The Dow Jones Industrial Average (DJI) is poised to continue Wednesday's Fed-induced sell-off, with futures down more than 92 points. "All market sectors finished sharply lower yesterday, after the release of the Federal Open Market Committee's (FOMC) policy statement," noted Schaeffer's Senior Options Strategist Tony Venosa, CMT. "Fed Chairman Ben Bernanke did say that if current economic conditions continue, the central bank could reduce the pace of bond purchases later this year." A worse-than-expected Chinese manufacturing report has only added to the global risk-off mentality, with international bourses swathed in red ink.
Futures on the Dow Jones Industrial Average are more than 92 points below fair value.
The Chicago Board Options Exchange (CBOE) saw 854,718 call contracts traded on Wednesday, compared to 559,941 put contracts. Both the resultant single-session put/call ratio and the 21-day moving average arrived at 0.66.
From the Trading Floor
"The SPDR S&P 500 ETF (SPY) closed nearly 1.4% lower on Wednesday -- beneath the $165 mark, which is home to peak call open interest," continued Venosa. "Watch this level for resistance on a possible rally. On the downside, large put open interest resides at the 160 strike, which could come into play during the latter half of this week."
Currencies and Commodities
Earnings and Economic Data
Weekly jobless claims, the flash purchasing managers index (PMI), existing home sales, the Conference Board's index of leading economic indicators, and the Philadelphia Fed's manufacturing survey will all be released today. Kroger (KR), Oracle (ORCL), Rite Aid (RAD), and Tibco Software (TIBX) will announce their earnings results.
The Case for Big Moves in IWM and QQQ
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