Dow 20,000 in the Rearview as Earnings Spark Risk-On Rally

4 Bollinger Band Breakouts to Trade

Jan 25, 2017 at 4:20 PM
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The Dow Jones Industrial Average (DJIA) broke through the highly-anticipated 20,000 level right out of the gate this morning and never looked back. The large-cap index tacked on triple digits, notching new highs on both an intraday and closing basis. Strength in financial stocks -- along with increased confidence, after several days of the Trump presidency in which numerous executive orders have made a clear start in delivering on major campaign promises -- boosted the market. A post-earnings pop for Boeing Co (NYSE:BA) also gave the blue-chip index a lift. Not to be outdone, the S&P 500 Index (SPX) and Nasdaq Composite (COMP) rallied to fresh all-time highs, as well. Meanwhile the CBOE Volatility Index (VIX) -- commonly known as the "fear index" -- dropped to yet another two-and-a-half-year low.
 
Continue reading for more on today's market, including:
 

  • 4 Bollinger Band breakouts to watch, according to Schaeffer's Senior Trading Analyst Bryan Sapp.
  • How options traders are trying to profit from pre-earnings volatility on Alphabet Inc (NASDAQ:GOOGL).
  • The $565 million deal that sent this restaurant stock to record highs.
  • Plus, big expectations for Starbucks earnings, 5 energy stocks on our watchlist, and why put selling picked up on 2 low-priced stocks.

The Dow Jones Industrial Average (DJIA - 20,068.51) added 155.8 points, or 0.8%, tagging a record intraday high of 20,082.00 along the way. Of the 30 blue-chip components, 23 finished higher, led by BA's 4.2% gain. Procter & Gamble Co (NYSE:PG) paced the laggards, shedding 0.8%.

The S&P 500 Index (SPX - 2,298.37) climbed 18.3 points, or 0.8% by the close, after tapping an intraday peak of 2,299.55. Meanwhile, the Nasdaq Composite (COMP - 5,656.34) tacked on 55.4 points, or 1%, and notched a new intraday high of 5,658.59.

The CBOE Volatility Index (VIX - 10.81) gave back 0.3 point, or 2.4%, for its second consecutive 30-month low.

Indexes Closing Summary Jan 25
NYSE and Nasdaq Stats Jan 25

5 Items on Our Radar Today

  1. President Donald Trump today signed directives to begin the process of building a wall on the border with Mexico, and put special focus on "sanctuary" cities and states, stopping federal subsidies from moving toward areas that are known to harbor illegal immigrants. As for financing the much-anticipated wall, Trump reiterated his belief that the U.S. will "be reimbursed at a later date from whatever transaction we make from Mexico," noting that the compensation may come in "a complicated form." (Reuters)
  2. Harvard University announced it will outsource investment management for the majority of the school's endowment fund, currently worth nearly $36 billion -- the largest in the world. In doing so, Harvard Management Co. will cut roughly half of its 230-person staff by the year's end. (Bloomberg)
  3. Options traders are pricing in an unusually big post-earnings swing for Starbucks Corporation (NASDAQ:SBUX).
  4. 5 energy stock charts we're watching.
  5. The strategy behind a surge in put-selling on these 2 low-priced stocks.

quarterly earnings jan 25
Unusual Options Activity Jan 25
Data courtesy of Trade-Alert

Commodities

A sharp uptick in U.S. crude stockpiles, per the Energy Information Administration's (EIA) weekly inventories report, sent oil prices sliding lower, even as the stock market continued its climb. Crude futures for March delivery gave up 43 cents, or 0.8%, to finish at $52.75 per barrel.

The continuation of the market's "Trump rally" today put pressure on gold prices, as traders embraced higher risks with stocks. February-dated gold dipped back below the $1,200 mark, falling $13, or 1.1%, to close at $1,197.80 an ounce.

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