Opening View: DJIA, SPX Range-Bound Ahead of Triple-Witching Expiration

By
A A A

Following a sharp rally into the close on Thursday, the Dow Jones Industrial Average ( DJIA ) closed its third consecutive day above 10,400. What's more, the S&P 500 Index ( SPX ) logged its third close in a row above its 200-day moving average, continuing to build the case that Wall Street is finally emerging from a bull market correction. Trading today could be interesting, however; today is triple-witching Friday, as option expiration coincides with the expiration of stock index futures and stock index options. This triple expiration can create additional volatility for the market, though much of the repositioning doesn't arrive until the Monday morning following expiration. Heading into the open, futures on the DJIA and SPX are trading in a tight range, down 12 points and 1 point versus fair value, respectively, so plan accordingly.

In equity news, Standard & Poor's Ratings Services cut BP plc's ( BP ) long-term credit rating to A from AA-, keeping the company on a negative outlook. "The downgrade reflects our opinion of the challenges and uncertainties that BP continues to face in the aftermath of the explosion on the Deepwater Horizon rig in the Gulf of Mexico on April 20, 2010, and the subsea Macondo well blowout," said Simon Redmond, an S&P credit analyst.

Also on the ratings front, Moody's Investors Service upgraded the corporate and probability of default ratings for Tenet Healthcare Corp. ( THC ) to B2 from B3. Moody's said that the company's ratings outlook is stable. "The upgrade of Tenet's ratings reflects continued improvement in operating results, which was further supported by the company's recent announcement raising 2010 adjusted EBITDA guidance," said Moody's in a statement.


Earnings Preview

There are no earnings reports scheduled for release today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar is devoid of reports today. Looking ahead, Monday's calendar is also clear, while May's existing home sales will arrive on Tuesday. As for Wednesday, weekly U.S. petroleum supplies will be overshadowed later in the day by the Federal Open Market Committee's interest rate decision. Thursday brings the usual weekly initial jobless claims, as well as May's durable goods orders. Finally, we round out next week with the initial third-quarter gross domestic product reading and June's final University of Michigan consumer sentiment index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,191,990 call contracts traded on Thursday, compared to 817,352 put contracts. The resultant single-session put/call ratio arrived at 0.69, while the 21-day moving average held at 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 weak this morning, as only six of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.04%. Trading in Asia closed mixed, as Australian markets rallied on strength in the commodities sector, while Shanghai pulled back due to a round of profit taking. Meanwhile, European shares are pulling back from a one-month high, with weakness in the drug sector and oil producers leading the way lower. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

Trading activity is down across the board this morning, as weakness in stocks has not given rise to strength in the U.S. dollar or gold, both of which are typically seen as safe-haven investments. Specifically, the U.S. Dollar Index is trading flat in pre-market activity, perched at 85.69 at last check. Meanwhile, gold futures are heading lower, with the front-month contract off $1.60 at $1,247.10 in London. A pullback in gold may be expected today, as the malleable metal tagged a fresh all-time high of $1,248.70 on Thursday. Finally, crude futures are retreating alongside equities this morning, with the lead contract down 1.41% at $76.94 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

Click here for the new spring issue of SENTIMENT magazine



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options


Schaeffer's Investment Research

Schaeffer's Investment Research
  • See all for Schaeffer's Investment Research
  • View Print Version

More from Schaeffer's Investment Research:

Related Videos

Stocks

Referenced

Most Active by Volume

33,110,376
  • $113.99 ▲ 1.77%
25,034,179
    $17.98 unch
24,486,872
  • $7.41 ▲ 2.07%
20,864,535
  • $7.39 ▼ 2.76%
18,600,501
  • $8.30 ▼ 0.36%
17,530,211
  • $8.14 ▲ 3.17%
17,299,208
  • $93.79 ▲ 2.74%
14,669,760
  • $25.78 ▼ 0.19%
As of 12/26/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com