Opening View

Dow Jones Industrial Average Poised to Build on Wednesday's Gains

European stocks rally following Federal Reserve announcement

by 12/19/2013 8:10:59 AM
Stocks quoted in this article:

The Dow Jones Industrial Average (INDEXDJX:.DJI) is poised to continue higher out of the gate following yesterday's record finish. With the central bank's latest policy decision on the books, the blue-chip index spiked nearly 300 points -- its largest single-day gain since Oct. 10 -- to close at a new historical peak. Later today, investors will be focused on the latest round of jobless claims news, as well as the monthly existing home sales reading.

"The Federal Reserve decided to begin the tapering process, scaling back its bond purchases by $10 billion per month, starting in January," noted Schaeffer's Senior Options Strategist Tony Venosa, CMT. "Equities rallied hard on the announcement, possibly with a sense of relief, as every sector finished yesterday's session well in the green. In addition, the SPDR S&P 500 ETF Trust (SPY) blew through the enormous call open interest at the 180 strike, boding well for the rest of the week. With that being said, heading into expiration Friday, keep an eye on the 182 level as the next possible roadblock for shares, as a decent number of calls reside at this out-of-the-money strike."

Plus, our Trading Topic of the Week -- Trading Low-Priced Options: DON'T short-change yourself on time. Compared to a front-month contract, an option with six months of shelf life offers more time for the shares to move as you expect. This extra time provides you with a little breathing room to allow the predicted price move to play out.

And now, on to the numbers...

Dow Jones Industrial Average, S&P and Nasdaq futures

Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) are roughly 14 points above breakeven.

Market Statistics

The Chicago Board Options Exchange (CBOE) saw 1,307,296 call contracts traded on Wednesday, compared to 814,502 put contracts. The resultant single-session put/call ratio rose to 0.62, while the 21-day moving average stayed at 0.56.

NYSE and Nasdaq summary

Volatility indices

Currencies and Commodities

  • The U.S dollar index is up 0.5% in pre-market trading to linger near 80.50.
  • Crude oil is little changed, with the front-month contract just 0.03% lower at $98.03 per barrel.
  • Meanwhile, gold futures have dropped 2.3% ahead of the bell, with gold for February delivery last seen trading at $1,206.70 an ounce.
Currencies and commodities

Earnings and Economic Data

Weekly jobless claims, the Philadelphia Fed's manufacturing survey, existing home sales, and leading indicators will be released today. Telling all in the earnings confessional are Nike (NKE), Cintas (CTAS), ConAgra Foods (CAG), Darden Restaurants (DRI), KB Home (KBH), Pier 1 Imports (PIR), Red Hat (RHT), Rite Aid (RAD), and Tibco Software (TIBX).

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