The Dow's Futures Cool After Monday's Breakout

After rallying out of correction territory yesterday, the Dow Jones Industrial Average (DJIA) is set to take a breather. Likewise, the S&P 500 Index (SPX) is pointed lower on the heels of its longest winning streak of the year. Traders are treading cautiously ahead of a post-close speech from San Francisco Fed President John Williams -- a voting Federal Open Market Committee (FOMC) member -- as well as the unofficial start to earnings season later this week.

Continue reading for more on today's market, including:

 

• Schaeffer's Senior VP of Research Todd Salamone explained why short interest is a red flag for bulls and bears alike. 
• The stock is up 2.6% pre-market -- but how were pre-earnings option traders playing PepsiCo, Inc. (NYSE:PEP)?
• Analyzing the bearish bias on these 2 energy stocks. 
• Plus … 5 things you need to know this morning -- including stocks making waves and what's happening overseas.

And now, on to the numbers…

Futures on the Dow Jones Industrial Average (DJIA) are 32.4 points below fair value.

5 Things You Need to Know Today

 

1. Stimulus hopes are stoking a rally in Tokyo, while German data disappointed.
2. The Chicago Board Options Exchange (CBOE) saw 813,612 call contracts traded on Monday, compared to 501,108 put contracts. The resultant single-session equity put/call ratio dropped to 0.62, while the 21-day moving average remained at 0.77. 
3. Lions Gate Entertainment Corp. (USA) (NYSE:LGF) and Starz (NASDAQ:STRZA) are in advanced merger talks, the Los Angeles Times reported. STRZA has been a long-time center of Hollywood M&A chatter, with AMC Networks Inc (NASDAQ:AMCX) once a reported suitor.
4. Late Monday, DuPont (NYSE:DD) said CEO Ellen Kullman will step down from her post this month, to be temporarily succeeded by current board member Edward Breen. Kullman's departure is expected to open the door for another proxy battle with activist investor Nelson Peltz, who grabbed headlines yesterday when his Trian Fund Management LP announced a $2.5 billion stake in General Electric (NYSE:GE). DD is up 6.5% ahead of the bell.
5. AmerisourceBergen Corp. (NYSE:ABC) said it will buy PharMEDium Healthcare Holdings Inc. from privately held Clayton, Dubilier & Rice for nearly $2.6 billion in cash. ABC -- which has typically fared well on Tuesdays -- is off 1.4% in pre-market trading.
   

Earnings and Economic Data

 

News remains light today, as we will be treated to the international trade balance and a speech from San Francisco Fed President John Williams. Beverage giant PEP reported earnings, and Yum! Brands (YUM) will announce results after the close. To see what else is coming up on this week's docket, click here.