Opening View: DJIA Futures Rise Ahead of Retail Sales

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Plagued by fears of Chinese interest rate hikes and European sovereign debt, the Dow Jones Industrial Average (DJIA) sold off sharply last week, closing below the 11,200 level and its 20-day moving average. However, the blue chip barometer has found a positive bias this morning, as futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 19 points and 1.7 points above fair value, respectively. Wall Street appears optimistic heading into this morning's retail sales report, as traders gear up for the holiday shopping season. Look for the DJIA to attempt to reclaim its 20-day trendline, though the Dow could find stiff resistance in the 11,250 region. As for the SPX, support should hold near 1,195 and the index's 20-day trendline, while resistance could emerge near 1,200-1,205.

On the sentiment front, if you missed this weekend's edition of Monday Morning Outlook , Todd Salamone, Senior Vice President of Research, made an observation that should not be overlooked. Specifically, the 50-day buy-to-open put/call volume ratios on the PowerShares QQQ Trust ( QQQQ ) and the SPDR S&P 500 ETF ( SPY ) are currently rising. In our experience, such trends are indicative of hedge fund accumulation, which could translate into additional buying power in the market.

In equity news, Lowe's Companies ( LOW ) reported that its third-quarter earnings rose 17% to $404 million, or 29 cents per share, from $344 million, or 23 cents per share, last year. Excluding one-time charges, Lowe's earned 31 cents per share in the third quarter. Sales rose 1.9% to $11.6 billion. Wall Street was looking for earnings of 30 cents per share on revenue of $11.76 billion. Looking ahead, LOW said it sees fourth-quarter earnings of 16 cents to 19 cents per share, compared to the consensus estimate of 18 cents per share.


Also, merger and acquisition activity is heating up this morning. Caterpillar Inc. ( CAT ) announced today it will buy mining equipment maker Bucyrus International Inc. ( BUCY ) for $8.6 billion, including the assumption of $1 billion in debt, while EMC Corp. (EMC) will acquire Isilon Systems Inc. (ISLN) for $2.25 billion. ISLN shares were last seen more than 18% higher in electronic trading.

Earnings Preview

On the earnings front, China Sunergy Co. Ltd. (CSUN), Diana Shipping Inc. (DSX), The Gymboree Corp. (GYMB), Nordstrom Inc. (JWN), and Urban Outfitters Inc. (URBN) will release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar is packed this week, with October's retail sales, November's Empire State manufacturing index, and September's business inventories report included in today's offering. Tomorrow, the October producer price index (PPI) and core PPI will be accompanied by the twin reports on industrial production and capacity utilization for October.

Wednesday brings the usual weekly report on U.S. petroleum supplies, as well as the October consumer price index (CPI), core CPI reading, October's housing starts, and building permits. We end the week early on Thursday, with weekly initial jobless claims, October's leading economic indicators, and November's Philadelphia Fed manufacturing index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,427,699 call contracts traded on Friday, compared to 949,723 put contracts. The resultant single-session put/call ratio arrived at 0.67, while the 21-day moving average rose to 0.59.

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 nine of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.30%. In Asian trading, regional markets closed broadly higher, despite concerns over prospect of further interest rate hikes in China. Across the pond in Europe, lingering debt concerns weighed on sentiment, with Ireland seen likely to need funds from the European Union. Economic data has helped lift stocks from their early morning lows, however, as euro zone export growth came in stronger than expected.

Overseas markets

Currencies and Commodities

With European debt concerns continuing to pressure the euro, the U.S. dollar has found additional strength this morning. In fact, the U.S. Dollar Index has added 0.50% to trade at 78.47 in premarket activity. Meanwhile, crude futures have ignored the dollar's advance, with the December contract up 55 cents at $85.89 in electronic trading. Finally, gold futures are feeling the pinch of a stronger dollar, with the lead contract up a mere 30 cents at $1,365.80 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: BUCY , CAT , LOW , QQQ , SPY

Schaeffer's Investment Research

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