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Stocks Close Up After Bulls and Bears Bounced Around on the Tape

Another day, another session of struggling for direction on light volume, as markets tried to find momentum and conviction.

Another day, another session of struggling for direction on light volume, as markets tried to find momentum and conviction. Stocks managed to close near the highs after bouncing back and forth most of the day. Bottom line is, the September rally still has legs and the underlying bid to equities remain, which is making it hard for the tape to sustain a meaningful sell off. The Dow Jones Industrial Average ended up 46.10 points, or 0.43%, to close at 10,858. The S&P 500 gained 5.54 points, or 0.49%, to close at 1125, and the Nasdaq was up 9.82 points, or 0.41%, to finish at 2379.

CBOE Volatility IndexI:VIX puts were three times as active as calls into end of quarter on Thursday. VIX closed up $0.03, at $22.57, on put volume of 178,000 contracts as compared to call volume of 63,000. VIX traded above its 50 and 200-day moving averages this morning, retreated and then traders became active in November puts, suggesting the VIX could trade lower into October, as investors adjust positions before and after quarter end.

The SPDR S&P 500 ETF (SPY) - Get SPDR S&P 500 ETF Trust Report closed up $0.40, at $114.67, and is now up over 9% since the start of September. Put volume of 984,000 contracts compared to call volume of 572,000, with active volume in October 113 and 115 puts. October option implied volatility of 21 is below its four-month average of 25. The October 115 straddle is priced for a SPY movement of 3% into October expiration. Traders are currently looking at technical resistance of about $117.30.

The PowerShares QQQ Trust (QQQQ) closed down $0.02, at $49.37. QQQQ put volume of 241,000 contracts compared to call volume of 186,000. QQQQ October option implied volatility of 21 and November is at 24, below its three-month average of 26. The Qs traded down to its 25-day trend line and then pivoted up to intra-day highs, with traders taking profits by selling into the close.

Apple (AAPL) - Get Apple Inc. Report closed down $4.30, at $286.86, after trading at an intra-day low of $275.0 0 on rumors that the company's COO was leaving for Hewlett Packard (HPQ) - Get HP Inc. Report. Apple is expected to report EPS in the third week of October. Put volume 212,000 contracts compares to call volume of 271,000. October option implied volatility is at 31 and November is at 35, compared to its 26-week average of 35, indicating decreasing near-term price movement.

Looking ahead to Wednesday, the following economic data are expected to be released: MBA Purchase Applications at 7:00 a.m. EDT, EIA Petroleum Status Report at 1030 a.m. EDT and Farm Prices at 3:00 p.m. EDT. The following notable companies are expected to release earnings: Actuant (ATU) , Family Dollar Stores (FDO) , and Worthington Industries (WOR) - Get Worthington Industries, Inc. Report.

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