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."
Futures on the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) are nearly 65 points above breakeven.
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.
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
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), Ctrip.com 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).
The Case for Big Moves in IWM and QQQ
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