Opening View: DJIA Poised to End November With a Loss

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The Dow Jones Industrial Average (DJIA) is trading roughly 44.5 points below fair value this morning, with the S&P 500 Index (SPX) on track for an opening loss of about 4.6 points. Wall Street remains under pressure from fears of spreading contagion in the euro zone, with Spain and Portugal seen as the next potential targets in the wake of Ireland's bailout. On the home front, Merck & Co. ( MRK ) is weighing on the DJIA, plunging nearly 8% in premarket activity, while retail stocks will be front and center again, after the National Retail Federation announced that Cyber Monday attracted an estimated 107 million shoppers - up 10% from a year ago.

Technically, the Dow rebounded from a triple-digit loss on Monday, as a late-session rally helped the blue chip barometer to reclaim psychological support at the 11,000 level. It was the DJIA's fourth such rebound in nine sessions. Given the poor disposition of U.S. stock futures heading into the open, Wall Street bulls will be pressured to extend this streak. The SPX, meanwhile, is facing a similar technical showdown, with the broad-market index bouncing along support in the 1,175 area. Both the DJIA and the SPX are at risk of ending the month with losses.

In equity news, pharmaceutical concern Merck & Co. Inc. ( MRK ) announced that Kenneth C. Frazier has been appointed as chief executive officer and president. Frazier will also serve on the company's board. The appointments are effective on Jan. 1, 2011.

Elsewhere, Lowe's Companies Inc. ( LOW ) reiterated its 2010 earnings forecast for a profit of $1.37 per share to $1.40 per share. The company also backed its 2010 same-store sales growth forecast of 1% to 2%, as well as its total sales growth expectations of 3% to 4%. Analysts are currently looking for 2010 earnings of $1.41 per share. Lowe's also said that it will announce new strategies to "serve what it called more exacting consumers." "In no way are we stepping away from the retail operations that are the foundation of our success, but we recognize that the store experience alone is not enough for customers today," Chief Executive Robert Niblock said.

Finally, ABB Ltd. ( ABB ) announced that it is buying Baldor Electric Co. ( BEZ ) for $4.2 billion, including $1.1 billion in debt. BEZ shares have surged 40% in premarket trading.

Earnings Preview

On the earnings front, Barnes & Noble Inc. ( BKS ), Trina Solar Limited (TSL), and OmniVision Technologies Ltd. (OVTI) are slated to release their quarterly reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Case-Shiller 20-city index for September will be released today, along with the Chicago purchasing managers'index for November, and the November consumer confidence survey. Wednesday will be busy. ADP and Challenger, Gray & Christmas will kick off three successive days of jobs data, with the former reporting on private sector growth in November, and the latter releasing data on layoffs. The Institute for Supply Management's (ISM) manufacturing index for November is also on tap for Wednesday, as is the October construction spending and auto sales reports.

Weekly initial jobless claims arrive on Thursday, while Friday brings the much anticipated nonfarm payrolls and the unemployment rate for November, which will be accompanied by October factory orders and the ISM's services index for November.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 964,930 call contracts traded on Monday, compared to 682,920 put contracts. The resultant single-session put/call ratio arrived at 0.71, while the 21-day moving average rose to 0.60.

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 divided this morning, as half of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.36%. In Asia, regional markets declined on fears of further monetary tightening measures out of Beijing, pushing the Shanghai Composite to a seven-week low. What's more, Japanese shares tagged a two-week nadir after data showed a rise in unemployment and a drop in industrial production for October. European markets, meanwhile, are treading water just above breakeven, as traders continue to debate the extent of the region's sovereign debt crisis. Despite concerns that the contagion could spread to Spain and Portugal, yields on Spanish government bonds soared.

Overseas markets

Currencies and Commodities

Currency traders continue to punish the euro this morning, with fears of European debt contagion running rampant across the region. So far this morning, the euro has broken below the $1.30 level, the currency's first breach of this region since September. Weakness in the euro has translated into strength for the greenback, as the U.S. Dollar Index has added 0.41% to trade at 81.17 in premarket activity, placing the index in contention with former support/resistance in the 81.50 region. Meanwhile, crude futures, which typically trade inversely to the greenback, have given back some of Monday's gains, with the lead contract off 33 cents at $85.40 per barrel. Gold futures, however, are bucking the downtrend, adding $7.60 to trade at $1,375.10 an ounce in London.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

Unusual options activity - calls

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This article appears in: Investing , Options

Referenced Stocks: ABB , BEZ , BKS , LOW , MRK

Schaeffer's Investment Research

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