The Dow Jones Industrial Average (INDEXDJX:.DJI) has moved slightly higher ahead of the bell, following Thursday's 225-plus-point plunge. While the earnings calendar is bare, investors have a slew of economic reports to digest throughout the day, including housing starts and building permits, preliminary productivity and labor costs, and the latest consumer sentiment index.
Meanwhile, "We finally broke through the 1,675 support level on the S&P 500 Index (SPX) yesterday, so the next area to watch below is the 50-day moving average, located near 1,656," warned Schaeffer's Senior Trading Analyst Bryan Sapp.
Futures on the Dow Jones Industrial Average are roughly 11 points north of fair value.
The Chicago Board Options Exchange (CBOE) saw 1,293,346 call contracts traded on Thursday, compared to 848,218 put contracts. The resultant single-session put/call ratio surged to 0.66, while the 21-day moving average rose to 0.60.
From the Trading Floor
"One really interesting thing that surfaced yesterday was the recent hedge fund allocations in gold," said Sapp. "John Paulson, a long-time gold bull, cut his massive position in half recently. Additionally, other fund managers like George Soros and Daniel Loeb completely dissolved their stakes. It's interesting to see this, because what many considered a very crowded long trade over the past year has now shaken out even the most staunch bulls. When I see things like this, it makes me want to buy what they sold. If you look at gold and miners over the past month or so, they've been on quite a tear. The old saying is the market causes the most pain for the greatest number, so this could very well be a contrarian buy signal."
Currencies and Commodities
Earnings and Economic Data
The week closes out with housing starts and building permits, preliminary productivity and labor costs for the second quarter, and the preliminary August reading of the Thomson Reuters/University of Michigan consumer sentiment index. There are no notable earnings reports slated today.
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