Opening View: Traders Cautious This Morning; VIX Soared 20 Percent on Friday

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Weaker-than-expected jobs data and growing overseas concerns pummeled the Dow Jones Industrial Average ( DJIA ) to a loss of more than 300 points on Friday. In fact, the Dow closed beneath the 10,000 level for only the third time since November 2009, extending its weekly decline to 2%. The blue-chip barometer wasn't the only one to give up round-number support; the S&P 500 Index ( SPX ) finished below the 1,100 level. Todd Salamone pointed out in this week's Monday Morning Outlook , that "In observing various sentiment indicators, pessimism has reached levels that have been consistent with bottoms during the past year. For example, the 10-day moving average of the International Securities Exchange's ( ISE ) all-equity call/put ratio is 1.52, which is around the level that preceded major bottoms in July 2009 and February 2010." However, Todd warned that pessimism may need to reach even more extreme levels than in the past considering the recent weakness in the market. Traders remain wary this morning after Friday's drop, with the DJIA and the SPX trading slightly above fair value. Finally, the CBOE Market Volatility Index ( VIX ) skyrocketed 20% on Friday to close back above its 10-day and 20-day moving averages.

Late Friday, Oracle Corp.( ORCL ) announced that it now expects up to $825 million in additional restructuring costs related to its acquisition of Sun Microsystems Inc., due to additional severance payments and other items in Europe and Asia. Oracle had previously disclosed an estimated $325 million in restructuring costs related to its $5.6 billion purchase of Sun, which closed earlier this year. The additional restructuring costs will be incurred "through calendar 2011," Oracle said.

Wal-Mart Stores Inc. ( WMT ), which grew its overseas sales to over $100 billion for the first time last year, is looking for acquisitions around the world, said Doug McMillon, head of the overseas division, which represents about 25% of the world's largest retailer's total. McMillon said he's also looking at ways including possible acquisitions to enter Russia. He said the company looked at its recent purchase of the British operations of the deep discounter Netto "as a real estate transaction." He also said Wal-Mart won't rule out expanding in China through opening its own shopping center, a strategy that its rival Tesco has already taken.

Earnings Preview

On the earnings front, FuelCell Energy Inc. ( FCEL ) and The Pep Boys ( PBY ) are scheduled to release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,203,231 call contracts traded on Friday, compared to 719,353 put contracts. The resultant single-session put/call ratio arrived at 0.60, while the 21-day moving average held at 0.67.

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

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Overseas Trading

Overseas trading is a little on the weak side this morning, as only one of the 10 markets that we follow is in positive territory. The cumulative average return on the group stands at a loss of 1.36%. In Asia, the stock markets tumbled, spooked by disappointing U.S. jobs data. Meanwhile, Europe retreated for the second consecutive day on worries over euro zone debt, with banks the major losers. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

The U.S. dollar is trading slightly lower this morning against strength in the euro. As a result, the U.S. Dollar Index is down 0.05% in pre-market trading. Elsewhere, crude futures remain weak on concerns of over a weak economy and slackening demand in the U.S. In electronic trading, the most active contract was down 3 cents at $71.48 per barrel. Finally, gold is slipping as well this morning, losing $$2.10 to sit at $1,215.60 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

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This article appears in: Investing , Options


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