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Fed Minutes Show Flexibility; Dow Gains Triple Digits

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by 5/21/2014 4:20:46 PM
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"There was very little data or news to move the market today, but the major benchmarks still produced a sizeable gain regardless," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "In what has become familiar for market participants, small-caps underperformed, and large-caps led the way." Indeed, the Dow Jones Industrial Average (DJI) rallied throughout the session, closing with a triple-digit gain and near its intraday peak.

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

  • News that Netflix, Inc. (NASDAQ:NFLX) will expand its business across much of Europe stirred up some excitement in the Netflix options pits, as traders wagered on continued strength in the shares.
  • Three big names have quarterly results due tomorrow: see our pre-earnings previews of one leading electronic retailer, a video game heavyweight, and a notable semiconductor concern.
  • Is General Electric Company (NYSE:GE) destined to stay range-bound for the next several months? One straddle seller seems to think so.
  • Plus ... Fed minutes hit the Street, Facebook Inc (NASDAQ:FB) speculators shift gears, and a Bank of America Corp (NYSE:BAC) bull places a large and gutsy bet.
Trading Topic of the Week -- How to Get Started with Options: Stick with basic strategies. Make sure you master the fundamentals before spreading your wings with iron condors and long butterflies.

The Dow Jones Industrial Average (DJI - 16,533.06) spent the entire day in the green, moving slowly and steadily higher all the way through the closing bell. All told, the blue-chip index gained 158.8 points, or nearly 1%. All but two of the Dow's 30 components moved higher today, paced by Goldman Sachs Group Inc (NYSE:GS), which gained 1.9%. At the back of the pack was AT&T Inc. (NYSE:T), which edged 0.7% lower.

The S&P 500 Index (SPX - 1,888.03) also had a strong day, rising 15.2 points, or 0.8%, and popping back above its 10-day moving average. The tech-laden Nasdaq Composite (COMP - 4,131.54) bounced as well, adding 34.6 points, or 0.9%.

The CBOE Volatility Index (VIX - 11.91) took a tumble amid the market's move higher. The "fear gauge" slipped more than 1 point, or 8.1%, on the day, notching an intraday low of 11.80 and putting in its lowest close since last August.



A Trader's Take:

"The SPX and Russell 2000 Index (RUT) both continue to hold near their respective support areas," added Bell. "While the S&P 500 has traded within a tight range during the past month, the small-cap index is in the midst of testing its former 2014 low."

5 Items on Our Radar Today:

  1. The minutes from the April 29-30 Federal Reserve meeting showed an emphasis on tightening monetary policy, but no ultimate resolution as far as timing, or next steps. The notes also revealed that central bank officials were unconcerned about the anemic first-quarter gross domestic product reading, and feel stronger economic growth is ahead. (MarketWatch)
  2. Tiffany & Co. (NYSE:TIF) was among the day's top performers out of the gate, as first-quarter earnings easily surpassed analysts' expectations. Specifically, net income surged 50% to 97 cents per share, thanks in part to strong Valentine's Day sales. Looking forward, the jewelry name now expects full-year net income of $4.15 to $4.25 per share, a dime higher than earlier estimates, and surrounding Wall Street's consensus outlook of $4.19 per share. (Associated Press, via ABC News)
  3. One Facebook Inc (NASDAQ:FB) skeptic sold overhead calls to wager on short-term resistance.
  4. One speculator spent $40,000 for a short-term bet on Bank of America Corp (NYSE:BAC) shares. The options market is pricing in an under-10% chance the contracts will be in the money by expiration.
  5. Following yesterday's yearly investor day, Cisco Systems, Inc. (NASDAQ:CSCO) scored a price-target hike from Stifel.

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

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