Opening View: DJIA May Be In For Another Rough Friday; Should You Buy The Dip?

By
A A A

After spending much of Thursday flirting with positive territory, the Dow Jones Industrial Average ( DJIA ) gave up in the final hour of trading, plunging to a loss of 114 points. What's more, early futures indications are for another rough session today, as DJIA futures are trading about 50 points below fair value. The S&P 500 Index ( SPX ) performed similarly yesterday, and is facing a potential deficit of roughly 6 points on the open later this morning. Clearly, we are not out of the woods just yet. Still, both the DJIA and the SPX are on pace for solid gains this week. Even in the event of a sharp sell-off, the Dow should find support in the 10,600 area (home to its 20-week moving average), while the SPX could hold firm at the 1,140 level (site of its 20-week trendline). However, a sell-off would not be too out of the ordinary, considering the market's performance on Fridays so far this year, says Schaeffer's Quantitative Analyst Chris Prybal . What's more, Chris also noted that the SPX has had a tendency to rally on Mondays in 2010, meaning that if you can stomach the risk of holding your positions over the weekend, you might consider buying into today's dip.

In earnings news, NVIDIA Corp. ( NVDA ) reported a first-quarter profit of $137.6 million, or 23 cents per share, as revenue rose to $1 billion. Analysts had expected the graphics chip company to report earnings of 21 cents per share on revenue of $986.2 million. In electronic trading, NVDA is down more than 6%.

Also in the technology sector, CA Inc. ( CA ) reported a fourth-quarter profit of $101 million, or 34 cents per share. Revenue rose to $1.1 billion from $1.04 billion a year ago. Analysts estimated a quarterly profit of 36 cents per share on revenue of $1.12 billion. CA has fallen more than 6.5% in electronic trading following the report.


Finally, Nordstrom Inc. ( JWN ) posted a first-quarter profit of $116 million, or 52 cents per share, with same-store sales rising 12% over the same quarter last year. Analysts were looking for a profit of 54 cents a share on sales of $1.99 billion. JWN shares have shed 2.6% in pre-market trading.

Earnings Preview

On the earnings front, J.C. Penney Co. Inc. ( JCP ) rounds out a busy week of quarterly reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,501,324 call contracts traded on Thursday, compared to 857,077 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average rose to 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

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.

Overseas Trading

Overseas trading is considerably worse for wear this morning, as only one of the 10 foreign indexes that we track is in positive territory. The cumulative average return on the collective stands at a loss of 1.49%. In Asia, stocks surrendered part of the prior session's rally, as investors remained skittish in the face of euro zone debt worries and doubts about the U.S. economic recovery. Turning to Europe, stocks retreated on mounting worries that tough new austerity measures in southern Europe will dampen economic growth. Furthermore, French President Nicolas Sarkozy threatened to pull France out of the euro zone unless other members promised to help Greece, according to a report in Spain's El Pais. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

Reports that France's president has threatened to pull his country out of the euro zone has renewed concerns about financial stability in Europe. Following the report, the euro plunged to a 17-month low versus the dollar, helping to boost the U.S. Dollar Index 0.67% to 85.78 in pre-market trading. Meanwhile, gold futures are rallying against the dollar's gains, soaring $18.20 to $1,247.40 an ounce in London. Finally, crude futures have pulled back sharply on the European financial concerns, with the most active contract dropping $1.82 to $77.17 per barrel.

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

Click here for the new spring issue of SENTIMENT magazine



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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options


Schaeffer's Investment Research

Schaeffer's Investment Research
  • See all for Schaeffer's Investment Research
  • View Print Version

More from Schaeffer's Investment Research:

Related Videos

Don't Pay Up to Play REITs
Don't Pay Up to Play REITs          

Stocks

Referenced

Most Active by Volume

100,376,898
  • $17.62 ▲ 0.51%
83,231,837
  • $25.62 ▲ 1.91%
75,739,329
  • $111.78 ▼ 0.77%
65,297,937
  • $36.37 ▼ 1.76%
59,053,093
  • $47.66 ▲ 0.29%
53,482,350
  • $2.59 ▼ 0.38%
51,504,284
  • $7.34 ▲ 2.37%
51,434,656
  • $8.14 ▲ 6.96%
As of 12/19/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com