Opening View: DJIA, SPX Bulls Retreat Following Monday's Spike


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The Dow Jones Industrial Average ( DJIA ) came roaring back on Monday, surging more than 400 points in the wake of the European Union's moves to prop up the euro and bailout Greece. However, the Dow's rally was capped by its 50-day moving average, which is currently resting near 10,850. Look for this region to persist as short-term resistance, while support could materialize near 10,700. As for the S&P 500 Index ( SPX ), short-term resistance lies in the 1,170 area, while support should hold near 1,150. Heading into the open, it appears that investors are finally digging into the European bailout plan, and are finding it not quite to their liking. Specifically, futures on the DJIA and the SPX are trading 112 points and 11 points below fair value, respectively. Finally, even volatility has been volatile recently. The CBOE Market Volatility Index ( VIX ) plunged more than 29% yesterday, after spiking an impressive 85% last week. The VIX is currently trading just shy of the 30 level, which it may surpass once again today if U.S. stock futures trading is any indication.

In earnings news, Inc. ( PCLN ) said first-quarter net income rose to $1.06 per share, or $1.70 per share on a pro forma basis, from 53 cents per share a year ago. Revenue grew 26.5% to $584.4 million. Analysts estimated earnings of $1.66 per share. The stock is down more than 12.6% in pre-market trading.

Elsewhere, LDK Solar Co. Ltd. ( LDK ) reported a first-quarter profit of $7.2 million, or 6 cents per share. Analysts were looking for a profit of 2 cents per share. Sales rose 23% to $347.6 million from a year ago. Gross profit margin expanded to 15.7% from 1.7%. In electronic trading, LDK has rallied more than 3.4%.

Finally, J.C. Penney Co. ( JCP ) was downgraded to "neutral" from "overweight" by JPMorgan Chase this morning. The brokerage firm cited increased competition from rival Macy's Inc. ( M ) and challenges in its home business. What's more, JPMorgan said that JCP's five-year growth target may be too optimistic. Heading into the open, JCP shares were off 3.38%.

Earnings Preview

On the earnings front, Fossil Inc. ( FOSL ), JA Solar Holdings Co., Ltd. ( JASO ), Electronic Arts Inc. ( ERTS ), SunPower Corp. ( SPWRA ), and The Walt Disney Co. ( DIS ) are slated to release their quarterly earnings reports. Keep your browser at for more news as it breaks.

Economic Calendar

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,656,149 call contracts traded on Monday, compared to 1,045,195 put contracts. The resultant single-session put/call ratio arrived at 0.63, while the 21-day moving average rose to 0.54.

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

It's all or nothing in overseas trading this week, as none of the 10 foreign indexes that we track are in positive territory this morning. The cumulative average return on the collective stands at a loss of 1.75%. In Asia, most stocks finished lower, as doubt lingered about how Greece and other debt-laden euro zone countries will reduce their budget deficits. Turning to Europe, stocks retreated, as doubts about Greece's ability to smoothly cut its fiscal deficit persisted. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

Crude futures are back in the headlines this morning, as traders realized that they may have jumped on the recovery bandwagon too soon. Specifically, investors are nervous ahead of tomorrow's U.S. petroleum supplies report. After yesterday's roughly 2% rally, crude futures are down 1.54% at $75.62 per barrel in electronic trading this morning. The U.S. dollar is also applying pressure to crude, as the greenback is once again a favorite safe-haven investment amid global economic uncertainty. Ahead of the open, the U.S. Dollar Index has added 0.50% to trade at 84.58. Finally, gold has regained quite a bit of its luster amid the European debt crisis. The malleable metal is making gains again this morning, rallying $15.80 to $1,216.60 an ounce in London.

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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