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TODAY’S S&P 500 SET-UP - November 4, 2010

As we look at today’s set up for the S&P 500, the range is 15 points or -1.00% downside to 1186 and 0.25% upside to 1201.  Equity futures continue to hold above fair value as the positive reaction to yesterday's announcement by the Fed to purchase $600B of longer-term Treasuries over the next eight months encourages risk appetite.

Today's highlight sees weekly jobless numbers and Q3 Nonfarm Productivity….

  • Chesapeake Energy (CHK): 3Q EPS beat est, raised 2012 production outlook
  • Dendreon (DNDN) forecast 2010 rev. below est. 
  • MercadoLibre (MELI) 3Q rev. missed est.
  • Monolithic Power Systems (MPWR) forecast 4Q rev. below est.
  • News Corp. (NWSA) 1Q EPS ex. tax benefit beat est., maintained 2011 forecast
  • Prudential Financial (PRU) 3Q rev., EPS beat ests.
  • Qualcomm (QCOM) forecast 1Q, 2011 EPS, rev. above ests.
  • Whole Foods Market (WFMI) raised FY2011 profit outlook
  • True Religion Apparel (TRLG) cut its 2010 EPS forecast
  • ValueClick (VCLK) forecast 4Q adj. EPS, rev. above ests.
  • Zumiez (ZUMZ) 3Q EPS, Oct. comps beat ests.

 PERFORMANCE

  • One day: Dow +0.24%, S&P +0.37%, Nasdaq +0.27%, Russell 2000 +0.32%
  • Month-to-date:  Dow +0.87%, S&P +1.24%, Nasdaq +1.31%, Russell +1.68%.
  • Quarter-to-date: Dow +3.96%, S&P +4.95%, Nasdaq +7.25%, Russell +5.77%.
  • Year-to-date: Dow +7.55%, S&P +7.43%, Nasdaq +11.95%, Russell +14.35%
  • Sector Performance: Financials +0.99%, Consumer Disc +0.51%, Tech +0.57%, Consumer Spls +0.31%, Energy +0.21%. Industrials +0.15, Healthcare +0.06%, Materials (0.28%), Utilities (0.19%)
  • MARKET LEADING/LAGGING STOCKS YESTERDAY: Hartford Financial +9.18%, Marshall & Ilsley 5.50% and Ford +4.92%/Quanta -9.98%, EOG Resources -9.31% and Pulte -7.68%.

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 453 (-988)  
  • VOLUME: NYSE: 1103.41 (+21.61%)
  • VIX: 19.56, -9.32% - YTD PERFORMANCE: (-9.78%)
  • SPX PUT/CALL RATIO: 1.97 from 1.21 +63.216%  

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 17.24, +0.406 (2.412%)
  • 3-MONTH T-BILL YIELD: 0.13%    
  • YIELD CURVE: 2.33 from 2.29

COMMODITY/GROWTH EXPECTATION:

  • CRB: 305.07 +0.09% - up 8 of the last 9 days
  • Oil: 84.69 +0.94% - BULLISH  - up 7 of the last 9 days
  • COPPER: 378.50 -1.41% - BULLISH  
  • GOLD: 1,337.15 -1.43% - BULLISH

CURRENCIES:

  • EURO: 1.4040 +0.03% - BULLISH
  • DOLLAR: 76.481 -0.31%

OVERSEAS MARKETS:

European markets:

  • European markets saw solid gains from the open buoyed by the US Federal Reserve's decision for an additional $600B of QE and constructive corporate results from European heavy-weight companies.
  • A generally weaker US dollar post the Fed's decision saw commodities higher, with mining shares amongst the leading gainers.
  • All sectors tradomg higher with banks and food & beverage amongst the leading gainers.
  • Market participants await the BOE interest rate decision at 8ET with benchmark interest rate expected to be left unchanged at 0.5%, the focus on any additional QE and ECB is expected to leave interest rates unchanged at 1% at 8:45ET.
  • UK Oct Halifax house price index +1.8% m/m vs con +0.6%
  • France Oct final Services PMI 54.8 vs con 55.3
  • Germany Oct final Services PMI 56.0 vs con 56.6
  • EuroZone Oct final Services PMI at 5ET
  • EuroZone Sep PPI due at 6ET

Asian markets:

  • Asian markets rose today, reacting positively to the Federal Reserve’s quantitative easing announced yesterday.
  • Every sector except pulp and paper rose in Japan, with winning stocks outnumbering losers more than 4-to-1.
  • Property developers lifted Hong Kong on bets that interest rates will remain low for some time to come.
  • Li & Fung rose 2% on announcing it will become a sourcing agent for Li Ning.
  • BHP Billiton led Australia up after Canada blocked its bid for Potash.
  • Energy stocks rose as people assumed they might become targets for cash-rich BHP.
  • Tech players supported South Korea. 

Howard Penney
Managing Director

THE DAILY OUTLOOK - levels and trends

THE DAILY OUTLOOK - S P

THE DAILY OUTLOOK - VIX

THE DAILY OUTLOOK - DOLLAR

THE DAILY OUTLOOK - OIL

THE DAILY OUTLOOK - GOLD

THE DAILY OUTLOOK - COPPER