Stocks Hit New Highs On Trump Tax Talk, Popping Oil Prices

The Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Composite all hit new all-time peaks

by Karee Venema |

Published on Feb 10, 2017 at 3:02 PM
Updated on Feb 10, 2017 at 3:07 PM

It was another record-setting week on Wall Street, with Thursday's comments from President Donald Trump over the upcoming release of a "phenomenal" tax plan boosting stocks into uncharted territory -- and JPMorgan Chase & Co. (NYSE:JPM) highlighting these two names specifically as possible beneficiaries of lowered corporate tax rates. Markets continued this advance on Friday, as oil prices rallied on the back of a well-received global production check from the International Energy Agency (IEA). As such, the Dow, S&P 500 Index (SPX), and Nasdaq Composite (COMP) are all set to close out the trading week with strong gains -- and enter the second half of historically bearish February on a high note.

Retail Stocks and the Bollinger Band "Buy" Signal

While the president seemingly started a Twitter feud with retailer Nordstrom, Inc. (NYSE:JWN) after the company said it would no longer carry Ivanka Trump's brand amid declining sales, shares of JWN brushed off Trump's tweet. What's more, as JWN bounced off its lower Bollinger Band, a similar move in the broader SPDR S&P Retail ETF (XRT) -- and now surging Sears Holdings Corp (NASDAQ:SHLD) -- suggests the oversold sector could be due for a short-term pop. This indicator, which Schaeffer's Senior Quantitative Analyst Rocky White recently noted was the best "buy" signal since 2016, also just flashed for Chesapeake Energy Corporation (NYSE:CHK) and H & R Block Inc (NYSE:HRB) -- with the two stocks possibly presenting particularly appealing trade ideas.

Twilio, Activision Shares Soar After Earnings

Elsewhere, on Wall Street, fourth-quarter earnings season rolled on, with tech companies sharing the limelight with Walt Disney Co (NYSE:DIS) -- which refused to budge after an ESPN-related revenue miss. Twilio Inc (NYSE:TWLO) shares, for instance, jumped after the cloud firm's quarterly results, and are now lingering near levels not seen since December. Meanwhile, chipmaker Advanced Micro Devices, Inc. (NASDAQ:AMD) extended its Barron's-induced run higher after NVIDIA Corporation's (NASDAQ:NVDA) report, while shares of video game maker Activision Blizzard, Inc. (NASDAQ:ATVI) hit a new record high after earnings. Not all of the week's quarterly results were well-received, though, with social media stock Twitter Inc (NYSE:TWTR), retailer Michael Kors Holdings Ltd (NYSE:KORS), and drugmaker Gilead Sciences, Inc. (NASDAQ:GILD) among those taking post-earnings plunges.

Options Traders Flood Apple Stock, Gold Shares

On the heels of its own blowout earnings report from last week, Apple Inc. (NASDAQ:AAPL) continued to notch new annual highs -- prompting a massive influx of call volume in the stock's options pits, a potentially bullish options signal. With plenty of pessimism left to unwind, the argument could be made for AAPL record highs, with one brokerage firm setting a lofty $154 price target on Wednesday. Options traders were quick to target gold shares, too, as the malleable metal hovers in three-month-high territory. In fact, 50-day buy-to-open option volume on the VanEck Vectors Gold Miners ETF (GDX) is within striking distance of the one-million-contract marker -- a level surpassed only one other time in its history.

Yellen, Options Expiration Could Move Markets

Looking ahead, there's plenty of action on next week's calendar to keep traders on their toes. Fed Chair Janet Yellen, for instance, is slated to join a number of Fed speakers at the mic. With the March Fed meeting roughly one month away, Wall Street will look to see if Yellen echoes this week's relatively hawkish tone taken by Philadelphia Fed President Patrick Harker, or the more dovish approach of Minneapolis Fed President Neel Kashkari, who offered support for a more accommodative take to raising interest rates. Elsewhere, standard February options are due to expire at next Friday's close, and Schaeffer's Senior V.P. of Research Todd Salamone has repeatedly noted in Monday Morning Outlook that monthly options expiration can impact equity price action. After the SPDR S&P 500 ETF Trust (SPY) left the call-heavy 230 strike in the dust this week, Salamone targeted the overhead 232 level as the next one to watch for SPY.

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