Stocks are set to open lower Monday morning, as investors brace for a busy week of economic news. Less than an hour before the opening bell, stock index futures hint at a possible 50-point loss for the Dow Jones Industrial Average in early trading. The NASDAQ is indicated 5 to 10 points lower.
The automakers will be in focus with grim monthly sales reports expected later today. Detroit’s Big Three December sales are expected to slump about 40 percent.
A report on Construction Spending is due out at 10:00 a.m. ET. The economic calendar remains busy throughout the week, concluding with key payroll data Friday. Factory orders and the ISM Services Index are scheduled for Tuesday. ADP private sector jobs report is due out Wednesday morning and weekly jobless claims follow on Thursday.
Commodity-related stocks might come under pressure after crude oil traded down 59 cents to $45.75 a barrel and gold sank $26.70 to $852.80 an ounce.
Gold was reeling under the pressure of euro weakness. The euro is down to 1.3681 on the dollar, compared to 1.3857 late Friday. The dollar rose to 93 against the yen.
Bonds fell after the latest issue of Barron’s printed a cover page story titled “Get Out Now!” saying the “bubble in Treasuries is ready to pop.” The benchmark ten-year lost 27/42 in early pit trading. It now yields 2.474 percent.
Some of the flight out of Treasuries might find its way to equities after Goldman Sachs strategists said to buy stocks this year. “We believe that significant macro challenges and optimistic earnings expectations are likely to lead to high market volatility over the first half of 2009. We expect a large rebound in the second half, believing that the rate of deterioration in macro data will slow and that large fiscal stimulus packages will be announced,” according to the firm.
In the options market, trading picked up a bit Friday. Approximately 4.5 million puts and 4.8 million calls traded across the options exchanges. The Dow Jones Industrial Average rallied 184 points and the CBOE Volatility Index (.VIX) closed at three-month lows of 39.19.
JA Solar (JASO) calls were actively traded amid increasing interest in solar energy names. JASO rallied almost 50 percent last week. February calls at the $5 strike saw increasing volume and open interest as the stock rallied Friday. Bullish trading was also seen in Radioshack (RSH), SanDisk (SNDK), and AU Optronics (AUO).
Iron Mountain (IRM) options were active Friday. Total volume rose to 9 times the average daily levels, with 7,500 puts and 1,000 calls traded. Shares closed at $24.72 and Jan 22.5 and 20 puts led the most actives. The activity appeared to be defensive positioning, possibly due to concerns about the short-term outlook for the business services company. Bearish order flow also picked up in Corning (GLW), Cavium Networks (CAVM), and Advanced Medical Optics (EYE).
Frederic Ruffy
WhatsTrading.com
