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TODAY’S S&P 500 SET-UP - November 11, 2010

As we look at today’s set up for the S&P 500, the range is 33 points or -1.04% downside to 1206 and 1.66% upside to 1239.  Equity futures are trading lower tracking a mixed show from European indices and the broader Asia.  Gaining momentum is concern over the state of the economies in Ireland and Portugal.

California's fiscal outlook, which shows a budget problem of $25.4B that must be addressed prior to the enacting of a 2011-12 state budget, is making headlines this morning.  Along similar lines, reports are also emerging that Harrisburg's (PA) City Council has hired a law firm on a pro bono basis for counsel on a possible bankruptcy filing.

Earnings and guidance from Cisco (CSCO) is weighing on the Nasdaq futures and technology in general. No major economic data is due today, and the bond market is closed in observance of Veteran's Day.

  • Advance Auto Parts (AAP) raised 2010 EPS forecast to $3.80-$3.90 from $3.70-$3.80, vs est. $3.85
  • Aegean Marine Petroleum Network (ANW) 3Q adj. EPS, rev. miss est.
  • Armstrong World Industries (AWI): BofA is arranging a $550m term loan B with interest rate 3.5ppt- 3.75ppt over Libor as it seeks to make shareholder payout and refinance debt, according to a person familiar with the matter
  • Brooks Automation (BRKS) 4Q rev. $181.6m vs est. $177m
  • Cisco Systems (CSCO) sees 2011 rev up 9-12%, implies $43.64b-$44.84b, vs est. $45.26b. Stock down as much as 12% in German trading; also watch BRCM, CAVM, CTXS, FFIV, JNPR, MOT
  • Concur Technologies (CNQR) sees 1Q adj. EPS 18c vs est. 22c
  • Dendreon (DNDN) Provenge drug has “moderate” evidence showing that it works, according to a tech assessment
  • Kulicke & Soffa Industries (KLIC) sees 1Q rev. $125m-$135m vs est. $202.5m
  • Marriot International (MAR) plans to add 30,000 rooms worldwide annually for next three years; open 100 hotels in China
  • Optimer Pharmaceuticals (OPTR) told FDA it is terminating Pruvel study
  • Prudential Financial (PRU) said it started a public offering of $1b of its common stock to help pay for AIG Star deal
  • Rosetta Stone (RST) forecast 4Q rev. $76m-$81m vs est. $83.2m
  • SurModics (SRDX) reported 4Q adj. loss-shr, rev. below est.
  • Thermadyne Holdings (THMD) said it will sell $250m senior notes to fund LBO
  • Watson Pharmaceuticals (WPI) says second-largest holder Quiver to sell its entire stake, 10.54m shares

 PERFORMANCE

  • One day: Dow +0.09%, S&P +0.44%, Nasdaq +0.62%, Russell 2000 +1.22%
  • Month-to-date: Dow +2.05%, S&P +2.55%, Nasdaq +2.22%, Russell +4.48%.
  • Quarter-to-date: Dow +5.27%, S&P +6.79%, Nasdaq +8.87%, Russell +7.38%.
  • Year-to-date: Dow +8.81%, S&P +8.68%, Nasdaq +12.95%, Russell +17.50%
  • Sector Performance: Energy +1.29%, Financials +1.12%, Consumer Disc +0.89%, Materials +0.50%, Tech +0.08%, Healthcare (0.03%),Industrials (0.3%), Consumer Spls (0.31%), Utilities (0.44%)
  • MARKET LEADING/LAGGING STOCKS YESTERDAY: Polo RL +7.29%, Harman +4.93% and Halliburton +4.91%/Assurant -11.16%, Dean Foods -9.76% and Invesco -3.92%.

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 697 (+2145)  
  • VOLUME: NYSE - 1117.12 (+0.46%)
  • VIX: 18.47 -3.20% - YTD PERFORMANCE: (-14.81%) - BEARISH TREND
  • SPX PUT/CALL RATIO: 1.61 from 1.59 +0.96%  

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 16.39 0.507 (3.194%)
  • 3-MONTH T-BILL YIELD: 0.13%
  • YIELD CURVE: 2.21 from 2.26

COMMODITY/GROWTH EXPECTATION:

  • CRB: 317.11 -0.63% - First down day in 9
  • Oil: 87.81 +1.26% - BULLISH
  • COPPER: 396.90 -1.83% - BULLISH
  • GOLD: 1,395.32 -1.93% - BULLISH

CURRENCIES:

  • EURO: 1.3739 -0.80% - BEARISH - Down 3.22% in the last 4 days
  • DOLLAR: 77.634 +0.25%  - BULLISH - Up 2.30% in the last 4 days

OVERSEAS MARKETS:

European markets:

  • FTSE 100: +0.23%; DAX: +0.28%; CAC 40: (0.01%)
  • European markets were initially buoyed by economic data out of China before continuing worries over the financial health of peripheral Europe and disappointment over corporate results reversed the early modest gains.
  • Cisco Systems trades down over (10%) in Germany on an “AIR POCKET” post EPS.
  • Peripheral debt spreads continue to widen.
  • Major indices currently trade little changed with falls in peripheral markets of over (1%) in many instances.
  • Just 4 sectors trade higher led by industrials and autos.
  • Mining shares are little changed overall despite higher metal prices, banks and technology shares are the leading decliners.
  • UK Q3 home repossessions 8,900 vs prior quarter 9,400

Asian markets:

  • Asian Markets: Nikkei +0.31%; Hang Seng +0.8%; Shanghai Composite +1.0%
  • Asian markets were weaker today, with most major markets falling except China and Japan
  • Chinese banks rose in Hong Kong on despite expectations China will raise interest rates; higher reserve requirements called for yesterday went largely ignored by investors.
  • Japan rose slightly on a weaker yen, with fears of overheating limiting gains.
  • Japan September core machinery orders (10.3%) m/m vs (9.4%) consensus. October CGPI +0.9% y/y.
  • China October CPI +4.4% y/y vs +4.0% consensus. October PPI +5.0% y/y vs +4.6% consensus. October value-added industrial output +13.1% y/y vs +13.4% consensus. October retail sales +18.6% y/y. October new loans CNY587.7B vs CNY490B consensus. October M2 +19.3% y/y vs prior +19.0%.
  • Australia October unemployment rate 5.4% vs 5.1% consensus. 

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