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US Markets Dismiss Overseas Peer Pressure to Move Sharply Higher
By: Schaeffer's Investment Research
"What a day. Everyone was freaking out last night when Japan was
down significantly at the open," recalled Schaeffer's Senior
Technical Strategist Ryan Detrick, CMT. "This morning, the Nikkei
eventually closed down 6.4%, and U.S. futures were much lower. Then
a funny thing happened ... we got some decent economic data in the
form of May retail sales and weekly jobless claims, and an oversold
bounce was born." The
Dow Jones Industrial Average (DJI)
snapped its three-day losing streak to power nearly 200 points
higher, retaking short-term trendline support. "The big question
is," Detrick added, "can this bounce last?"
Continue reading for more on today's market, including :
- A clear sign that " bulls won't go down without a fight ," courtesy of Schaeffer's Senior Trading Analyst Bryan Sapp.
- Is Research In Motion ( BBRY ) still a buy ? Our Senior Options Strategist Tony Venosa, CMT, thinks so, and has 11 reasons why.
- One large-scale Intel Corporation ( INTC ) option trader remains bullish as the stock challenges resistance at $25.
- Retail sales top expectations, Microsoft (
) unveils a new partner, and Micron Technology (
) speculators see limited volatility.
The topsy-turvy movement in the Dow Jones Industrial Average (DJI) continued, as the blue-chip index gained 180.9 points, or 1.2%, to settle at 15,176.08. With this advance, the Dow retook control of the 15,000 mark, as well as its 10-day and 40-day moving averages. Of the Dow's 30 components, 28 finished north of breakeven, with Caterpillar ( CAT ), Merck (MRK), and Pfizer (PFE) each gaining 2.3%. The two underperformers were Microsoft ( MSFT ) and DuPont (DD), respectively off 0.8% and 0.7%.
Also bounding higher was the S&P 500 Index (SPX) , which added 23.8 points, or 1.5%, to end the session at 1,636.36. The index finished near its highs of the day, and back above its 10-day trendline. The SPX has closed north of its 10-day just four times since May 22. The Nasdaq Composite (COMP) also edged back above its 10-day moving average, settling with a gain of 44.9 points, or 1.3%, at 3,445.36.
The CBOE Market Volatility Index (VIX) plunged as the bulls returned to the fray, dropping 11.7%, or 2.2 points, to close at 16.41. Still, the VIX remains 8.4% higher for the week.
A Trader's Take :
"What is encouraging is the S&P 500 once again found support from its 50-day moving average," continued Detrick. "Now, we've seen bounces like this a lot the past few weeks and just as quickly, they are sold. News is light and tomorrow is a Friday in the summer, so a light-volume day is likely. Still, volatility has really ramped up, so I wouldn't expect a boring day."
3 Things to Know About Today's Market :
- Initial jobless claims were better than expected , dropping 12,000 last week to a seasonally adjusted 334,000. This was nearly a five-year low. (Reuters)
- Elsewhere on the economic front, retail sales rose by 0.6% in May to a seasonally adjusted $421.15 billion, edging past economists' projections. And business inventories expanded by 0.3% in April, in line with expectations. (Los Angeles Times, CNBC)
- Microsoft ( MSFT ) is teaming up with Best Buy (BBY) to open 500 store-within-a-store locations in the U.S. The outlets will feature BBY employees trained in Microsoft products including tablets, PCs, phones, software, and the Xbox gaming console. (CNET)
5 Stocks We Were Watching Today :
- Short-term straddle sellers wagered on limited volatility in Advanced Micro Devices (AMD) .
- Long-term call buying was popular in the Alcatel Lucent SA (ALU) option pits today.
- A neutral short strangle was executed on Micron Technology ( MU ) , after the shares earned multiple price-target hikes.
- Barnes & Noble (BKS) call buyers swooped in looking for bargains, as the stock took a plunge.
- Following news that it was unloading its Canadian operations, Safeway Inc. (SWY) was downgraded at Citigroup.
For a look at today's options movers and commodities activity, head to page 2.
Oil futures advanced in today's trading, responding favorably to upbeat retail sales and jobless claims news. Crude for July delivery traded up 81 cents, or 0.8%, to close at $96.69 a barrel.
Conversely, the combination of better-than-expected U.S. data and sharp losses in Japan sent gold futures into the red today. By the close, August-dated gold had dropped $14.20, or 1%, to settle at $1,377.80 an ounce.