Relief Rally Short-Lived as Stocks and Commodities Drop Again

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"Although there were some whispers about potential downgrades over in Europe, today was largely driven by earnings," summarized Schaeffer's Senior Equity Analyst Joe Bell. After bouncing back on Tuesday, the Dow Jones Industrial Average (DJI) was firmly controlled by the bears again today, as it again violated increasingly tenuous support at its 10-day moving average. Volatility swelled, as represented by the CBOE Market Volatility Index (VIX) , which jumped more than 28% intraday to its highest level since its late-February spike.

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

  • What Schaeffer's Senior Trading Analyst Bryan Sapp finds "amazing" about this market. Plus -- S&P 500 levels to watch .
  • The Weekly Contrarian: price action has been strong in Citigroup ( C ), but for how long?
  • The options crowd thinks the Sprint Nextel ( S ) story is far from over.


  • Another painful day for market bulls, a visit by Apple ( AAPL ) to the sub-$400 mark, and a look at Advanced Micro Devices ( AMD ) before earnings.

The Dow Jones Industrial Average (DJI) managed to close off its lows of the day but still suffered a 138-point decline, falling 0.9% to 14,618.59. Four of the Dow's 30 members ended in positive territory, with Johnson & Johnson ( JNJ ) leading the pack, up 0.6%. Bank of America (BAC) paced the 26 decliners, off 4.7% on the heels of its quarterly earnings report.

The S&P 500 Index (SPX) gave back 23 points, or 1.4%, but managed to stay above psychologically strong support at 1,550, closing the session at 1,552.01. In intraday action, however, the index dipped to the 1,543.69 mark. Elsewhere, the Nasdaq Composite (COMP) plunged 1.8%, or 60 points, to 3,204.67.

The CBOE Market Volatility Index (VIX) bounced back today, regaining much of what was lost in Tuesday's session. Although it surged to 17.90 in late-morning action, the VIX closed up 2.6 points, or 18%, at 16.51.


A Trader's Take :

"The S&P 500 managed to close above its April lows and finds itself right near the bottom of its weekly range," noted Bell. "In spite of the plethora of poorly received news today, a hold above this level is promising."

3 Things to Know About Today's Market :

  • Apple Inc. ( AAPL ) hit its lowest point since December 2011, notching an intraday nadir of $398.11. Likely to blame for this drop -- in addition to broader market malaise -- were reports that shipments of the iPad mini could drop as much as 30% in the second quarter and news that chip supplier Cirrus Logic (CRUS) had reduced its revenue outlook amid an inventory surplus. (Fox Business/Bloomberg)
  • The Federal Reserve's "Beige Book" revealed modest economic growth throughout all 12 districts, in the most recent reporting period from late February to early April. Central bank officials noted that construction spending was a notable bright spot. (CNBC)
  • Several Google Inc (GOOG) products -- including Gmail and Google Drive -- endured an intermittent outage this morning that impacted a minor fraction of users. (The Washington Post)

5 Stocks We Were Watching Today :

  1. Bearish speculators have been stocking up on Research In Motion (BBRY) puts of late.
  2. As Apple Inc. ( AAPL ) tumbled, option players loaded up on short-term puts .
  3. A quick look at the sentiment backdrop in Advanced Micro Devices ( AMD ) ahead of tomorrow's earnings report.
  4. RBC lowered its price target for Nokia Corporation (ADR) (NOK) by 10% ahead of the open.
  5. Netflix Inc. (NFLX) was targeted by short-term call buyers , who may be trying to catch a falling knife.

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


Commodities :

Crude futures headed south again today, after the Energy Information Administration (EIA) said gasoline demand was unexpectedly weak during the week ended April 12. By the close, May-dated oil had shed $2.04, or 2.3%, to close at a new year-to-date low of $86.68 per barrel.

Gold futures also backpedaled, thanks in part to a stronger U.S. dollar. June gold futures lost $4.70 on the day, or 0.3%, to settle at $1,382.70 per ounce.


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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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