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Dow Trims Loss to 25 Points; Is Worst Behind Us?
By: Schaeffer's Investment Research
A bearish fever plagued the
Dow Jones Industrial Average (DJI)
for most of the day, as major domestic news and economic tensions
abroad tested investor mettle. "The European Union (EU) remained in
focus as the EU Summit commenced today, while financials received
much of the spotlight back home," explained Senior Equities Analyst
Joe Bell. "JPMorgan Chase (
) dragged on the financial sector, as reports surfaced that some of
its trading losses could be much worse than previously expected. In
addition, Citigroup downgraded several banks in the sector."
Click through to see what else was on our radar today:
- Did today's fast market pay off for Wall Street's day traders ?
- How to get super leverage from trading commodity options.
- Plus, how did healthcare-related stocks check out after the Obamacare ruling ?
In the last two hours of trading, the Dow Jones Industrial Average (DJI - 12,602.26) found itself 176.8 points lower at a session nadir of 12,450.17, but battled back to pare a big chunk of its losses. By the time the dust cleared, the Dow was off by only 24.8 points, or 0.2%. Sixteen of the 30 blue chips turned in deficits, with JPMorgan Chase & Co.'s ( JPM ) 2.5% pullback leading the laggards. Chevron ( CVX ) paced the 13 winning issues with a 0.9% climb, while 3M ( MMM ) remained unchanged.
The S&P 500 Index (SPX - 1,329.04) fared a similar fate, inching 2.8 points, or 0.2%, lower. Meanwhile, the Nasdaq Composite (COMP - 2,849.49) backpedaled 25.8 points, or 0.9%, posting the worst performance of its fellow benchmarks. At their intraday worsts, the SPX and COMP traded at 1,313.29 and 2818.19, respectively.
The CBOE Market Volatility Index (VIX - 19.71) rose on today's bearish turn for stocks, but only slightly. The market's fear gauge tacked on 1.3%, and settled below its session high of 21.19.
Today's highlight : "There wasn't much to cheer about from a price-action perspective today, but we finally got the Supreme Court's ruling on Obama's healthcare law," said Bell. "After initial confusion from different media outlets as to whether it was upheld or not, word finally came through that it was indeed sustained by the court. Healthcare stocks initially sold off on the news, but then regained their footing and don't appear any worse for the wear."
Turning to today's major market stories...
- The latest American Association of Individual Investors (AAII) sentiment survey showed bullish sentiment at a three-year low.
- Schaeffer's Columnist Alan Knuckman explained the "super leverage" of trading options on SPDR Gold Trust (ETF) (NYSEARCA:GLD).
- Following the Obamacare ruling, hospital stocks Community Health Systems ( CYH ) and HCA Holdings Inc ( HCA ) were popular dishes in the options pits .
- Costco Wholesale Corporation (COST) leapt to an all-time best, while JinkoSolar Holding Co., Ltd. (JKS) tripped to an all-time worst.
- With earnings just around the corner, check out three ways to bet bearishly on QUALCOMM, Inc. (QCOM) .
- Analysts weighed in on tech companies EMC Corporation (EMC) , VMware, Inc. (VMW) , NVIDIA Corporation (NVDA) .
- One options player struck it rich with Arena Pharmaceuticals, Inc. (ARNA) .
- Weekly options traders took a look at Google Inc's (GOOG) new tablet .
- A short strangle was initiated on Renren Inc (RENN).
- And in case you missed it... Bernie Schaeffer On Charts : The New VIX Resistance Level to Watch.
For today's activity in commodities, options, and more, head to page 2.
Oil futures plummeted today, bending to their lowest price since October, and their worst settlement in 2012. Rising concerns that the EU summit will fail to resolve the region's debt problems, as well as a stronger dollar and a sell-off in the broader equities market, weighed on the commodity. By the close, crude for August delivery burned off $2.52, or 3.1%, to end at $77.69 a barrel.
Similarly, gold futures took a tumble today, as traders contemplated the EU's persistent economic crisis and today's Supreme Court healthcare ruling. As the dollar strengthened, August-dated gold retreated $28, or 1.8%, to land at $1,550.40 an ounce. This marked the precious metal's lowest price since May.
Levels to watch in trading...
Dow Jones Industrial Average (DJI - 12,602.26)
- support at 11,500; resistance at 14,000
S&P 500 Index (SPX - 1,329.01)
- support at 1,100; resistance at 1,500
- Nasdaq Composite (COMP - 2,849.49) - 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.