The Dow is Set to Rally as Earnings Season Looms

Earnings season unofficially begins tonight with Alcoa Inc (AA)

Jan 12, 2015 at 8:24 AM

The Dow Jones Industrial Average (INDEXDJX:DJI) is poised to recover partially from Friday's beat down, as futures are positioned solidly higher ahead of the open. While things are quiet on the economic front today, Alcoa Inc (NYSE:AA) will usher in the unofficial start to earnings season following the closing bell. Meanwhile, crude has resumed its downward trajectory, again flirting with fresh five-year lows, after Goldman Sachs reduced its short-term price forecast.

Breaking down the $1 million bearish bet on J C Penney Company Inc (NYSE:JCP).
How option traders reacted to big days for Novavax, Inc. (NASDAQ:NVAX) and Agenus Inc (NASDAQ:AGEN).
Schaeffer's Senior Quantitative Analyst Rocky White examines this current phenomenon, and why bulls might find it "quite impressive."

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 48 points above fair value.

Market Statistics

The Chicago Board Options Exchange (CBOE) saw 1.02 million call contracts traded on Friday, compared to 654,819 put contracts. The resultant single-session equity put/call ratio jumped to 0.64, while the 21-day moving average held steady at 0.65.

Currencies and Commodities

The U.S. dollar index is up 0.4% at 92.29.
Crude oil is poised to sustain its negative momentum, off 2.5% at $47.76 per barrel.
Gold has tacked on 0.3% to trade at $1,219.90 per ounce.

Earnings and Economic Data

The week begins with AA's unofficial kickoff to earnings season.

Overseas Trading

Asian bourses ended mixed, as traders reacted differently to Friday's nonfarm payrolls report out of the U.S. China's Shanghai Composite tumbled 1.7%, pressured by this week's rush of public offerings, and weakness among financial and property stocks. Elsewhere, South Korea's Kospi edged 0.2% lower, while Hong Kong's Hang Seng bucked the trend, tacking on 0.5%. Japan's Nikkei was closed for the "Coming of Age Day."

Stocks in Europe are solidly higher around midday, buoyed by strength in the health care and chemicals sectors, and anticipation of a quantitative easing program from the European Central Bank. Also sparking optimism was news that drugmaker Shire PLC (ADR) (NASDAQ:SHPG) has agreed to purchase U.S.-based biotech issue NPS Pharmaceuticals, Inc. (NASDAQ:NPSP). At last check, London's FTSE 100 is 0.3% higher, while the French CAC 40 and German DAX have each advanced 1.5%.

Unusual Put and Call Activity:

For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations.

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