Opening View: DJIA Bulls Look for Fuel to Extend September Rally

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The Dow Jones Industrial Average (DJIA) rallied more than 80 points on Monday, as Wall Street cheered the Basel, Switzerland, financial reforms. However, that goodwill has apparently hit its limit ahead of this morning's August retail sales data. Economists are currently looking for a rise of 0.3%, which is just shy of July's 0.4% rise. With expectations set for declining momentum in the retail sector, futures on the DJIA and the S&P 500 Index (SPX) are trading 27 points and 3.6 points below fair value, respectively. The Dow enters today trading below resistance in the 10,600 region, while support resides near 10,450. Meanwhile, the SPX should hold support near its 200-day moving average, in the 1,116 region, while resistance could materialize at the 1,130 level.

In equity news, Green Mountain Coffee Roasters Inc. ( GMCR ) may be close to acquiring Van Houtte Inc. in a deal worth approximately $1 billion, according to The Wall Street Journal . Van Houtte operates in Quebec, Canada, selling packaged coffee beans for retailers and coffee-brewing equipment, and it operates cafes in Quebec.

Elsewhere, Cracker Barrel Old Country Store Inc. ( CBRL ) reported fourth-quarter net income of $27.4 million, or $1.14 per share, on revenue of $612.5 million. Wall Street was expecting earnings of $1.12 per share and revenue of $613.8 million. Looking ahead, Cracker Barrel said it expects 2011 earnings of $3.95-$4.10 per share, compared to the consensus estimate for $4 per share.


Finally, OfficeMax Inc. ( OMX ) said that it expects its third-quarter adjusted income margin rate to be slightly higher than a year ago, due to tax benefits. The company had expected a lower margin. OfficeMax still expects same-store domestic sales to decline in the current quarter, but said that the results should favorably compare to the second quarter's 2.1% decline.

Earnings Preview

On the earnings front, Best Buy Co. Inc. ( BBY ), The Kroger Co. ( KR ), and Pall Corp. ( PLL ) are slated to release their quarterly earnings reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

August retail sales could set the tone of trading today, and will be joined by July's business inventories. The New York Fed will release its report on September manufacturing activity tomorrow, which will be accompanied by August's industrial production and the weekly report on U.S. petroleum supplies. We'll get the weekly report on new jobless claims on Thursday, as well as the producer price index for August and the Philadelphia Fed's manufacturing report. Finally, the Labor Department will deliver the August consumer price index on Friday, while the University of Michigan will give its first peek at consumer sentiment in September.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,251,676 call contracts traded on Monday, compared to 645,382 put contracts. The resultant single-session put/call ratio arrived at 0.52, while the 21-day moving average slipped to 0.62.

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 three of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.07%. In Asia, Japanese shares rebounded from heavier losses after Japanese Prime Minister Naoto Kan survived a party leadership challenge from Ichiro Ozawa. Still, most regional indexes finished flat to lower. In Europe, stocks headed lower in choppy trading, as a sharp drop in Germany's ZEW business sentiment gauge weighed on the region.

Overseas markets

Currencies and Commodities

With Wall Street a bit nervous ahead of today's August retail sales data, the U.S. dollar is receiving a renewed safe-haven bid this morning. At last check, the U.S. Dollar Index was up 0.10% at 81.99. Gold is also popular in pre-market trading, with the lead contract rising $8.80 to $1,255.90 in London. Finally, crude is headed lower, with the most active contract slipping 48 cents to $77.55 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

Every morning, our research staff analyzes the prior day and the overnight markets, and monitors the morning wires to give you an accurate preview of the day to come. If you enjoyed today's edition of Opening View, sign up here for free daily delivery, straight to your inbox, before the opening bell.



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: BBY , CBOE , CBRL , GMCR , KR , OMX , PLL

Schaeffer's Investment Research

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