Opening View: DJIA Bulls Lose Momentum After 100-Point Jump

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The Dow Jones Industrial Average (DJIA) rallied 103 points on Monday, snapping a five-day losing streak for the blue-chip barometer. Despite the upturn in investor sentiment, the Dow met with staunch resistance near the 10,500 level yesterday. The area is home to the DJIA's 200-day moving average, and could become a considerable technical hurdle for the bulls. Support, meanwhile, continues to play out at the 10,300 level, with Wall Street refusing to allow the Dow to slip below this round-number region. As for the S&P 500 Index (SPX), the broad-market index is staring up at psychological resistance in the 1,100 region, though support could materialize just below 1,090 at the SPX's 50-day moving average. Heading into the open, we could see these short-term support levels tested, as futures on the DJIA and the SPX are trading about 26 points and 2 points below fair value, respectively. Finally, the CBOE Market Volatility Index (VIX) gapped below support/resistance at the 25 level yesterday. The VIX could now be range-bound between this potential technical hurdle and support at its 200-day trendline (near 23.50).

In equity news, Deere Co. ( DE ) reported third-quarter earnings of $617 million, or $1.44 per share, as sales rose 16% to $6.84 billion. Analysts were looking for earnings of $1.20 per share, on sales of $6.52 billion. For the fourth quarter, Deere forecast net income of about $375 million, below Wall Street's current outlook for $388.9 million.

Meanwhile, BHP Billiton's ( BHP ) attempted takeover of Potash Corp. of Saskatchewan ( POT ) has gone hostile, with BHP taking its $130-per-share offer directly to POT shareholders. Potash rejected BHP's offer on Wednesday, calling the plan "grossly inadequate." Potash also adopted a poison-pill antitakeover measure. BHP called the proposal "attractive."

Earnings Preview

On the earnings front, BJ's Wholesale Club Inc. ( BJ ), Chico's FAS Inc. ( CHS ), Target Corp. ( TGT ), Applied Materials Inc. ( AMAT ), Brocade Communications Systems Inc. ( BRCD ), Hot Topic Inc. ( HOTT ), and Limited Brands Inc. ( LTD ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The usual weekly report on U.S. petroleum supplies is due out later today, while 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 1,092,171 call contracts traded on Tuesday, compared to 691,409 put contracts. The resultant single-session put/call ratio arrived at 0.63, 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 struggling this morning, as only four of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.02%. In Asia, regional indexes finished mixed, with Japanese stocks advancing due to strong earnings reports from technology and automobile exporters. Across the pond in Europe, markets are mostly lower, with traders consolidating their positions following strong gains on Monday.

Overseas markets

Currencies and Commodities

Crude prices are headed lower in pre-market activity, as investors weigh yesterday's U.S. petroleum supplies data from the American Petroleum Institute and gains in the U.S. dollar in Asian trading. At last check, the front-month contract was down 98 cents at $75.18 per barrel. Despite overnight strength in Asia, the U.S. dollar is weakening in pre-market trading. At last check, the U.S. Dollar Index was seen lower by 0.15% at 82.10. Finally, gold futures are retreating heading into the open, with the most active contract off $2.60 at $1,225.70 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

Senior Equities Analyst Andrea Kramer will be live blogging from the Schaeffer's booth at the San Francisco Money Show later this week. Click here for an advance look at what to expect at this premier investor event.



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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