Dow Posts Best January in Years, Despite Today's Drop

DJI, SPX notch best monthly return since October 2011

by 1/31/2013 4:25:31 PM
Stocks quoted in this article:

"After such a strong rally in early January, it seems like the market is continuing to take a breather here," said Schaeffer's Senior Equity Analyst Joe Bell of today's trading. But he noted that, "the market's ability to grind higher off its early morning lows was a nice sign of strength." The Dow Jones Industrial Average (DJI) fell for the second straight day, but finished with the best January since 1994. And while the blue-chip index backed down some, that 14,000 mark is still in reach.

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

  • The 10 reasons Senior Options Strategist Tony Venosa, CMT, thinks SINA Corp (NASDAQ:SINA) is a great setup for a short trade.
  • Why today's price action in small-caps, transportation stocks, and junk bonds "bodes well for the market," according to Senior Trading Analyst Bryan Sapp.
  • Traders could be targeting Ford Motor Company (NYSE:F) for a short-term rally.
plus...
  • Mixed economic reports, Anheuser-Busch InBev (NYSE:BUD) draws the ire of the DOJ and option bears, and the impact of another delay from Take-Two Interactive Software (NASDAQ:TTWO).

Despite some mildly encouraging economic news, the Dow Jones Industrial Average (DJI) dropped for the second straight day, finishing at 13,860.58 after falling nearly 50 points, or about 0.4%. Only nine companies advanced on the 30-member Dow, led by The Travelers Companies (NYSE:TRV), which jumped 1.1%. Verizon Communications Inc. (NYSE:VZ) was unchanged. United Technologies (NYSE:UTX) had the biggest fall out of the 19 decliners, dropping 1.7%. Despite the two-day losing streak to close the month, the Dow jumped 5.8% in January, its best opening month in almost two decades, and the best overall monthly gain since October 2011.

The S&P 500 Index (SPX) also fell, dropping nearly 4 points, or 0.3%, to close at 1,498.11. The index failed to stay above the 1,500 mark after four consecutive sessions above that threshold. Yet, it was the best month for the SPX since October 2011, with the index climbing 5.0% in January. The Nasdaq Composite (COMP) fell less than 1 point (0%) to finish at 3,142.13. For the month, COMP climbed 4.1%.

The CBOE Volatility Index (VIX) finished at 14.3, down less than 0.1 point, or 0.3%. The VIX finished above 14 for the second straight session, and above 13 for the fourth straight day. Still, the VIX finished the month down 20.8%.

CLOSING SUMMARY – INDICES

CLOSING SUMMARY – NYSE AND NASDAQ

A Trader's Take:

"The day got off to a fast start, as the market received numerous economic data points and several company earnings reports," Bell said. "Overall, the economic reports were mixed and the market once again failed to make a major move in one direction or the other."

3 Things to Know About Today's Market:

  • The day was chock-full of economic releases, including new unemployment claims, personal spending and income, and a key manufacturing index. Initial jobless claims rose by 38,000 to a seasonally adjusted 368,000, a week after the indicator had fallen to the lowest total number in five years. Personal income and spending both climbed, by 2.6% and 0.2%, respectively. And the Chicago Purchasing Managers Index showed a big jump to a healthy-trending 55.6%, its best reading since last April. (Los Angeles Times; Time.com; MarketWatch)

  • United Parcel Service, Inc. (NYSE:UPS) delivered disappointing earnings for the fourth quarter and gave an outlook for 2013 that was below current estimates. (CNBC.com)

  • And overseas, Deutsche Bank AG (USA) (NYSE:DB), Germany's largest bank, reported a fourth-quarter loss of $3 billion, due to ongoing legal issues and write-downs on certain assets. Company officials vowed to change the bank's reputation as one of the most highly leveraged in Europe. (New York Times)

5 Stocks We Were Watching Today:

  1. Ciena Corporation (NASDAQ:CIEN) drew bullish traders in droves, who were going against recent bearish trends.
  2. The U.S. Department of Justice's opposition to a proposed merger sank shares of Anheuser-Busch Inbev (ADR) (NYSE:BUD), and the short-term bears swooped in.
  3. The Boeing Company's (NYSE:BA) stronger-than-expected earnings Wednesday attracted lots of call action, with optimists apparently discounting the ongoing grounding of the 50-plane Dreamliner 787 fleet.
  4. News that video-game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has delayed the launch of its flagship Grand Theft Auto game until September created a lot of interest in short-term puts.
  5. Options traders were pessimistic in front of this week's earnings from Exxon Mobil Corporation (NYSE:XOM), with puts trading at nearly six times the normal pace.
EARNINGS

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

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