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TODAY’S S&P 500 SET-UP - October 21, 2010

As we look at today’s set up for the S&P 500, the range is 13 points or -0.44% downside to 1173 and 0.66% upside to 1186.  Equity futures are trading above fair value in a continuation of Wednesday's rally.

Chinese Q3 GDP came in above forecasts and there have also been some strong services and manufacturing PMI data out of Germany.  The dollar spiked in early Asian trading after the WSJ reported that Treasury Secretary Geithner believed there was no reason for the dollar to fall further.  Since then the dollar index has fallen back to trade close to its 10-month low of 76.15.

Earnings remain a focus, including results from LUV, FCX, AXP, MCD , CMG and CAT.  Jobless Claims and the Philadelphia Fed will be key economic reports.

  • Alliance Data Systems (ADS) forecast earnings below est.
  • Covanta Holding (CVA) 2010 EPS may beat est.
  • EBay (EBAY) 4Q sales, EPS forecast ahead of est.
  • Fidelity National Financial (FNF) 3Q EPS beat est. 
  • Netflix (NFLX) 3Q EPS, rev. beat est., raised FY view
  • Raymond James Financial (RJF) 4Q rev. beat ests.
  • Xilinx (XLNX) forecast 3Q rev. below est.  

 PERFORMANCE

  • One day: Dow +1.18%, S&P +1.05%, Nasdaq +0.84%, Russell 2000 +1.15%
  • Month/Quarter-to-date: Dow +2.97%, S&P +3.24%, Nasdaq +3.75%, Russell +3.84%
  • Year-to-date: Dow +6.52%, S&P +5.66%, Nasdaq +8.30%, Russell +12.27%
  • Sector Performance: Material +2%, Telecom +1.4%, Energy +1.4%, Industrials +1.3%, Consumer Disc +1.2%, Financials +1.1%, Healthcare +0.8%, Utilities +0.8%, Tech +0.8%, Consumer Spls +0.6%.

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1566 (+3543)
  • VOLUME: NYSE - 1100.94 (-13.42%)
  • MARKET LEADING/LAGGING STOCKS YESTERDAY: Monster WW +6.53%, Boston Scientific +5.53% and Micron Tech +5.49%/Marshall & Ilsley -10.22%, Intuitive Surgical -7.02% and Comerica -6.38%.
  • VIX: 19.79 -4.70% - YTD PERFORMANCE: (-8.72%)
  • SPX PUT/CALL RATIO: 1.93 from 1.46 +32.18%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 15.86 0.203 (1.296%)
  • 3-MONTH T-BILL YIELD: 0.14%  
  • YIELD CURVE: 2.16 from 2.13

COMMODITY/GROWTH EXPECTATION:

  • CRB: 299.00 +2.05%
  • Oil: 82.54 +2.97% - BULLISH
  • COPPER: 379.35 +0.96% - OVERBOUGHT
  • GOLD: 1,346.32 +0.40% - BULLISH

CURRENCIES:

  • EURO: 1.3961 +1.08% - BULLISH
  • DOLLAR: 77.171 -1.30%  - BEARISH

OVERSEAS MARKETS:

European markets

  • FTSE 100: +0.64%; DAX +0.57%; CAC 40 +0.71%
  • Major indices were firmer in response to some strong manufacturing and services PMI data out of Germany and a slew of earnings from the region which generally met or surpassed expectations.
  • Food & Beverage, P&HG and Auto names are pacing gainers amid another sluggish performance by banks
  • Novartis Q3 EPS $1.36 ex-items vs Rtrs $1.24
  • Credit Suisse Q3 net CHF 609M vs Rtrs CHF 857.5M
  • France Oct Preliminary Services PMI +55.3 vs consensus +57.5; Manufacturing PMI +55.2 vs consensus +55.3
  • Germany Oct Preliminary Services PMI +56.6 vs consensus +54.8; Manufacturing PMI +56.1 vs consensus +54.6
  • EuroZone Oct advance Services PMI 53.2 vs consensus 53.7; Manufacturing PMI 54.1 vs consensus 53.2
  • UK Sep Retail Sales +0.5% y/y vs consensus +1.0% and prior revised to +0.8%

Asian markets

  • Nikkei (0.05%); Hang Seng +0.39%; Shanghai Composite (0.68%)
  • Asian markets were mixed in a tight range today as China’s growth slowed, though the pace was expected.
  • Hong Kong rose, but China Mobile lost 2% as its nine-month results missed expectations.
  • South Korea rose slightly. Samsung Electronics rose 3% after revealing it is bidding for a controlling stake in Medison.
  • Taiwan finished flat
  • Australia finished flat, with miners leading a recovery in cyclical stocks.
  • Japan was flat as the effects of a strong yen fought with a better mood inspired by the rebound in the US.
  • Banks fell on profit-taking, leading China down.
  • China Q3 GDP +9.6% y/y vs survey +9.5% weakest in a year
  • China - September CPI +3.6% y/y, matching expectations - fastest increase in two years
  • China - September PPI +4.3% y/y vs survey +4.1%.
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