The Dow Jones Industrial Average (DJI) is eyeing modest gains heading into the session. Investor sentiment is being fueled by rumors the Federal Open Market Committee (FOMC) will reveal some sort of stimulus measures on Wednesday. However, "The same round numbers are still in play on the major market indexes, and will likely remain that way until the FOMC unveils its latest minutes tomorrow," said Schaeffer's Senior Trading Analyst Bryan Sapp. "To the upside, we're watching 1,425 on the S&P 500 Index (SPX), 3,000 on the Nasdaq Composite (COMP), and 1,000 on the S&P MidCap 400 Index (MID) as potential areas of resistance."
Futures on the Dow Jones Industrial Average are 50 points above fair value.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 631,082 call contracts traded on Monday -- the fewest since Nov. 23 -- compared to 393,857 put contracts. The resultant single-session put/call ratio dipped to 0.62, while the 21-day moving average stayed at 0.67.
From the Trading Floor
"Michael Santoli wrote a piece for Yahoo! Finance about CBOE Market Volatility Index (VIX) buy-to-open call volume being at record levels," continued Sapp. "Our founder and CEO Bernie Schaeffer has been talking about this for some time now, which Santoli noted. These elevated levels show continued skepticism and fear toward the market, and actually could lead to the VIX being overstated. Those who are short these record number of calls are likely using the long VIX futures as a hedge, and that essentially is not real buying. If and when the VIX calls are sold, then those short the calls will likely sell their VIX futures hedge."
Currencies and Commodities
Earnings and Economic Data
Today's docket includes the international trade balance, wholesale inventories, and the National Federation of Independent Business (NFIB) small business optimism index. Elsewhere, investors will have the chance to digest earnings results from Dollar General (DG).
Mid-Caps Nearing a Triple of March 2009 Lows
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