Opening View: SPX Looking Up at 1,100 Again; Is DJIA at a Crossroads?

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The Dow Jones Industrial Average ( DJIA ) was hammered for a 149-point loss yesterday, and the DJIA enters today trading below a 50% retracement of its 2010 high and low. The position is precarious in that the Dow is hovering just above key support at the 10,290 area, home to prior resistance and its 10-day moving average, even as traders prepare for the Fed's decision on U.S. monetary policy. Along the same lines, the S&P 500 Index ( SPX ) plunged below its widely watched 200-day moving average yesterday. This trendline is viewed by many market technicians as a bull/bear market line of demarcation. Heading into the open, futures on the DJIA and the SPX are trading about 41 points and 4.5 points above fair value, respectively. Finally, keep in mind that market headwinds could be significant in this post-expiration week environment, as traders reestablish hedges that expired last week. This activity could also increase volatility, as seen by the CBOE Market Volatility Index's ( VIX ) continued rebound from support at its 200-day moving average.

In earnings news, Adobe Systems Inc. ( ADBE ) reported second-quarter earnings of 44 cents per share, excluding items, as revenue rose to $943 million. Analysts had expected Adobe to post a profit of 43 cents per share on $905.9 million in revenue. In pre-market trading, ADBE shares were last seen lower by more than 2%.

Elsewhere, Red Hat Inc.'s ( RHT ) first-quarter earnings, excluding items, came in at 18 cents per share, with revenue jumping 20% to $209 million. The quarterly results were in line with Wall Street's views, while revenue topped expectations for $202.9 million. RHT shares were flat in pre-market trading.

Rounding out our equity coverage, Jabil Circuit Inc. ( JBL ) said that it swung to a third-quarter profit of $52 million, or 24 cents per share, as revenue grew to $3.46 billion from $2.62 billion. Analysts had expected earnings of 34 cents per share on revenue of $3.21 billion. Heading into the open, JBL shares have vaulted nearly 9% higher.

Earnings Preview

On the earnings front, Canadian Solar Inc. ( CSIQ ), CarMax Inc. ( KMX ), Rite Aid Corp. ( RAD ), Bed Bath & Beyond Inc. ( BBBY ), Darden Restaurants Inc. ( DRI ), and NIKE Inc. ( NKE ) are scheduled to release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Weekly U.S. petroleum supplies will be overshadowed later today by the Federal Open Market Committee's interest rate decision. Tomorrow brings the usual weekly initial jobless claims, as well as May's durable goods orders. Finally, we round out the 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 1,017,734 call contracts traded on Tuesday, compared to 649,261 put contracts. The resultant single-session put/call ratio arrived at 0.64, while the 21-day moving average slipped to 0.62.

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 in poor shape this morning, as only two of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.42%. In Asia, stocks dropped as weaker-than-expected U.S. housing data and declining commodities prices weighed on investor sentiment. Meanwhile, European shares fell for a second straight day on caution over global economic growth. Financials were among the leading losers. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

With the Fed's monetary policy statement just hours away, currency traders are allowing the U.S. dollar to languish. Most analysts expect the central bank to hold rates steady and maintain its "extended period" policy on record low rates, a factor which has sapped the dollar's strength. Heading into the open, the U.S. Dollar Index is off 0.13% at 86.00. Meanwhile, the weaker dollar is having an uplifting effect on gold prices, with the front-month contract up $5.10 at $1,245.90 in London. Finally, a sharp build in U.S. petroleum stockpiles is being blamed for a decline in crude oil futures in early activity. The American Petroleum Institute reported last night that crude inventories rose by 3.69 million barrels, igniting debate over rising supply and declining demand. At last check, crude futures were down 37 cents at $77.48 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

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This article appears in: Investing , Options


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