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Relief Rally Continues, Taking Dow and S&P 500 to Weekly Wins
By: Schaeffer's Investment Research
"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
Continue reading for more on today's market, including :
- Schaeffer's Senior Trading Analyst Bryan Sapp illustrates why " the bulls are once again in control of the market ," with one obvious caveat.
- Nine reasons why Apollo Group ( APOL ) could pop higher in the near term, courtesy of our Senior Options Strategist Tony Venosa, CMT.
- These three small-cap names may have big upside potential .
- Consumer confidence backslides, JPMorgan Chase (
) posts its first quarterly loss in nearly a decade, and Yahoo! (
) investors bet bullishly before earnings.
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%.
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 :
- Market watchers maintained high hopes for near-term solutions to the government shutdown and the looming debt-limit pressure. Senate Republican leader Mitch McConnell, R-Ky., said this morning that the GOP was working toward a bipartisan resolution , following constructive meetings last night and this morning with President Barack Obama. (The Associated Press, via ABC News)
- The Thomson Reuters/University of Michigan consumer sentiment index for mid-October dipped to 75.2 from 77.5 at the end of last month, amid heightened focus on issues at the federal level. The preliminary reading was roughly in line with economists' estimates. (The Wall Street Journal)
- JPMorgan Chase ( JPM ) posted a third-quarter loss of $380 million, or 17 cents per share, the bank's first quarterly loss since 2004 . Excluding items -- such as $9.2 billion in legal costs -- the financial bellwether earned $1.42 per share. Revenue was off $2 billion on a year-over-year basis to $23.9 billion, falling short of analysts' expectations. (The New York Times)
5 Stocks We Were Watching Today :
- Option players focused on the call side of the fence ahead of next week's earnings announcement from Yahoo! ( YHOO ) .
- Bearish option traders (or, potentially, conservative shareholders) scooped up long-term, out-of-the-money puts in Cisco Systems (CSCO) .
- The possibility of a breakfast menu earned Chipotle Mexican Grill (CMG) an upgrade from Janney ahead of the opening bell.
- Our Option Idea of the Week has a stylish choice for option bulls: Michael Kors (KORS) .
- With its earnings report due next Tuesday, Intel Corporation (INTC) was targeted by short-term bearish option traders.
For a look at today's options movers and commodities activity, head to page 2.
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%.