Opening View: Korean Tensions Sink DJIA Futures

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The Dow Jones Industrial Average (DJIA) is headed sharply lower this morning, as Wall Street reels from reports of an exchange of fire between North and South Korea. North Korea fired dozens of artillery rounds at a South Korean island near the two nations' western border, and South Korea said it fired back. The escalation between the Koreas is grating on U.S. investors already bedraggled by Ireland's ongoing debt concerns. Heading into the open, futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 90 points and 11 points below fair value. Look for the Dow to potentially test support at the 11,000 level today, with resistance remaining firm at the 11,200 level. The SPX, meanwhile, should hold support at the 1,175 level, with resistance holding at the 1,200 level.

In equity news, Campbell Soup Co. ( CPB ) reported a first-quarter profit of $279 million, or 82 cents per share. Sales for the quarter were $2.17 billion. Wall Street was expecting a profit of 83 cents per share on sales of $2.2 billion. Looking ahead CPB said it sees fiscal 2010 earnings growth of 2%-4%, and fiscal 2011 sales growth of 1%-3%. In a statement, the company said that it plans "to place greater focus on advertising and brand-building initiatives in our marketing efforts."

Also, Hewlett-Packard ( HPQ ) reported a fourth-quarter profit of $2.5 billion, or $1.10 per share, on revenue of $33.3 billion. Adjusted income was $1.33 per share. Analysts had expected the company to post earnings of $1.27 per share on revenue of $32.7 billion. For the current quarter, HPQ said that it sees adjusted earnings of $1.28 to $1.30 per share on revenue of roughly $32.8 billion to $33 billion. Wall Street currently expects earnings of $1.22 per share on $32.72 billion in sales.

Brocade Communications Systems ( BRCD ) reported fourth-quarter non-GAAP earnings of $66 million, or 14 cents per share, on revenue of $550 million. Analysts were expecting earnings of 13 cents per share on revenue of $536.11 for the period. Looking ahead, the company said that it expects revenue for the current quarter to arrive in a range of $535 million to $550 million, below the current consensus estimate for revenue of $555.6 million.

Earnings Preview

On the earnings front, Cracker Barrel Old Country Store Inc. ( CBRL ), Hormel Food Corp. ( HRL ), TiVO Inc. (TIVO), and Guess?, Inc. (GES) will release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The second estimate on third-quarter gross domestic product will arrive today, accompanied by October's existing home sales. The Street will be drenched in data tomorrow, with October's personal income and spending reports, October durable goods orders, weekly initial jobless claims, November's University of Michigan consumer sentiment index, October's new home sales, and weekly U.S. petroleum supplies. The market is closed for Thanksgiving on Thursday, and there are no economic reports slated for release on Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,339,851 call contracts traded on Monday, compared to 765,451 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average fell to 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 looks 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 1.25%. Reports that North Korea and South Korea exchanged fire dominated the landscape in both Asian and European trading, with regional indexes declining roughly 1% across the board. Losses in Hong Kong neared 3%, while China's Shanghai dipped roughly 2%, as the Korean conflict added to uncertainty surrounding Beijing's ongoing monetary policy. In Europe, a strengthening dollar and falling euro applied pressure across the region, which continues to struggle with uncertainty surrounding the fallout from an Irish bailout.

Overseas markets

Currencies and Commodities

With hostilities between the Koreas boiling over once again, safe-haven buying has quickly become the theme of the morning. The U.S. dollar is benefiting from this flight to safety, with the U.S. Dollar Index rising 0.31% to 78.93 in premarket trading. Naturally, the dollar's rise is crude's demise, with the December crude oil contract down 57 cents at $81.17 per barrel in electronic trading. What's more, even gold, much heralded for its safe-haven qualities, is struggling this morning, adding a mere $3.50 to trade at $1,361.30 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

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: BRCD , CBRL , CPB , HPQ , HRL

Schaeffer's Investment Research

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