The Dow Jones Industrial Average (INDEXDJX:.DJI) is poised to resume its uptrend today, with futures pointed higher ahead of the bell. In morning action, investors will have the chance to evaluate a round of delayed housing starts. However, the day's focus will likely be centered on the Federal Reserve, as Wall Street contemplates whether or not the central bank will announce a tapering to its asset-buying program when Chairman Ben Bernanke takes the stage this afternoon.
Meanwhile, "The levels of interest on the S&P 500 Index (SPX) continue to be 1,800, 1,780, and 1,770," said Schaeffer's Senior Trading Analyst Bryan Sapp. "Given that today is the Federal Open Market Committee (FOMC) policy statement release, it's very likely that we'll get a significant move that will break one of these levels, and signal the next trend into year's end."
Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) are nearly 40 points above breakeven.
The Chicago Board Options Exchange (CBOE) saw 1,052,970 call contracts traded on Tuesday, compared to 561,173 put contracts. The resultant single-session put/call ratio rose to 0.53, while the 21-day moving average dipped to 0.56.
From the Trading Floor
"There is a big skew in CBOE Volatility Index (INDEXCBOE:VIX) and iPath S&P 500 VIX Short-Term Futures ETN (VXX) calls, when compared to the implied volatility of puts," continued Sapp. "This is typical of the action ahead of a Fed day, but the current skew is bigger than the historical norm. To me, this is showing that taper fears are a bit excessive, and could lead to an outsized move higher, should we get no surprises today."
Currencies and Commodities
Earnings and Economic Data
Economic reports slated for today include housing starts for September through November and weekly crude inventories. The FOMC announcement is due at 2 p.m. ET, followed by a 2:30 p.m. press conference at which Fed Chairman Ben Bernanke will speak. Stepping up to the earnings plate are FedEx (FDX), General Mills (GIS), Lennar (LEN), Oracle (ORCL), and Paychex (PAYX).
Recent XIV Action May Bode Well for Bulls
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