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Dow Jones Industrial Average Little Changed Ahead of Factory Data

Japan's Nikkei slumped to its lowest mark since mid-November

by 2/3/2014 8:15:34 AM
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The Dow Jones Industrial Average (INDEXDJX:.DJI) is sitting slightly above the flatline this morning, after the blue-chip barometer notched its worst monthly loss since May 2012 on Friday. The Institute for Supply Management's (ISM) manufacturing index, construction spending, and motor vehicle sales are all on the day's economic agenda. Additionally, U.S. Treasury Secretary Jack Lew is slated to take the podium at 9 a.m. ET to discuss the debt ceiling. Meanwhile, Janet Yellen will officially be sworn in as the newest chair of the Federal Reserve.

Elsewhere, Schaeffer's Senior Trading Analyst Bryan Sapp is "still watching the 1,770-1,800 range on the S&P 500 Index (SPX). Last week was very volatile on an intraday basis, but we essentially went nowhere week-over-week. The primary long-term trend remains higher, but the bears have recently been in control. It makes this area a 'prove something' point for the market to determine who will take the reins going forward."

Plus, our Trading Topic of the Week -- Reasons to Dodge Directional Risk: Increase the odds of a winning trade. All other things being equal, a straddle is more likely to end up a winner than an at-the-money call or put -- the strategy boasts a 42% win rate, compared to roughly 34% for a directional play.

And now, on to the numbers...

Dow Jones Industrial Average, S&P and Nasdaq futures

Futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) are roughly 10 points above breakeven.

Market Statistics

The Chicago Board Options Exchange (CBOE) saw 1,343,844 call contracts traded on Friday, compared to 886,751 put contracts. The resultant single-session put/call ratio rose to 0.66, while the 21-day moving average edged higher to 0.56.

NYSE and Nasdaq summary

Volatility indices

From the Trading Floor

"Yet another big sentiment poll surfaced on Thursday afternoon -- the National Association of Active Investment Managers (NAAIM) -- which measures active money managers' exposure to the market," continued Sapp. "The previous week saw the biggest decline in the index since August of last year. As you would imagine, market pullbacks are met with rising skepticism, but given the magnitude of this market pullback, the reaction seems a bit excessive. Such a massive shift in sentiment could be a contrarian buy signal."

Currencies and Commodities

  • The U.S dollar index has shed 0.1% ahead of the bell, with the currency last seen at 81.20.
  • Elsewhere, crude oil has barely budged in pre-market trading, with the front-month contract up a slight 0.04% to hover near $97.53 per barrel.
  • Gold futures, meanwhile, have tacked on 0.7% to trade at $1,248 an ounce.
Currencies and commodities

Earnings and Economic Data

Data on construction spending and motor vehicle sales will be released today, along with January's final reading of the purchasing managers manufacturing index (PMI) and the ISM manufacturing index. Earnings are expected from Anadarko Petroleum (APC), Edwards Lifesciences (EW), Hartford Financial (HIG), Hologic (HOLX), Suncor Energy (SU), SYSCO (SYY), TTWO, and Yum! Brands (YUM).

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