Opening View: DJIA Futures Head Higher; Portugal, Adobe in Focus

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The Dow Jones Industrial Average (DJIA) slipped fractionally lower on Monday, failing to follow the S&P 500 Index (SPX) and Nasdaq Composite (COMP) higher. Some of yesterday's tensions have been relieved, with rhetoric on the Korean peninsula returning to normal, but a downgrade warning for Portugal from Moody's Investor Services could create a fresh point of concern this morning. Heading into the open, futures on the DJIA and the SPX are trading roughly 22 points and 3 points above fair value, respectively. Look for the Dow to find support at 11,400-11,450, with resistance at 11,500-11,520. The SPX, meanwhile, has resistance at 1,250, and support at 1,240.

Checking in with the CBOE Market Volatility Index (VIX), we find that the so-called "fear" index rebounded from its 2010 lows near the 16 level on Monday. The index has fallen more than 31% since peaking at 23.84 on Nov. 29, and has plunged a hefty 66% since its May 21 perch at 48.20. On one hand, a low VIX means that portfolio insurance is relatively inexpensive at the moment. On the other hand, with the index trading more than 25% below its 120-month (or 10-year) moving average, there is some concern that volatility could be poised for a mean-reversion rally.

In equity news, Adobe Systems Inc. ( ADBE ) reported a fourth-quarter profit of $268.9 million, or 53 cents per share. On a non-GAAP basis, the company earned $285.7 million, or 56 cents per share, for the recent period. Revenue grew 33% to $1 billion. Analysts were expecting earnings of 52 cents per share on revenue of $988 million.

Also, Jabil Circuit Inc. ( JBL ) said that it earned a first-quarter profit of $106.7 million, or 49 cents per share, on revenue of $4.1 billion. Excluding one-time items, Jabil earned $132.1 million, or 61 cents per share. Wall Street was looking for a profit of 55 cents per share on $3.97 billion.


Earnings Preview

On the earnings front, CarMax Inc. ( KMX ), ConAgra Foods Inc. ( CAG ), Hovnanian Enterprises Inc. ( HOV ), Nike Inc. (NKE), Red Hat Inc. (RHT), Tibco Software Inc. (TIBX), and Cintas Corp. (CTAS) are 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 release today, while tomorrow offers up the latest estimate on third-quarter gross domestic product, 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 1,414,644 call contracts traded on Monday, compared to 808,226 put contracts. The resultant single-session put/call ratio arrived at 0.57 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 looks strong this morning, as all 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 1.01%. Asian markets headed broadly higher, with stocks enjoying a relief rally after tensions eased on the Korean peninsula. Early in the overnight session, the Bank of Japan left its policy rates and economic assessment unchanged. Across the pond in Europe, regional markets are headed for their second consecutive winning session. Stocks are following Asia's lead higher, despite a warning from Moody's Investor Services that the firm may downgrade Portugal's rating.

Overseas markets

Currencies and Commodities

The U.S. dollar is trading lower versus its major foreign competitors this morning, as supportive comments out of Beijing have helped provide lift for the euro. Specifically, comments from Chinese Vice Premier Wang Qishan indicated that China backed Europe's efforts to stabilize global markets. At last check, the U.S. Dollar Index was off 0.2% at 80.47. Crude futures have failed to take advantage of the greenback's weakness, with the most active contract up a mere 2 cents at $89.39 per barrel. Finally, gold futures are also hovering close to breakeven, rising 80 cents to $1,386.90 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 , CAG , HOV , JBL , KMX

Schaeffer's Investment Research

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As of 12/18/2014, 04:15 PM


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