Opening View: DJIA, SPX Plummet Toward February Lows; VIX Could Hit 50

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Monday's late-session sell-off on the Dow Jones Industrial Average ( DJIA ) appears to have been merely a prelude to today's plunge. The DJIA traded between 10,200 and 10,100 for much of Monday, only to plummet to within 70 points of the 10,000 level by the close. Heading into the open this morning, DJIA futures are trading some 225 points below fair value, indicating that the blue-chip barometer could open at or below its February low of 9,835. Meanwhile, futures on the S&P 500 Index ( SPX ) are trading more than 30 points below fair value, potentially placing the SPX below its February low of 1,044. If these levels fail to hold, the next area of support for the DJIA lies near 9,700, while the SPX could find buyers near 1,030 - home to the market's October 2009 lows. Finally, VIX watchers will want to keep a close eye on the 50 level, as the CBOE Market Volatility Index ( VIX ) could make a beeline for this round-number level.

In equity news, EMC Corp. ( EMC ) was downgraded to "neutral" from "overweight" at JPMorgan Chase, while the brokerage firm upgraded NetApp ( NTAP ) to "overweight" from "neutral." The firm noted that NetApp provided a "more seamless and cost-effective approach to implementing server virtualization." As for EMC, JPMorgan stated that the company doesn't have a lot of "upside potential to top- and bottom-line growth."

In earnings news, Sanderson Farms Inc. ( SAFM ) posted a profit of $35.1 million, or $1.62 per share, as revenue rose 14% to $487.1 million. "Demand for chicken at retail grocery stores remains strong and the ongoing issues we and our industry face in export markets have not yet significantly disrupted the markets," said CEO Joe Sanderson.

Finally, Donaldson Co. ( DCI ) reported a third-quarter net income of $49.5 million, or 62 cents per share. Revenue increased 20% to $497.6 million. Analysts estimated a quarterly profit of 59 cents per share on revenue of $477.1 million.

Earnings Preview

On the earnings front, AutoZone Inc. ( AZO ), Cracker Barrel Old Country Store Inc. ( CBRL ), Medtronic Inc. ( MDT ), Trina Solar Limited ( TSL ), and TiVo Inc. ( TIVO ) are slated to release their quarterly earnings reports. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

GDP

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,232,396 call contracts traded on Monday, compared to 792,605 put contracts. The resultant single-session put/call ratio arrived at 0.64, 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

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Overseas Trading

Overseas trading is imploding, as none of the 10 foreign indexes that we track are in positive territory. Furthermore, the cumulative average return on the collective stands at a loss of 2.95%. In Asia, stocks plunged on concerns that the euro zone's troubles might spread. Meanwhile, regional indexes in Europe plunged to nine-month lows for similar reasons after the Bank of Spain took over a small savings bank over the weekend. Nervousness in the euro zone was exacerbated by heightened geopolitical tensions in Korea after the North Korean leader Kim Jong-il ordered his military to be on combat footing. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

Fear of the plunge in global equities is driving investors into the perceived safe haven of the U.S. dollar this morning. At last check, the U.S. Dollar Index had soared 1.26% higher to 87.30. With the greenback in rally mode, most commodities are trading sharply lower. Specifically, crude futures are down $2.37 at $67.84 per barrel, while gold futures have dropped $5.50 to trade at $1,188.50 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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