Opening View: DJIA, SPX Rebound from 2010 Lows; Investor Pessimism Rises

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Not only did the market bulls defend the 2010 lows during Tuesday's plunge, but the late-session rally pushed the Dow Jones Industrial Average ( DJIA ) back above the 10,000 mark. What's more, with DJIA futures trading roughly 44 points above fair value, it appears that the rally may spill over into the open this morning. If the buying mood catches on, traders should keep an eye out for potential short-term resistance in the 10,200 region. Meanwhile, futures on the S&P 500 Index ( SPX ) are trading 7.5 points above fair value, placing the broad-market index on course to challenge potential short-term resistance near 1,090. On the sentiment front, investors have amassed a healthy degree of pessimism lately, with the 21-day moving average of the Chicago Board Options Exchange's ( CBOE ) single-session, equity only put/call ratio currently resting at its highest level since March 5.

In earnings news, Toll Brothers Inc. ( TOLL ) reported a net loss of $40.4 million, or 24 cents per share, as revenue fell 22% to $311.3 million. Write-downs were $42.3 million. For the quarter, Toll Brothers said it delivered 543 homes and signed contracts on 820 homes. The second-quarter backlog was 1,738 homes, up 10% from the same quarter last year. TOLL investors are cheering the report, sending the stock more than 6% higher in electronic trading.

Finally, TiVo Inc. ( TIVO ) reported a net loss of $14.2 million, or 13 cents per share, as revenue fell 11% to $43.2 million. Analysts were expecting a loss of 16 cents per share on revenue of $42.8 million. In pre-market trading, TIVO shares were down more than 2% following the report.

Earnings Preview

On the earnings front, American Eagle Outfitters ( AEO ), Diana Shipping Inc. ( DSX ), Solarfun Power Holdings Co. Ltd. ( SOLF ), Hoku Corp. ( HOKU ), Jo-Ann Stores Inc. ( JAS ), NetApp Inc. ( NTAP ), and Take-Two Interactive Software Inc. ( TTWO ) 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 1,423,252 call contracts traded on Tuesday, compared to 984,027 put contracts. The resultant single-session put/call ratio arrived at 0.69, while the 21-day moving average rose to 0.69.

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 rally mode this morning, as all 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 1.46%. In Asia, regional markets finished broadly higher as traders took their cues from a late-session rally on Wall Street. Furthermore, South Korean stocks overcame volatile trading, even though the Korean won extended its recent losses due to continuing tensions with the North. Meanwhile, European stocks turned higher as bargain hunters rushed into snap up oversold issues, namely banking shares, in the wake of Tuesday's plunge. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

A rebound in commodities and global equities is creating trouble for the U.S. dollar this morning. However, the euro remains weak against the greenback, providing lift for the U.S. Dollar Index, which is trading flat at 86.76 in pre-market activity. Elsewhere, commodities are rallying sharply, as investor confidence makes a u-turn following yesterday's plunge. Specifically, crude futures have jumped $1.67 to $70.42 per barrel, while gold futures have rebounded $14.50 to trade at $1,212.50 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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