apple Inc. ( AAPL ), as weekly options traders ramped up their positions .
- Earnings-related put writers built up their positions on PulteGroup, Inc. ( PHM ) .
- Option players bet on a post-earnings dip for Delta Air Lines, Inc. (DAL) .
- Potential area of technical support is forming in the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) .
And, in case you missed it ... These stocks continue to rally despite the bearish sentiment against them.
For today's activity in commodities, options, and more, head to page 2.
Crude plummeted to a third consecutive loss today, after the Keystone pipeline was restarted, which ultimately eased supply concerns. As the broader-equities market retreated and the U.S. dollar turned higher, oil for December delivery fell $1.98, or 2.2%, to land at $86.67 per barrel. This marked the lowest close for crude since July 12.
Likewise, the strengthening greenback and faltering stock markets weighed on gold futures. On growing concerns for the global economy, December-dated gold sawed off $16.90, or 1%, to close at $1,709.40 an ounce -- its worst settlement since Sept. 6.
Levels to watch in trading...
Dow Jones Industrial Average (DJI - 13,102.53)
- support at 11,500; resistance at 14,000
S&P 500 Index (SPX - 1,413.11)
- support at 1,100; resistance at 1,500
- Nasdaq Composite (COMP - 2,990.46) - 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.