Opening View: DJIA, SPX Mired in Trading Ranges

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Judging by its trading activity during the past couple of weeks, it appears that the Dow Jones Industrial Average ( DJIA ) has settled into a 200-point trading range between support at 11,000 and resistance near 11,200. The average came close to tagging both levels on Monday, but, given the direction of futures trading this morning, the Dow could retest 11,000 by midday. The S&P 500 Index ( SPX ), meanwhile, has been locked between the 1,185 and 1,215 levels since early April. Heading into the open, futures on the DJIA and SPX are trading 45 points and 6 points below fair value, respectively. On the sentiment front, Senior Quantitative Analyst Rocky White noted in Monday Morning Outlook this weekend that 50% of all analyst rankings tracked by Zacks are currently "buys." This figure has eclipsed the most recent peak of 49%, set in mid-2006, but is still far from the extremes of 70% plus seen during the dot-com bubble. While rising bullish sentiment can be a sign of short-term weakness, we believe that these readings are consistent with the market finally accepting the current rally.

In earnings news, Pfizer Inc. ( PFE ) reported adjusted first-quarter net income of 60 cents per share, as revenue increased 54% to $16.8 billion. Wall Street was looking for earnings of 53 cents per share and revenue of $16.6 billion. Looking ahead, Pfizer expects 2010 adjusted earnings of $2.10 per share to $2.20 per share, compared to the consensus estimate for $2.20 per share. However, the company said that it's reducing its 2012 revenue target by $800 million to reflect higher health care costs. The stock has added nearly 2% in pre-market trading.

Elsewhere, Sirius XM Radio Inc. ( SIRI ) said it swung to a first-quarter profit of $41.6 million, or a penny per share, from a loss of $238.8 million, or 7 cents per share, a year earlier. Revenue rose to $663.8 million from $587 million. The company projected net subscriber additions of more than 500,000 for the full year, with $2.7 billion in adjusted revenue. SIRI shares are down more than 2% in electronic trading.

Finally, CVS Caremark Corp. ( CVS ) reported a first-quarter profit of $771 million, or 56 cents per share, on revenue of $23.76 billion. Adjusted earnings were 60 cents per share. Wall Street was looking for earnings of 58 cents per share on sales of $24.07 billion. The company also hiked the low end of its 2010 guidance by 3 cents to a range of $2.77 per share to $2.84 per share. CVS has added roughly 1.3% in pre-market activity.

Earnings Preview

On the earnings front, Archer Daniels Midland Co. ( ADM ), ArvinMeritor Inc. ( ARM ), Beazer Homes USA Inc. ( BZH ), Duke Energy Corp. ( DUK ), Fresh Del Monte Produce Inc. ( FDP ), Marathon Oil Corp. ( MRO ), MasterCard Inc. ( MA ), Merck & Co. Inc. ( MRK ), Molson Coors Brewing Co. ( TAP ), Tenet Healthcare Corp. ( THC ), Suncor Energy Inc. ( SU ), Thomson Reuters Corp. ( TRI ), Vornado Realty Trust ( VNO ), Cephalon Inc. ( CEPH ), Chesapeake Energy Corp. ( CHK ), Evergreen Solar Inc. ( ESLR ), SBA Communications Corp. ( SBAC ), and True Religion Apparel Inc. ( TRLG ) are slated to release their quarterly earnings reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

ISM

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,674,493 call contracts traded on Monday, compared to 891,203 put contracts. The resultant single-session put/call ratio arrived at 0.53, while the 21-day moving average held at 0.48.

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 is in poor shape this morning, as none of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.97%. In Asia, stocks pulled back from early gains despite a strong session on Wall Street. China returned from a long weekend holiday to trade lower following tightening measures from the country's central bank. Japan remained closed for the Golden Week holidays. European stocks fell sharply, as mounting doubts over Greece's bailout and fears of contagion to other euro zone countries rattled investors. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

The U.S. dollar continued to gain ground on the euro in overseas trading, with the European currency falling to a fresh one-year low versus the greenback. Furthermore, another spike in fear surrounding European sovereign debt has added a safe-haven bid to the dollar's upside this morning. In pre-market trading, the U.S. Dollar Index has gained 0.47% to trade at 82.74. The combination of a stronger dollar and concerns over tomorrow's supply data has sent crude futures back below the 85 mark. Specifically, crude futures had dropped $1.29 to $84.90 per barrel in electronic trading. Finally, gold futures are trending higher amid continued European uncertainty. At last check, futures were up $4.20 at $1,187.50 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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