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Opening View: DJIA Could Test 12,000 as Oil Tops $100

By: Schaeffer's Investment Research
Posted: 2/24/2011 8:03:00 AM
Referenced Stocks: AIG;CRM;GM;PCLN;TGT

Technically, the DJIA closed below its 20-day moving average for the first time since Nov. 30 on Wednesday, logging its second consecutive 100-point drop. While the blue chip barometer clambered back above the 12,100 level just before the close, the Dow has very little in the way of support until reaching the psychologically significant 12,000 level. The SPX, meanwhile, is facing a potential breach of the 1,300 level if premarket weakness carries over into the open. The index has not closed below this key area since Jan. 31.

Headlining this morning's earnings reports, General Motors Co. ( GM ) posted a fourth-quarter profit of $500 million, or 31 cents per share, on revenue of $36.9 billion. The results include a charge of $400 million, or 21 cents per share, which was a result of the previously disclosed $700 million loss on the purchase of U.S. Treasury preferred shares. Analysts were looking for earnings of 49 cents per share on revenue of $34.30 billion.

Also, Target Corp. ( TGT ) reported a fourth-quarter profit of $1.04 billion, or $1.45 per share, with sales rising 2.8% to $20.3 billion. Same-store sales for the period rose 2.4%. Wall Street was expecting a profit of $1.39 per share. In a statement, Target President and CEO Gregg Steinhafel said that the company plans "to expand our store footprint in new ways, opening our first City Target stores in 2012 and opening 100 to 150 Canadian Target stores in 2013 and 2014."

After the close last night, Inc. ( PCLN ) posted a fourth-quarter net profit of $135.7 million, or $2.66 per share, on revenue that rose 35% to $731.3 million. Excluding one-time items, earnings came in at $3.40 per share. Analysts were expecting a profit of $3.09 per share on $734.9 million in revenue, according to Thomson Reuters . Heading into the open, PCLN has received price-target increases from JPMorgan, to $496 from $484 per share; Citigroup, to $575 from $540 per share; and Susquehanna, to $600 from $496 per share.

Earnings Preview

On the earnings front, ( CRM ), American International Group ( AIG ), Sears Holding Corp. (SHLD), and The Gap (GPS) are slated to release their quarterly earnings reports. Keep your browser at for more news as it breaks.

Economic Calendar

The government's weekly report on crude supplies hits the Street a day late today, due to Monday's holiday. Traders will also receive their regularly scheduled update on weekly jobless claims this morning. Finally, we round out the week tomorrow with a pair of key economic reports: the preliminary estimate on fourth-quarter gross domestic product (GDP), and February's consumer sentiment index from Reuters/University of Michigan.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,714,232 call contracts traded on Wednesday, compared to 1,235,683 put contracts. The resultant single-session put/call ratio arrived at 0.72, while the 21-day moving average rose to 0.58.

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 broadly lower 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 0.76%. Asian stocks were driven lower by continued unrest in Libya and soaring crude prices, which are seen as stifling economic growth. Furthermore, exporters once again led the retreat in Japan, as the yen's safe-haven status pushed the Japanese currency higher versus its major rivals. Across the pond in Europe, Germany's DAX is leading a broad retreat, with automakers driving a wave of selling pressure on concerns that Porsche Automobil Holding SE's deal with Volkswagen AG could fail.

Overseas markets

Currencies and Commodities

Oil has resumed its role as a lightning rod on Wall Street this morning, with the April contract jumping $2.83 to a fresh two-year high at $100.93 per barrel in electronic trading. Concerns about Libyan and Middle Eastern turmoil continue to drive supply concerns for black gold, with Reuters reporting that Libya has narrowed its daily crude production by a quarter as a result of the riots. Elsewhere, the U.S. dollar is extending its decline, shedding 0.26% to 77.21, as the greenback weakens against the euro. Finally, gold futures are surprisingly flat given the rising tensions in the Middle East. At last check, the April gold contract was up 40 cents at $1,414.40 an ounce.

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.