Opening View: DJIA, SPX Bulls Optimistic Ahead of Bernanke Testimony

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Despite plunging to a triple-digit loss early in the session, the Dow Jones Industrial Average (DJIA) came roaring back to finish Tuesday with a gain of roughly 75 points. The bulls are looking to extend the rally this morning, drawing strength from strong earnings from Apple Inc. and expectations that Federal Reserve Chairman Ben Bernanke may announce policy accommodation measures in testimony before the U.S. Senate Banking Committee later today. The DJIA could find resistance out of the gate this morning, with former support at the 10,250 level looming large as a potential hurdle. Above this area, the 10,400 level could cap any extended rallies by the blue-chip barometer. As for the S&P 500 Index (SPX), the index rebounded from its May "flash crash" low yesterday, and is now challenging former support/resistance near 1,085. Should the SPX push past this hurdle, longer-term resistance remains overhead at the 1,100 level. Heading into the open, the DJIA and the SPX are trading 13 points and 2.5 points above fair value, respectively, pointing toward a flat-to-higher open.

In earnings news, Apple Inc. ( AAPL ) said that strong demand for iPhones and iPads lifted third-quarter earnings to $3.25 billion, or $3.51 per share, compared with earnings of $1.83 billion, or $2.01 per share, last year. Revenue soared 61% to $15.7 billion. Analysts were expecting earnings of $3.11 per share on revenue of $14.75 billion. Looking ahead to the fourth quarter, Apple said it expects revenue of $18 billion with earnings of $3.44 per share, versus Wall Street's view for earnings of $3.82 per share on revenue of $17.03 billion. AAPL shares are up nearly 4% in pre-market trading.

Elsewhere, Yahoo! Inc. ( YHOO ) reported second-quarter net income of $213.3 million, or 15 cents per share, on revenue of $1.13 billion. Analysts had expected Yahoo! to post earnings of 14 cents per share on $1.16 billion in net revenue. YHOO was off nearly 7% in electronic trading at last check.

Finally, EMC Corp. ( EMC ) reported a second-quarter profit of $426 million, or 20 cents per share, as sales rose 24% to $4.02 billion. Earnings, excluding one-time items, came in at 28 cents per share. Analysts were expecting earnings of 28 cents per share on sales of $3.99 billion. Looking ahead, EMC said it expects to exceed its prior 2010 sales outlook of $16.5 billion. Still, EMC shares are off roughly 1.3% in pre-market trading.

Earnings Preview

On the earnings front Abbott Laboratories ( ABT ), The Coca-Cola Co. ( KO ), Wells Fargo & Co. ( WFC ), Baidu Inc. ( BIDU ), CA Inc. ( CA ), eBay Inc. ( EBAY ), Netflix Inc. ( NFLX ), QUALCOMM Inc. ( QCOM ), Starbucks Corp. ( SBUX ), Western Digital Corp. ( WDC ), and Xilinx Inc. ( XLNX ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The market will be graced with the weekly report on U.S. petroleum supplies today, while weekly initial jobless claims will be joined by June's existing home sales and June's leading economic indicators tomorrow. Friday ends the week as it began, with no reports slated for release.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,246,606 call contracts traded on Tuesday, compared to 661,150 put contracts. The resultant single-session put/call ratio arrived at 0.53, while the 21-day moving average held at 0.64.

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 looks strong this morning, as nine of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.90%. In Asia, steel stocks led a broad rally in China after the government announced that it is working to consolidate local industry. Meanwhile, Japan retreated in the wake of a strengthening yen. Across the pond in Europe, strength in commodities is driving solid gains in regional markets, pushing stocks toward the end of a four-session losing streak.

Overseas markets

Currencies and Commodities

The U.S. dollar continues to gain ground in overseas trading this week. Heading into the open this morning, the U.S. Dollar Index has advanced 0.26% to trade at 82.96. Elsewhere, commodities are shaking off the greenback's rise, with gold futures up $1.70 at $1,193.40 in London, while crude oil has added 34 cents to trade at $77.92 per barrel in electronic 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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