Opening View: DJIA Futures Retreat Ahead of Earnings, Data

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The Dow Jones Industrial Average (DJIA) posted its first triple-digit gain of 2011 on Monday, but those gains may be short-lived given the state of premarket trading. DJIA and S&P 500 Index futures are trading roughly 13.5 points and 3.4 points below fair value, respectively, as Wall Street braces for a flood of corporate earnings reports, including data from five Dow components. Additionally, housing and consumer confidence numbers are on tap, as well as tonight's State of the Union address and tomorrow's Fed statement on U.S. monetary policy.

Technically, the DJIA blew past the 11,900 level yesterday, and is currently hovering just below the psychologically important 12,000 region. If the Dow can hold above it, the 11,900-11,950 area could create a short-term region of support, though a stiffer backstop lies at 11,800 and the DJIA's 10-day moving average. As for the SPX, the broad-market index rebounded from support at its 10-day trendline on Monday, pushing back above the 1,290 level. Support for the SPX should emerge near 1,275-1,280 -- site of its 20-day moving average.

In equity news, Verizon Communications Inc. ( VZ ) reported that its fourth-quarter net profit rose to $2.64 billion, or 93 cents per share, from $617 million, or 22 cents per share, in the same period a year ago. Analysts expected fourth-quarter earnings of 55 cents per share. Operating revenue dropped to $26.4 billion from $27.09 billion.

Also, DuPont ( DD ) posted fourth-quarter net income of $376 million, or 40 cents per share. Excluding one-time items, adjusted earnings came in at 50 cents per share, topping the consensus estimate for a profit of 31 cents per share. Revenue rose 4% to $7.4 billion. DuPont also lifted its 2011 outlook to a range of $3.45 to $3.75 per share, but cautioned that its acquisition of Danisco could reduce earnings by 30 cents to 45 cents per share.

After the close last night, Texas Instruments Inc. ( TXN ) reported a fourth-quarter net income of $942 million, or 78 cents per share, as revenue rose to $3.53 billion. Analysts were expecting a profit of 63 cents per share on revenue of $3.51 billion. For the current quarter, the company sees revenue in the range of $3.27 billion to $3.55 billion, and earnings of 54 cents per share to 62 cents per share.

Earnings Preview

On the earnings front, 3M Company ( MMM ), AK Steel Holding Corp. ( AKS ), Corning Inc. (GLW), EMC Corp. (EMC), Harley-Davidson Inc. (HOG), Johnson & Johnson (JNJ), The Travelers Companies Inc. (TRV), United States Steel Corp. (X), and Yahoo! Inc. (YHOO) are slated to release their quarterly earnings reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Case-Shiller 20-city home price index for November and the Conference Board's Consumer Confidence Index for January will arrive today. Tomorrow offers up December's new home sales, 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 pending homes sales, and the University of Michigan's final look at January consumer sentiment.

Market Statistics

Equity option activity on the CBOE saw 1,633,084 call contracts traded on Monday, compared to 865,327 put contracts. The resultant single-session put/call ratio arrived at 0.53, 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, as five of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.07%. Inflation concerns continue to plague Asian trading, with India's quarter-point rate hike reminding investors that China could also lift its rates in a move to tighten monetary policy. Additionally, year-end profit taking was also responsible for regional losses, with Chinese New Year arriving next week. Meanwhile, European markets are headed cautiously higher, driven by solid corporate earnings. However, commodities-related stocks are creating drag on the region, as metals and petroleum decline sharply.

Overseas markets

Currencies and Commodities

Commodities appear to be in full retreat this morning, with crude and gold futures both falling sharply. Crude prices extended recent losses in overnight trading, dropping $1.31, or 1.49%, to $86.56 per barrel in electronic trading. Gold, meanwhile, has plummeted $19.90 to $1,324.60 an ounce in London, tagging its lowest level in roughly three months. Strength in the greenback is complicating matters, as the U.S. Dollar Index has gained 0.17% to 78.19.

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: AKS , DD , MMM , TXN , VZ

Schaeffer's Investment Research

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