The Dow Jones Industrial Average (INDEXDJX:.DJI) is set to soar this morning, after former Treasury Secretary Lawrence Summers removed his name from the list of potential candidates to head the Federal Reserve. The move pushes notoriously dovish Fed Vice Chairman Janet Yellen into the lead.
Meanwhile, "Outside of the S&P 500 Index (SPX) levels I referenced last week, I'm also keeping a close eye on the 10-year bond yield, which closed at 2.89% on Friday," commented Schaeffer's Senior Trading Analyst Bryan Sapp. "The yield is nearing a major mark at 3%. A spike above this area could cause some crazy things to happen in the market, and, depending upon what action the Fed takes this week, we could see a rise in yields."
Futures on the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) are nearly 189 points above fair value.
The Chicago Board Options Exchange (CBOE) saw 907,155 call contracts traded on Friday, compared to 541,493 put contracts. The resultant single-session put/call ratio fell to 0.60, while the 21-day moving average stayed at 0.58.
From the Trading Floor
"There are definitely conflicting signals with regard to sentiment indicators at the moment," opined Sapp. "We're seeing call buying on the CBOE Market Volatility Index (VIX), but the CBOE equity put/call ratios remain very low -- which indicates optimism. Perhaps this is people buying calls on stocks and hedging with VIX calls, but sentiment at the present time is pretty cloudy, and there just doesn't seem to be much consensus on either side. For that reason, I think price action this week could be very volatile, as market participants will likely jump on one side of the fence or the other, depending on what is said at the Federal Open Market Committee (FOMC) meeting."
Currencies and Commodities
Earnings and Economic Data
Due for release today is the Empire State manufacturing survey, along with industrial production and capacity utilization figures. There are no notable earnings reports scheduled.
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