Opening View: DJIA Futures Slip on Bernanke Commentary

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The Dow Jones Industrial Average (DJIA) clawed its way back into positive territory on Friday, ending the week with a gain of 2.6%. However, the blue chip barometer could be in for a rocky start this week, as futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 22 points and 3.6 points below fair value, respectively. Despite providing the impetus for Friday's late-session rally, Federal Reserve Chairman Ben Bernanke's "60 Minutes" interview has created turmoil this morning. Specifically, Bernanke said that "it's certainly possible" that the central bank could expand its $600 billion Treasury purchase program. While the admission is proof that the Fed stands ready to help, some investors are viewing the statement as a sign that U.S. economy is still so weak it needs to be propped up.

Technically, the DJIA is hovering just below round-number resistance in the 11,400 region, with potential support at the 11,300-11,350 region. As for the SPX, the broad-market index is staring up at potential resistance near its 2010 highs in the 1,226 area, while support resides near the 1,210 level.

In equity news, Dollar General Corp. ( DG ) reported a third-quarter profit of $128.1 million, or 37 cents per share, as net sales rose 10% to $3.22 billion and same-store sales increased 4.2%. Excluding items, earnings in the quarter were 39 cents per share. Analysts were looking for a profit of 35 cents per share on sales of $3.23 billion. Looking ahead, Dollar General said that it expects full-year adjusted earnings of between $1.78 and $1.81 per share, up from previous guidance for earnings of between $1.68 and $1.74 per share. Analysts had been forecasting earnings for the year of $1.78 per share.

Elsewhere, MetLife Inc., ( MET ) said that it expects to post full-year 2010 earnings of $3.13 to $3.57 per share, up from a loss of $2.89 per share last year. Operating earnings for the full year should come in at $4.26 to $4.36 per share. Analysts are expecting a 2010 profit of $4.26 per share. For 2011, operating earnings are seen at $4.75 to $5.15 per share on revenue of $45.8 billion to $47 billion.

Finally, Pfizer Inc. ( PFE ) announced over the weekend that CEO Jeffrey Kindler will unexpectedly retire. Ian Read, head of the company's biopharmaceuticals arm, will succeed Kindler. Kindler cited the heavy demands of the job during the past four and a half years as reason for his departure.

Earnings Preview

On the earnings front, The Pep Boys - Manny, Moe & Jack ( PBY ) is scheduled to release its quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports scheduled for today, while the October consumer credit report will arrive tomorrow. On Wednesday, we'll get the usual weekly report on crude inventories, while Thursday offers up the weekly report on jobless claims and October's wholesale inventories. Friday ends the week with November's import/export prices, December's University of Michigan consumer sentiment index, and November's Treasury budget.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,189,532 call contracts traded on Friday, compared to 623,556 put contracts. The resultant single-session put/call ratio arrived at 0.52 while the 21-day moving average held at 0.57.

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 is mixed this morning, with only four of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.11%. In Asian trading, traders digested the weaker-than-expected rise in U.S. nonfarm payrolls and indications that the U.S. Fed could further expand its asset purchase program. Meanwhile, the financial sector is weighing heavily on European regional markets, with investors playing it close to the vest ahead of data on the European Central Bank's latest bond-buying program.

Overseas markets

Currencies and Commodities

Crude futures have pulled back from fresh two-year highs this morning, as the U.S. dollar rebounded from last week's slide. At last check, the front-month contract was down 42 cents at $88.77 per barrel, while the U.S. Dollar Index had added 0.58% to trade at 79.84. Gold futures, meanwhile, have largely ignored the greenback's rebound, rallying $6.90 to $1,413.10 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

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This article appears in: Investing , Options

Referenced Stocks: CBOE , DG , MET , PBY , PFE

Schaeffer's Investment Research

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