Dow Jones Industrial Average Set to Snap Win Streak as Banks, Oil Slide

Is Stock Volatility About to Explode?

Feb 24, 2017 at 12:06 PM
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After closing at record-high levels for 10 consecutive sessions -- the longest streak in 30 years -- the Dow Jones Industrial Average (DJIA) is pulling back today as stocks take a breather. Financial shares are the leading laggards, with Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) the biggest decliners on the blue-chip index, at last check. Tax and trade concerns are in focus, with investors cautious as President Donald Trump is due to speak before Congress next Tuesday. A pullback in oil prices is also weighing on the market, with April-dated crude futures off 0.8% at $54.03 per barrel, following a run to their highest point since mid-2015. On the economic front, the Thomson Reuters/University of Michigan consumer sentiment index slipped slightly less than expected in February, after notching a 13-year high a month earlier, while new home sales rose less than predicted in January. 

Continue reading for more on today's market -- and don't miss:

  • Is stock volatility about to explode? Schaeffer's founder and CEO Bernie Schaeffer weighs in.
  • 2 underloved steel stocks offering bargains for options buyers. 
  • Plus, Applied Optoelectronics options explode, the drugmaker breaking out on data, and Acacia Communications tests support.

Midday Market Stats February 24

Fiber optics firm Applied Optoelectronics Inc (NASDAQ:AAOI) is among the stocks with unusual options volume at midday. The shares are up 25.9% at $47.19 -- fresh off a new record high of $47.73 -- after reporting better-than-expected quarterly earnings and receiving upbeat analyst attention. The stock's typically quiet options pits are on fire, with puts crossing the tape at 39 times the expected intraday pace. Still, calls are in the lead on an absolute basis, with more than 2,100 traded -- 10 times the amount usually seen at this point in the session. In fact, call, put, and total options volume have already notched new annual highs. The March 45 call is most active so far, and it looks like some traders are buying to open new positions here, expecting AAOI to extend its run above the strike through front-month expiration, three weeks from now.

Positive drug trial results for Cempra Inc's (NASDAQ:CEMP) bacterial skin infection treatment have the stock up 36.5% to $4.30, making it one the Nasdaq's top performers. But the shares still have miles to go to fill in a pair of bear gaps from November and December, which have CEMP down 75.6% on a year-over-year basis. On the upside, the stock is set to close above its 50-day moving average for the first time in nearly four months.

CEMP Daily Chart February 24

Networking specialist Acacia Communications, Inc. (NASDAQ:ACIA) is among the worst performers on the Nasdaq, shedding 12.7% to $55.39, as a disappointing current-quarter outlook overshadows an earnings beat. Analysts wasted no time in lowering their price targets on the shares, which seem to be holding on to support in the $55 region.

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