The major market indexes didn't stray too far from breakeven today, as investors held their breath ahead of the Federal Reserve's interest rate decision, slated for release tomorrow afternoon. In the meantime, the Street digested a mountain of merger-and-acquisition news. Most notably, Berkshire Hathaway announced plans to purchase railroad issue Burlington Northern Santa Fe (BNI), with billionaire investor Warren Buffett calling the acquisition "an all-in wager on the economic future of the United States." Elsewhere, traders essentially shrugged off a stronger-than-anticipated report from the Commerce Department, which indicated that U.S. factory orders rebounded in September. However, though the equities market was relatively apathetic, it was a virtual party in the commodities pits. Crude futures extended their recent journey higher on a fresh wave of demand-related optimism, while a hefty purchase from India's central bank fueled gold futures to a new record peak.
The Dow Jones Industrial Average (DJIA – 9,771.91) failed to explore the north side of breakeven today, settling on a loss of 17.5 points, or 0.2%. Eleven of the Dow's 30 blue chips bucked the trend, led by industrial issues Alcoa (AA) and Caterpillar (CAT). Tech titan Intel Corp. (INTC) paved the path into the red, after Morgan Stanley slashed its rating on the chip sector. Despite today's decline, the Dow maintained its foothold atop its 10-week moving average, which has been violated on a weekly closing basis only three times since mid-March.
The S&P 500 Index (SPX – 1,045.41), on the other hand, found its way into positive territory by the close, finishing with a slim gain of 2.5 points, or 0.2%. However, the broad-market barometer still remains poised to close the week beneath its 10-week trendline for the second straight week. Finally, the Nasdaq Composite (COMP – 2,057.32) fared the best of the three, thanks to a late-session buying spree and support from its 80-day moving average. By the close, the tech-rich index added 8.1 points, or 0.4%.
Turning to equities in focus, Canadian Solar Inc. (CSIQ) scored an upgrade ahead of the bell ... The Option Coach examined the ins and outs of the options-related resistance ... and today's Quote of the Day comes from Thomas Brown. With current CEO Kenneth Lewis set to step down at the end of the year, Charlotte, North Carolina-based Bank of America Corp. (BAC) has been actively seeking his replacement. However, according to a Bloomberg article, the bank's board has raised concerns about the potentially shallow pool of qualified candidates willing to move to the South. Brown, the CEO of New York-based hedge fund Second Curve Capital, offered up his two cents on the matter, stating:
"There aren't too many people around the world who think that Charlotte is a major financial center."
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Option Blog coverage of:
And, in case you missed it, Andrea Kramer explained how to profit from a post-earnings price swing by employing the long strangle. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Crude futures extended their journey higher today, thanks to revived demand-related optimism. Oil traders were encouraged by data showing that domestic factory orders escalated at a faster-than-expected pace in September, which some interpreted as signaling a rebound in fuel demand. Echoing that sentiment, the latest MasterCard SpendingPulse report indicated that U.S. retail gasoline demand rose 3.3% last week, compared to the same period a year ago. Elsewhere, Organization of Petroleum Exporting Countries (OPEC) member Venezuela said it saw no need for the cartel to boost crude output at its upcoming meeting in December. Against this backdrop, crude oil for December delivery advanced $1.47, or 1.2%, to settle at $79.60 per barrel.
Gold futures skyrocketed to a new closing high today, after the International Monetary Fund (IMF) sold 200 metric tons of gold to the Reserve Bank of India for $6.7 billion, or about $1,045 an ounce. In fact, the precious metal rallied despite the U.S. dollar's newfound strength, as the greenback gained ground ahead of the Federal Reserve's policy meeting on Wednesday. By the close, December-dated gold added $30.90, or 2.9%, to finish at $1,084.90 an ounce – a record closing high. Earlier in the session, the December contract tagged an intraday peak of $1,085.20 an ounce.
Levels to Watch in Trading:
Dow Jones Industrial Average (DJIA – 9,771.91) - support at 7,500; resistance at 10,500
S&P 500 Index (SPX – 1,045.41) - support at 950; resistance at 1,300
Nasdaq Composite (COMP – 2,057.32) - support at 1,650; resistance at 2,200
At the end of every market day, the staff at Schaeffer's Investment Research reviews the trading day in detail, covering major events and key market developments. Don't miss this critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.
