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Market Recap: Stocks Finish the Week With a Merger-Related Bang; Google and Yahoo! in Focus

Microsoft's (MSFT) bid for Yahoo! (YHOO) helps push the market, and has a halo effect on rival Google (GOOG) after earnings

by Mark Fightmaster (mfightmaster@sir-inc.com) 2/1/2008 4:15 PM

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With their morning cup of java, investors were greeted with news that Google (GOOG) saw its fourth-quarter earnings fall short of the consensus estimate. This news was offset by reports that Microsoft (MSFT) would try to capitalize on GOOG's perceived weakness by making an offer to purchase Yahoo! (YHOO) - a rather substantial offer, at that. Whatever enthusiasm existed was curbed a bit by news that nonfarm payrolls fell more than expected. Nevertheless, the intraday low was reached early in the session and the day finished in positive territory.

When the closing bell sounded, the Dow Jones Industrial Average (DJIA � 12,743.2) advanced nearly 93 points, despite the fact that 8 of its components dropped into negative territory. The largest loser on the day was Microsoft, followed by Exxon Mobil (XOM) and Boeing (BA). The remaining 22 stocks were led higher by IBM (IBM) and 3M Company (MMM). For the week, the blue-chip barometer added more than 4%. Unfortunately for the Dow, it proved unable to close above its descending 10-week and 20-week moving averages.

The S&P 500 Index (SPX � 1,395.42) edged close to a 17-point gain before the closing bell sounded. The index finished the week with a 4.9% gain, but could not break through overhead resistance at the 1,400 level. Finally, the tech-rich Nasdaq Composite (COMP � 2,413.4) added 23.5 points on the day and 3.8% for the week. Although the Nasdaq topped the 2,400 level, it could not advance through its 10-week and 20-week moving averages.

Turning to equities in focus, Motorola (MOT) reported that it will consider spinning off its mobile-device unit ... the potential buyout news sparked a flurry of option activity on Yahoo! (YHOO) ... Affymetrix (AFFX) rallied thanks to a strong 2008 earnings outlook ... Digital River (DRIV) plummeted following a weak forecast ... we also took a look at whether or not a win by the Patriots would spell doom for the market ... and today's Quote of the Day comes from Senator Arlen Spector (R-Pa.), who, in this article on ESPN.com, noted he may subpoena NFL Commissioner Roger Goodell and ask why the New England Patriots' Spygate video tapes were destroyed and review the NFL's antitrust status. Specter noted that the matter "may not compare to the CIA's destruction of interrogation tapes," but the Senator noted:

"I do believe that it is a matter of importance. It's not going to displace the [economic] stimulus package or the Iraq war, but I think the integrity of football is very important, and I think the National Football League has a special duty to the American people � and further the Congress � because they have an antitrust exemption."

But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:

And, in case you missed it, our resident fight master, Mark Fightmaster, took a look at a company with nearly as cool a name - Force Protection (FRPT)- in this week's edition of StockCenter. Chuck Norris wants you to click here to watch the video, and you better do what Chuck wants.

Black gold slipped for a second straight day this afternoon, thanks to the weaker-than-expected payroll data. This poor data suggests that the U.S. economy could be falling into recession, meaning there could be curbed crude spending in the world's largest crude consumer. The front-month contract shed 3%, or $2.79, to close at $88.96 per barrel. The intraday low for the contract stood at $88.25 per barrel. Along with the payroll data, the Organization of Petroleum Exporting Countries (OPEC) decided to keep its current output levels unchanged. This move was expected, so it had little to do with the contract's drop.

Gold futures could not take advantage of the day's early weaker-than-expected payroll numbers, as the dollar strengthened throughout the day. As a result of the greenback's renewed strength, the malleable metal slipped $14.50 to close at $913.50 an ounce. Compared to a week ago, gold slipped $2.70. Some analysts are looking at today's (and this week's) action as a "much needed breather after the 10% increase in value in January."

Levels to Watch in Trading:

Dow Jones Industrial Average (DJIA � 12,743.2) - support at 11,500; resistance at 12,800

S&P 500 Index (SPX � 1,395.42) - support at 1,250; resistance at 1,420

Nasdaq Composite (COMP � 2,413.4) - support at 2,200; resistance at 2,600

OUTPERFORMING AND UNDERPERFORMING SECTORS

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Options Stew: A Taste of the Week's Spiciest Plays

(11/20/2009 10:45:27 AM)

Welcome to our new video series, Options Stew, where we take a look back at what's been cookin' in the option pits this week. Join us as we sample just a few of the unusual option plays from the past week, with our "recipe" broken down into three unique segments:

read more...

Schaeffer's Media Outtake: Thoughts on Hedging, Volatility

(11/19/2009 4:15:00 PM)

"Standard & Poor's, the world's leading index provider, announced today the launch of the S&P 500 Dynamic VEQTOR Index which dynamically allocates between equity, volatility and cash to provide broad equity market exposure with an implied volatility hedge. 'Implied equity volatility typically has a strong negative correlation to equity market returns, and is considered a useful tool to hedge against the potential downside risk of the broad equity market,' says Liz Taxin, Director of Strategy Indices for S&P Indices. The S&P 500 Dynamic VEQTOR Index is comprised of three components: Equity, as represented by the S&P 500; Volatility, as represented by the S&P 500 Short-Term VIX Futures Index; and Cash, as represented by the Overnight LIBOR rate. The Index allocates between equity and volatility based on the combination of realized and implied volatility trend decision variables, and these allocations are evaluated on a daily basis."
(PR newswire � 11/18/09)

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Put Trading Swells on J. Crew Group Ahead of Earnings

(11/18/2009 11:05:48 AM)

Retailers continue to line up for the earnings confessional, and one particular high-flyer is slated to release its quarterly report next week. J. Crew Group Inc. (JCG: sentiment, chart, options) is known for its preppy fashions, including jeans, khakis, and other basic (but often pricey) items sold to young professionals. J. Crew sells through its catalogs, Web sites, and some 300 retail and outlet stores in the U.S. under the J. Crew, crewcuts (for kids), and Madewell banners. Madewell, launched in 2006, is a women's-only collection of hip, casual clothes.

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Drilling Down on Rowan Companies' Rally Prospects

(11/18/2009 10:00:00 AM)

Rowan Companies Inc. (RDC: sentiment, chart, options) performs contract drilling of oil and gas wells. Its fleet consists of 22 jack-up rigs and 32 land-drilling rigs. The company operates primarily in the Middle East, Texas, the Gulf of Mexico, and the North Sea.

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Drug Delay Prompts Put Trading on ISIS Pharmaceuticals, Inc. (ISIS)

(11/17/2009 1:50:13 PM)

Bearish option bettors have virtually blitzed ISIS Pharmaceuticals, Inc. (ISIS: sentiment, chart, options) today, with intraday put volume skyrocketing to nearly 38 times the norm. The pharmaceutical firm this morning confessed that it's delaying plans to seek approval for experimental drug mipomersen by nearly a year, from mid-2010 to mid-2011.

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Pre-Earnings Option Activity Accelerates on Sears Holdings Corporation

(11/16/2009 1:55:56 PM)

Sears Holdings Corporation (SHLD: sentiment, chart, options) has been a hot topic on both sides of the options aisle today, as investors race to place their bets ahead of the retailer's looming turn on the earnings stage. According to Thomson Reuters, the firm is expected to report its third-quarter figures before the opening bell on Thursday, Nov. 19.

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Options Traders Bulk Up on Puts on Software Vendor

(11/13/2009 12:34:23 PM)

Options players are placing some heavy bets that salesforce.com inc. (CRM: sentiment, chart, options) is going to suffer a disappointing earnings report next week, as traders load up on puts. The International Securities Exchange (ISE) has reported 2.7 puts purchased to open for every one call purchased to open during the past 10 trading sessions. This ratio of puts to calls is higher than 93.8% of all those taken during the past year. In other words, puts are significantly more popular than calls among traders.

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Hopes Are Riding High for GameStop's Earnings

(11/13/2009 11:35:33 AM)

The video game sector is struggling. U.S. video game sales dropped by 18% in October compared to the same period last year, according to the latest data from NPD Group. Meanwhile, analysts had forecast a more modest decline of 11%.

read more...

Options Stew: A Taste of the Week's Spiciest Plays

(11/13/2009 10:55:42 AM)

Betting on a Short-Term Bounce for First Solar, Inc. (FSLR)

(11/12/2009 3:15:41 PM)

Call traders have been fond of First Solar, Inc. (FSLR: sentiment, chart, options) today, despite the solar concern's retreat into the red. In afternoon trading, the security has already seen roughly 18,000 calls cross the tape � nearly tripling its average intraday volume of fewer than 6,250 contracts.

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Market Recap: Stocks Finish the Week With a Merger-Related Bang; Google and Yahoo! in Focus

Microsoft's (MSFT) bid for Yahoo! (YHOO) helps push the market, and has a halo effect on rival Google (GOOG) after earnings

by Mark Fightmaster (mfightmaster@sir-inc.com) 2/1/2008 4:15 PM

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