Dow Roars Out of Gate and Finishes Above 14,000

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Referenced Stocks:AA;CSCO;DELL;GOOG;SPLS

"Strong European returns sparked by a big improvement in the German investor confidence index got things started off in the right direction early," said Schaeffer's Senior Technical Strategist Ryan Detrick, CMT, on today's market, which saw the Dow Jones Industrial Average close above 14,000 for the first time since early last week and hit a new five-year high in the process. "It was a relatively quiet day on the news front though ... but that couldn't stop the new highs across the board, specifically new all-time highs in small and mid-cap stocks."

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

• Our Senior Trading Analyst Bryan Sapp says tomorrow and Thursday "should prove eventful" and highlights levels to watch .
• How Google ( GOOG ) hitting a new all-time high played in the option markets.
• Staples got ( SPLS ) a big boost from merger talks, which turned into bullish action among option traders.

plus...

• A big day in the markets, a dire presidential warning, and how one trader is looking for a better buyout price for computer maker Dell Inc. ( DELL ).

Buoyed by encouraging news out of Europe and potential news of another big merger, the Dow Jones Industrial Average got off to a rip-roaring start and never quit -- finishing up nearly 54 points, or 0.4%, to close at 14,035.67. The day saw the Dow touch a new five-year high and close above 14,000 for the first time since Feb. 12. Cisco Systems ( CSCO ) led the 22 advancers on the 30-member Dow, jumping 2.2%. Alcoa ( AA ) had the biggest drop of the eight decliners, losing 2.8%.

The S&P 500 Index also had a strong day, gaining 11 points, or 0.7%, to close at its intraday high of 1,530.94, also a five-year peak. The Nasdaq Composite finished at 3,213.59, up nearly 22 points, or 0.7%.

The CBOE Volatility Index (VIX) finished at 12.31, down about 0.2 point, or 1.2%.

A Trader's Take :

"Last week we saw Warren Buffett buy H.J. Heinz Company (HNZ), and this week we were greeted by a potential merger of Office Depot (ODP) and OfficeMax (OMX)," Detrick said. "This is yet another sign that merger and acquisition activity is alive and well and that the market continues to think there are tremendous values out there -- even though we are at multi-year highs."

3 Things to Know About Today's Market :

• President Obama warned that the impending so-called "sequester" -- the automatic spending cuts set to go into effect March 1 -- could cause the federal government to shed jobs, which could mean "the unemployment rate might tick up again." (CNBC)
• Confidence among homebuilders fell slightly in February but remained near the six-year high set last month. (Bloomberg)
• Sony Corporation (ADR) (SNE) is set to unveil its new PlayStation 4 on Wednesday, beating both Nintendo (NTDOY) and Microsoft (MSFT) to market with the latest iteration of gaming platforms. (MarketWatch)

5 Stocks We Were Watching Today :

1. Option traders bet that Humana Inc. (HUM) would continue to struggle on the charts.
2. First Solar (FSLR) was targeted by short-term bulls looking to cash in on the stock's sudden surge.
3. One investor bucked the trend on SodaStream International (SODA) and laid down a pre-earnings bull put spread.
4. Another bold investor put down a big bet that there would be a higher buyout bid for computer maker Dell Inc. ( DELL ).
5. A new annual high from SunPower Corporation (SPWR) created a flurry of long calls, as traders look for the stock to go even higher.

For a look at today's options movers and commodities activity, head to page 2.

Commodities :

A weaker U.S. dollar helped crude oil futures rebound from last Friday's drop, with the soon-to-expire March contract adding 80 cents, or 0.8%, to close at $96.66 per barrel.

April-dated gold dropped $5.30, or 0.3%, to $1,604.20 an ounce (another new six-month low). This continued a downward trend for gold, with investors turning their buying power toward equities.

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.