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Dow Jones Industrial Average Churns Higher; Plus, 2 Levels to Watch on the S&P 500

What the recent spike in fear could spell for markets going forward

by 5/20/2014 8:15:52 AM
Stocks quoted in this article:

The Dow Jones Industrial Average (INDEXDJX:DJI) is poised to continue its slow churn higher, with futures sitting slightly above breakeven ahead of the bell. With the day's economic calendar absent of any major reports, traders will turn to their attention to earnings results from the likes of The Home Depot, Inc. (NYSE:HD), Staples, Inc. (NASDAQ:SPLS), and The TJX Companies, Inc. (NYSE:TJX) for direction. Additionally, speeches from a pair of Federal Reserve officials are slated for this afternoon.

On the charts, "Since peaking over 1,900 last week, the S&P 500 Index (SPX) has been contained in a range between its highs at 1,902 and its 50-day moving average, currently located at 1,868," commented Schaeffer's Senior Trading Analyst Bryan Sapp. "I would look for a definitive break of either side as a signal for the next big market move."

Plus, our Trading Topic of the Week -- How to Get Started with Options: Learn how options pricing works. Options pricing isn't rocket science, but it's not quite as straightforward as stocks (implied volatility, anyone?).

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 about 2 points above breakeven.

Market Statistics

The Chicago Board Options Exchange (CBOE) saw 1,031,567 call contracts traded on Monday, compared to 556,188 put contracts. The resultant single-session put/call ratio fell to 0.54, while the 21-day moving average remained at 0.64.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

"Last Thursday saw a large downside move on the indexes -- and also a significant spike in put buying on both the SPDR S&P 500 ETF Trust (SPY) and the iShares Russell 2000 Index ETF (IWM)," said Sapp. "In fact, SPY put volume for the day was over 2 million contracts, and this was the 11th time this year we've seen such big buying. The other 10 days of buying at this level were excellent contrary indicators, so I certainly wouldn't be surprised if this recent surge in fear marked a near-term bottom in stocks."

Currencies and Commodities

  • The U.S. dollar index is flirting with a 0.1% lead ahead of the bell, with the currency last seen at 80.04.
  • Elsewhere, crude oil is eyeing a third straight day in the green, with black gold up 0.2% in pre-market trading to linger near $102.26 per barrel.
  • Gold futures, meanwhile, are on pace to erase Monday's advance, with the malleable metal down 0.2% at $1,291 an ounce.
Currencies and commodities

Earnings and Economic Data

Today's calendar is bare of any notable economic reports. HD, Dick's Sporting Goods (DKS), hhgregg (HGG), Intuit (INTU), Medtronic (MDT), Red Robin Gourmet Burgers (RRGB), Salesforce.com (CRM), SPLS, and TJX will report earnings.

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