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Relief Rally Continues, Taking Dow and S&P 500 to Weekly Wins

Posted
10/11/2013 4:21:00 PM
By: Schaeffer's Investment Research
Referenced Stocks:APOL;BA;JNJ;JPM;YHOO

"We continue to battle our way through the headlines from Washington, and yesterday's momentum was able to continue after a bit of a flat start," summarized Schaeffer's Senior Equity Analyst Joe Bell, CMT. "News hit today that the Republicans put a new offer on the table to avoid the Treasury default, so it seems like the nation's lawmakers may finally be making some headway in their discussions." By the close, the Dow Jones Industrial Average (DJI) had posted another triple-digit gain to finish the week in the black.

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

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After a sluggish start, the Dow Jones Industrial Average (DJI - 15,237.11) added to its gains from Thursday, rising 111 points, or 0.7%, by the close to settle just shy of its intraday peak. On a week-over-week basis, the blue-chip index rose 1.1%. Two dozen Dow names closed in the black, with Johnson & Johnson's ( JNJ ) 1.9% gain pacing the winners. Boeing ( BA ) fared the worst of the six decliners, shedding 0.8%.

The S&P 500 Index (SPX - 1,703.20) climbed 10.6 points, or 0.6%, to finish back above the 1,700 level for the first time since Sept. 23. The Nasdaq Composite (COMP - 3,791.87) followed suit, adding 31.1 points, or 0.8%, to retake control of its 20-day moving average after three days spent below this trendline. For the week, the SPX added 0.8%, while the COMP surrendered 0.4%.

The CBOE Volatility Index (VIX - 15.72) continued to retreat, closing south of the 16 mark for the first time since Oct. 1, ending 0.8 point, or 4.6%, lower on the day. The market's fear gauge went on a wild weekly ride, spanning an intra-week high and low of 21.34 and 15.46, respectively. By the time the dust settled, the VIX logged a weekly loss of 6.1%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Earnings season started to heat up today, with JPMorgan Chase ( JPM ) and Wells Fargo (WFC) releasing their results," continued Bell. "The news wasn't great, and both names finished narrowly in the red. Elsewhere, until we get clear and complete news from D.C. that agreements have been reached, it remains speculation. For now, though, the markets like what they see here, and the panic selling seems to have come to an end."

3 Things to Know About Today's Market :

5 Stocks We Were Watching Today :

  1. Option players focused on the call side of the fence ahead of next week's earnings announcement from Yahoo! ( YHOO ) .
  2. Bearish option traders (or, potentially, conservative shareholders) scooped up long-term, out-of-the-money puts in Cisco Systems (CSCO) .
  3. The possibility of a breakfast menu earned Chipotle Mexican Grill (CMG) an upgrade from Janney ahead of the opening bell.
  4. Our Option Idea of the Week has a stylish choice for option bulls: Michael Kors (KORS) .
  5. With its earnings report due next Tuesday, Intel Corporation (INTC) was targeted by short-term bearish option traders.

EARNINGS

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

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude oil reversed lower today, following an upwardly revised supply outlook from the International Energy Agency. The November contract lost 99 cents on the day, or 1%, to close at $102.02 per barrel. This week, black gold posted a 1.8% loss.

Gold futures also fell, as cautious optimism regarding the gridlock in Washington weighed on the malleable metal. By the close, December-dated gold was off $28.70, or 2.2%, at $1,268.20 an ounce, near a three-month low. On a weekly basis, gold gave back 3.2%.

SCHAEFFER'S MARKET POSTURE