Opening View: DJIA Poised for Another Test of 12,000

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The Dow Jones Industrial Average (DJIA) cracked 12,000 for the first time since June 2008 yesterday, but the blue chip barometer was unable to hold its lofty perch amid a veritable storm of economic and earnings data. Wall Street will have no time to rest today, either, as the continuing corporate earnings deluge will be joined by weekly initial jobless claims and durable goods data. Against this backdrop, futures on the DJIA and the S&P 500 Index (SPX) are trading basically flat this morning, with the Dow 5 points above and the SPX 1.2 points below fair value.

Technically, the DJIA could make another run at 12,000 today, and support remains firm near 11,900. Additional support resides in the 11,800-11,850 area, which is home to the Dow's rising 10-day moving average. The SPX, meanwhile, rebounded off its 10-day trendline on Wednesday, and could now challenge the 1,300 level once again today. Support for the broad-market index resides near 1,275-1,280 -- site of its 20-day moving average.

In equity news, Procter & Gamble Co. ( PG ) reported that its second-quarter profit slid 28% to $3.33 billion, or $1.11 per share. Excluding charges and discontinued operations, earnings came in at $1.13 per share, as revenue climbed 1.5% to $21.35 billion. Wall Street was looking for a second-quarter profit of $1.10 per share. Looking ahead, PG forecast third-quarter earnings of 95 cents to $1 per share, with total sales expected to rise 5% to 7%. Analysts surveyed were expecting earnings of 99 cents on $20.12 billion in sales.

After the close last night, Netflix Inc. ( NFLX ) said that its fourth-quarter profit rose 52% to $47 million, or 87 cents per share, as revenue rose 34% to $596 million. This blew past Wall Street's estimates, with analysts expecting earnings of 71 cents per share on revenue of $596.4 million. The company, which announced it now has more than 20 million subscribers, said it expects to end the first quarter with 21.9 million to 22.8 million subscribers, and revenue of $684 million to $704 million. The consensus first-quarter revenue estimate currently sits at $675.7 million.

Also, Starbucks ( SBUX ) reported first-quarter profit of $347 million, or 45 cents per share, up from $242 million, or 32 cents per share, in the year-earlier period. Sales rose 8% to $3 billion. Analysts had expected Starbucks to earn 39 cents per share on sales of $2.92 billion.

Finally, Qualcomm ( QCOM ) announced that its earnings rolled in at $1.17 billion, or 71 cents per share, compared to net income of $841 million, or 50 cents per share, for the same period the previous year. On a non-GAAP basis, the company said it earned $1.35 billion, or 82 cents per share, for the recent quarter. Revenue grew 25% to $3.35 billion. Analysts were expecting earnings of 72 cents per share on revenue of $3.2 billion.

Earnings Preview

On the earnings front, Altria Group Inc. ( MO ), AT&T Inc. (T), Caterpillar Inc. (CAT), D.R. Horton Inc. (DHI), Lockheed Martin Corp. (LMT), Potash Corp./Saskatchewan (POT), Raytheon Company (RTN), Tyco International Ltd. (TYC), Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT), Monster Worldwide Inc. (MWW), SanDisk Corp. (SNDK), and Verisign Inc. (VRSN) are slated to release their quarterly earnings reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Weekly initial jobless claims will be joined by December's durable goods orders today, while we round out the week tomorrow with a first look at fourth-quarter gross domestic product (GDP), November's 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 1,474,263 call contracts traded on Wednesday, compared to 857,603 put contracts. The resultant single-session put/call ratio arrived at 0.58, while the 21-day moving average held at 0.53.

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 has a positive bias this morning, with seven of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a gain of 0.16%. Asian markets closed mostly higher, though Hong Kong's Hang Seng and China's Shanghai closed mixed following news that Beijing unveiled a fresh set of measures to check rising home prices. Across the pond in Europe, stocks are trading broadly higher, though the banking sector is weak after Standard and Poor's downgraded Japan's credit rating to AA- from AA.

Overseas markets

Currencies and Commodities

The dollar received a bit of lift in overseas trading in the wake of Standard and Poor's downgrade of Japan's credit rating. However, while the greenback has gained ground versus the yen, it remains weak against the rest of its major competitors. Specifically, the U.S. Dollar Index has fallen 0.24% to 77.72 in premarekt trading. Crude has been unable to capitalize on the dollar's weakness, with futures down 63 cents at 86.70 per barrel heading into the open. Finally, gold futures are only modestly higher in London, rising $5.70 to $1,340.20 an ounce.

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.



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This article appears in: Investing , Options

Referenced Stocks: MO , NFLX , PG , QCOM , SBUX

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