Opening View: DJIA Bears Take Reins Heading Into Weekend

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The Dow Jones Industrial Average (DJIA) dropped 144 points on Thursday, ending the bulls' attempt to regain control and take the market higher. The DJIA is headed into the weekend perched on support at its 10-week moving average, with additional support near 10,250. This region is home to a 38.2% Fibonacci retracement of the Dow's April 26 high and its July 2 low. Meanwhile, the S&P 500 Index (SPX) is hovering just above technical support in the 1,070 region. Heading into the open, futures on the DJIA and the SPX are trading about 58 points and 6.9 points below fair value, respectively, indicating that we could see the market test the aforementioned support levels in early trading. Finally, there are signs that bearish sentiment is reaching elevated levels, with the most recent American Association of Individual Investors survey revealing that 42.47% of those polled are bearish on the market, versus 30.11% bullish. These are the highest bearish and lowest bullish readings since July 8.

In equity news, J.M. Smucker Co. ( SJM ) reported first-quarter earnings of $102.9 million, or 86 cents per share, as revenue slipped to $1.04 billion. Analysts were looking for a profit of 96 cents per share. The company also lifted its 2011 sales growth outlook to "slightly ahead" of its original estimate for 3% growth due to recent pricing moves. It expects to earn $4.50 to $4.60 per share for the full year.

Elsewhere, Hewlett-Packard Co. ( HPQ ) reported a fiscal third-quarter profit of $1.8 billion, or 75 cents per share, compared with a profit of $1.7 billion, or 69 cents per share, for the year-earlier period. Revenue was $30.7 billion, up from $27.6 billion. Adjusted income was $1.08 per share.


Finally, Dell Inc. ( DELL ) reported a second-quarter profit of $545 million, or 28 cents per share, on $15.5 billion in sales, compared with earnings of $472 million, or 24 cents per share on revenue of $12.8 billion in the same period a year ago. Excluding one-time items, Dell would have earned $629 million, or 32 cents per share. The consensus estimate was for 30 cents per share on revenue of $15.2 billion.

Live From San Francisco : Senior Equities Analyst Andrea Kramer is live blogging from the Schaeffer's booth at the San Francisco Money Show this week. If you didn't catch last night's post, you missed out on Steve Forbes and his three-step approach for resuscitating the American economy, including his opinion on the U.S. dollar, the federal tax code, and "Obamacare." Click here to check it out.

Earnings Preview

On the earnings front, AnnTaylor Stores Corp. ( ANN ) and Hormel Foods Corp. ( HRL ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports scheduled for release today. Looking ahead to next week, Monday is also devoid of reports, while Tuesday offers up July's existing home sales data. On Wednesday, July's durable goods orders, new home sales, and the weekly report on U.S. petroleum supplies will hit the Street. Weekly initial jobless claims will arrive on Thursday, while Friday rounds out the week with a second look at second-quarter U.S. gross domestic product and the final reading on the University of Michigan's August consumer sentiment index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,179,244 call contracts traded on Thursday, compared to 884,513 put contracts. The resultant single-session put/call ratio arrived at 0.75, while the 21-day moving average rose to 0.63.

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

Overseas Trading

Overseas trading looks abysmal this morning, as none of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 1.10%. In Asian trading, Japanese shares erased their gains for the week, plunging roughly 2% as the dollar remains weak against the yen, keeping the cost of exports for the country high. Meanwhile, Chinese markets dropped after Beijing announced new property-tightening measures, with the Ministry of Land and Resources saying it will crack down on land hoarding and misuse by property developers. Markets are broadly lower in Europe as well, with economic concerns and falling crude prices applying pressure to commodities-related stocks.

Overseas markets

Currencies and Commodities

Safe-haven buying is the name of the game this week in currencies and commodities, with the U.S. dollar heading for its second winning week in a row. However, the U.S. Dollar Index is still facing resistance at its 10-week moving average, near 83.23. In pre-market trading the index is up 0.75% at $83.06. Commodities, meanwhile, are struggling under the weight of a rising greenback. Most notably, oil prices are taking a beating due, not only to the rising dollar, but also because of the recent round of weak economic data. In electronic trading, the front-month crude contract is down $1.06 at $73.71 per barrel - a six-week low. Finally, gold prices are pulling back from a yesterday's seven-week high near $1,240. In London, the malleable metal has slipped $2.90 to $1,232.50 an ounce.

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

Referenced Stocks: ANN , CBOE , DELL , HPQ , HRL , SJM

Schaeffer's Investment Research

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As of 12/19/2014, 04:15 PM


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