Opening View: 1,000-Point Plunge Unnerves DJIA Bulls; VIX Skyrockets

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The Dow Jones Industrial Average ( DJIA ) plummeted nearly 1,000 points yesterday, wiping out nearly $1 trillion in U.S. equity values, before the blue-chip barometer pared those losses to close down a mere 348 points. Furthermore, many on Wall Street were unsettled by news of erroneous trades involving Proctor & Gamble Co. ( PG ) shares, which pushed the DJIA to its biggest intraday percentage loss since 1987. The S&P 500 Index ( SPX ) suffered a similar fate, dipping below its 200-day moving average, but rebounding to close with a loss of 3.2%. Playing it safe this morning, look for short-term DJIA support near 10,500, with psychological support at 10,000, while the SPX has short-term support near 1,120, with psychological support at its 200-day trendline (near 1,095). Heading into the open, futures on the DJIA and the SPX are trading 36 points and 4.5 points above fair value, respectively. Finally, I would be remiss not to mention that the CBOE Market Volatility Index ( VIX ) rocketed more than 48% higher yesterday, peaking above the 40 level amid the worst selling of the day. The VIX has not traded near 40 since April 2009. What's more, the index logged its biggest single-session move since October 2008.

Now that I've invoked both 1987 and October 2008, let's knock on wood and move on to earnings. Kraft Foods ( KFT ) reported first-quarter net income of $1.88 billion, or $1.16 per share, as sales rose 26% to $11.3 billion. Excluding items, Kraft said it earned 49 cents per share. Analysts were looking for earnings of 43 cents per share on sales of $10.98 billion. In pre-market trading, KFT was up 1.1%.

Elsewhere, Crocs Inc. ( CROX ) swung to a first-quarter net income of $5.7 million, or 7 cents per share, from a loss of $22.4 million, or 27 cents per share, a year earlier. Revenue rose 24% to $166.9 million. Analysts had forecast a profit of a penny per share on revenue of $160 million. CROX is up more than 6% in electronic trading.

Finally, Activision Blizzard Inc. ( ATVI ) reported first-quarter earnings, excluding the effects of deferred revenues from certain game sales, were $116 million, or 9 cents per share. Revenue jumped 33% to $1.3 billion, or $714 million excluding the deferred sales. Analysts were expecting earnings of 4 cents per share on revenue of $570 million. Shares of ATVI are trading flat following the company's quarterly results.

Earnings Preview

On the earnings front, CF Industries Holdings Inc. ( CF ), Edison International ( EIX ), and PG&E Corp. ( PCG ) are slated to release their quarterly earnings reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 2,811,670 call contracts traded on Thursday, compared to 1,983,110 put contracts. The resultant single-session put/call ratio arrived at 0.71, while the 21-day moving average rose to 0.52.

Volatility indices

NYSE and Nasdaq summary

**The volume data shown above is from the Nasdaq and NYSE exchanges only. It does not include regional volume activity, which means that other daily volume quotes you see may be higher.**

Dow, S&P and Nasdaq futures

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Overseas Trading

Overseas trading is in poor shape this morning, as only one of the 10 foreign indexes that we track is in positive territory. The cumulative average return on the collective stands at a loss of 1.10%. In Asia, the various stock markets retreated after U.S. stocks plunged more than 3% as selling due to Europe's debt crisis gathered paced. European shares plunged to a three-month low in early trading on Friday, with mounting concerns about a severe debt crisis in the euro zone forcing investors to dump equities. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

While the dollar is heading higher versus the yen and the British pound, global support for Greece has provided solid lift for the euro this morning. As such, the U.S. Dollar Index has fallen 0.51% to 84.47 in pre-market trading. In commodities, crude futures are rebounding from yesterday's drubbing, adding 85 cents to trade at $77.96 per barrel. Finally, gold futures are continuing to benefit from safe-haven buying, with the malleable metal jumping $5.70 to $1,1203 an ounce in London.

Currencies and commodities

Unusual Put and Call Activity:

For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations .

Unusual options activity - puts

Unusual options activity - calls

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options


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