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Dow Jones Industrial Average Bounces Back; All Eyes on Yellen, Alibaba

Growing violence in Ukraine sent Asian bourses into the red

by 5/7/2014 8:11:31 AM
Stocks quoted in this article:

In the wake of Tuesday's triple-digit decline, futures on the Dow Jones Industrial Average (INDEXDJX:DJI) are sitting solidly above breakeven. Investors appear optimistic ahead of this morning's congressional testimony from Federal Reserve Chair Janet Yellen, who is slated to appear in front of the Joint Economic Committee at 10 a.m. ET. Ahead of this event, traders will get the latest update on productivity and unit labor costs, which can often offer up signals to future inflationary trends. Additionally, the tech sector should remain in focus, after Chinese e-commerce issue Alibaba on Tuesday filed papers for its initial public offering.

Looking at the charts, "The Russell 2000 Index (RUT) closed south of its 200-day moving average on Tuesday," said Schaeffer's Senior Trading Analyst Bryan Sapp. "This continues to be a warning sign for stocks, as the former upside leaders are now doing the same on the downside. On a relative basis, the S&P 500 Index (SPX) yesterday held above Monday's lows and its 50-day moving average -- which are both located near 1,865 -- so that may offer some hope for the bulls."

Plus, our Trading Topic of the Week -- 5 Ways to Win with Aggressive Trades: Stay open to both bullish and bearish setups. Thanks to the flexibility of options, you can reap leveraged profits even when the market is in sell-off mode.

And now, on to the numbers...

Dow Jones Industrial Average, S&P and Nasdaq futures

Futures on the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) are nearly 65 points above breakeven.

Market Statistics

The Chicago Board Options Exchange (CBOE) saw 1,049,527 call contracts traded on Tuesday, compared to 713,728 put contracts. The resultant single-session put/call ratio rose to 0.68, while the 21-day moving average edged higher to 0.61.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

"Despite Tuesday's big move lower -- and outright bloodbath in some sectors -- the CBOE Volatility Index (VIX) closed up a paltry 3.8%," noted Sapp. "This is a sign of complacency to me, and something to keep a close eye on. It is rare for markets to find significant bottoms before fear hits a crescendo."

Currencies and Commodities

  • The U.S. dollar index is sitting slightly above the flat line this morning, with the greenback lingering near 79.13.
  • Elsewhere, crude oil is eyeing a move back above the century mark, with the commodity last seen up 0.8% at $100.34 per barrel.
  • Gold is higher, as well, with the malleable metal flirting with a 0.2% lead to trade at $1,310.70 an ounce.
Currencies and commodities

Earnings and Economic Data

The regularly scheduled crude inventories report will be released today, along with preliminary data on productivity and unit labor costs for the first quarter. Plus, Federal Reserve Chair Janet Yellen is slated to appear before the Joint Economic Committee at 10 a.m. ET. Companies releasing earnings reports Wednesday include Tesla Motors (TSLA), Allergan (AGN), Anheuser-Busch (BUD), AOL, Inc. (AOL), Ariad Pharmaceuticals (ARIA), Avis Budget Group (CAR), Caesars Entertainment (CZR), Chesapeake Energy (CHK), International (CTRP), Devon Energy (DVN), GT Advanced Technologies (GTAT), Hertz Global (HTZ), Humana (HUM), GMCR, Kinross Gold (KGC), MCP, Mondelez International (MDLZ), Prudential (PRU), Rosetta Stone (RST), SolarCity (SCTY), Sotheby's (BID), Transocean LTD (RIG), and Zillow (Z).

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