Opening View: DJIA Futures Pressured by European Debt Concerns

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The Dow Jones Industrial Average (DJIA) retreated roughly 22 points on Friday, as investors debated December's employment data. Unfortunately for Wall Street bulls, European debt concerns have U.S. stocks headed for losses once again this morning, following reports that Portugal is being pressured to accept a bailout. In fact, futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 48 points and 7.5 points below fair value, respectively. The losses have set a sour backdrop for Alcoa Inc. ( AA ), which kicks off the start to the 2010 fourth-quarter earnings season after the close of trading this afternoon.

Technically, the DJIA telegraphed its support and resistance levels on Friday, fluctuating between 11,600 and 11,750. Additional support may be found in the 11,550 region, which is currently home to the Dow's 20-day moving average. The SPX logged a similar performance on Friday, with support emerging near 1,260, while resistance held firm at 1,275. The 1,255 level should provide additional support, if selling pressure takes hold.

In earnings news, Alcoa is expected to post a profit of 19 cents per share in the most recent quarter, up sharply from a profit of just a penny per share in the same quarter last year. Historically, the company has topped expectations in two of the prior four reporting periods, missing in the first and second quarters of 2010. As a result, the company has an average downside surprise of roughly 9.6% during this time frame.

In equity news, Credit Suisse upgraded Vodafone Group PLC ( VOD ) to "outperform" from "neutral." In a note to clients, Credit Suisse said that gaining the iPhone in Germany and the U.S. could allow the company to outperform its peers and return to growth in Europe in the fourth quarter. The broker cautioned, however, that U.S. margins are expected to fall.

Elsewhere, BP plc ( BP ) dropped more than 2% in European trading following the shutdown of the Trans-Alaska Pipeline System due to a pumping station leak. The closure has forced oil companies, including BP, which has a 47% stake in the pipeline, to halt 95% of production from the North Slope area.

Finally, LDK Solar Co. ( LDK ) lifted its fourth-quarter revenue and gross margin estimates last night. The company now sees revenue at $870 million to $910 million, up from prior forecasts of $710 million to $750 million. Gross margin should come in at 25% to 27%, compared with LDK's previous expectation of 24% to 26%. Analysts are looking for revenue of $728 million for the quarter.

Earnings Preview

On the earnings front, Alcoa Inc. ( AA ) will be joined by Helen of Troy Ltd. ( HELE ), Apollo Group Inc. (APOL), and WD-40 Company (WDFC). 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 November's wholesale inventories. On Wednesday, the Fed will release its Beige Book for January, while the weekly report on U.S. petroleum supplies will also hit the Street. Thursday offers up the weekly report on initial jobless claims as well as December's producer price index, while Friday rounds out the week with December's consumer price index, retail sales figures, and industrial production numbers.

Market Statistics

Equity option activity on the CBOE saw 1,770,738 call contracts traded on Friday, compared to 891,224 put contracts. The resultant single-session put/call ratio arrived at 0.50, while the 21-day moving average held at 0.51.

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 in trouble this morning, with only one of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.95%. In Asia, stocks headed broadly lower on concerns that Beijing would tighten its property and monetary policies once again. Pressure was also derived from a weak showing in U.S. jobs data on Friday. Across the pond in Europe, banks are leading a steep retreat, as sovereign debt concerns resurfaced following speculation that Portugal is under pressure to take a bailout.

Overseas markets

Currencies and Commodities

News of the shutdown of the Trans-Alaska Pipeline over the weekend raised concerns about a short-term disruption in U.S. oil supplies, sending crude futures higher in overnight trading. Heading into the open this morning, crude futures are up 62 cents at $81.13 per barrel, despite a rise in the U.S. dollar. Speaking of the greenback, the U.S. Dollar Index has risen 0.14% to 81.13 in premarket trading. Finally, gold is struggling to make headway this morning, with the most active futures contract down 80 cents at $1,368.10 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.



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This article appears in: Investing , Options

Referenced Stocks: AA , BP , HELE , LDK , VOD

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