The Dow Jones Industrial Average (
DJIA
) gave up a 90-point lead yesterday to close down 115 points, as
bullish investors were overwhelmed by a wave of late-session
selling pressure. The Dow's decline found support at the 10,500
level, but, given the direction of futures this morning, we could
see the DJIA head sharply lower, potentially breaching short-term
support at 10,450 and the average's 160-day moving average.
Speaking of 160-day trendlines, the S&P 500 Index (
SPX
) is either in the process of
setting a near-term bottom
, or breaking out below key long-term support. The SPX closed
yesterday perched on this trendline, which is located in the 1,120
area. The next layer of potential support lies at 1,110, while
long-term and psychological support resides at 1,100. Heading into
the open, futures on the DJIA and the SPX are trading roughly 70
points and 11 points below fair value. Finally, the CBOE Market
Volatility Index (
VIX
) has held above the 30 level and its 10-day moving average for the
past three sessions. The so-called "fear" index rallied nearly 10%
on Tuesday, and could challenge short-term resistance at the 35
level in today's trading.
In earnings news, Deere & Co. (
DE
) reported a second-quarter profit of $547.5 million, or $1.28 per
share. On an adjusted basis, earnings were $1.58 per share, topping
analyst expectations. Sales in the period rose 6% to $7.13 billion.
For the full year, Deere said it expects net income of $1.3
billion. Heading into the open, DE has gained more than 2% in the
wake of its quarterly report.
Elsewhere, Hewlett-Packard Co. (
HPQ
) reported a second-quarter profit of $2.2 billion, or 91 cents per
share, as revenue rose to $30.8 billion. Adjusted income was $1.09
per share. Analysts expected earnings of $1.05 per share on revenue
of $29.8 billion. HPQ shares have rallied 2.80% in pre-market
activity.
Finally, BJ's Wholesale Club Inc. (
BJ
) said that its first-quarter profit rose to $26.1 million, or 49
cents per share, as sales rose 13% to $2.55 billion. Excluding
gasoline sales, same-store sales rose 4.2%. The company raised its
full-year forecast to $2.58 to $2.68 per share. Analysts were
looking for first-quarter results of 44 cents per share and
full-year guidance of $2.61 per share. In electronic trading, BJ is
up 0.13%.
Earnings Preview
On the earnings front, Applied Materials Inc. (
AMAT
), Hot Topic Inc. (
HOTT
), and Limited Brands Inc. (
LTD
) are slated to release their quarterly earnings reports. Keep your
browser at
SchaeffersResearch.com
for more news as it breaks.
Economic Calendar
CPI
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 1,527,969 call contracts traded on Tuesday, compared to
994,570 put contracts. The resultant single-session put/call ratio
arrived at 0.65, while the 21-day moving average rose to 0.60.
**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.**
Every morning, our research staff analyzes the prior day and
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Overseas Trading
Overseas trading is abysmal 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
1.81%. In Asia, stocks retreated as moves to toughen financial
regulation in both the U.S. and Europe rattled markets and sapped
investors' appetite for risk. Investors were also unnerved by news
Germany had moved to ban naked short-selling in certain securities,
which triggered a sharp slide in the euro. The tighter regulation
in German has slammed European trading as well. Analysts said there
were concerns the ban would restrict the ability of markets to
manage risk and hedge positions. A broader euro zone-wide ban could
result in funds and business draining away from Frankfurt to London
and other global financial centers, analysts noted. Overseas market
information comes to you courtesy of
Schaeffer's Daily Bulletin
.
Currencies and Commodities
The U.S. Dollar Index has rallied to an annual high above the 87
level this morning, as the greenback gained strength in the wake of
a four-year low in the euro. At last check, the index was up 0.15%
at 87.30. Commodities are suffering under the weight of a rising
dollar, with crude futures falling $1.04 to $71.66 in electronic
trading. What's more, the combination of a rising dollar and
falling euro has pressured gold futures $7.70 lower to $1,206.90 an
ounce. If this weakness continues, gold may be in danger of
breaching the psychologically important 1,200 level.
Unusual Put and Call Activity:
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