Opening View: Is DJIA Building a Floor at 11,350?

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The Dow Jones Industrial Average (DJIA) added a mere 13 points on Wednesday, as the blue chip barometer continues to consolidate into support at the 11,350 level. Heading into the open this morning, the Dow appears to be moving higher, with futures on the DJIA and the S&P 500 Index (SPX) trading roughly 33 points and 4.9 points above fair value, respectively. With Europe and Asia relatively quiet for the moment, traders have turned their attention to today's report on weekly U.S. jobless claims.

Technically, support is solidifying in the 11,350 region for the DJIA, while resistance at the 11,400 level remains firm. That said, that very narrow 50-point trading range may not hold much longer; the Dow has tended to break sharply whenever it has approached an annual peak this year. Finally, the SPX is looking for a foothold above the 1,228 level, which is home to the index's November high. However, the 1,235 level remains a significant short-term hurdle for the SPX.

In equity news, lululemon athletica Inc. ( LULU ) reported a third-quarter profit of $25.7 million, or 36 cents per share, as revenue rose to $175.8 million. Wall Street analysts were expecting earnings of 25 cents per share on revenue of $159.6 million. Looking ahead, LULU anticipates fourth-quarter earnings of 46 cents per share to 48 cents per share, above the current consensus estimate for a profit of 41 cents per share.

In mergers and acquisitions, Helen of Troy Ltd. ( HELE ) is buying Kaz Inc. for $260 million in cash, with the deal expected to close by the end of 2010. Kaz owns the rights to market products under the brand names Vicks and Braun through a license from Procter & Gamble Co. ( PG ). Also, MasterCard Inc. ( MA ) purchased Travelex's prepaid card program management business for $458 million. The companies expect the deal to close in the first half of 2011.

Finally, Smithfield Foods Inc. ( SFD ) banked a second-quarter profit of $143.7 million, or 86 cents per share, as sales rose 11% to $3 billion. Analysts were expecting earnings of 56 cents per share on sales of $3.1 billion.

Earnings Preview

On the earnings front, Brown-Forman Corp (BF.B), Ciena Corp. (CIEN), Costco Wholesale Corp. (COST), Learning Tree International Inc. (LTRE), National Semiconductor Corp. (NSM), and Pall Corporation (PLL) are scheduled to release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Street will be greeted with the weekly report on jobless claims today, as well as October's wholesale inventories. We round out the week tomorrow with November's import/export prices, December's University of Michigan consumer sentiment index, and November's Treasury budget.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,379,230 call contracts traded on Wednesday, compared to 681,958 put contracts. The resultant single-session put/call ratio arrived at 0.49 while the 21-day moving average held at 0.57.

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

Overseas Trading

Overseas trading has a bullish bias this morning, with six of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective is flat. Asian markets finished mostly higher, with South Korean shares jumping to a three-year high after the country's central bank left interest rates unchanged. However, China's Shanghai Composite plunged as investors anticipated an interest rate increase from the People's Bank of China. Meanwhile, technology stocks are helping to provide a bullish bias in Europe, after ASML Holding (ASML) forecast stronger-than-expected demand for lithography equipment. Still, gains were limited due to pressure on the banking sector after Fitch Ratings cut Ireland to "BBB+" from "A+."

Overseas markets

Currencies and Commodities

The U.S. dollar remains strong against its foreign competitors this morning, with the greenback gaining notable ground versus the euro. At last check, the U.S. Dollar Index was up 0.28% at 80.22. Crude futures have retreated from their overnight highs, but remain in positive territory, with the front-month contract up 33 cents at $88.61 per barrel. Finally, gold futures are modestly higher in London, adding $2.60 to $1,385.80 an ounce.

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

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.



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This article appears in: Investing , Options

Referenced Stocks: HELE , LULU , MA , PG , SFD

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