Opening View: DJIA Leaves April Behind, Looks to Higher Ground in May

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The Dow Jones Industrial Average's ( DJIA ) eight-week winning streak came to an end last week, as a confluence of weak economic data, Goldman Sachs ( GS ) fallout, a massive oil spill in the Gulf, and concern over European sovereign debt sent investors running for the sidelines. Still, the bulls claimed a couple small victories, as the DJIA held above the 11,000 level, marking its third consecutive positive monthly close, and the first monthly close above this region since August 2008. Look for support to hold in the area, while short-term resistance may manifest in the 11,150 area. The S&P 500 Index ( SPX ), meanwhile, is clinging to support in the 1,180 region, with potential resistance at 1,220. There appears to be a positive bias heading into the open, as the DJIA and the SPX are trading 32 points and 3.4 points above fair value, respectively. Finally, the CBOE Market Volatility Index ( VIX ) soared nearly 20% on Friday, allowing the VIX to close the week above its 10-week and 20-week trendlines for the first time since early February. That said, the fear index is still staring up at its 10-month moving average, which the VIX has not closed a month above since March 2009.

Headlining equity news this morning, Continental Airlines Inc. ( CAL ) and UAL Corp. ( UAUA ) announced this morning that they are merging in an all-stock deal. Under terms of the agreement, CAL shareholders will receive 1.05 shares of United common stock for each Continental share they own. United shareholders will own roughly 55% of the combined company. The combined airline behemoth is expecting annual cost savings of $1 billion to $1.2 billion by 2013. Jeff Smisek, Continental's CEO, will head the combined company, while Glen Tilton, CEO of UAL, will serve as a non-executive chairman. The newly merged company will operate under the United Airlines name and the marketing brand will be a combination of both.

Finally, Loews Corp. ( L ) said it swung to a first-quarter net profit of $420 million, or 99 cents per share, from a net loss of $647 million, or $1.49 per share, in the same quarter last year. Revenue was $3.71 billion for the period. Analysts were expecting earnings of 96 cents per share. L shares were up fractionally heading into the open.

Earnings Preview

On the earnings front, The Clorox Co. ( CLX ), Arrow Electronics Inc. ( ARW ), CNA Financial Corp. ( CAN ), Integra LifeSciences Holdings Corp. ( IART )., SYSCO Corp. ( SYY ), Pitney Bowes Inc. ( PBI ) and Yamana Gold Inc. ( AUY ) are slated to release their quarterly earnings reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

ISM

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,691,760 call contracts traded on Friday, compared to 1,029,855 put contracts. The resultant single-session put/call ratio arrived at 0.61, while the 21-day moving average held at 0.48.

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 poor shape this morning, as none of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.53%. Trading in Asia finished in the red on fears that Greece will face stiff political challenges, while fresh steps by China to cool its economy added to near-term uncertainty. Turning to Europe, trading was weak on thin volume, with banks falling on concerns a massive bailout package for Greece may face political problems and on doubts about whether Greece can sustain the tough austerity measures. Markets in the U.K were closed for a holiday. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

The U.S. dollar has gained ground on the euro in the wake of the $146 billion Greek aid package, as the deal was still not enough to assuage fears over European sovereign debt. In pre-market trading, the U.S. Dollar Index has gained 0.38% to trade at 82.18. As a result of the dollar's strength, gold futures are basically flat in London, adding a mere 30 cents to $1,181 an ounce. Finally, crude futures have edged 14 cents higher to $86.29 per barrel in pre-market trading.

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


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