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Stocks Finish Solidly Higher as Attention Turns to the Fed

Posted
3/18/2014 4:18:00 PM
By: Schaeffer's Investment Research
Referenced Stocks:V;NKE;GS;AAPL;GTAT

"The bulls enjoyed two straight days of gains, with another strong session in the books after last week's 2% drop," observed Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "Most impressive was that small-caps had a big day under the surface, after lagging somewhat yesterday. In the end, the Russell 2000 Index (RUT) and S&P 500 Index (SPX) finished just about one good day shy of new all-time highs, and it's tough to argue with that. One of the criticisms of the recent bounce is that it has occurred on light volume. While this is 100% true, we've also heard that argument many times during the past few years, and it hasn't slowed the bull market down yet." The Dow Jones Industrial Average (DJI) traded on the positive side of the tape all day and closed back atop its 10-day moving average.

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

Trading Topic of the Week -- How to Get Started with Options: Learn how options pricing works . Options pricing isn't rocket science, but it's not quite as straightforward as stocks (implied volatility, anyone?).

The Dow Jones Industrial Average (DJI - 16,336.19) spent the day in the green, closing up 89 points, or 0.6%, to finish above its 10-day moving average following four sessions below this trendline. Microsoft Corporation (MSFT) led the Dow's 27 advancers with a gain of 3.9%. The Boeing Company (BA) paced the index's three decliners, shedding 1.1% on the day.

The S&P 500 Index (SPX - 1,872.25) also gained ground, closing up 13.4 points, or 0.7%. The Nasdaq Composite (COMP - 4,333.31) outperformed its index peers, tacking on 53.4 points, or 1.3%.

The CBOE Volatility Index (VIX - 14.52) continued to move lower, closing with a loss of 1.1 points, or 7.2%. This week alone, the "fear gauge" has given back 18.5%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"I do find it interesting that buyers have been relatively aggressive ahead of the Fed," added Detrick. "With the central bank set to announce its decision on interest rates and where quantitative easing plans are headed, be on the lookout for some volatility tomorrow afternoon."

5 Items on Our Radar Today :

  1. Russian President Vladimir Putin opted to defy Western wishes and face sanctions, signing a treaty that would make Crimea part of the Russian Federation. But in a bit of relieving news, he also told his nation's parliament that he had no interest in annexing other sections of Ukraine. (Reuters)
  2. Housing starts were little changed in February, slipping 0.2% to come in roughly in line with economists' estimates. Building permits spiked 7.7% higher in February, thanks to escalating strength in the multi-family housing segment. The consumer price index (CPI), meanwhile, edged 0.1% higher last month -- in line with expectations -- as food prices posted their sharpest monthly gain in over two years. Excluding food and energy costs, the core CPI ticked 0.1% higher as well. (USA Today; MarketWatch)
  3. Wal-Mart Stores, Inc. (WMT) announced plans to buy back used video games in exchange for store credit. The service will launch on March 26 in 3,100 locations across the U.S. In response, GameStop Corp. (GME) shares shed roughly 3.4% on the day. (The New York Times)
  4. It was a good day for Microsoft Corporation (MSFT) , which earned an upgrade amid rumors that the Seattle software giant's Office suite was coming to the Apple Inc. ( AAPL ) iPad later this month.
  5. Nokia Corporation (ADR) (NOK) was targeted by put buyers betting on a pullback to year-to-date lows.

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 swung higher in Tuesday's session, ahead of tomorrow's inventories report and the Federal Reserve's interest-rate decision. By the close, April oil futures were up $1.62, or 1.7%, to end the session at $99.70 per barrel.

Gold futures continued to lose ground today, settling at their lowest level in a week as concerns about the Ukraine situation continued to ease. The April-dated contract slipped $13.90, or 1%, to $1,359 an ounce.

SCHAEFFER'S MARKET POSTURE