Opening View: DJIA Bulls Try to Break Month-Long Trading Range

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Dow Jones Industrial Average ( DJIA ) bulls have their work cut out for them this week, as the Dow is currently hovering fewer than 150 points above key support at the 10,000 level. Meanwhile, the DJIA is staring up at stiff overhead resistance in the 10,300 area, as well as the 10,350 region, with the Dow's 200-day moving average residing in the latter area. Meanwhile, if we learned one thing about the S&P 500 Index ( SPX ) last week, it's that the index's break above its 200-day moving average was a short-term "sell" signal; much like it was in June 2009. For support, the SPX is holding firm above the 1,065-1,070 area, which was home to the index's May lows. Resistance, however, resides at the 1,100 level, and near 1,110, which is home to the index's 200-day moving average. Heading into the open, futures on the DJIA and SPX are trading 43 points and 6 points above fair value, respectively. On a final note, I found it quite interesting that Friday's exceptional volume and breadth of trading resulted in very little directional movement in either the DJIA or SPX. One could make the argument that Friday's trend mirrored the past month's trading activity, with the SPX closing within about 5 points of its May 20th finish.

In equity news, Noble Corp. ( NE ) announced that it is buying privately held FDR Holdings Ltd. in a cash deal valued at $2.16 billion. Noble said it expects the deal to close by the end of July. Separately, the company also signed two 10-year ultra-deepwater-drillship contracts with Shell and extended another one for three years.

Finally, U.S. consumer products giants Kellogg Co. ( K ) and Procter & Gamble Co. ( PG ) both issued product recalls this weekend. Kellogg issued a voluntary recall on 28 million boxes of cereal, citing "uncharacteristic off-flavor and smell" that it blamed on package liners. Meanwhile, P&G recalled about 35,000 bottles of Scope mouthwash, citing faulty child-resistant caps.

Earnings Preview

On the earnings front, Barnes & Noble Inc. ( BKS ) and Micron Technology Inc. ( MU ) will release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks the week off this morning with May's personal income and personal spending reports, while tomorrow offers up the Case-Shiller home price index for April and the the Conference Board's consumer confidence index. The usual weekly U.S. petroleum supplies will arrive on Wednesday, accompanied by ADP private sector employment numbers for June and the Chicago Purchasing Managers' Index for June. Thursday brings the usual weekly initial jobless claims, as well as reports on construction spending in May and auto sales in June. We round out the week with the Big Kahuna: nonfarm payrolls and the unemployment rate for June.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 992,969 call contracts traded on Friday, compared to 645,656 put contracts. The resultant single-session put/call ratio arrived at 0.65, while the 21-day moving average rose to 0.64.

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 moderately positive this morning, with eight of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a gain of 0.42%. In Asia, stocks were range-bound as traders digested commentary from the weekend's Group of 20 meeting. Across the pond in Europe, regional indexes rebounded in morning trading, driven higher by a rally in auto makers and oil-related stocks. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

The U.S. dollar is headed higher this morning, benefiting from a weakening euro in the wake of this weekend's Group of 20 meaning. The G-20 leaders reached agreement on goals for debt and deficit reduction, but did not discuss currency issues directly. The lack of attention benefited stronger currencies, and the U.S. Dollar Index has added 0.16% to trade at 85.45 as a result. Elsewhere, gold futures are basically flat in London trading, with the front-month contract rising 70 cents to $1,256.90 an ounce. Finally, economic uncertainty continues to weigh on crude futures this morning, with the lead contract down 65 cents at $78.21 per barrel in pre-market trading.

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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