"In a relatively uneventful day, the markets caught their breath after yesterday's strong rally," summarized Schaeffer's Senior Equity Analyst Joe Bell. The Dow Jones Industrial Average (DJI) broke higher in the afternoon after a sluggish start, closing the session at its highest point since December 2007. "Meanwhile, the CBOE Market Volatility Index (VIX) dropped to its lowest level since June 2007," Bell noted, "as investors continued to bid the market higher as the week drew to an end."

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

• Why Senior Trading Analyst Bryan Sapp expects "more upward price action" next week.
• Option Idea of the Week: how to target further upside in Goldman Sachs (NYSE:GS) using in-the-money calls.
• Senior V.P. of Research Todd Salamone looked at the pin risk faced by Apple (NASDAQ:AAPL) option players today.

• A debt-ceiling update, pre-earnings action in Starbucks (NASDAQ:SBUX), and some VIX knowledge in our tweet of the day.

The Dow Jones Industrial Average (DJI) closed at its highest level in more than five years, though it failed to peg a new annual peak on an intraday basis. The index closed up 54 points, or 0.4%, today, and ended the week 1.2% higher. Of the 30 Dow components, 22 closed in positive territory, led by General Electric (NYSE:GE), which rallied 3.5% after a well-received earnings report. The six losers were paced by Intel (NASDAQ:INTC), which dropped 6.3% after its own earnings news. Microsoft (NASDAQ:MSFT) and Hewlett-Packard (NYSE:HPQ) were unchanged on the day.

The S&P 500 Index (SPX) reached another new multi-year high at the closing bell, ending the session with a gain of 5 points, or 0.3%. The Nasdaq Composite (COMP) was fractionally lower, off 1.3 points, or less than 0.1%. For the week, the SPX gained 0.9% while the COMP added 0.3%.

The CBOE Market Volatility Index (VIX) hit a 5-1/2-year low of 12.29, giving back 8.2%, or 1.1 points. On a weekly basis, the fear barometer shed 6.7%.

A Trader's Take:

"There was a worse-than-expected University of Michigan survey for the first half of January, but it did very little damage to the overall market," Bell said. "The market also received earnings reports from Intel (NASDAQ:INTC) and Advanced Micro Devices (NYSE:AMD) that left little to be excited about. The technology sector was dragged down as a result but managed to close slightly higher on a weekly basis."

3 Things to Know About Today's Market:

• House Republicans are looking to buy time to hold bipartisan budget negotiations and will hold a vote next week on an extension of the debt ceiling. The new measure would reportedly prolong the government's borrowing authority by roughly three months. The proposal includes the clause that if a new budget does not pass by April 15, policymakers will stop receiving their paychecks. Or simply, according to House Majority Leader Eric Cantor, R-Va., "No budget, no pay."
• The first reading of the Thomson Reuters/University of Michigan consumer sentiment index for 2013 slid to 71.3 from 72.9 at the end of December. Not only did this figure fall shy of economists' expectations of a rise to 75.0, but it marked the index's lowest reading in more than a year.
• Dow component General Electric (NYSE:GE) reported fourth-quarter earnings of 44 cents per share (excluding items), exceeding analysts' consensus estimates by a penny. Revenue came in 4% higher at $39.3 billion, edging out expectations of $38.74 billion. One analyst told CNBC that GE serves as a good bellwether for larger-cap stocks in general, as it is "attached to so many different verticals in the S&P 500."

Plus ... Yelp (NYSE:YELP) is bolstering its arsenal of information by adding health-inspector grades to its restaurant reviews. This will be a gradual roll out; the grades will first be added to restaurants in the San Francisco area, then New York City. Ratings will vary based on the system in the municipal area, as New York, for example, provides letter grades (A, B, or C), while San Francisco rates on a numerical scale capped at 100.

Today's Top Tweet:

"the $VIX is getting hit because it's pricing in a 3 day weekend. A more accurate reading for downmove is in the vix futures $$"
@stevenplace, (Steve Place), 11:50 a.m.

5 Stocks We Were Watching Today:

1. Facebook (NASDAQ:FB) option speculators used a time spread to bet on more upside next week ... and even more upside down the road.
2. Google (NASDAQ:GOOG) enjoyed a price-target hike at Nomura ahead of the open.
3. State Street (NYSE:STT) rallied after its earnings release, prompting attention from call buyers.
4. Starbucks (NASDAQ:SBUX) option bulls bought calls ahead of the company's earnings report.
5. QUALCOMM (NASDAQ:QCOM) saw call buyers swoop in on a pullback in the shares.

Question of the Day:

Q: What is time value?
A: Time value is the reason that a January 2014 call will be more expensive than its July 2013 counterpart -- because you're buying more time for the underlying stock to move as you expected. In-the-money options carry both intrinsic value and time value, while out-of-the-money options consist solely of time value. The loss of time value on your option is referred to as time decay, and it accelerates as the option draws closer to its expiration date. The rate at which your option will lose time value can be measured by theta, which is one of the infamous "Greeks."

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