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Opening View: DJIA Futures Welcome 2011 With a Bang
By: Schaeffer's Investment Research
The Dow Jones Industrial Average (DJIA) looks primed to start
2011 with a bang, as futures for the blue chip barometer are
trading roughly 64.5 points above fair value. What's more, the
S&P 500 Index (SPX) is set to follow suit, with the index
pointing to a gain of about 7.4 points on the open. With strong
overseas gains in Asia and Europe providing a foundation, Wall
Street is entering the New Year with a positive outlook, and this
week's economic data could solidify those hopes. Today's Institute
for Supply Management manufacturing index could set the stage,
while Friday's nonfarm payrolls and unemployment report for
December will be the main event.
Technically, the DJIA closed out 2010 with a gain of 11%, while the SPX added 12.8% last year. Bolstered by support at its 10-day moving average, the Dow could be on track for its first close above 11,600 since Aug. 28, 2008. Above 11,600, the 11,700 area emerges as the next layer of short-term resistance, while support resides at 11,550, which is home to the DJIA's 10-day moving average. The SPX, meanwhile, will challenge resistance at the 1,260 level once again, with 1,270 potentially creating a ceiling. Support should emerge near 1,255, which is home to the index's 10-day trendline.
In equities news, The Boeing Co. ( BA ) was reiterated at "overweight" by Barclays Capital. However, the brokerage firm cut its price target to $80 from $87 per share. In a report to clients, Barclays the delay in the 787 Dreamliner. But "the risk-reward profile of BA shares in the mid-$60s remains tilted toward the positive, with long-term potential above $100," the brokerage firm said.
Meanwhile, Google Inc. ( GOOG ) could be in focus after a report in The Wall Street Journal said that GOOG is gaining publisher support for a digital newsstand for Android users. Such a move would be a direct challenge to a similar service offered via Apple Inc.'s ( AAPL ) iTunes store.
Finally, Facebook received investments of $450 million from Goldman Sachs ( GS ) and $50 million from Russia's Digital Sky Technologies. The stakes both valued Facebook at $50 billion, The New York Times reported today. The new funding could increase pressure on the company into an initial public offering, the Times noted, as the Securities and Exchange Commission is looking into how many Facebook shares are being traded privately.
There are no major earnings reports scheduled. Keep your browser at SchaeffersResearch.com for more news as it breaks.
November's construction spending and the Institute for Supply Management's ( ISM ) December manufacturing index will arrive today, while tomorrow sports minutes from the latest Federal Open Market Committee meeting, November's factory orders, and December's auto sales. On Wednesday, the ISM offers up its December services index, while Challenger, Gray & Christmas and ADP will provide separate looks at the employment picture. We'll also get the usual weekly report on crude inventories on Wednesday. Thursday brings the weekly report on initial jobless claims, while Friday rounds out the week with December's nonfarm payrolls and unemployment rate.
Equity option activity on the CBOE saw 657,548 call contracts traded on Friday, compared to 480,691 put contracts. The resultant single-session put/call ratio arrived at 0.73, while the 21-day moving average arrived at 0.52.
**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.**
Overseas trading looks strong this morning, as seven of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.88%. Hopes for a strong global economy lifted South Korean shares to a fresh all-time high to ring in the New Year, with technology and automotive stocks leading the way. Trading was light, however, as exchanges in Japan, New Zealand, Thailand, Vietnam, and mainland China were closed. In Europe, London markets were also closed, but that hasn't stopped the region from surging higher out of the gate in 2011, with traders keying off strong gains in Asia.
Currencies and Commodities
The New Year is off to a bright start for the U.S. dollar, as the greenback is once again poised to challenge the round-number 80 level after rallying nearly 0.5% in overnight trading. At last check, the U.S. Dollar Index was seen up 0.47% at 79.34. Despite the strong dollar, crude futures are in rally mode this morning. In fact, the front-month contract is up 78 cents at $92.16 per barrel. For the record, crude gained 15% in 2010. Gold, however, has not joined in the party. In London, the front-month gold contract is down 90 cents at $1,420.50 an ounce. Don't feel too bad for gold, however, as the precious metal soared 29.7% last year.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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.