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Dow Stays in Tight Range, Snaps Winning Streak as Traders Tread Water

Oil loses 1.3% ahead of tomorrow's inventories report

by 5/28/2014 4:19:57 PM
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"It was a fairly quiet day for the market, as most major indexes finished near breakeven," summarized Schaeffer's Senior Equity Analyst Joe Bell, CMT. "This was not a huge surprise after the strong momentum that we've experienced during the past few market sessions." The primary benchmarks were lower at the close, with the Dow Jones Industrial Average (DJI) in the red by a modest margin, while the S&P 500 Index (SPX) managed to pull out another new all-time high before resolving to the downside.

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

Trading Topic of the Week -- Tips for Buying Weekly Options: Wait for the right setup. Weekly options offer plenty of advantages, but they aren't necessarily all-purpose trading vehicles.

The Dow Jones Industrial Average (DJI - 16,633.18) was in the red for the entirety of Wednesday's session, trading in a 55-point range and closing down 42.3 points, or 0.3%. The blue-chip index did approach breakeven in the final hour of trading, before selling pressure emerged. One-third of the Dow's components closed higher on the day, led by INTC and JPMorgan Chase & Co. (NYSE:JPM), which each added 0.6%. Pfizer Inc. (NYSE:PFE) was unchanged on the day, and MCD brought up the rear with a 1% drop.

The S&P 500 Index (SPX - 1,909.78) finished 2.1 points, or 0.1%, lower, but not before tagging another new intraday high of 1,914.46. The Nasdaq Composite (COMP - 4,225.07) slipped 12 points, or 0.3%, by the close.

The CBOE Volatility Index (VIX - 11.68) moved higher once again, closing up 0.2 point, or 1.5%.



A Trader's Take:

"Today's big winner was definitely bonds," added Bell. "Despite the recent market strength, bonds once again jumped and are trading at their highest level since last June. It continues to show that investors are looking to reduce risk, relative to what we saw in 2013."

5 Items on Our Radar Today:

  1. The yield on the 10-year Treasury bond sank to its lowest point since last summer, slipping south of the key 2.5% level to hit an intraday low of 2.43%. The yield has shed more than 20 basis points in May and is on track for its sharpest one-month decline since January. (MarketWatch)
  2. McDonald's Corporation (NYSE:MCD) announced plans to give back up to $20 billion to its shareholders over the next two years, through increased stock buybacks and dividends. (For context, MCD returned $16.4 billion to its shareholder base from 2011 to 2013.) The company also announced plans to refranchise at least 1,500 of its locations -- particularly those in international markets -- by 2016. (Chicago Tribune)
  3. Short-term traders pounced on Tesla Motors Inc (NASDAQ:TSLA) today, picking sides on where the shares may finish the week.
  4. Intel Corporation (NASDAQ:INTC) bears bet on a quick retreat, adding to a recent trend toward put buying .
  5. Who won this week's Brand Face-Off between software heavyweights Adobe Systems Incorporated (NASDAQ:ADBE) and Autodesk, Inc. (NASDAQ:ADSK)?

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

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