Opening View: DJIA Futures Edge Higher as Korean Tensions Ease

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Despite creeping lower on Friday, the Dow Jones Industrial Average (DJIA) added 0.7% last week, as traders overlooked euro-zone troubles in favor of strong domestic economic data. We could see a continued drift higher today, with futures on the DJIA and the S&P 500 Index (SPX) trading roughly 31 points and 4.7 points above fair value, respectively. With very little in the way of economic data heading into the Christmas holiday, though, volume should be rather light this week. That said, North and South Korea are attempting to spice things up a bit, although the North said it would not retaliate after South Korea's artillery tests. North Korea's reported willingness to permit U.N. nuclear inspectors to return also has helped calm Wall Street's concerns.

Technically, the DJIA still faces a significant hurdle at the 11,500 level, while support is now firming in the 11,450 region - especially with the ascent of the Dow's 10-day moving average. Additional support rests near the 11,400 region. As for the SPX, the broad-market index continues to struggle with overhead resistance in the 1,245-1,246 region. This area has capped the SPX since Dec. 10. That said, the SPX should find support at the 1,235 level, which is currently home to its rising 10-day moving average.

In equity news, Barclays Capital affirmed its "overweight" rating on Amazon.com Inc. ( AMZN ). What's more, analyst Douglas Anmuth raised his price target 8%, to $195 from $180. Anmuth also lifted his fourth-quarter 2010 and full-year 2011 earnings estimates for Amazon, stating that "the online holiday season has been strong" and that the company "continues to gain market share." Anmuth also reiterated that Amazon is "the best positioned company in the Internet space over the long term."

Also, eBay Inc. ( EBAY ) announced that it will buy Berlin online shopping club brands4friends for $200 million. eBay said in a statement this morning that the deal would strengthen its position as an online fashion provider in Europe. Brands4friends sells fashions from major brands at discount prices "through limited special offers on a daily basis," eBay said.

Finally, Adobe Systems Incorporated ( ADBE ) is scheduled to release its fourth-quarter earnings report after the close of trading today. Wall Street is looking for a profit of 52 cents per share from the Flash video guru, up from 31 cents per share in the same quarter last year. Historically, ADBE has surpassed the consensus estimate in each of the past four reporting periods for an average upside surprise of roughly 5%.

Earnings Preview

On the earnings front, Jefferies Group Inc. ( JEF ), Darden Restaurants Inc. ( DRI ), Jabil Circuit Inc. (JBL), and Paychex Inc. (PAYX) are also slated to release their quarterly reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports scheduled for Monday or Tuesday. On Wednesday, the latest estimate on third-quarter gross domestic product will arrive alongside November's existing home sales and the weekly report on U.S. petroleum supplies. The Commerce Department will report on personal income and spending, durable goods orders, and new home sales for November on Thursday, while the market will be closed for the Christmas holiday on Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,642,894 call contracts traded on Friday, compared to 842,264 put contracts. The resultant single-session put/call ratio arrived at 0.51 while the 21-day moving average held at 0.53.

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 is mixed this morning, as six of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.12%. Asian markets ended broadly lower, but off their session lows. Selling began in earnest early in the session, due to fears that a South Korea's planned artillery tests in the Yellow Sea would prompt a response from North Korea. However, tensions eased after reports that the North was willing to permit U.N. nuclear inspectors to return. Korean concerns are also being felt in European markets, limiting a bullish start to the session by most euro zone stocks.

Overseas markets

Currencies and Commodities

The U.S. dollar is flat with its major foreign competitors this morning, with trading expected to be light heading into the long holiday weekend. At last check, the U.S. Dollar Index was up 0.01% at 80.38. Meanwhile, crude futures have a slight positive bias in premarket trading, with the front-month contract up 11 cents at $88.71 per barrel. Finally, gold futures have added $4.20 an ounce to trade at $1,383.40 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

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: ADBE , AMZN , DRI , EBAY , JEF

Schaeffer's Investment Research

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