Opening View: Stocks Could Retest Resistance Ahead of Earnings Kick-Off; AA, NYX, ENDP, LVLT in Focus

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The major market indexes appear ready to take another shot at technical resistance today, after finishing last week on the wrong side of key levels. Fueling the pre-market optimism has been a round of buyout announcements from both Endo Pharmaceuticals Holding ( ENDP ) and Level 3 Communications ( LVLT ), which unveiled plans to acquire American Medical Systems ( AMMD ) and Global Crossing Ltd. ( GLBC ), respectively. In fact, the merger mania has helped to take the spotlight off NYSE Euronext ( NYX ), which rejected a trumped-up buyout bid from Nasdaq OMX Group (NDAQ) and IntercontinentalExchange (ICE). Furthermore, the Street is on pins and needles ahead of Alcoa Inc.'s (AA) unofficial earnings-season kick-off after the closing bell, which could set the tone for the looming onslaught of quarterly confessions. Against this optimistic backdrop, the Dow Jones Industrial Average (DJIA ) is trading nearly 30 points above fair value, while the S&P 500 Index (SPX ) is flirting with a 2-point lead.

Dow, S&P and Nasdaq futures

In equities news, NYSE Euronext (NYX - 38.70) last night said its board rejected the unsolicited, $11.3 billion buyout bid from Nasdaq OMX Group (NYX - 38.70) and IntercontinentalExchange (ICE - 120.55), which the firm said was "highly conditional" on a breakup of the exchange, and would "require shareholders to shoulder unacceptable execution risk." Instead, NYX reiterated its commitment to Deutsche Boerse, despite the German exchange operator's lower bid. In response, ICE Chairman and CEO Jeffrey Sprecher said that "by declining to meet with us, the NYSE Euronext Board is ignoring its obligations to its stockholders," prompting speculation that NDAQ and ICE could take their offer straight to investors. At last check, the shares of NYX are down 0.7%, NDAQ is trading about 2% lower, and ICE has surrendered 1.4%.

Meanwhile, Endo Pharmaceuticals Holding (ENDP - 40.85) said it will acquire medical device manufacturer American Medical Systems Holdings (AMMD - 22.33) for about $2.6 billion in cash, or $30 per share, representing a notable premium to AMMD's closing price of $22.33 on Friday. "Through the acquisition of AMS, we will gain scale in devices and services, and will be positioned as a leading provider of healthcare solutions in the field of pelvic health, with a full spectrum of product offerings ranging from pharmaceuticals to medical devices," President and CEO Dave Holveck said, adding that he expects the deal to close late in the third quarter. In pre-market action, the shares of ENDP have advanced more than 7.5%, while AMMD has skyrocketed roughly 32.5%.

Elsewhere on the M&A front, Level 3 Communications (LVLT - 1.44) said it will buy Global Crossing Ltd. (GLBC - 14.80) for about $3 billion, or roughly $23.04 per share, representing a hefty premium to GLBC's settlement price of $14.80 on Friday. Level 3 said the merger -- which the firm expects to close before the end of the year -- will better position the company to address expansion in key global markets, and to be accretive to free cash flow in 2013. At last check, LVLT has added 26.3%, while GLBC is up more than 71%.

Earnings Preview

Alcoa (AA) will unofficially get the earnings ball rolling after the closing bell today. Keep your browser at for more news as it breaks.

Economic Calendar

There are no major economic reports slated for release today, but Chicago Fed President Charles Evans is scheduled to speak at the Annual Risk Conference. Tuesday brings us the February trade balance, as well as import/export prices and the Treasury budget for March, while Wednesday will feature the Fed's Beige Book report for April, along with February's business inventories and the regularly scheduled update on crude inventories. As usual, weekly jobless claims are scheduled to hit the Street on Thursday. Inflation data also starts to roll in, with the release of the producer price index (PPI) and core PPI for March. The week wraps up with a flurry of economic data, including industrial production, capacity utilization, the consumer price index (CPI) and core CPI for March, the preliminary April Reuters/University of Michigan sentiment survey, and the Empire State manufacturing index for April.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,219,691 call contracts traded on Friday, compared to 717,289 put contracts. The resultant single-session put/call ratio docked at 0.59, while the 21-day moving average fell to 0.60.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Asian markets ended lower today, with auto stocks pacing the decliners in Japan after Citigroup slashed its rating on the sector to "sell." Meanwhile, airline issues dragged Korean stocks lower, as traders considered the ill effects of rising oil prices on the group. By the close, Japan's Nikkei index gave back 0.5%, the Shanghai Composite fell 0.2%, and Hong Kong's Hang Seng retreated nearly 0.4%.

Over in Europe, stocks are bouncing around the breakeven line at midday. Echoing the action in Asia, regional automakers slipped after Credit Suisse downgraded the sector to "benchmark." However, strength in commodity stocks, such as mining giant BHP Billiton (BHP), helped to offset some of the weakness. At last check, London's FTSE 100 is up about 0.1%, while France's CAC 40 has surrendered 0.5%, and Germany's DAX is hovering just a hair's breadth south of breakeven.

Overseas markets

Currencies and Commodities

The greenback has gained some ground this morning, with the U.S. dollar index up 0.1%. Elsewhere, crude futures have backpedaled from multi-year high territory, thanks to speculation of a cease-fire in Libya. In electronic trading, the May crude futures contract has given up almost 0.7%, but remains above the $112-per-barrel marker. Finally, gold futures are also retreating from record highs. At last check, the front-month contract has fallen 0.2% to trade at $1,470.70 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options
Referenced Symbols: AMMD , ENDP , GLBC , LVLT , NYX

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