Will a 60-Point Pop in the Dow Pull the VIX Lower?

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Wall Street is in rally mode for a second straight day, with the Dow Jones Industrial Average (DJI) on pace to solidify its spot above the 13,000 mark. As bullish excitement abounds, a number of indicators could demand traders' attention throughout today's session.

  • As stocks edge higher, can the VIX continue to retreat from the critical 20 mark ?
  • With Apple (AAPL ) poised for a post-earnings pop, will the Nasdaq Composite (COMP) break its recent losing streak?
  • See Senior Options Strategist Tony Venosa's take on the day in our new section, From the Trading Floor .
Among equities in focus, Amgen (AMGN ) shorts closed out their bearish bets ahead of earnings, while traders took diverging paths on Dow components Boeing (BA ) and Caterpillar (CAT ) before their quarterly results.

And now, on to the numbers...

Dow, S&P and Nasdaq futures

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,228,132 call contracts traded on Tuesday, compared to 823,240 put contracts. The resultant single-session put/call ratio arrived at 0.67, while the 21-day moving average was 0.64.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

According to Senior Options Strategist Tony Venosa, "Earnings season has been in full gear for the regional bank sector, which has been relatively stronger than the broader market over the past couple of weeks." Tony goes on to say, "The big news to focus on today will be the much anticipated Federal Open Market Committee (FOMC) policy statement, set to be released at 12:30 p.m. Eastern. At 2:15 p.m. Eastern, Ben Bernanke will hold a press briefing for further discussion. Possible hints at QE3 would probably excite the market."

Currencies and Commodities

  • The U.S. dollar index is hovering near breakeven to trade at $79.18.
  • Crude oil is continuing its move higher, with crude for June delivery up 0.7% at $104.23 per barrel.
  • Gold futures are taking a breather after yesterday's rally , with the malleable metal fractionally lower at $1,643.20 an ounce.

Currencies and commodities

In earnings news, Apple's (AAPL - 560.28) fiscal second-quarter profit surged 94% to $11.62 billion, or $12.30 per share, as revenue jumped 59% to $39.19 billion. The results crushed analysts' expectations, which called for earnings of $10.04 per share on $36.81 billion in revenue. While demand for iPods continued to slip, sales of iPhones were up 88% during the quarter, and iPad sales more than doubled year-over-year. No less than 92% of analysts deem AAPL worthy of a "buy" or "strong buy" recommendation. AAPL is set to open the session with a 9% pop.

Amgen (AMGN - 68.63) said its first-quarter profit rose 5.2% to $1.18 billion, or $1.48 per share. Excluding items, earnings arrived at $1.61 per share, while revenue climbed 9.2% to $4.05 billion. The results topped analysts' expectations for a profit of $1.45 per share on sales of $3.93 billion. Short interest depleted by 10.2% in the latest reporting period. AMGN is up 1% in pre-market trading.

The Boeing Company (BA - 73.21) reported a first-quarter profit of $923 million, or $1.22 per share, representing a 58% year-over-year improvement. Revenue was also on the rise, increasing 30% to $19.4 billion. The results easily beat analysts' expectations for earnings of 94 cents per share on revenue of $18.37 billion. Traders on the International Securities Exchange (ISE), Chicago Board Options Exchange ( CBOE ), and NASDAQ OMX PHLX (PHLX) bought to open 2.41 calls for every put in the 10 sessions prior. BA is 2.6% higher ahead of the bell.

Caterpillar Inc. (CAT - 108.40) said its first-quarter profit jumped 29% to $1.6 billion, or $2.37 per share, while revenue jumped 23% to $15.98 billion. The results were mixed, with analysts calling for a per-share profit of $2.13 on $16.22 billion in sales. Traders were picking up CAT's near-term puts ahead of earnings, with the stock's Schaeffer's put/call open interest ratio (SOIR) docked at 1.34. CAT is looking at a 1.3% drop right out of the gate.

Earnings and Economic Data

Durable goods data and the regularly scheduled crude inventories report will hit the Street today. The FOMC will announce its latest policy decision at 12:30 p.m. Eastern, to be followed by a 2:15 p.m. press conference with Fed Chairman Ben Bernanke . Meanwhile, investors will get a chance to digest earnings results from Eli Lilly ( LLY ) , Corning ( GLW ), Sprint Nextel ( S ) , Cirrus Logic ( CRUS ), Citrix Systems (CTXS), Cliffs Natural Resources (CLF), Harley-Davidson (HOG) , Cheesecake Factory (CAKE), Lorillard (LO), Ryland Group (RYL), Zipcar (ZIP) , and Xilinx (XLNX).

Overseas Trading

Stocks in Asia wavered between modest gains and minor losses today, with the tech sector catching a boost from Apple's stronger-than-forecast earnings report. Conversely, a chilly revenue forecast from Internet giant Baidu (BIDU) weighed on its peers, with Tencent Holdings taking a hit in Hong Kong. Meanwhile, high hopes for stimulus measures out of Beijing helped Chinese property developers claw higher. By the close, Japan's Nikkei rose 1%, China's Shanghai Composite advanced 0.8%, Hong Kong's Hang Seng declined 0.2%, and South Korea's Kospi edged 0.07% lower.

European markets are pointed north at midday, as traders have mostly shrugged off weak gross domestic product (GDP) data out of Britain. The U.K.'s GDP shrank by 0.2% during the first three months of 2012 -- marking the second straight quarterly decline, which suggests the economy has slipped into a recession. However, the tech sector is basking in the halo effect of earnings beats from Apple and Ericsson (ERIC), with cohorts like ARM Holdings (ARMH) and Alcatel-Lucent (ALU) trending higher. At last check, London's FTSE 100 has added 0.1%, the German DAX has gained 1.3%, and the French CAC 40 is up 1.8%.

Overseas markets

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

Referenced Stocks: CBOE , CRUS , GLW , LLY , S

Schaeffer's Investment Research

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