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TODAY’S S&P 500 SET-UP - December 17, 2010

As we look at today’s set up for the S&P 500, the range is 14 points or -0.71% downside to 1234 and 0.41% upside to 1248.  Equity futures are trading little changed to fair value following Thursday's positive finish, which saw the S&P close at its highest level since Sep 2008 to prolong the December rally. The main catalyst for the move was largely better-than-expected economic data.

News coming out of the EU Council summit is that members have agreed to create a permanent crisis-management mechanism by 2013 but specifics are thin. Germany's Chancellor Merkel has ruled out expanding the EFSF/ESM, which would have allowed the EFSF to buy governments' bonds. Today's macro highlight will be Novembers's Leading Indicators.

  • Accenture (ACN) raised FY2011 adj. EPS forecast; 1Q rev. beat est.
  • Cousins Properties (CUZ) rated new neutral at JPMorgan
  • Gilead Sciences (GILD) said DOJ decided not to “intervene” in a lawsuit filed by a former employee of CV Therapeutics regarding the promotion of Ranexa
  • Lockheed Martin (LMT)’s F-22 jets suffer corrosion, U.S. report says
  • Oracle (ORCL) sees 3Q adj. EPS above est.
  • Quiksilver (ZQK) 4Q adj EPS, rev. beat est.
  • Research in Motion (RIMM) 3Q rev. beat est.
  • Steelcase Inc. (SCS) 3Q adj. EPS, rev. top est.
  • Sonic (SONC) repurchased $62.5m of debt, will recognize gain of ~$5m
  • Take-Two Interactive Software (TTWO): Quarterly adj. EPS, rev. beat ests. Will sell 10m shrs via Credit Suisse.

PERFORMANCE

  • One day: Dow +0.36%, S&P +0.62%, Nasdaq +0.77%, Russell 2000 +1.07%
  • Last Week:  Dow +0.25%, S&P +01.28%, Nasdaq +1.78%, Russell +2.70%
  • Month-to-date: Dow +4.48%, S&P +5.28%, Nasdaq +5.57%, Russell +6.82%
  • Quarter-to-date: Dow +6.59%, S&P +8.91%, Nasdaq +11.34%, Russell +14.85%
  • Year-to-date: Dow +10.27%, S&P +11.46%, Nasdaq +16.22%, Russell +24.17%
  • Sector Performance: +1.1%, Materials +1.1%, Utilities +0.9%, Consumer Spls +0.9%, Consumer Disc +0.8%, Healthcare +0.7%, Energy +0.7%, Financials +0.2%, Tech +0.2%  

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1072 (+2037)  
  • VOLUME: NYSE 989.84 (-10.91%)
  • VIX:  17.39 -3.07% YTD PERFORMANCE: -19.79%
  • SPX PUT/CALL RATIO: 1.10 from 1.12 -1.97%  

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 17.70 -0.203 (-1.132%)
  • 3-MONTH T-BILL YIELD: 0.13% -0.01%  
  • YIELD CURVE: 2.81 from 2.85

COMMODITY/GROWTH EXPECTATION:

  • CRB: 317.34 -0.47%
  • Oil: 87.70 -1.04%
  • COPPER: 411.60 -0.40%
  • GOLD: 1,371.91 -1.04%%

CURRENCIES:

  • EURO: 1.3233 -0.32%
  • DOLLAR: 79.797 -0.10%

OVERSEAS MARKETS:

EUROPEAN MARKETS:

  • European markets have traded in a narrow range, with major indices mainly in slightly positive territory, and peripheral markets pressured by Moody's downgrade of Ireland's sovereign credit rating to Baa1 from Aa2 and negative outlook.
  • EU leaders agreed to set up a permanent bailout mechanism from 2013, though details were limited, and there will be no enlargement of the current temporary rescue fund. Leaders also indicated they would do whatever was necessary to protect the euro.
  • Advancing sectors lead decliners 12-6 with basic resources and technology shares leading gainers, while telecom and healthcare lag.
  • France December manufacturing Business Conf 103 vs consensus 101
  • Germany is trading lower by -0.11%  - Dec IFO Business Climate Index 109.9 vs consensus 109.1
  • European Automobile Manufacturers' Association Nov Commercial Vehicles Registrations in EU+EFTA countries +7.5% y/y
  • The UK is trading down -0.16% - The pound was pressured by Nationwide's Nov Consumer confidence index 45 vs prior 52, its lowest reading since Mar 2009 and BOE report that said UK banks were vulnerable to the debt turmoil in Europe

ASIAN MARKTES:

  • Asian markets were mixed today.
  • South Korea rose 0.85% - Post-close, Daewoo Engineering & Construction said it was considering selling a stake in Korea Express.
  • A broad-based rise sent Taiwan +0.41% to a new 31-month high. Chimei Innolux edged up on news that it will build a new factory in China.
  • Hong Kong rose slightly +0.20%. Cosco International rose 3% after saying it will sell its 17% stake in Sino-Ocean Land, which jumped 6% on the news.  China Datang Corp Renewable Power dropped 6% on its trading debut after considerably cutting back the size of its IPO.
  • Japan closed down -0.07%, with trading-house losses being balanced by rises in big banks and real-estate companies. Square Enix plunged 10% after reducing its FY net profit outlook. Sharp rose 3% on a report it will spend ¥100B on production lines for small and midsize LCDs. Mitsui & Co fell 2% on fears that the US government’s suing BP may lead to bigger oil-spill losses than predicted.
  • Australia finished down -0.44%, with Hills Holdings plunging 12% on a profit warning.
  • Thailand declined -0.69% - Thai Airways fell 1% on saying it expects revenues to grow 10% next year.

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