Opening View: DJIA Bulls Hope to End Five-Day Losing Streak

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The Dow Jones Industrial Average (DJIA) slipped fractionally on Monday, as Wall Street bulls came out in force to defend support in the 10,300 region. This morning, the bulls' hard work appears to have paid off, as the blue-chip barometer could be headed toward an end of its five-session losing streak. At last check, DJIA futures were indicating an opening gain of about 52 points, with strong quarterly results from retailing giant Wal-Mart Stores Inc. ( WMT ) and home-improvement retailer Home Depot Inc. ( HD ) providing rally fuel. Meanwhile, the S&P 500 Index (SPX) is trading about 7.4 points above fair value, as the broad-market index looks to reclaim the 1,080 level and its 50-day moving average. Finally, the CBOE Market Volatility Index (VIX) experienced an outside day on Monday. An "outside day" is a technical formation where a stock or index hits a higher high and a lower low than the previous day. With the VIX closing lower yesterday, this technical formation could indicate that the index is set to reverse course and decline once again, potentially breaching short-term support near the 25 level in the process.

In equity news, Potash Corporation of Saskatchewan Inc. ( POT ) announced that its board unanimously rejected an unsolicited takeover bid from BHP Billiton Ltd. ( BHP ). BHP offered $130 per share in cash for POT; POT's board declared the offer "grossly inadequate." POT has soared some 19% in pre-market trading following the news.

Wal-Mart Stores Inc. ( WMT ) posted a second-quarter profit of $3.75 billion, or 97 cents per share. Net sales rose 2.8% to $103 billion. Analysts were looking for earnings of 96 cents per share on sales of $105.46 billion. For the third quarter, Wal-Mart forecast earnings in the range of 87 cents to 91 cents per share, while raising its full-year guidance to $3.95 to $4.05 per share. The consensus is expecting third-quarter earnings of 91 cents per share and 2010 earnings of $4.01 per share.

Finally, The Home Depot Inc. ( HD ) reported a second-quarter profit of $1.19 billion, or 72 cents per share, on net sales of $19.41 billion. Analysts had expected earnings of 71 cents per share on revenue of $19.62 billion. Comparable-store sales for the quarter rose 1.7%. For fiscal 2011, Home Depot expects to earn $1.90 per share from continuing operations as sales rise 2.6%. The consensus profit estimate stands at $1.92 per share for the year.

Earnings Preview

On the earnings front, Abercrombie & Fitch Co. ( ANF ), Saks Inc. ( SKS ), and Analog Devices Inc. ( ADI ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Commerce Department will release reports on housing starts and building permits for July today, while the Labor Department will supply July readings on the Producer Price Index (PPI) and the core PPI. Meanwhile, the Federal Reserve will report on industrial production in July. The usual weekly report on U.S. petroleum supplies is due on Wednesday. The weekly report on initial jobless claims will be released on Thursday, along with the Conference Board's Leading Indicators Index for July, and the Philadelphia Fed Index for August. There are no major economic reports scheduled for Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 815,446 call contracts traded on Monday, compared to 586,308 put contracts. The resultant single-session put/call ratio arrived at 0.72, while the 21-day moving average held at 0.61.

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 looking strong this morning as eight of the 10 markets that we follow are in positive territory. The cumulative average return on the group stands at a gain of 0.50%. In Asia, stocks finished mixed, with Japan's Nikkei falling to its lowest close in more than eight months. Exporters suffered the most, as the yen held its ground versus the U.S. dollar. Meanwhile, European shares edged up, buoyed by miners as metals prices rose on a softer dollar, and insurer Aegon after it said it would repay state aid.

Overseas markets

Currencies and Commodities

The U.S. Dollar Index is continuing to pull back this week, with the yen gaining strength on news that the Bank of Japan is considering a stimulus package. Currently, the index has slipped 0.30% to trade at 82.59, below former support in the 82.50 region. In commodities, gold remains a favorite among investors looking for a safe haven. In London, the malleable metal has gained $2.60 to trade at $1,228.80 an ounce. Finally, crude prices continue to rebound by trading inversely to the U.S. dollar. At last check, the front-month crude contract was up 83 cents at $76.43 per barrel.

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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This article appears in: Investing , Options


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