Oct 102012

Traders Summary of Todays Stock Market Action – 10/10/2012

The Dow Jones Industrial Average (DJI – 13,344.97) buckled to its intraday bottom of 13,327.62 in the last minutes of trading today, and turned in slightly better results by the time the dust settled. On the day, the blue-chip barometer plummeted 128.6 points, or roughly 1%. All but five of the Dow’s 30 components suffered losses, as Alcoa Inc.’s (NYSE:AA) earnings-related decline of 4.6% led the underperforming issues. Conversely, Wal-Mart Stores, Inc. (NYSE:WMT) topped the winning minority with a 1.7% rise. Bank of America Corp (NYSE:BAC) stayed at breakeven.

The S&P 500 Index (SPX – 1,432.56) and Nasdaq Composite (COMP – 3,051.78) prolonged their recent downtrends as well. The SPX retreated 8.9 points, or 0.6%, to end at its lowest level in a month. The COMP, meanwhile, burned off 13.2 points, or 0.4%, dipping below its 60-day trendline for the first time since July 25.

The CBOE Market Volatility Index (VIX – 16.29) remained very near breakeven today, inching lower by 0.08 point, or 0.5%. Once again, the VIX ran into resistance at its 80-day moving average.

Today’s highlight: “The Federal Reserve released its Beige Book, a survey that showed nearly all regions of the United States are reporting stronger housing markets,” said Bell. “The earnings season is also underway, with a few important bank reports due out later this week.”

What’s Buzzing on Schaeffer’s Daily Option Blog

Turning to today’s major market stories…

  • A collar strategy was set up on Facebook Inc (NASDAQ:FB), while a short strangle was implemented on Citigroup Inc. (NYSE:C).
  • Option bears used long puts to bet against Sirius XM Radio Inc (NASDAQ:SIRI).
  • Option Volume Briefs: Front-month put buyers tuned in to Pandora Media Inc (NYSE:P), while LEAPS activity ramped up on the iShares Silver Trust (ETF) (NYSEARCA:SLV).
  • Out-of-the-money calls were purchased on Chevron Corporation (NYSE:CVX).
  • Qlik Technologies Inc (NASDAQ:QLIK) long calls were a popular choice in the options arena.
  • Analysts at Credit Suisse weighed in on Tyco International Ltd. (NYSE:TYC) and IMAX Corporation (USA) (NYSE:IMAX).
  • The most recent Investors Intelligence (II) sentiment survey showed a dip in the bulls-minus-bears line.
  • : Optimists Turn a Blind Eye to Activision’s Technical Troubles

Make it three losses in a row for the Dow Jones Industrial Average (DJI), which was off more than 145 points at its session low, and suffered a second straight triple-point pullback. “The broad market started off flat, but sellers slowly asserted their control,” noted Schaeffer’s Senior Equities Analyst Joe Bell. “Alcoa Inc. (NYSE:AA) kicked off the third-quarter earnings season with a lackluster report, sending the shares down about 4%. While the company beat on earnings and revenues, it lowered its forecast for aluminum demand going forward. Consumer staples took a leadership role, as investors continued to reduce positions and yesterday’s sell-off continued.”
Click through to see what else was on our radar today:

  • Options pits were bustling with intraday action on Wall Street notables Sirius XM Radio Inc (NASDAQ:SIRI), Facebook Inc (NASDAQ:FB), and Pandora Media Inc (NYSE:P)
  • Weekly Contrarian: Despite its technical troubles, optimism blankets Activision Blizzard, Inc. (NASDAQ:ATVI).
  • Plus, as the market’s fear gauge dips lower, call open interest in the VIX rockets higher.

Stock Levels to watch in trading…

  • Dow Jones Industrial Average (DJI – 13,344.97) – support at 11,500; resistance at 14,000
  • S&P 500 Index (SPX – 1,432.56) – support at 1,100; resistance at 1,500
  • Nasdaq Composite (COMP – 3,051.78) – support at 2,400; resistance at 3,400