Opening View: DJIA, SPX Hope to Find Support Near Year's Lows

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The Dow Jones Industrial Average ( DJIA ) waved as it blew past the 10,000 level yesterday, plunging nearly 270 points to test its 2010 lows near 9,800. The blue-chip barometer paused briefly near the 9,900 region, but fear surrounding a weakening global economy proved too much. The S&P 500 Index ( SPX ), however, breached its 2010 nadir, to close at its lowest point since Oct. 20, 2009. Should the market turn lower today, support might be found near 9,800 for the Dow, and 1,030 for the SPX. However, it appears that we may get at least a minor dead-cat bounce today, as futures on the DJIA and SPX are trading roughly 38 points and 4.6 points above fair value, respectively. Finally, the CBOE Market Volatility Index ( VIX ) spiked more than 17% yesterday. However, the fear index was held in check by the 35 level. While we are far from out of the woods just yet, we may see a pullback in the VIX today, should pre-market equities trading carry over into the open.

In equity news, The Boeing Company ( BA ) announced that it is buying combat-systems provider Argon ST ( STST ) for $34.50 per share, or about $775 million. The transaction is expected to close by the end of the third quarter, pending regulatory approval. "Combining the strength of Boeing with the experience of Argon ST will significantly accelerate our capabilities in sensors, communications technologies and information management," said Dennis Muilenburg, chief executive of Boeing Defense, Space & Security.

Elsewhere, General Mills, Inc. ( GIS ) reported earnings of 41 cents per share on revenue of $3.6 billion. Analysts were expecting a profit of 41 cents per share on revenue of $3.55 billion. GIS results fell slightly short of those from the year-ago period, when the company posted a profit of 43 cents per share on $3.65 billion in revenue.

Finally, Sealy Corporation ( ZZ ) reported a second-quarter profit of 2 cents per share on revenue of $316.5 million. The results were just shy of the consensus estimate for a profit of 2 cents per share on revenue of $319.86 million.

Earnings Preview

On the earnings front, Canadian Solar Inc. ( CSIQ ), Monsanto Company ( MON ) and Apollo Group Inc. ( APOL ) will post their quarterly results today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The usual weekly U.S. petroleum supplies will arrive later this morning, accompanied by ADP private sector employment numbers for June and the Chicago Purchasing Managers' Index for June. Thursday brings the usual weekly initial jobless claims, as well as reports on construction spending in May and auto sales in June. We round out the week with the Big Kahuna: nonfarm payrolls and the unemployment rate for June.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,178,380 call contracts traded on Tuesday, compared to 927,616 put contracts. The resultant single-session put/call ratio arrived at 0.79, while the 21-day moving average rose to 0.66.

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 mixed this morning, which is a significant improvement over Tuesday's performance. At last check, six of the 10 foreign indexes that we track were in positive territory, with a cumulative average return of 0.20%. In Asia, stocks fell after renewed jitters about the global economic outlook sparked a sell-off on Wall Street. Global financial markets faced pressure after data showed a steep fall in U.S. consumer confidence and a sharp downward revision to China's leading indicators index. Meanwhile, European shares rose in choppy trading, after the European Central Bank ( ECB ) announced results for its latest liquidity operation. Specifically, the ECB lent banks 131.9 billion euros ($161.4 billion) in three-month funds -- less than expected -- as banks face the repayment of close to half a trillion euros in 12-month funds. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

The European Central Bank auction has returned some confidence to world markets this morning, and traders are once again moving out of safe-havens, like currencies, and back into stocks. As such, the U.S. Dollar Index is off 0.37% heading into the open. However, the dollar's weakness has not translated into strength for gold, as the front-month contract is up a mere $1.50 at $1,243.90 an ounce in London. Crude oil, however, is taking advantage of the drooping dollar, with the most-active contract up 50 cents at $76.44 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

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This article appears in: Investing , Options


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As of 8/21/2014, 04:03 PM

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