Stocks That Stopped the Dow's Winning Streak

Preliminary results for the University of Michigan Consumer Sentiment index fell to 71.8 in March. Economists were expecting a reading of 78, after the index hit 77.6 in February. The index indicates that U.S. consumers are still optimistic about the economy and jobs market, but slightly less than they were last month. One theory is the spending cuts from the sequestration will hurt millions of Americans through forced furlough days, which the federal government has now enacted. The lost income will not trickle down to other sectors of the economy, which may result in job loss in the retail and service industries.

After the University of Michigan Consumer Sentiment report hit investor's desks this morning, all signs pointed toward a lower market close today, and that was exactly what happened. The Dow Jones Industrial Average's (DJINDICES: ^DJI  ) 10-day winning streak is officially over, after the index lost 25 points, or 0.17%, during today's trading session, and 19 of the Dow's 30 components ended in the red.

This morning, I highlighted a few Dow components that were all directly affected by the CSI numbers; click here to read which companies they were.

The downers of the Dow
Shares of Intel (NASDAQ: INTC  ) lost 1.27% of their value today despite positive news. Yesterday, the executive vice president of Samsung's mobile operating business told an interviewer that a mobile operating system call Tizen, which Samsung, Intel, and 10 other companies are working on, will be released sometime this August or September. The move to collaborate on a mobile operating system makes sense for Intel because it should give the company the inside track on supplying the mobile chips that the system will run on.  

This is likely a small bet Intel is making in the mobile arena and could pay-off handsomely. Regardless of whether this venture is a success or failure, it has the potential to open up a number of doors for Intel later down the road.

Crude inventory levels in the U.S again rose this week and, as a result, the Dow's big oil companies saw their shares fall today. The U.S. Energy Department's weekly inventory report showed that stockpiles of crude oil throughout the country rose by 2.62 million barrels during the week of March 4th through the 8th, while analysts were expecting an increase of only 2.3 million barrels. This is following a weekly rise of 3.83 million barrels from the previous reading, and puts the total U.S. oil inventory at 383.98 million barrels, or a 27.1 day crude supply cover.  

Chevron's (NYSE: CVX  ) stock price fell 0.32% today, while shares of ExxonMobil (NYSE: XOM  ) were down 0.51% when the closing bell rang.

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  • Report this Comment On March 16, 2013, at 10:29 AM, stretcho44 wrote:

    "executive vice president of Samsung's mobile operating business told an interviewer that a mobile operating system call Tizen, which Samsung, Intel, and 10 other companies are working on, will be released sometime this August or September. The move to collaborate on a mobile operating system makes sense for Intel because it should give the company the inside track on supplying the mobile chips that the system will run on."

    Samsung choosing an OS they helped to develop and have engineers working on makes sense. Just because Intel was involved, gives them no special edge. This Samsung decision is really Intel neutral.

    Intel was down yesterday because it was options expiration day and some very active April options activity by those setting up for Intel earnings.

    Days trading range $21.27 - $21.70

    APR CALL CONTRACTS

    $21 6,167

    $22 12,865

    $23 15,963

    $24 15,665

    APR PUT CONTRACTS

    $19 30,972

    $20

    $21 12,794

    $22 5,056

    Think about LONG STRANGLES when matching the ..

    12k contracts APR $22 CALLS with the APR $21 PUTS (bought for around 60 cents)

    30k contracts APR $23 & $24 CALLS with the $19 PUTS (bought for around 10 cents and 5 cents respectively)

    This is a volatility play on the Intel Apr 16 earnings announcement. Read about Long Strangles and what will happen when someone buys 42,000 put contracts.

    There is likely some abusive shorting going on too. Short interest has been increasing steadily over the last year since it peaked last May. Since Goldman Sachs analysts have put a $16 target price on Intel, I would expect that Intel shorting is coming from the Goldman Sachs organization.

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