Opening View: DJIA Futures Flat Ahead of Earnings and Fed

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The Dow Jones Industrial Average (DJIA) rallied nearly 50 points on Friday, and closed last week with a gain of 0.7%. Corporate earnings will continue to drive Wall Street this week, with McDonald's Corp. ( MCD ) and American Express Co. ( AXP ) among those reporting today. However, investors may be taking a cautious stance ahead of Wednesday's Federal Open Market Committee policy statement. Heading into the open, the DJIA and the S&P 500 Index (SPX) are trading relatively flat with fair value.

Technically, the DJIA enters this week trading at its highest point since June 2008. The 11,900 level has emerged as the next area of potential technical resistance, while the 12,000 region will likely contain any breakout rally from the blue chip barometer. Look for support in the 11,750-11,800 region, which is currently home to the Dow's 10-day moving average. As for the SPX, the broad-market index reclaimed support at its 10-day trendline on Friday, but remains stymied by resistance in the 1,295-1,300 region. Support for the SPX should emerge near 1,270 -- site of its 20-day moving average.

In equity news, Halliburton Co. ( HAL ) reported a fourth-quarter profit of $605 million, or 66 cents per share. Operating income jumped to 68 cents per share, as revenue rose to $5.16 billion. Wall Street was looking for earnings of 63 cents per share on revenue of $4.86 billion. Looking ahead, Halliburton said it sees a "favorable outlook for oil services and technologies in 2011 and beyond."

Also, J.C. Penney Inc. ( JCP ) announced a restructuring plan that includes the closure of five department stores and one home store. JCP will also continue to wind down its catalog business by closing nine outlet stores in 2011 and 2012. The company expects these measures to lift earnings by 7 cents per share in the first full year of implementation, though they will result in a fourth-quarter charge of $30 million, or 8 cents per share. In 2011, there will be charges of around $20 million, or 5 cents per share.


The pharmaceutical sector could also garner attention this morning, after Novartis AG ( NVS ) agreed to acquire Genoptix Inc. (GXDX) in an all-cash deal worth $25 a share. Also, Sanofi-Aventis SA (SNY) extended its offer of $69 per share in cash for Genzyme Corp. (GENZ). The offer was previously scheduled to expire on Jan. 21.

Earnings Preview

On the earnings front, McDonald's Corp. ( MCD ), PetMed Express Inc. (PETS), Albemarle Corp. (ALB), American Express Co. ( AXP ), CSX Corp. (CSX), Packaging Corp. of America (PKG), SL Green Realty Corp. (SLG), STMicroelectronics N.V. (STM), Texas Instruments Inc. (TXN), VMware Inc. (VMW), and Zions Bancorporation (ZION) are slated to release their quarterly earnings reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports scheduled for release today, while tomorrow offers up the Case-Shiller 20-city home price index for November and the Conference Board's Consumer Confidence Index for January. December new home sales will arrive on Wednesday, but the big news of the day will arrive in the afternoon, when the Federal Open Market Committee (FOMC) issues its decision on U.S. monetary policy. On Thursday, weekly initial jobless claims will be joined by December's durable goods orders, while Friday rounds out the week with a first look at fourth-quarter gross domestic product (GDP), November's s pending homes sales, and the University of Michigan's final look at January consumer sentiment.

Market Statistics

Equity option activity on the CBOE saw 2,271,763 call contracts traded on Friday, compared to 1,263,551 put contracts. The resultant single-session put/call ratio arrived at 0.56, while the 21-day moving average held at 0.52.

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

Trading the News: A Contrarian View. Check out this special report from Bernie Schaeffer here.

Overseas Trading

Overseas trading is mixed this morning, with four of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.15%. Strong sales at Honda Motor Co. and a weakening yen helped boost Japanese stocks in Asian trading. However, the rest of the region was plagued by profit taking ahead of the Chinese New Year next week. In Europe, stocks turned broadly lower, with the technology sector leading the way after Royal Philips Electronics missed earnings expectations.

Overseas markets

Currencies and Commodities

The U.S. dollar has gained some ground on its foreign competitors this morning. The greenback has been especially strong versus the euro, after news that Ireland may need to hold elections. Commodities, meanwhile, are mixed, with crude futures heading sharply lower, falling 71 cents to $88.40 per barrel. Gold, however, has bounced back in London, adding $5.60 to $1,346.60 an ounce following last week's sell-off.

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: AXP , HAL , JCP , MCD , NVS

Schaeffer's Investment Research

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