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View Full Version : Daily Market Analysis - Q4, 2011



Conrad
10-03-2011, 06:54 AM
WELCOME TO QUARTER 4, 2011!
Now we can look forward and leave that awful quarter 3 behind us. Not that it was that awful, really. The trading was good but I can't say the long term positions benefited from all those massive gyrations. Now we face the most potentially tragic month of the trading year - October - famous for all the worst market crashes in history ... and there have been a lot of them lately. Ominous? Definitely. But it is still a money making opportunity if you know how. And it is a good, a very good opportunity. I'll be gagging for it!


U.S. MARKET RECAP - Monday 26 September, 2011 to Friday 30 September, 2011 AMC
http://img225.imageshack.us/img225/1385/dexweek.jpg (http://imageshack.us/photo/my-images/225/dexweek.jpg/)


The end of Quarter 3 is weak. Window Dressing in the last days of September gives the month some bullish respite. The last day of Q3 has seen the DOW down 10 of the last 14 ... The end of September also brings the end to the worst quarter of the trading year. I'll be glad when its over so that we can move on with Q4, my favorite quarter for so many reasons. For now, I'll just have to lick my wounds for not taking my own advice to stay away from the market in September. The trading was good, make no mistake about it because I love volatility. But my positions .... that's another story, a tragic one, for which my only thanks is that I was leveraged conservatively. Now I have one week to make up the difference. So I guess its happy hunting for me then.

Direction for the week Monday 26 September, 2011 to Friday 30 September, 2011; ∆ Up

Wasn't quite off on the weekly read on the DOW coz it closed the week in the black. But in the general scheme of things, it was more like a bearish week than it was a bullish one. Either way, I am taking the result as it was like a quoted it would be, volatile and weak with some bullish respite.


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Dow Jones Industrial Average - Friday 30 September, 2011 AMC
http://img687.imageshack.us/img687/9226/dexsx.jpg (http://imageshack.us/photo/my-images/687/dexsx.jpg/)


Trivia: The last day of Q3 has seen the DOW down 10 of the last 14 ... I am so glad that this quarter is ending. For some reason, September has been an exceptionally long month but the trading was really good. It was a pleasure to have been part of that historical ride. I thrive on a volatile market and judging by the way the market is going now, I suspect the volatility is going to get worse. And I am gagging for it!

Direction for Friday 30 September, 2011; ∇ Down

And indeed, price-to-price divergence and self-fulfilling prophecies were spot on. The inherent market weakness plagued the US markets again in spite of some good economic data. Once again, leadership in the market were from defensive trades like Telecom, Utilities, Staples and Health Care while weakness was led by the sectors that usually provide strength; Industrials, Financials and Materials.


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MARKET SUMMARY - Friday 30 September, 2011


BRIEFING.COM - Friday 30 September, 2011
Daily Sector Wrap: Stocks Slide to Another Weekly Loss

A weak performance on Friday resulted in another weekly loss for stocks -- their eighth in 10 weeks of trade. Such an extensive stretch of weakness has left the stock market to log a monthly loss of 7% and a quarterly loss of more than 14%.

Trade on Friday was spent entirely in negative territory. Participants turned to selling after watching markets overseas slide. Trade in Europe, which has influenced sentiment at home for weeks, saw Britian's FTSE fall 1.3%, France's CAC close 1.5% lower, and Germany's DAX drop 2.4% after a 3.0% jump in Eurozone CPI dampened hope for a rate cut by the European Central Bank. Overnight action in Asia saw Hong Kong's Hang Seng slide 2.7%, China's Shanghai Composite slip 0.3%, and Japan's Nikkei finish flat. China's HSBC Manufacturing PMI for September stayed below 50, the dividing line between contraction and expansion, for the third straight month, making some question the country's ability to sustain growth in the face of sluggish global conditions.

The inclination to sell trumped a couple of better-than-expected domestic reports. The Chicago PMI for August bested the Briefing.com consensus call of 54.0 by improving to 60.4 from 56.5 in July. The final September reading on consumer sentiment from the University of Michigan was revised upward to 59.4 from the preliminary reading of 57.8. A reading of 57.5 had been expected.

Personal income and spending numbers for August were less impressive. Income declined by 0.1% while spending increased by 0.2%. Income failed to meet the 0.1% increase expected, on average, by economists polled by Briefing.com, but the increase in spending was exactly in line with what had been expected.

Without any kind of positive leadership, stocks were left to wrestle with sellers throughout the session. Even defensive-oriented stocks succumbed to aggressive selling pressure after they had limited losses in the first half of the day. As a result, all 10 major sectors tumbled to losses in excess of 1%.

Financials and materials stocks fell the hardest. They dropped 3.5% and 3.7%, respectively. They were also some of the poorest performers for all of September and all of the third quarter. During September, financials fell 11.5% while materials tumbled 16.6%. Over the course of the quarter, though, financials shed 23% and materials surrendered a full quarter, 25%, of their market cap.

With selling intensifying into the close, stocks effectively surrendered the gains that they had staged in previous sessions. That caused stocks to record a weekly loss of 0.4%. It all made for an appropriate conclusion to the third quarter, which goes down as the stock market's poorest quarter since a near 23% drop in the fourth quarter of 2008.

Sector Leaders/Laggards for Friday 30 September, 2011
Leading Sectors: None.
Leading Industries/ETFs : Vix- VXX +7.0%, Treasuries- TLT +2.5%, livestock & meat futures- COW +1.7%, Dollar index- UUP +1.0%.

Lagging Sectors: Telecom -1.1%, Utilities -1.1%, Consumer Staples -1.2%, Health Care -1.3%, Energy -2.8%, Tech -2.8%, Consumer Discretionary -2.8%, Industrials -3.3%, Financials -3.5%, Materials -3.7%
Lagging Industries/ETFs : Grains- JJG -7.0%, Solar TAN -5.3%, coal- KOL -5.3%, Financials- KCE -4.9%, Crude oil- OIL -4.8%, 4.6%, Broker- IAI -4.6%, Airlines- FAA -4.6%, Oil service- OIH -4.4%,

Other Market Moving Factors:
• Stocks left without leadership as financials fall sharply
• Overseas markets slide amid disappointing data
• Monthly income and spending prove unexciting, but consumer sentiment and Chicago PMI prove pleasing
• Share volume picks up with end-of-quarter action


BRIEFING.COM - Friday 30 September, 2011
After-Hours Report: Weekly Wrap

Although the action on Friday appeared appropriate in the context of the quarter, it contrasted with trade at the start of the week, when stocks climbed more than 2% on Monday and another 1% on Tuesday. Buying in both days was based largely on hope that officials in Europe are finally crafting a comprehensive plan that will help the region shore up its finances.

Momentum from those two sessions helped stocks open higher on Wednesday, but participants, starved for details of the rumored plan, began to push back against stocks and ultimately dropped the market for a 2% loss. Data that day didn't do anything to bolster the case buying either -- durable goods orders and orders less transportation both slipped 0.1% during August.

But by Thursday, approval from highly influential Germany to expand the European Financial Stability Facility helped stocks snap back. Upbeat data also played a pivotal part. The latest weekly initial jobless claims count dropped by 37,000 from the prior week to 391,000, which is the first time in more than a month that initial claims fell below 400,000. Moreover, the final reading for second quarter GDP showed growth of 1.3%, which not only marked an increase from the 1.0% rate posted in the prior reading, but it also bested the 1.2% growth rate that had been broadly expected.


http://img854.imageshack.us/img854/7672/dexsumm.jpg (http://imageshack.us/photo/my-images/854/dexsumm.jpg/)

This week's biggest % gainers/losers
The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

• This week's top 20 % gainers
Technology: P (14.65 +36.28%),
Services: AMBO (6.82 +16.18%), BIOS (6.36 +13.98%), ARO (10.81 +12.49%),
Industrial Goods: HXL (22.16 +12.2%), DEL (59.68 +11.99%),
Financial: HGIC (58.86 +87.93%), AHT (7.02 +15.84%), ING (7.05 +13.53%), GNW (5.74 +12.77%), AEG (4.05 +11.88%), EIG (12.76 +11.64%),
Consumer Goods: GNRC (18.81 +20.81%), PPC (4.27 +17.96%), SMBL (5.9 +13.46%), SAFM (47.5 +12%), SCS (6.31 +11.48%),
Basic Materials: KIOR (20.74 +20.65%), EXH (9.72 +18.39%), SVM (7.91 +17.88%)

• This week's top 20 % losers
Technology: ISS (6.49 -34.31%), CALX (7.8 -25.5%), MU (5.04 -24.21%), IPGP (43.44 -21.95%), TSL (6.08 -20.94%), YNDX (20.46 -19.89%), GAME (3.97 -19.64%), IDCC (46.58 -19.43%), JASO (1.78 -19.09%), SFUN (10.18 -18.56%), VHC (14.99 -18.53%), SOHU (48.2 -18.06%), AMD (5.08 -17.67%), SINA (71.61 -17.6%),
Services: FMCN (16.83 -36.99%), HMIN (25.77 -23.6%), SVN (12.66 -20.53%), EDU (22.97 -18.75%), MPEL (8.31 -18.45%),
Basic Materials: XG (5.9 -21.75%)


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ECONOMIC COMMENTARY - Friday 30 September, 2011

• China Sep HSBC Flash China Manufacturing PMI 49.9 vs 49.9 in Aug
The prelim figure was 49.4.

• New Zealand Aug Building Permits +12.5% vs +14.3% in Jul

• Australia Economic Data

- Sep NBNZ Activity Outlook 35.4 vs 43.3 in Aug
- Aug Private Sector Credit +0.2% vs 0.3% in Jul

• Japan Economic Data

- Sep Nomura/JMMA Manufacturing Purchasing Manager Index 49.3 vs 51.9 in Aug
- Aug Household Spending -4.1% vs -2.1% in Aug 2010
- Aug Jobless Rate 4.3% vs 4.7% in Jul
- Aug National Consumer Price Index Ex-Fresh Food +0.2% vs +0.1% in Aug 2010
- Aug prelim Industrial Production +0.6% vs -3.0% in Aug 2010

• UK Sep GfK Consumer Confidence Survey -30 vs -31 in Aug

• Eurozone Economic Data

- Sep CPI +3.0% vs +2.5% in Sep 2010
CPI is regarded as higher than expected.
- Sep Unemployment rate 10.0% vs 10.0% in Aug

• France Economic Data

- Aug Producer Prices 0.0% vs -0.1% in Jul
- Aug Consumer Spending +0.2% vs +1.2% in Jul

• Germany Aug Retail Sales -2.9% vs 0.0% in Jul

• U.S. Economic Data

- August PCE Prices- Core M/M +0.1% vs +0.2%; Prior +0.2%
Core Y/Y +1.6%; Headline Y/Y +2.9%
- August Personal Spending +0.2% vs +0.2%; Prior +0.8%
- August Personal Income -0.1% vs +0.1%; Prior +0.3%
- September Chicago PMI 60.4 vs 54.0; July 56.5
- September Michigan Sentiment- Final 59.4 vs 57.5; Prelim 57.8

Personal Income and Spending Weaken in August
Personal income and spending weakened in August. Income declined 0.1% after increasing a downwardly revised 0.1% (from 0.3%) in July. Spending slowed from a downwardly revised 0.7% (from 0.8%) increase in July to a 0.2% increase in August. The Briefing.com consensus expected personal income and spending to increase 0.1% and 0.2% respectively. The fact that consumption growth remained positive during a time of falling income suggests that consumers are not as worried about the economy as their confidence levels suggest. The personal savings rate fell from 4.7% in July to 4.5% in August. If the confidence reports were valid, the savings rates should have increased, not decreased, during this time of uncertainty. Goods and services spending each increased 0.2% in August, down from 1.0% and 0.6%, respectively, in July. The modest gain in service consumption was unexpected. Restaurant expenditures and air conditioning usage both weakened over the last month. Normally, this would signal a contraction in services spending. In terms of the overall economy, the data are mostly in-line with the advance retail sales report and will likely have only a minimal effect on our current GDP forecast.

In Contrast to the National Trend, Manufacturing Expands in the Chicago Region in September
The Chicago Purchasing Managers Index from Kingsbury International, Ltd., increased from 56.5 in August to 60.4 in September. The Briefing.com consensus expected the Chicago PMI to fall to 54.0. With the exception of the Kansas City Fed's Survey of Tenth District Manufacturers and the Chicago PMI, every other regional manufacturing survey contracted in September. This suggests that the growth in Chicago is most likely the result of higher demand from Midwest-specific industries, such as motor vehicle manufacturers, and not a harbinger of a national rebound in the manufacturing sector. The production index increased from 57.8 in August to 63.9 in September. The increase in production may be unsustainable since it was due solely to the largest month-to-month gain in new orders since October 2009. The new orders index increased from 56.9 in August to 65.3, which is the highest level since April. At the same time, order backlogs fell to a 23-month low. The contraction in backlogs accelerated from 49.6 in August to 45.4 in September. Without a steady supply of backlogs, production will fall precipitously if new order demand slips. The employment index increased from 52.1 in August to 60.6 in September.

Consumer Sentiment Ticks Higher in the Final September Reading
The final reading for the University of Michigan Consumer Sentiment Index for September increased from 57.8 in the preliminary reading to 59.4. The Briefing.com consensus expected the Consumer Sentiment Index to fall to 57.5. Both the current conditions and the economic outlook indices were revised higher in the final reading. The current conditions index increased from 74.5 in the preliminary reading to 74.9 in the final report. This is up from 68.7 in August. The expectations index rose from 47.0 to 49.4. Sentiment is typically correlated with employment, gasoline prices, equity prices, and media reports. With the exception of lower gasoline prices, the remaining underlying fundamentals all weakened in September. This should have resulted in a weaker sentiment level. However, the August sentiment level was influenced by the division in Congress on passing a debt ceiling extension. Those feelings seem to have passed and the index returned to a more normal level. Thus, the increase in sentiment in September does not appear to be due to stronger economic fundamentals.

• Asian Markets Close: Nikkei UNCH, Hang Seng -2.7%, Shanghai -0.3%, Sensex -1.5%

The major Asian indices closed mostly lower as concerns regarding the European debt crisis continue to weigh on markets. The Shanghai Composite ended today's session near a 30-month low while selling in Hong Kong capped off the Hang Seng's biggest quarterly loss in a decade. The index fell 22% for the quarter. China's 5-yr CDS has seen significant widening over the past couple of sessions and is back above 200 bps for the first time since March 2009. Chinese markets will be shuttered all of next week for the Golden Week holiday. Data in the region was heavy as Chinese HSBC Final Manufacturing PMI ticked up to 49.9 (49.4 previous) but still shows contraction in the sector. Japanese household spending (-4.1% YoY actual v. -2.7% YoY expected) and preliminary industrial production (0.8% MoM actual v. 1.5% MoM expected) missed estimate Tokyo Core CPI (-0.1%) was in-line. Private sector credit in Australia was in-line with estimates (0.2% MoM). Looking at the currencies...USDCNY settled at a record 6.3790 while USDJPY is flat at 76.83.

In Japan, the Nikkei closed flat as strength in financials was offset by weakness in utilities. Promise closed limit up (+18%) after Sumitomo Mitsui Financial announced it would make the co a wholly-owned subsidiary after previously owning just 22% of the co. Utilities were under pressure as Sumitomo Electric tumbled 8.0% after rival Furukawa Electric (-5.3%) agreed to pay a $200 mln fine for violation of U.S. antitrust law.

In Hong Kong, the Hang Seng finished -2.7% as exporters were under pressure. Wal-Mart supplier Li & Fung shed 3.6% on global growth concerns. Travel Expert Asia Enterprises fell 25% in its debut as the IPO environment remains difficult.

In China, the Shanghai Composite settled -0.3% as cement makers saw losses on expectations of a slowdown in growth. Huaxin Cement led the space lower with a loss of 5.3%.

In India, the Sensex closed -1.5% as resource stocks saw selling after India's federal cabinet proposed legislation to increase compensation for people who are displaced by mining projects. Coal India was hit hard on the news, shedding 5.2%.

• European Markets Closing Prices
UK's FTSE: -2.0%
Germany's DAX: -3.0%
France's CAC: -2.0%
Spain's IBEX: -0.5%
Portugal's PSI: -1.8%
Italy's MIB Index: -1.4%
Irish Ovrl Index: -0.3%
Greece FTSE/ASE 20: -0.4%

IN OTHER NEWS ...

• USDA releases stocks report; reports corn stocks down 34% YoY, soybean stocks up 42%, and wheat stocks down 12%
Old crop corn stocks in all positions on September 1, 2011 totaled 1.128 billion bushels; old crop soybeans stored in all positions on September 1, 2011 totaled 215 million bushels; all wheat stored in all positions on September 1, 2011 totaled 2.15 billion bushels.
Click here to see full report. (http://usda.mannlib.cornell.edu/usda/current/GraiStoc/GraiStoc-09-30-2011.pdf)

• Fed releases it 'twist' schedule
Click here (http://www.newyorkfed.org/markets/tot_operation_schedule.html) to see the schedule.


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TECHNICAL UPDATE - Friday 30 September, 2011 - AMC


With one more session to go, all three benchmarks are on cue to close out Q3 of 2011 as the worst quarter since Q4 of 2008. Here's a real poser though ... Has the DOW formed a Double Bottom from week 2 of August and week 3 of September with the bottom at 11,600? Hmmm ... makes you wonder, doesn't it?

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img690.imageshack.us/img690/8784/dowrvp.jpg (http://imageshack.us/photo/my-images/690/dowrvp.jpg/)
10,913.38 -240.60 (-2.16%)
Volume: 213,199,511 from 191,335,698 the previous day
Range: 10,909.52 – 11,152.39

Here we go ... 10,700 will be the key interest this coming week. A break below that and its going to make for excellent sell-down that should rival some of the tankers of October 2008. If the August and September ranges were any indication, we're in for major volatility.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img195.imageshack.us/img195/3159/ndxc.jpg (http://imageshack.us/photo/my-images/195/ndxc.jpg/)
2,415.40 -65.36 (-2.63%)
Volume: 597,967,391 from 610,573,398 the previous day
Range: 2,415.07 – 2,468.98

Watch for 2,350 and 2,330. Having broken down below its Flag and failing to return inside it, NASDAQ and its weakness in Tech could well end up being the leadership to the downside in the weeks to come.

S&P 500 INDEX (SPX: CBOE)
http://img593.imageshack.us/img593/6673/spxl.jpg (http://imageshack.us/photo/my-images/593/spxl.jpg/)
1,131.42 -28.98 (-2.50%)
Volume: 986,533 from 883,318 the previous day
Range: 1,131.34 – 1,159.93

SPX's last stand will be 1,120. Beyond that and we're looking like 2008 all over again. All three benchmarks look on the mark to get set and go make its second downside on an Elliot Wave correction.


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MARKET INTERNALS - Friday 30 September, 2011

NYSE :
Higher than avg volume @ 1320 mln, vs. 1263 mln
Decliners outpaced Advancers (adv/dec): 615/2457
New lows outpaced new highs (hi/lo): 29/275

NASDAQ :
Lower than avg volume @ 1980 mln, vs. 2170 mln
Decliners outpaced Advancers (adv/dec): 582/1997
New lows outpaced new highs (hi/lo): 3/247


Advancers outpaced Decliners by an average 2.07 to 1 on lower average volumes (-1.05%) on Thursday (avg +0.56%).

The internals went divergent after the first hour with the TRIN holding above 1.00 and the VIX breaking above and below 40.00 like a yo-yo. Nothing about Thursday's session pointed to any clear direction. The only clear stand out was that confusion dominated the session and fear, as confirmed in the bond space, that lost the benchmarks more than half of their massive early gains for the third straight session.

Decliners outpaced Advancers by an average 3.72 to 1 on lower volumes (-3.87%) on Friday (avg -2.43%).

Looks like the VIX wants to find higher ground having broken out of its Bear Flag. That is enough to convince me to be extremely cautious and even deter me from being long. The internals have been hinting at a major sell-off in the making and with volumes getting weaker with each session in September, it won't take much to bring this edgy market down. Leadership has been favoring the defensive plays and even they are copping losses while the usual bullish leaders maintained their leadership to the downside. The last week's "rallies" have been nothing more than short covering. So with the bears rather empty handed and foolish bulls slightly stocked up, expect the market to turn down sharply as the bulls force-sell and the bears short the market again.

http://img695.imageshack.us/img695/9788/vixq.jpg (http://imageshack.us/photo/my-images/695/vixq.jpg/)

http://img838.imageshack.us/img838/1387/intid.jpg (http://imageshack.us/photo/my-images/838/intid.jpg/)


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COMMODITIES & BONDS - Summary for Friday 30 September, 2011

Weak Conclusion to Weak Quarter - from Briefing.com

Pit trade concluded with oil prices down 3.6% to $79.20 per barrel. The energy component's weak close added to its quarterly loss, which totaled 17.0%. As for natural gas, its price tumbled 2.1% to $3.67 per MMBtu, which is 16.0% below where it began the third quarter. Oct heating oil shed 4 cents to finish at $2.79, while Oct RBOB gasoline finished lower by 2 cents at $2.54.

Precious metals put on a mixed performance today, and the quarter for that matter. Specifically, gold prices eked out a 0.3% gain to close the week at $1622.30 per ounce. The yellow metal advanced 7.9% for the quarter. Meanwhile, silver prices slid 1.4% to $30.08 per ounce in today's pit trade, but booked a 13.5% loss for the quarter. Dec copper gained 2 cents to close at $3.17.

The CRB Commodity Index, a collective measure of commodities, closed today's trade with a 2.6% loss at a new 2011 low. The CRB logged a 12% loss for the third quarter.

Commodities AMC on Friday 30 September, 2011:
For the full list of up-to-date commodity closes, Click here (http://money.cnn.com/data/commodities/?iid=MKT_Sub).

BONDS - Weekly Summary for Monday 26 September, 2011 to Friday 30 September, 2011
Close on Highs: 10-yr: +28/32..1.902%

Treasuries gave back some of last week's gains that occurred on the Fed's announcement of the ?twist" as losses were heaviest in the belly of the curve. Sellers attacked the 5-, 7-, and 10-yr maturities which produced a rise of between 10 and 12 bps in their yields. Selling in the 10-yr caused its yield to climb 10 bps over the past week as it finished at 1.924%. Outperformance came from the wings of the curve as the 2- and 30-yr yields were up just 4 bps apiece. Curve watchers will be paying careful attention to next week's developments as the Fed's Operation Twist' begins on Monday.

The yield curve steepened from last week's closing level as the 2-10-yr spread widened by 7 bps to 166 bps. However, flattening occurred in the knob of the curve as the 10-30-yr spread tightened 6 bps to 100 bps.

Treasury Yields AMC on Friday 30 September, 2011:
• 2 Year Note 0.25% -0.02
• 5 Year Note 0.96% -0.02
• 10 Year Note 1.92% -0.07
• 30 Year Bond 2.90% -0.13
2/30 Spread : 265bps ( -0.11 ) ... 2/10 Spread : 167bps ( -0.05 )


As the confusion prevails in the risk space, the curve flattens out more as if to confirm the bearish sentiment. With divergence on the indices and a rash of buying into longer term maturities, the signals are becoming more immediate that a massive sell-down is eminent.

At the end of the month, the curve settles with the 5, 10 and 30 year yields twice below par while the spreads on the 2/30 and 2/10 remain below par and continue tightening. This unprecedented curve has been akin to a recessionary indication and even depressionary indication. Quite foreboding if you consider that the curve has been leading into this for more than a quarter now thus leaving us less than three months before its impending confirmation.


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REVIEW FOR THE MONTH - SEPTEMBER, 2011
Floor Talk: Looking back at September and Q3

Volatility Continues In September
The extreme volatility of August continued through September, with the S&P 500 losing another 6% (similar to the 6% drop in August) and the VIX remaining around the 40 level. The movement in the U.S. market continued to be highly correlated with the European markets, and has seen added volatility around the Fed's actions and economic data here at home. The month started with the disappointing jobs report for August, which showed that nonfarm payrolls were unchanged versus a +70K consensus. The S&P fell nearly 30 points (-2.5%) that day. Since then, it's been a choppy, back and forth market which has managed to hold above the August lows, but remains just above those levels.

After getting a poor start to the month with the weak employment data, the focus shifted to the Fed. Speculation that the Central Bank would adjust the length of maturities on their balance sheet after the September meeting proved to be correct. The Fed confirmed this "operation twist" idea in its 9/21 policy statement, which laid out a program to sell $400 bln in short term Treasuries and use the proceeds to buy an equal amount of longer term treasuries. The Fed also mentioned that the economic outlook is "facing significant downside risks." The market fell ~6% in the two days surrounding the FOMC meeting.

Earlier in the month, President Obama laid out a $450 bln stimulus package that includes an extension of deeper tax cuts and increased infrastructure spending. The package is larger than had been telegraphed by the press, but its prospects in Congress remain highly uncertain despite the President's demands to pass the bill.

Across the pond in Europe the Swiss National Bank set the minimum CHF (Swiss Franc) exchange rate target at 1.20 per EUR and said it is prepared to buy foreign currency at unlimited quantities. This news sharply reversed the uptrend in the CHF. On 9/9, it was announced that ECB chief economist Stark may resign due to conflicts about the ECB's bond purchases; the ECB subsequently confirmed that he will resign for "personal reasons." Last week there were reports in the market suggesting the EFSF fund could be used for an EU investment bank, which can lever up and raise capital for European banks. However, those reports were subsequently denied.

Finally, in Asia, the Shanghai Index fell 8.1% for the month to levels not seen since July of 2010 on fears of a hard landing and global slowdown affecting China. The Reserve Bank of India raised its key interest rate as expected.

In summary the S&P 500 & Nasdaq fell ~ 6% this month. The Dow fared slightly better falling by ~ 4%. In Europe, the CAC index performed the worst, falling ~ 8% followed by the FTSE (-4.9%) and DAX (-4.8%). In Asia, the Hang Sang Index fell double digits closing ~ 14% lower for the month. The Shanghai fared a little better falling ~ 8%. Japan's Nikkei outperformed them both falling by ~ 3%.

Q3 Represents Worst Quarter Since Financial Crisis For Many Markets
For many markets, 3Q11 was the worst quarter since the financial crisis. Markets were influenced by political headlines and related macroeconomic uncertainty. In July, the long debt ceiling debate finally drew to a close. Congress reached an agreement to raise the debt ceiling by $2.4 trillion. The sell-off in equity markets, however, was driven by fears of a double dip recession in the US. Days later the S&P downgraded the US' credit rating to AA+, adding downside pressure to the markets. Finally, the Fed's "Operation Twist" was met with a relatively disappointing initial response in the stock market. In Europe, banks were subject to speculation that they needed to be recapitalized and it was feared that Greece would default on its debt without help from the stronger European nations.

While the broader market has settled into a range now, much of the uncertainty remains, keeping valuations of risky assets down.

In Summary, the S&P 500 fell ~ 12.5% for the quarter, The Nasdaq was close behind falling by ~ 11.3%. The Dow fell by 10.6%. In Europe, the CAC & DAX fell ~ 26%. The FTSE fell 14.4%. In Asia, the Nikkei fell ~ 12%. The Hang Sang fell by ~ 22%, while the Shanghai lost ground by ~ 14%.

Click here to see August monthly performance for select indices/currencies/commodities (http://www.briefing.com/common/images/content/pagecontent/InDepth/20110930145902SeptWrap.JPG).


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PREVIEW FOR THE MONTH - OCTOBER, 2011

October starts Quarter 4 and the final earnings season of the year. It is also the worst of the three months of the quarter. October is infamous for the worst market crashes in history; 1929, 1978, 1979, 1987, 1989 1997, and 2008.

Having said that, October is also known as a "Bear Killer" as the market turned up in a big way in 1946, 57, 60, 62, 66, 74, 87, 90, 98, 2001 and 02 to reverse some of the most bearish markets in history. Will October 2011 be a Bear Killer and "bail" the market out of this rut? I certainly hope so.

Statistically, October ends the worst six months on the DOW and S&P500. The really good news is that October is a great time to buy if the preceding September sold down big time - and we sold down big time in September 2011.

October Trivia
• There are 21 trading days in October 2011
• The first trading day of October has been down 4 of the last 6
• October traditionally starts out poorly in the first week
• The first week of October holds the record for the worst historical week on Wall Street in 2008
• Saturday 07 October is Yom Kippur
• Monday 10 October is a Bond trading holiday in observance of Columbus Day
• The second week is typically bearish
• The second week ends bullishly and carries into the third week
• The Monday before Expiration Friday has been up on the DOW 25 of the last 40
• October 19 is the anniversary of the Crash of 1987 (DOW went down 22.6% in a single session)
• October Expiration Friday has been bearish 7 of the last 8
• 28 October is the anniversary of the 1929 Crash (DOW went down 23% in two days)
• The last three days of October are traditionally bullish
• Halloween on 31 October is traditionally bullish

Commodities
• Oil remains weak (Hold)
• Natural Gas tops out
• Short Gold and Silver till end October/early November
• Copper stays bearish
• Start accumulating Corn, Wheat and Soyabeans from mid October
• Corn is a good bet for a run till end April
• Sugar is another good bet and stays bullish in October
• Cocoa and Coffee prices usually stabilize in October


___________________________________________

PREVIEW FOR THE WEEK - MONDAY 03 OCTOBER, 2011 TO FRIDAY 07 OCTOBER, 2011

Data kicks off for the week on Monday with the release of the ISM Index, construction spending (10), and auto/truck sales (15). The Fed's ?twist' begins with the purchase of $2.25-2.75 bln worth of 2036-2041 maturities. The Fed will also buy $2.75-3.00 bln worth of 2014/2015 maturities through its Permanent Open Market Operations.

Tuesday is limited to just factory orders (10). Fed speak begins on Tuesday with Federal Reserve Governor Raskin speaking on "Policy Opportunities and Challenges in Crafting a Foreclosure Response," (9) and will be followed by Chairman Bernanke's testimony in front of the Joint Economic Committee on his outlook for the U.S. economy. Tuesday's ?twist' purchases take place in 2019-2021 maturities with the Fed looking to buy $4.25-5.00 bln worth.

Data picks back up on Wednesday wit the weekly MBA Mortgage Index (7), Challenger Job Cuts (7:30), ADP Employment Change (8:15), and ISM Services (10). The Fed will buy $1.00-1.50 bln worth of 2018-2041 maturities through its ?twist.' Permanent Open Market Operations conclude for the week with the Fed purchasing $3.25-4.00 bln worth of 2018-2021 maturities.

Thursday will see just initial and continuing claims (8:30). The Fed will sell $8.00-9.00 bln worth of 2012 maturities through the ?twist.'

Friday's data is the most anticipated of the week with nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, the average workweek (8:30), wholesale inventories (10), and consumer credit (15) all being released. The Fed's ?twist' purchases continue with the buying of $1.50-2.00 bln worth of 2021-2031 maturities.

There are no Treasury auctions of note.

Earnings Highlights
Monday: WWW, LRN, and TISI.
Tuesday: GPN, LNDC, RECN, and YUM.
Wednesday: AYI, COST, MON, RPM, CBK, DRWI, MAR, OCZ, and RT.
Thursday: STZ, HELE, ISCA, RBN, and ANGO.
Friday: No companies are confirmed.

Economic Events
Monday:
10:00 am ISM Index Sep
10:00 am Construction Spending Aug
15:00 pm Auto Sales Sep
15:00 pm Truck Sales Sep
Tuesday:
10:00 am Factory Orders
Wednesday:
07:00 am MBA Mortgage Index
07:30 am Challenger Job Cuts
08:15 am ADP Employment Change Sep
10:00 am ISM Services
10:30 am Crude Inventories
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
10:30 am Natural Gas Inventories
Friday:
08:30 am Nonfarm Payrolls Sep
08:30 am Nonfarm Private Payrolls Sep
08:30 am Unemployment Rate Sep
08:30 am Hourly Earnings Sep
08:30 am Average Workweek Sep
10:00 am Wholesale Inventories Aug
15:00 am Consumer Credit

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- LogiPharma 2011
Johnson Rice and Company Energy Conference
- Global Gaming Expo
Tuesday:
- SIG at Signet Jewelers Investor Day
- HILL at 1 on 1's with Dot Hill Systems FBN Securities
- Apple (AAPL) Will Hold A Media Event On October 4 To Unveil The iPhone 5-- Time TBD
Wednesday:
- Imperial Capital Global Opportunities Conference
- PC at International Home Care and Rehabilitation Exhibition
- CBOE at CBOE Holdings Investor Day
Thursday:
- Craig-Hallum 2nd Annual Alpha Select Conference
- ECB Rate Announcement
- SMTC at Semtech Corporation Analyst Day
Friday:
- Atlanta Fed President Lockhart to speak at 10:45


___________________________________________

SUMMARY

Price-to-price divergence. Haven't seen that in a long time. That's when one or all three indices are totally divergent in their movement and percentage range. Another 300 point day that washed out and became negative but this time, the hype and hoopla is about a ridiculous 140 point fight back in the last half hour, not about the 160 points that were lost nor the significance of the P2P divergence which almost always is followed by a bearish session.

The week is filled with all sorts of data that spell trouble for the bulls. Friday will be the mother of all the reports this week. Given that the employment front in the US hasn't been getting worse according the Initial Claims, the market could get some respite at the end of the week. The mid-week ADP report will be keenly watch for any indication that Friday's NFP may turn south so I'll be wary on both days just in case. The first week of October is one of the most horrible weeks in the trading calendar because of all the historical sell-downs and crashes. I won't be tempting fate and will keep straight puts for insurance.

And now we wait in anticipation of another DFDM. With only the ISM and Construction SPending due out 10:00 EST, I won't be holding my breath for any respite at the open. And with the DOW going down 4 of the last 6 on the first trading in October, all the indications point to a major sell-off in the making.

Direction for Monday 03 October, 2011; ∇ Down

Direction for the week Monday 03 October, 2011 to Friday 07 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 107/174 (61.49%)

2011 Weekly Directional Accuracy Year-To-Date: 24/38 (63.16%)

Conrad
10-04-2011, 08:40 AM
U.S. MARKETS - Monday 03 October, 2011 AMC

http://img845.imageshack.us/img845/5912/dexsk.jpg (http://imageshack.us/photo/my-images/845/dexsk.jpg/)

And now we wait in anticipation of another DFDM. With only the ISM and Construction Spending due out 10:00 EST, I won't be holding my breath for any respite at the open. And with the DOW going down 4 of the last 6 on the first trading in October, all the indications point to a major sell-off in the making.

Direction for Monday 03 October, 2011; ∇ Down

What a way to start out the month - new 52 week lows, the second highest close on the VIX, one of the most lowest Up Volumes for the year, another DFDM making it 5 in 10 weeks on SPX, increased volumes on a down day and to make it worse, it was better volumes on a Monday which normally has weak volumes ... an ominous start indeed.


___________________________________________

MARKET SUMMARY - Monday 03 October, 2011


BRIEFING.COM - Monday 03 October, 2011 AMC
Daily Sector Wrap: Stocks Slump to New 52-Week Lows

The first session of the fourth quarter saw plenty of selling pressure. The effort culminated in a sharp loss for stocks, which settled at new 52-week lows.

Stocks just booked their worst quarter in almost three years, but sellers aren't yet ready to let up. As such, action today opened in negative territory. Participants continued to take their cues from Europe, where Greece admitted that it does not expect to hit a deficit target and the eurozone's PMI Manufacturing Index for September slipped. Between Germany, France, and the United Kingdom, only the UK experienced an increase in its monthly Manufacturing PMI.

The major averages managed to lure some buyers into the fold with help from a dose of upbeat data. Specifically, the ISM Manufacturing Index for September improved to 51.6 from 50.6 when it was widely expected to slip to 50.5. Construction spending swung from a 1.3% decline in July to a 1.4% increase in August, contrasting with the consensus call for a 0.5% decline.

Still, stocks struggled to sustain their midmorning move into positive territory. Once stocks faltered, the broad market was never able to return to higher ground. The struggle invited additional selling pressure, which prompted a steady descent. Bleeding was broad, but financials suffered the worst loss of any major sector by falling 4.5%.

Airlines experienced a dramatic drop, led lower by AMR (AMR 1.98, -0.98), which was caught up in rumors about bankruptcy. The company stated, though, that it is not seeking a prepackaged bankruptcy.

Given such aggressive selling pressure this session, the S&P 500 broke below the 1100 line and settled there for the first time in little more than a year. Both the Dow and Nasdaq also booked 52-week closing lows, but neither breached their one-year intraday lows.

Amid such weakness, many participants sought safety. In turn, the dollar advanced 1.1% against a basket of major foreign currencies and the benchmark 10-year Note climbed about a point and a half so that its yield tumbled to 1.75%. Gold prices advanced more than 2% to almost $1758 per ounce.

Sector Leaders/Laggards for Monday 03 October, 2011 AMC
Leading Sectors: Forget about it.
Leading Industries/ETFs : Vix- VXX +6.5%, Treasuries- TLT +2.5%, Silver- SLV +2.0%, Gold- GLD +1.8%.

Lagging Sectors: Consumer Staples -1.5%, Telecom -1.8%, Utilities -2.3%, Tech -2.3%, Materials -2.6%, Consumer Discretionary -2.9%, Industrials -3.0%, Health Care -3.2%, Energy -3.3%, Financials -4.5%
Lagging Industries/ETFs : FAA -9.6%, Solar- TAN -8.4%, Clean Energy- PBW -7.9%, Oil and gas exploration and production- XOP -6.7%, Home construction- ITB -5.6%, Homebuilders- XHB -5.6%, Coal- KOL -5.5%, Smart grid- GRID -5.5%, Steel- SLX -5.3.

Other Market Moving Factors:
• S&P 500 support levels fail; stocks set new 52-week lows
• Greece expects to come short of its deficit target; data from Europe disappoints
• ISM Manufacturing Index provides positive surprise; construction spendng also increases unexpectedly
• Dollar, Treasuries, and gold attract buying interest

Companies trading higher in after hours in reaction to earnings: TISI +4.3%.
Companies trading higher in after hours in reaction to news:
• SOMX +31.3% (Somaxon Pharmaceuticals announces FDA feedback on Silenor OTC regulatory pathway and changes to commercial team).

Companies trading lower in after hours in reaction to news:
• FIG -5.2% (Fortress Investment files $1 bln mixed securities shelf offering)
• BA -0.9% (Boeing awarded $11.75 bln contract - Dept. of Defense).


___________________________________________

ECONOMIC COMMENTARY - Monday 03 October, 2011

• UK Economic Data

- Sep Hometrack Housing Survey -0.1% vs -0.1% in Aug
- Sep Lloyds Business Barometer 7 vs -3 in Aug

• Australia Economic Data

- Sep AiG Performance of Manufacturing Index 42.3 vs 43.3 in Aug
- Sep TD Securities Inflation Expectation +0.1% vs -0.1% in Aug

• Japan Economic Data

- Q3 Tankan Large Manufacturers Outlook 4 vs 2 in Q2
- Q3 Tankan Large All Industry Capex +3.0% vs +4.2% in Q2
- Q3 Tankan Large Manufacturers Index 2 vs -9 in Q2
- Q3 Tankan Non-Manufacturing Index 1 vs -5 in Q2
- Q3 Tankan Non-Manufacturing Outlook 1 vs -2 in Q2
- Sep Vehicle Sales +1.7% vs -25.5% in Sep 2010

• China Economic Data

- Sep Manufacturing PMI 51.2 vs 50.9 in Aug
- Sep Non-manufacturing PMI 59.3 vs 57.6 in Aug

• UK Spe Manuf. PMI 51.1 vs 49.0 in Aug

• Eurozone Sep Manuf. PMI 48.5 vs 49.0 in Aug

• Germany Sep Manuf. PMI 50.3 vs 50.9 in Aug

• France Sep Manuf. PMI 48.2 vs 49.1 in Aug

• Switzerland Economic Data

- Aug Retail Sales -1.9% vs +2.9% in Aug 2010
- Sep Manuf. PMI 48.2 vs 51.7 in Aug

• U.S. Economic Data

- August Construction Spending +1.4% vs -0.5%
- September ISM Index 51.6 vs 50.5; August 50.6

Construction Spending Rebounds in August, Prompts Stronger Q3 GDP Forecast
Construction spending increased 1.4% in August and almost completely wiped away the 1.4% decline in July. The Briefing.com consensus expected construction spending to fall 0.5%. The rebound in construction spending dealt another blow to pundits noting there is an increased probability of an upcoming recession. In fact, this report is going to prompt upward revisions to Q3 GDP estimates. The big surprise was in the public sector. Public construction spending increased 3.1% in August after falling 1.5% in July. Public construction was expected to decline for a second consecutive month as state and local governments continue to implement spending cuts. Private construction increased a modest 0.4% in August after declining 1.4% in July. Private residential construction increased 0.7% as new, single and multi-family construction spending increased 0.8%. Home improvement projects rebounded modestly and increased 0.5% in August after falling 7.0% in July. Nonresidential construction edged up 0.2% in August after increasing 0.3% in July. Strong gains in power (+2.9%) and manufacturing (+1.8%) erased losses in lodging (-6.9%) and commercial (-2.6%) construction.

Manufacturing Growth Speeds Up in September, Sustained Growth May be Unlikely
The ISM Index held its ground in September and remained above the expansion/contraction threshold. Manufacturing activity sped up slightly as the index increased from 50.6 in August to 51.6 in September. The Briefing.com consensus expected the ISM index to fall to 50.5. The slight gain in the ISM index was at odds with the majority of the regional manufacturing surveys. With the exception of the Chicago PMI and the Kansas City Fed's Survey of Tenth District of Manufacturers, all regional Fed surveys were in a contraction zone in September. This included the worst reading of the New York Fed's Empire Manufacturing Survey since November 2010. Production expanded in September as the index recovered from a contraction reading (48.6) in August to 51.2. Growth in the ISM Index, however, and especially the Production Index, will be tough to sustain. The gains in production were due to a further paring down of order backlogs. The Backlog of Orders Index fell from 46.0 in August to 41.5 in September. That was the worst reading since April 2009. New orders contracted for the third consecutive month as the respective index remained at 49.6. Unless new orders pick up in the near future, manufacturers may not have a large enough supply of backorders to facilitate continued production growth.

• Asian Markets Close; Nikkei -1.8%, Hang Seng -4.4%, Shanghai CLOSED, Sensex -1.8%
It was a sea of red across Asia as the weekend brought little clarity to the ongoing European debt crisis. Loan worries in China weighed on the Hang Seng as it plunged 4.4% while emerging markets such as Indonesia and Thailand both tumbled more than 5.0%. China's Manufacturing PMI was released Friday evening and was in-line with its 51.2 estimate. Japan's Tankan Manufacturing Index was in-line with its estimate of 2 while the Tankan Non-Manufacturing Index posted a slight miss (1 actual v. 3 expected). Chinese markets are closed today and the rest of the week for the Golden Week. Looking at the currencies...USDCNY settled at a record 6.3755 while USDJPY is weaker at 76.80.

In Japan, the Nikkei closed -1.8% as financials weakened due to concerns of their exposure to Greece. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group both lost at least 3.0%. Telecom provider Softbank gained 3.4% after Alibaba's CEO (Softbank has a 30% stake in Alibaba and 42% stake in Yahoo Japan) indicated he was interested in buying Yahoo.

In Hong Kong, the Hang Seng finished -4.4% and is now at its lowest level since May 2009. Insurer Ping An plunged 13.4% as rumors that HSBC is selling its stake in the co persist. The stock has lost close to half of its value in the past quarter.

In China, the Shanghai Composite was closed for the Golden Week.

In India, the Sensex settled -1.8% as financials weighed. ICICI Bank and HDFC Bank were down as much as 4.0% before paring their losses. Automaker Maruti Suzuki lost 0.4% after seeing early gains as a month long strike at one of its plants ended.

• European Markets Closing Prices
UK's FTSE: -1.0%
Germany's DAX: -2.3%
France's CAC: -1.9%
Spain's IBEX: -2.3%
Portugal's PSI: -2.6%
Italy's MIB Index: -1.3%
Irish Ovrl Index: + 0.5%
Greece FTSE/ASE 20: -3.8%

IN OTHER NEWS ...

• Boeing (BA) awarded $11.75 bln contract - Dept. of Defense (58.25 -2.26)
The Boeing Co. is being awarded a maximum $11,750,000,000 Indefinite Delivery Indefinite Quantity contract for the C-17 Globemaster III Integrated Sustainment Program (GISP). This contract will provide support and sustainment services to the government product dupport manager (PSM)/product support integrator (PSI) for the C-17 weapon system. Support shall include, but not be limited to: program management; sustaining logistics; material and equipment management; sustaining engineering; quality assurance; depot level aircraft maintenance and modifications; F117 propulsion system management; long-term sustainment (LTS) planning; field services, unique foreign military customer services, and Air Logistics Center Partnering Support for the worldwide fleet of the C-17 aircraft. The level of support required will be outlined in individual task orders. Approximately 10 precent of this contract effort supports Foreign Military Sales to United Kingdom, Australia, Canada, United Arab Emirates, Qatar and NATO Strategic Airlift Capability. At this time, zero dollars have been obligated. Aerospace Sustainment Directorate Contracting Section (WR-ALC/GRGKA), Robins Air Force Base, Ga., is the contracting activity (FA8526-12-D-0001).

• S&P affirms unsolicited ratings on the United Kingdom At 'AAA/A-1+'; Outlook Stable

• Greece cabinet approves 2012 draft budget; sees deficit at 6.8% of GDP vs 6.5% target
Click here (http://www.ft.com/intl/cms/s/0/17955778-ed13-11e0-be97-00144feab49a.html#axzz1ZhdFkZ4o) for FT story


___________________________________________

TECHNICAL UPDATE - Monday 03 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,655.30 -258.08 (-2.36%)
Volume: 242,868,605 from 213,199,511 the previous day
Range: 10,653.34 – 10,979.19

http://img214.imageshack.us/img214/3416/dowm.jpg (http://imageshack.us/photo/my-images/214/dowm.jpg/)

Here we go ... 10,700 will be the key interest this coming week. A break below that and its going to make for excellent sell-down that should rival some of the tankers of October 2008. If the August and September ranges were any indication, we're in for major volatility ... Watch for 2,350 and 2,330. Having broken down below its Flag and failing to return inside it, NASDAQ and its weakness in Tech could well end up being the leadership to the downside in the weeks to come ... SPX's last stand will be 1,120. Beyond that and we're looking like 2008 all over again. All three benchmarks look on the mark to get set and go make its second downside on an Elliot Wave correction.

9,500, here we come! If you consider that far-fetched, then consider that I said it at the start of Q2 in 2008 when the DOW was still above 12,500 and got rubbished for it. DOW cut through 10,700 like a hot knife through butter as did S&P through the critical 1,120. Both NASDAQ and S&P now sit at new 52W lows and look set to start a lower range from hereon in. For now, all we have on all three benchmarks are soft supports, unreliable at best. Its going to take a few sessions to the down side to settle on which supports are going to be the next key levels over the next months.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,335.83 -79.57 (-3.29%)
Volume: 711,172,948 from 597,967,391 the previous day
Range: 2,335.23 – 2,430.88

S&P 500 INDEX (SPX: CBOE)
1,099.23 -32.19 (-2.85%)
Volume: 1,064,637 from 986,533 the previous day
Range: 1,098.92 – 1,138.99


___________________________________________

MARKET INTERNALS - Monday 03 October, 2011 AMC

NYSE :
Higher than avg volume @ 1400 mln, vs. 1276 mln
Decliners outpaced Advancers (adv/dec): 285/2799
New lows outpaced new highs (hi/lo): 14/837

NASDAQ :
Higher than avg volume @ 2487 mln, vs. 2187 mln
Decliners outpaced Advancers (adv/dec): 246/2388
New lows outpaced new highs (hi/lo): 5/645


Decliners outpaced Advancers by an average 3.72 to 1 on lower volumes (-3.87%) on Friday (avg -2.43%).

Looks like the VIX wants to find higher ground having broken out of its Bear Flag. That is enough to convince me to be extremely cautious and even deter me from being long. The internals have been hinting at a major sell-off in the making and with volumes getting weaker with each session in September, it won't take much to bring this edgy market down. Leadership has been favoring the defensive plays and even they are copping losses while the usual bullish leaders maintained their leadership to the downside. The last week's "rallies" have been nothing more than short covering. So with the bears rather empty handed and foolish bulls slightly stocked up, expect the market to turn down sharply as the bulls force-sell and the bears short the market again.

Decliners outpaced Advancers by an average 6.73 to 1 on higher average volumes (+12.24%) on Monday (avg -2.83%).

No contest. Expect to see more of the same with the VIX climbing to new highs along with the TRIN. But don't write off the possibility of bounces as key levels trigger system buys and short covers. Volumes will be key to identifying short selling opportunities.

http://img190.imageshack.us/img190/7889/intsj.jpg (http://imageshack.us/photo/my-images/190/intsj.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude drops, gold rallies on euro-zone concerns

Concerns about the euro zone were once again the focus in commodities. Those concerns led to a flight to safety in the precious metals. Gold futures did most of their rallying in the overnight session. Throughout pit trade, prices moved sideways. Gold closed with gains of 2.2% at $1657.70 per ounce. Silver futures had a very similar pattern of trade, rallying in overnight trade only to spend pit trade range bound. Silver ended with gains of 2.8% at $30.79 per ounce. Dec copper shed 3 cents to close at $3.12.

Strength in the dollar, coupled with concerns about the euro zone, pressured crude oil prices, which finished lower by 2% at $77.61 per barrel, its lowest settlement in a year. Crude did rally into positive territory at one point, but quickly gave back those gains to trade back toward lows. Natural gas prices shed 2% to finish at $3.62 per MMBTu. Heating oil ended off 2.1 cents at $2.75, while RBOB gasoline finished lower by 2.6 cents at $2.47 (all Nov contracts).

Corn settled higher by 2 cents to $5.95, wheat gained 9 cents to end at $6.18, soybeans were 3 cents lower at $11.76, ethanol fell 7 cents to close at $2.48, while sugar was unchanged at $0.25.

Commodities AMC on Monday 03 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 77.61 -1.59 (-2.01%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,657.70 +35.40 (+2.18%)

30-yr Yield Falls to 2.76%: Treasuries closed at session highs as a breakdown of the key 1120 support level in the S&P 500 sent traders running for safety into the Treasury complex. The long bond closed up almost three and a half points as buyers rushed into the higher yielding maturities. Today’s gains sent the 30-yr down 16 bps and to its lowest close since the opening days of 2009. Strength in the 10-yr dropped its yield 14 bps to 1.785% and with a move below 1.70% it will see a record low. Tightening continued along the yield curve as the 2-10-yr spread narrowed to 154 bps and the 10-30-yr spread fell to 97.5 bps.

Treasury Yields AMC on Monday 03 October, 2011:
• 2 Year Note 0.24% -0.01
• 5 Year Note 0.87% -0.09
• 10 Year Note 1.80% -0.12
• 30 Year Bond 2.76% -0.14
2/30 Spread : 252bps ( -0.13 ) ... 2/10 Spread : 156bps ( -0.11 )


At the end of the month, the curve settles with the 5, 10 and 30 year yields twice below par while the spreads on the 2/30 and 2/10 remain below par and continue tightening. This unprecedented curve has been akin to a recessionary indication and even depressionary indication. Quite foreboding if you consider that the curve has been leading into this for more than a quarter now thus leaving us less than three months before its impending confirmation.

This is major. The flattening accelerates again and the 30yr yield gets down to record lows ... yet again. The fall of the 30yr yield is going to be watched keenly for the possibility of an inversion against the 10yr yield. Keep watching this space!


___________________________________________

PREVIEW FOR TUESDAY 04 OCTOBER, 2011

Tuesday is limited to just factory orders (10:00). Fed speak begins on Tuesday with Federal Reserve Governor Raskin speaking on “Policy Opportunities and Challenges in Crafting a Foreclosure Response” (9:00), and will be followed by Chairman Bernanke’s testimony in front of the Joint Economic Committee on his outlook for the U.S. economy. Tuesday’s ‘twist’ purchases take place in 2019-2021 maturities with the Fed looking to buy $4.25-5.00 bln worth.

Earnings Highlights
BMO: GPN, LNDC, RECN, and YUM

Economic Events
10:00 am Factory Orders

Conferences and Shareholder/Analyst Meetings of Interest
- SIG at Signet Jewelers Investor Day
- HILL at 1 on 1's with Dot Hill Systems FBN Securities
- Apple (AAPL) will hold a media event to unveil The iPhone 5 at 13:00


___________________________________________

SUMMARY

The first week of October is one of the most horrible weeks in the trading calendar because of all the historical sell-downs and crashes. I won't be tempting fate and will keep straight puts for insurance.

I'm staying on the short side of the trade regardless of any bounce this week. And bounce will present an opportunity for opening vertical calls and I will be waiting for it.

Direction for Tuesday 04 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 108/175 (61.71%)

Conrad
10-05-2011, 06:13 AM
U.S. MARKETS - Tuesday 04 October, 2011 AMC

http://img254.imageshack.us/img254/2444/dexs.jpg (http://imageshack.us/photo/my-images/254/dexs.jpg/)

I'm staying on the short side of the trade regardless of any bounce this week. Any bounce will present an opportunity for opening vertical calls and I will be waiting for it.

Direction for Tuesday 04 October, 2011; ∇ Down

If you woke up this morning and saw the closing price from Tuesday's session, you'd probably be thinking that the market rallied more than 2%. The truth of the session is that the market tanked and stayed down by 2% for the most part. It was only in the last 45 minutes that it suddenly rallied for no real reason and on weaker average volumes ... short covering?. In the last 15 minutes, some news out of Europe rallied the market further up into the close and that rally had genuine volumes. By that time, it was too late and too little to determine if those volumes were enough to warrant any sort of conviction.

This is rubbish and I smell a rat ... more accurately, I smell a Dead Cat. I was so stunned by the speed and shallowness of the rally that I forgot to STO my Vertical Calls.

And truth be told, I was having too much fun scalping oil in the most brilliant 1 hour rally I have ever experienced for a $2.50 gain that went from $75.50 to $78.00 in 75 minutes between 3:15 to 4:30 EST. Now that was a great trade!


___________________________________________

MARKET SUMMARY - Tuesday 04 October, 2011


BRIEFING.COM - Tuesday 04 October, 2011 AMC
Daily Sector Wrap: Risk On, Risk Off

Trade on Tuesday was quite volatile. The S&P 500 quickly tumbled in excess of 2%, but retraced the downturn into midday. The struggle to extend the move into anything more than an incremental gain invited renewed selling in the afternoon, but a late rally helped the market close with a gain of more than 2%.

Ongoing concerns about financial conditions in Europe and Greece's ability to pay its debts, let alone meet deficit reduction targets, prompted overseas markets to suffer steep losses in schizophrenic-like trade. The negative sentiment permeated premarket trade and prompted domestic participants to push stocks sharply lower in the first few minutes.

Few stocks were sparred from the sell-off as the S&P 500 dropped to the 1075 line for the first time in about 13 months. At that point, the stock market was more than 20% below its early May high, bringing about the undesirable distinction of bear market territory.

Tech stocks provided support in the face of the broad market's dive. The sector rallied to a gain of more than 1% with help from semiconductor-related plays. Tech's strength took the Nasdaq up to a nice midsession gain and helped the S&P 500 reverse its loss, but the broad market measure was unable to move up from the neutral line while the Dow remained mired in the red.

Tech's strength was challenged in the afternoon, though. Loss of leadership from the sector, which is the largest by market weight, invited sellers to redouble their efforts and drive stocks back into negative territory.

Reports that officials in the European Union are considering plans to recapitalize banks coincided with a barrage of buying in the final hour. The move by the S&P 500 from its afternoon low to its close spanned 4%. At the same time, the Dow bounded by more than 350 points with barely a pause along the way. The Nasdaq settled with a 3% gain, the strongest of the trio.

Although the Nasdaq outpaced its counterparts, primary component Apple (AAPL 372.50, -2.01) was unable to find positive territory. The stock's loss came amid a rather negative response to the unveiling of the company's latest iPhone.

Comments from Fed Chairman Bernanke to the Joint Economic Committee were consistent with recent policy statements in that the Fed remains prepared to provide additional support as necessary. The absence of surprises essentially made the speech a non-event for the market.

The market's reversal into the close caused the dollar to take a late dive. It ended the day about 0.7% behind a basket of major foreign currencies after it had worked its way out of the red during afternoon trade. The downturn was largely owed to newfound support for the euro, which settled with a 1.4% gain at $1.337.

Treasuries also sold off. Their downturn wasn't terribly steep, but it was still enough to take the yield on the benchmark 10-year Note back above 1.80%.

A dour mood during pit trade kept pressure on oil prices, which closed the day with a 2.5% loss at $75.67 per barrel. That marked their lowest close in more than a year, but futures prices climbed in conjunction with the equity market after pit trade had closed. As for gold, the precious metal slumped during pit trade to $1616 per ounce for a 2.2% loss, unable to attract even safety seekers.

Sector Leaders/Laggards for Tuesday 04 October, 2011 AMC
Leading Sectors: Financials +4.1%, Materials +3.7%, Energy +3.2%, Consumer Discretionary +3.1%, Industrials +2.6%, Tech +2.1%, Health Care +1.0%, Consumer Staples +0.7%, Telecom +0.6%
Leading Industries/ETFs : Reg Bank KRE +8.0%, Semi Equip XSD +6 .4%, financial- KCE +6.1%, PBW +6.0%, IAI +5.2%, energy- XOP +5.6%, US retailers- XRT +5.4%, Clean energy- TAN +5.4%, Broker- IAI +5.2%, Housing XHB +5.2%, ITB +4.5%, Reg banks- RKH- +4.5%.

Lagging Sectors: Utilities -0.5%
Lagging Industries/ETFs : Vix- VXX- 7.0%, Gold miners- GDX -3.6%, Junior gold miners- GDXJ -2.6%, Platinum- PGM -1.7%, Silver- SLV -1.4%, Treasuries- TLT -1.3%.

Other Market Moving Factors:
• Concerns over Europe continue, but reports suggest officials are considering a bank recapitalization plan
• Tech oscillates after failing to sustain early leadership role
• Bernanke says in testimony that the Fed is prepared to take further action as appropriate

Companies trading lower in after hours in reaction to earnings: GPN -2.4%.
Companies trading lower in after hours in reaction to news:
• APKT -15.1% (Acme Packet sees Q3 EPS of $0.20-0.22 vs. $0.29 Capital IQ Consensus Estimates; sees revs of ~$70 mln vs. $82.5 mln; reaffirms 2011)
• SAFM -2.7% (Sanderson Farms files for $1 bln mixed securities shelf offering)
• DNR -1.7% (Denbury Resources President and COO resigns)
• BNS -1.2% (Scotiabank Designated as U.S. primary dealer)
• EWI (Moody's cuts Italy's govt. bond rating three notches to A2 with negative outlook -- CNBC).


___________________________________________

ECONOMIC COMMENTARY - Tuesday 04 October, 2011

• Japan Economic Data

- Aug Labor Cash Earnings -0.6% vs -0.2% in Aug 2010
- Sep Monetary Base +16.7% vs +15.9% in Sep 2010

• Australia Economic Data

- Aug Trade Balance (in AUD) 3100 mln vs 1817 mln in Jul
- Aug Building Approvals -5.5% vs -14.3% in Aug 2010
- Sep RBA Commodity Index SDR +26.6% vs +25.1% in Aug
- Sep RBA Commodity Price Index 115.4 vs 113.3 in Aug

• UK Sep Construction PMI 50.1 vs 52.6 in Aug

• Eurozone Aug PPI +5.9% vs +6.1% in Aug 2010

• U.S. Economic Data

- August Factory Orders -0.2% vs -0.1%

Factory Orders Slip in August on Weaker Demand for Metals and Oil Price Declines
Factory orders fell 0.2% in August after increasing a downwardly revised 2.1% (from 2.4%) in July. The Briefing.com consensus expected factory orders to fall 0.1%. Durable goods orders were unchanged from the advance release, declining 0.1% in August after increasing 4.2% in July. Nondurable goods orders fell 0.3% after increasing a downwardly revised 0.4% (from 1.0%) in July. A second month of strong aircraft sales was more than offset by weaker demand for primary and fabricated metals. The decline in nondurable goods was mainly due to a 2.5% drop in orders for petroleum and coal products. This is due most likely to the recent slide in oil prices and not from a drop in the quantity demanded. Business investment demand was slightly weaker than the advance durables report originally revealed. Orders of nondefense capital goods increased 0.9% in August, down from a 1.1% increase in the advance release. The effect on GDP, however, should be minimal. Shipments, which factor directly into GDP, were unchanged from the advance data. In contrast to the ISM report, order backlogs remained a source of strength for manufacturers. The ISM Index remained in an expansion mode due to companies paring back their order backlogs. That was not the case in the hard data. Unfilled orders increased 0.9% for the second consecutive month, signaling that the sector has plenty of backorders to support production in the case of a drop-off in new orders.

• Asian Markets Close; Nikkei -1.1%; Hang Seng -3.4%; Shanghai CLOSED; Sensex -1.8%
Most of the Asian equity markets saw selling pressure last night. The Hang Seng market flirted with positive territory, but eventually, the bears won out toward the close. There was market chatter of the BOJ stepping up its purchases of ETFs as part of its asset buying program, but there is nothing to prove that ever materialized. The Reserve Bank of Australia left rates unchanged at 4.75%, but took a dovish stance in the commentary. South Korea returned from its day off and saw the Kospi down as much as 6% intra-day. There is talk that pension funds stepped in to help stop the bleeding, but the index still managed to close down nearly 3.5%. China will be closed for the remainder of the week, however that did not prevent the PBOC from responding to US/China Currency Bill, which will move to Senate debate. The PBOC stated that China will continue with gradual and active currency reform, and to increase yuan flexibility. Looking at currencies...the yuan closed little changed to 6.3745; the yen is weaker vs the dollar to 76.68.

In Japan, the Nikkei closed down 1.1% as Oil & Gas (-3.0%), Basic Materials (-1.8%), and Industrials (-1.5%) were the weakest sectors, while Telecom (+1.3%) was the only sector in the black. Automakers such as Toyota (-2.5%) and Honda (-2.8%) both declined after reported weaker sales in the US.

In Hong Kong, the Hang Seng closed 3.4% lower. Shares of CNOOC declined 6.7%, reacting to the recent slide in oil prices.

In China, the Shanghai remained closed for Golden Week.

In India, the Sensex fell 1.8%. Banks were among the biggest losers as ICICI closed down 4.6% while HDFC Bank dropped 1.6%. Heavyweight Reliance Industries lost another 2.1% and is now down over 27% YTD.

• Earnings Call - After the Close Tuesday 04 October, 2011

Acme Packet (APKT) sees Q3 EPS of $0.20-0.22 vs. $0.29 Capital IQ Consensus Estimates; sees revs of ~$70 mln vs. $82.5 mln; reaffirms 2011
Co issues downside Q3 guidance and Co also reaffirmed 2011 EPS of $1.14-1.18 vs. $1.13 Capital IQ Consensus Estimate; reaffirms revs of $315-320 mln vs. $325.2 mln consensus. Co said, "While we remain confident in our second half growth plans, our Q3 results were adversely impacted by a very large opportunity at one of the two largest service providers in North America. We now expect this opportunity to close in the first half of Q4 and we remain confident in our ability to execute on our full year business outlook. I continue to believe we are well positioned to leverage the broad, multi-year, secular growth drivers associated with the global transition from TDM to IP for real time communications like voice and video. The co was recently selected as the session border controller supplier for a major universal voice platform at this Tier-1 service provider in the United States. This platform is initially designed to support the existing customer's "over-the-top" and wireline service offerings and will become a key infrastructure component to their Voice over Long Term Evolution offering. This platform is expected to become one of the largest such deployments in North America, supporting over 100 million subscribers. The initial deployment, which the co estimates will support ~5 mln subscribers, was expected to close in Q3 of 2011. However, during the final stage of Q3, the orders associated with this initial deployment were delayed to Q4. Accordingly, the co now expects this opportunity to close in the first half of Q4 of 2011.

YUM! Brands (YUM) beats by $0.01, beats on revs; reaffirms FY11 EPS growth of at least 12%
Reports Q3 (Sep) earnings of $0.83 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.82; revenues rose 14.4% year/year to $3.27 bln vs the $3.09 bln consensus. Yum! reconfirms full year EPS growth forecast of at least 12%, excluding special items. Co said, I'm pleased to report EPS growth of 13% in the third quarter, excluding special items. As a result of strong performance in China and other emerging markets, we confidently reaffirm our full-year EPS growth forecast of at least 12%, which will make 2011 the 10th consecutive year we exceed our annual target of at least 10% EPS growth. Our impressive international growth was offset by a 16% decline in U.S. profits. We're obviously disappointed in our U.S. performance. However, we have aggressively developed a pipeline of category leading innovation and have productivity initiatives planned to dramatically improve sales and profit performance in 2012. Looking ahead, the strength of our international brands and outstanding new unit development, combined with aggressive U.S. initiatives, make us confident we will continue our track record of double-digit earnings growth next year and beyond."

• European Markets Closing Prices
UK's FTSE: -2.6%
Germany's DAX: -3.0%
France's CAC: -2.6%
Spain's IBEX: -1.5%
Portugal's PSI: -2.2%
Italy's MIB Index: -2.7%
Irish Ovrl Index: -3.6%
Greece FTSE/ASE 20: -7.6%

IN OTHER NEWS ...

• Reserve Bank of Australia leave key interest rates unchanged at 4.75%, as expected
Click here (http://www.federalreserve.gov/newsevents/testimony/bernanke20111004a.htm) for details

• Fed Chairman Ben Bernanke Prepared Remarks - Excerpts

-- The functioning of financial markets and the banking system in the United States has improved significantly. Manufacturing production in the United States has risen nearly 15 percent since its trough, driven substantially by growth in exports.

-- overall, the recovery from the crisis has been much less robust than we had hoped. Recent revisions of government economic data show the recession as having been even deeper, and the recovery weaker, than previously estimated.

-- With commodity prices having come off their highs and manufacturers' problems with supply chains well along toward resolution, growth in the second half of the year seems likely to be more rapid than in the first half. However, the incoming data suggest that other, more persistent factors also continue to restrain the pace of recovery. Consequently, the Federal Open Market Committee (FOMC) now expects a somewhat slower pace of economic growth over coming quarters than it did at the time of the June meeting. Consumer behavior has both reflected and contributed to the slow pace of recovery.

-- European Risk: It is difficult to judge how much these financial strains have affected U.S. economic activity thus far, but there seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth.

-- important objective is to avoid fiscal actions that could impede the ongoing economic recovery.

-- As the FOMC anticipated, however, inflation has begun to moderate as these transitory influences wane; In addition to the stability of longer-term inflation expectations, the substantial amount of resource slack in U.S. labor and product markets should continue to restrain inflationary pressures.

-- The Committee will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability.
Click here (http://www.federalreserve.gov/newsevents/testimony/bernanke20111004a.htm) for file.

• Apple issued press release confirming launch details for the iPhone 4S, iOS 5 & iCloud
iPhone 4S will be available in the US for a suggested retail price of $199 for the 16GB model and $299for the 32GB model and $399 for the new 64GB model. iPhone 4S will be available from the Apple Online Store, Apple's retail stores and through AT&T (T), Sprint (S), Verizon Wireless (VZ) and select Apple Authorized Resellers. iPhone 4S will be available in the US, Australia, Canada, France, Germany, Japan and the UK on Friday, October 14 and customers can pre-order their iPhone 4S beginning October 7. iPhone 4 will also be available for just $99 and iPhone 3GS will be available for free with a two year contract. iPhone 4S will roll out worldwide to 22 more countries by the end of October including Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Mexico, Netherlands, Norway, Singapore, Slovakia, Slovenia, Spain, Sweden and Switzerland.

• Moody's cuts Italy's govt. bond rating three notches to A2 with negative outlook


___________________________________________

TECHNICAL UPDATE - Tuesday 04 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,808.71 +153.41 (+1.44%)
Volume: 267,440,833 from 242,868,605 the previous day
Range: 10,404.49 – 10,825.44

http://img545.imageshack.us/img545/1821/dowq.jpg (http://imageshack.us/photo/my-images/545/dowq.jpg/)

9,500, here we come! If you consider that far-fetched, then consider that I said it at the start of Q2 in 2008 when the DOW was still above 12,500 and got rubbished for it. DOW cut through 10,700 like a hot knife through butter as did S&P through the critical 1,120. Both NASDAQ and S&P now sit at new 52W lows and look set to start a lower range from hereon in. For now, all we have on all three benchmarks are soft supports, unreliable at best. Its going to take a few sessions to the down side to settle on which supports are going to be the next key levels over the next months.

I am discounting Tuesday's technicals as any sort of analysis will be off by a mile given the nature of the close. But it is important to note that the artificial rally towards the close has conveniently put all the benchmarks above their critical supports of 1,800, 2,400 and 1,120.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,404.82 +68.99 (+2.95%)
Volume: 846,124,469 from 711,172,948 the previous day
Range: 2,298.89 – 2,406.67

S&P 500 INDEX (SPX: CBOE)
1,123.95 +24.72 (+2.25%)
Volume: 1,234,751 from 1,064,637 the previous day
Range: 1,074.77 – 1,125.12


___________________________________________

MARKET INTERNALS - Tuesday 04 October, 2011 AMC

NYSE :
Higher than avg volume @ 1660 mln, vs. 1294 mln
Advancers outpaced Decliners (adv/dec): 1867/1236
New lows outpaced new highs (hi/lo): 5/1146 (at 15:00 EST)

NASDAQ :
Higher than avg volume @ 2962.0 mln, vs. 2215 mln
Advancers outpaced Decliners (adv/dec): 1903/692
New lows outpaced new highs (hi/lo): 3/683 (at 15:00 EST)


Decliners outpaced Advancers by an average 6.73 to 1 on higher average volumes (+12.24%) on Monday (avg -2.83%).

No contest. Expect to see more of the same with the VIX climbing to new highs along with the TRIN. But don't write off the possibility of bounces as key levels trigger system buys and short covers. Volumes will be key to identifying short selling opportunities.

Advancers outpaced Decliners by an average 1.95 to 1 on higher average volumes (+31.72%) on Tuesday (avg 2.21%).

The VIX hit a high of 46.88 before retreating to close out at 40.60 in the last 45 minutes of the session. And just for the record, Tuesday's market internals were more bearish than Monday up until that last 45 minutes.

By the way, nothing was moving up in after-hours trading ... nothing.

http://img194.imageshack.us/img194/7695/inttv.jpg (http://imageshack.us/photo/my-images/194/inttv.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold futures fall, ending recent 3-session bounce

The safe haven appeal of precious metals faded, for the time being, following commentary from Fed Chairman Bernanke which indicated the Fed might once again interject to help the flailing economy. Both gold and silver sold off throughout the session to finish near session lows. Gold prices ended off 2.5% at $1616 per ounce, while silver pries dropped 3.2% to finish at $29.84 per ounce. Dec copper ended off a penny at $3.09.

Weakness in the dollar, on the heels of the Fed Chairman's commentary, helped crude oil futures recoup overnight losses. They were, however, unable to maintain those gains and quickly pulled back into negative territory and accelerated to the downside heading into the close of pit trade. On the session, crude oil shed 2.5% to end at $75.67 per barrel, its lowest close since late Sept of 2010. Natural gas ended higher by 0.5% at $3.63 per MMBtu. Heating oil ended lower by 3 cents at $2.72, while RBOB gasoline shed 2 cents to finish at $2.48 (all Nov contracts).

Commodities AMC on Tuesday 04 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 75.67 -1.94 (-2.50%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,616.00 -41.70 (-2.52%)

Treasuries ended the day little changed after early morning gains quickly turned into losses as Chairman Bernanke addressed the Joint Economic Committee. In his testimony Mr. Bernanke stopped short of announcing any further measures to stimulate the economy but did say the Fed would act if needed. The complex did however rally in afternoon trade with late day buying causing maturities to finish near the flat line. Yields finished the day little changed as the 10- and 30-yr yields closed the cash session at their respective 1.783% and 2.758%. Slight flattening of the yield curve saw the 2-10-yr spread finish tighter at 154.5 bps.

Treasury Yields AMC on Tuesday 04 October, 2011:
• 2 Year Note 0.25% +0.01
• 5 Year Note 0.90% +0.03
• 10 Year Note 1.81% +0.01
• 30 Year Bond 2.77% +0.01
2/30 Spread : 252bps ( unch ) ... 2/10 Spread : 156bps ( unch )


This is major. The flattening accelerates again and the 30yr yield gets down to record lows ... yet again. The fall of the 30yr yield is going to be watched keenly for the possibility of an inversion against the 10yr yield. Keep watching this space!

If the risk market was bullish as the closing price suggests, then bonds surely didn't agree with that. The session was actually bullish as invested flooded more money into fixed income for most of the session and returned unchanged at the close. Behind the facade of a bullish close on the benchmark indices, Fear is still very alive and well.


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PREVIEW FOR WEDNESDAY 05 OCTOBER, 2011

Data picks back up on Wednesday with the weekly MBA Mortgage Index (7:00), Challenger Job Cuts (7:30), ADP Employment Change (8:15), and ISM Services (10:00). The Fed will buy $1.00-1.50 bln worth of 2018-2041 maturities through its ‘twist.'

Earnings Highlights
BMO: AYI, COST, MON, and RPM.
AMC: CBK, DRWI, MAR, OCZ, and RT.

Economic Events
07:00 am MBA Mortgage Index
07:30 am Challenger Job Cuts
08:15 am ADP Employment Change Sep
10:00 am ISM Services
10:30 am Crude Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- Imperial Capital Global Opportunities Conference
- PC at International Home Care and Rehabilitation Exhibition
- CBOE at CBOE Holdings Investor Day


___________________________________________

SUMMARY

What a way to start out the month - new 52 week lows, the second highest close on the VIX, one of the most lowest Up Volumes for the year, another DFDM making it 5 in 10 weeks on SPX, increased volumes on a down day and to make it worse, it was better volumes on a Monday which normally has weak volumes ... an ominous start indeed.

I'm staying bear and will continue to be on the lookout for opening Vertical Calls. Why not? Japan by its own admission is expecting worse (severe) to come ... Europe is deteriorating further in spite of its rhetoric to recapitalize the banks - while they dither, Europe withers ... Bernanke is screwing China up for screwing up the prospects of a global recovery by screwing up the currency markets with its untimely and deliberate intervention while Ben himself is screwing up America's economy which has the dollar all screwed up to screw up the global economy ... AAPL frustrates the world by not having a 5 but a 4S instead ... Shanghai continues its slow bleed with no fix in sight ... and Greece pulls up their deck-chairs to get the last few rays of the sun before the cold season comes while the rest of Europe bust their asses to figure out a way to save those sun-tanned Grecian butts.

And to top it all off, NYSE could be erased by Hackers on 10/10/11 (http://www.cnbc.com/id/44776749)!!!

Direction for Wednesday 05 October, 2011; ∇ Down

As Tuesday was more bearish than it was bullish, I'll take the result for now. If Wednesday confirms the last hour of Tuesday's bullishness, I'll forfeit it.

2011 Daily Directional Accuracy: 109/176 (61.93%)

Conrad
10-06-2011, 06:38 AM
U.S. MARKETS - Wednesday 05 October, 2011 AMC

http://img832.imageshack.us/img832/5912/dexsk.jpg (http://imageshack.us/photo/my-images/832/dexsk.jpg/)

... you'd probably be thinking that the market rallied more than 2% (on Tuesday). The truth of the session is that the market tanked and stayed down by 2% for the most part. It was only in the last 45 minutes that it suddenly rallied for no real reason and on weaker average volumes ... short covering?. In the last 15 minutes, some news out of Europe rallied the market further up into the close and that rally had genuine volumes. By that time, it was too late and too little to determine if those volumes were enough to warrant any sort of conviction ... This is rubbish and I smell a rat ... more accurately, I smell a Dead Cat.

Direction for Wednesday 05 October, 2011; ∇ Down

Looks like I have to relent on Tuesday's call. I can't deny the bullishness of Wednesday's session but I doubt the sustainability. Volumes were weaker for an up-day (again) and the under-lying fear is still very present. Wednesday's rally may have been nothing more than a reaction to data - lagging data - and we know that won't last.


___________________________________________

MARKET SUMMARY - Wednesday 05 October, 2011


BRIEFING.COM - Wednesday 05 October, 2011 AMC
Daily Sector Wrap: Stocks Ascend Again

Stocks overcame a relatively weak start to book another round of big gains, which have resulted in the market's best back-to-back performance in more than a month.

Momentum from the prior session's late surge was tested at the open, when participants contradicted the positive tone of premarket trade to send stocks into the red for the first few minutes of trade. Buyers took little time to step back in, though.

Favor for tech stocks and natural resource plays was the strongest. Tech, which offered leadership for the second straight session, helped the Nasdaq outpace its counterparts on its way to a gain of more than 2%. Yahoo! (YHOO 15.92, +1.46) was a high flyer in response to rumors that Microsoft (MSFT 25.89, +0.55) is interested in the company. Later reports refuted the rumor.

Materials stocks, which lack any kind of meaningful market weight, swung up to a 4.2% gain. Energy stocks climbed to a 3.3% gain, helped along by a spike in crude oil prices, which settled pit trade with at almost $79.70 per barrel for a gain of more than 5% following a weekly inventory report that featured a surprisingly large draw.

Financials dragged on trade for most of the session and were even the cause of a midsession pullback. Down more than 2% at its low, the sector spent all by the final 30 minutes of the day in negative territory as diversified financial services stocks and investment banks more than offset strength among insurers. However, the sector managed to bounce as the broad market staged the last leg of its climb into the close. Financials finished with a gain of more than 1%.

The stock market's final push into the close helped stocks settle near session highs. Stocks have now climbed 4% over the course of the past two sessions.

In the backdrop of today's action, an ADP Employment Change report showed that private payrolls increased by 91,000, which bested the Briefing.com consensus call for an increase of 45,000. The report offers an encouraging preview of the official nonfarm payrolls report, which will be released Friday morning.

The ISM Services Index for September was less exciting. It registered slipped to 53.0 from 53.3 in the prior month, but still narrowly exceeded the 52.8 that had been expected, on average, among economists polled by Briefing.com.

Sector Leaders/Laggards for Wednesday 05 October, 2011 AMC
Leading Sectors: Materials +4.2%, Energy +3.3%, Tech +2.4%, Industrials +2.2%, Consumer Discretionary +1.8%, Health Care +1.6%, Financials +1.2%, Consumer Staples +0.2%
Leading Industries/ETFs : Coal- KOL +5.8%, Junior miners- GDXJ +5.2%, Gold miners- GDX +4.6%, Basic materials- IYM +4.4%, Oil Service- OIH +4.4%, homebuilders & home const- ITB +4.2%, XHB +3.5%, Oil and gas- XOP +4.1%, Steel- SLX +4.1%, Internet- HHH +3.8%, Energy XLE -3.7%, Airlines- FAA +3.6%, Ag/Chem MOO +3.6%, Clean Enegy PBW +3.6%, TAN +3.5%.

Unchanged Sectors: Utilities 0.0%

Lagging Sectors: Telecom -0.3%
Lagging Industries/ETFs : Vix- VXX- 4.9%, Nat gas -2.3%, REITs IYR --0.8%

Other Market Moving Factors:
• Tech offers leadership, but financials lag
• ADP Employment Change proves stronger than expected
• ISM Services Index offers little surprise
• Europe's bourses bounce, helping promote improved sentiment

Companies trading higher in after hours in reaction to earnings: OCZ +15.7%.
Companies trading higher in after hours in reaction to news:
• ZUMZ +12.4% (Zumiez Inc reports Sep same store sales +10.1% vs +3.1% Retail Metrics consensus; raises Q3 guidance)
• CMTL +8.2% (Comtech Telecom higher following M&A talk)
• GLW +3.2% ( Corning increased dividend 50% to $0.075; announces and $1.5 bln stock buyback; however, co says it may see equity earnings that are at least 30% lower sequentially).

Companies trading lower in after hours in reaction to earnings: CBK -10.5%, RT -9.2%, DRWI -7.9%.


___________________________________________

ECONOMIC COMMENTARY - Wednesday 05 October, 2011

• UK Economic Data

- Sep BRC Shop Price Index +2.7% vs +2.7% in Sep 2010
- Sep Services PMI 52.9 vs 51.1 in Aug
- Q2 final GDP +0.1% vs +0.2% prelim
- Q2 prelim Exports -1.3% vs +2.4% in Q1
- Q2 prelim Imports -1.0% vs -2.4% in Q1
- Sep Official Reserves (Changes) -$2,444 mln vs +$2,237 mln

• Australia Economic Data

- Sep AiG Performance of Service Index 50.3 vs 52.1 in Aug
- Aug Retail Sales +0.6% vs +0.6% in Jul

• France Economic Data

- Sep Services PMI 51.5 vs 56.8 in Aug
This is the lowest reading since Auig 2009.

• Germany Economic Data

- Sep Services PMI 49.7 vs 51.1 in Aug
This is the first contraction since July 2009.

• Eurozone Sep Service PMI 48.8 vs 51.5 in Aug

• U.S. Economic Data

- MBA Mortgage Applications of -4.3% vs +9.3% Prior
- September ADP Employment Change 91K vs 45K
- September ISM Services 53.0 vs 52.8; August 53.3

ADP September Report
Private-sector employment increased by 91,000 from August to September on a seasonally adjusted basis, according to the latest ADP National Employment Report. The estimated advance in employment from July to August was revised down only slightly to 89,000 from the initially reported 91,000.

U.S. Nonfarm Private Employment Highlights
- September, 2011 Report:
-- Total employment: +91,000
-- Small businesses: +60,000
-- Medium businesses: +36,000
-- Large businesses: -5,000
-- Goods-producing sector: + 1,000
-- Service-providing sector: + 90,000

Addendum:
-- Manufacturing industry: -5,000

ISM Non-Manufacturing Index Declerated in September, Future Production Growth Looks Secure
The ISM Non-Manufacturing Index decelerated modestly in September but was in-line with the Briefing.com consensus estimate. The index declined from 53.3 in August to 53.0. Growth in new orders (56.5 from 52.8) led to an acceleration in business activity / production (57.1 from 55.6) in September. Order backlogs expanded for the first time since June as the respective index increased from 47.5 in August to 52.5 in September. The expansion in backlogs should be enough to support production growth in October even if new orders slip. That relationship stands in contrast to the September ISM Manufacturing Index, which showed potential weakness in future manufacturing production as the contraction in backlogs worsened. Not all of the non-manufacturing data was strong. Employment contracted for the first time since August 2010 as the respective index fell from 51.6 in August to 48.7 in September. Supplier deliveries (49.5 from 53.0) and imports (47.5 from 53.5) also entered a contraction phase in September.

• Oil Inventory Data

Dept of Energy reports that:

Crude oil inventories had a draw of 4.7 mln (consensus is a build of 1.8 mln)
Gasoline inventories had a draw of 1.1 mln (consensus is a build of 1.3 mln)
Distillate inventories had a draw of 0.7 mln (consensus is a draw of 0.3 mln)
Change in refinery utilization was -0.1% (vs consensus of -0.5%)
Summary of Weekly Petroleum Data for the week ending Sept 23

Production:U.S. crude oil refinery inputs averaged 15.1 mln bpd during the week ending September 30, 73 thousand bpd below the previous week's average. Refineries operated at 87.7% of their operable capacity last week. Gasoline production increased last week, averaging nearly 9.3 mln bpd. Distillate fuel production increased last week, averaging about 4.7 mln bpd.

Imports: U.S. crude oil imports averaged 8.7 mln bpd last week, down by 1.0 mln bpd from the previous week. Over the last four weeks, crude oil imports have averaged 8.8 mln bpd, 246 thousand bpd below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 505 thousand bpd. Distillate fuel imports averaged 208 thousand bpd last week.

Inventory: At 336.3 mln barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 1.1 mln barrels last week and are above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 0.7 mln barrels last week and are in the upper limit of the average range for this time of year. Propane/propylene inventories increased by 1.2 mln barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 4.6 mln barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged 8.9 mln bpd, down by 1.7% from the same period last year. Distillate fuel product supplied has averaged about 3.9 mln bpd over the last four weeks, up by 2.0% from the same period last year.

Finished Motor Gasoline (Implied Demand): Finished motor gasoline demand for the week ended 9/30 was 8,959K bpd, just shy of last week's 8,964K, and just below the yr ago period of 8,989K.

• Asian Markets Close; Nikkei -0.9%, Hang Seng CLOSED, Shanghai CLOSED, Sensex -0.5%
The major Asian indices closed mixed as investors remained cautious on European debt worries. A Bank of Japan governor gave a downbeat outlook on the Japanese economy and indicated the central bank would take bold measures to support growth. Australian data was mixed as retail sales (0.6% MoM actual v. 0.3% MoM expected) topped forecasts while the AIG Services Index fell to 50.3 (52.1 previous). Inflation remains problematic in the region with the Philippines seeing its CPI hit 4.6% YoY (4.3% YoY expected). Singapore's Purchasing Managers Index fell to 48.3 (49.4 previous) and indicated further contraction. Markets in China and Hong Kong were closed for holiday. Looking at the currencies...USDJPY is weaker at 76.73 while AUDUSD is stronger near .9585.

In Japan, the Nikkei closed -0.9% as financials weakened on the Moody's downgrade of Italian debt. Sumitomo Mitsui Financial Group fell 2.2% while rival Mitsubishi UFJ Financial Group shed 1.8%. Exporters remained under pressure as Toyota and Sony lost 2.0% and 1.8% respectively.

In Hong Kong, the Heng Seng was closed for Chung Yeung Festival.

In China, the Shanghai Composite remained closed for the Golden Week.

In India, the Sensex finished -0.5% as financials remained weak following yesterday's downgrade of State Bank of India. After falling 4.0% during yesterday's session, State Bank of India shed another 3.9% during today's session. Competitors ICICI Bank and HDFC Bank lost 2.7% and 2.3% respectively.

• European Markets Closing Prices
UK's FTSE: + 3.2%
Germany's DAX: + 4.9%
France's CAC: + 4.3%
Spain's IBEX: + 3.1%
Portugal's PSI: + 2.9%
Italy's MIB Index: + 3.9%
Irish Ovrl Index: + 2.2%
Greece FTSE/ASE 20: + 0.8%

EARNINGS CALL

• Before market open

Costco (COST) misses by $0.02, reports revs in-line; Sep comparable sales +12%
Reports Q4 (Aug) earnings of $1.08 per share, $0.02 worse than the Capital IQ Consensus Estimate of $1.10; revenues rose 17.0% year/year to $27.59 bln vs the $27.63 bln consensus. Co reports Total Company Comparable sales for Q4 of +12$ (US +10%, International +19%). Co also reports Sep comparable sales of +12% (US +11%, International +14%). The co also announced that effective November 1, 2011, it will increase annual membership fees by $5 for U.S. Goldstar (individual), Business, Business add-on and Canada Business members. With this increase, all U.S. and Canada Goldstar, Business and Business add-on members will pay an annual fee of $55. Also effective November 1, U.S. and Canada Executive Membership annual fees will increase from $100 to $110, and the maximum 2% reward associated with Executive Membership will increase from $500 to $750. The fee increases will impact a little over 22 million members, roughly half of which are Executive Members.

Monsanto (MON) beats by $0.05, beats on revs; guides Q1 EPS above consensus; guides FY12 EPS in-line
Reports Q4 (Aug) loss of $0.22 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of ($0.27); revenues rose 15.1% year/year to $2.25 bln vs the $1.91 bln consensus. Co issues upside guidance for Q1, sees EPS of $0.10-0.15, excluding non-recurring items, vs. $0.08 Capital IQ Consensus Estimate. Co issues in-line guidance for FY12, sees EPS of $3.34-3.44, excluding non-recurring items, vs. $3.42 Capital IQ Consensus Estimate. The Seeds and Genomics segment, which saw significant gross profit increase in 2011 and represents the growth area for Monsanto's business in fiscal year 2012 and beyond, is expected to deliver both single digit percentage unit volume growth and continued mix improvement. The company expects Seeds and Genomics gross profit in the range of $5.7 billion to $5.85 billion for the year, with unit volume growth complemented by mix from both germplasm and trait upgrades globally. Gross profit for the Agricultural Productivity segment is expected at roughly $800 million. The company projects free cash flow in the range of $1.3 billion to $1.5 billion for fiscal year 2012.

IN OTHER NEWS ...

• Allegheny Technologies (ATI) and Boeing (BA) extend long-term titanium products supply agreement
Co announced that it has extended the term of its long-term titanium products supply agreement with The Boeing Co (BA) through December 31, 2018. The extension agreement covers value-added titanium mill products and provides opportunity for greater use of ATI's highly engineered titanium cast and forged products.

• Boeing (BA) and Ethiopian Airlines announced an order for 4 Boeing 777 Freighters;
Order is valued at approximately $1.1 bln at list prices and was previously attributed to an unidentified customer on Boeing's website

• Apple reports Steve Jobs has died

http://img843.imageshack.us/img843/1488/jobsc.jpg (http://imageshack.us/photo/my-images/843/jobsc.jpg/)

Company reports founder, and one of the great innovators and industrialists of modern times, has succumbed to liver and pancreatic cancer. Jobs was 56 years old.


___________________________________________

TECHNICAL UPDATE - Wednesday 05 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,939.95 +131.24 (+1.21%)
Volume: 226,439,413 from 267,440,833 the previous day
Range: 10,738.10 – 10,950.89

http://img72.imageshack.us/img72/8712/dowhu.jpg (http://imageshack.us/photo/my-images/72/dowhu.jpg/)

I am discounting Tuesday's technicals as any sort of analysis will be off by a mile given the nature of the close. But it is important to note that the artificial rally towards the close has conveniently put all the benchmarks above their critical supports of 1,800, 2,400 and 1,120.

Forget the usual technicals. All I am watching for is a break in the trend. Watch for the indices to make New Highs after this New Low. On the DOW, that would be a break and close above 11,190, NASDAQ needs to get above 2,560 and SPX above 1,175.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,460.51 +55.69 (+2.32%)
Volume: 652,267,901 from 846,124,469 the previous day
Range: 2,380.96 – 2,466.50

S&P 500 INDEX (SPX: CBOE)
1,144.03 +20.08 (+1.79%)
Volume: 973,757 from 1,234,751 the previous day
Range: 1,115.68 – 1,146.07


___________________________________________

MARKET INTERNALS - Wednesday 05 October, 2011 AMC

NYSE :
Lower than avg volume @ 1190 mln, vs. 1301 mln
Advancers outpaced Decliners (adv/dec): 2211/826
New lows outpaced new highs (hi/lo): 12/57

NASDAQ :
Lower than avg volume @ 2130 mln, vs. 2230 mln
Advancers outpaced Decliners (adv/dec): 1762/804
New lows outpaced new highs (hi/lo): 11/86


Advancers outpaced Decliners by an average 1.95 to 1 on higher average volumes (+31.72%) on Tuesday (avg 2.21%).

The VIX hit a high of 46.88 before retreating to close out at 40.60 in the last 45 minutes of the session. And just for the record, Tuesday's market internals were more bearish than Monday up until that last 45 minutes ... By the way, nothing was moving up in after-hours trading ... nothing.

Advancers outpaced Decliners by an average 2.44 to 1 on higher average volumes (-5.98%) on Wednesday (avg +1.77%).

What started out as bearish in the first 90 minutes slowly but surely turned bullish by the afternoon with no divergence whatsoever. Volumes were the only blip but given the fact that we're heading into NFP Friday and earnings season next week, this was expected.

http://img593.imageshack.us/img593/4590/intrw.jpg (http://imageshack.us/photo/my-images/593/intrw.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude oil rallies on inventory data, ending three session sell-off

Crude oil futures, which rallied for 5.1% to settle at $79.68 per barrel, snapped a three session losing streak to post sizeable gains today on the back of this morning's bullish inventory data. The data, which showed a draw down versus consensus for a build, helped crude add to overnight gains and traded as high as $79.79 before closing. Natural gas futures ended lower by 7 cents at $3.57 per MMBtu, as they traded steadily lower through the session. Heating oil finished higher by 5 cents at $2.77, and RBOB gasoline gained 8 cents to end at $2.57 (all Nov contracts).

Following yesterday's sell-off, the precious metals rebounded today, with gold posting gains of 1.6% to end at $1641 per ounce and silver finishing higher by 1.8% at $30.35 per ounce. Gold futures rallied sharply off the flat line in afternoon trade, while silver futures traded steadily higher throughout the afternoon. Dec copper finished up 2 cents at $3.12.

Corn settled higher by 20 cents to $6.08, wheat gained 21 cents to end at $6.25, soybeans were 3 cents higher at $11.63, ethanol rose 6 cents to close at $2.39, while sugar rose 0.2% at $0.25.

Commodities AMC on Wednesday 05 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 79.68 +4.01 (+5.30%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,641.60 +25.60 (+1.58%)

Treasuries ended the session at their worst levels as the in-line to slightly better than expected data coupled with the strong rally in equities sent traders to the sidelines. Aggressive selling of the 30-yr ran its yield back up to 2.88% by the end of the day while a gain of 12 bps for the 10-yr yield caused it to close above the 1.90% threshold. The yield curve swung steeper with the 2-10-r spread widening to 164.5 bps.

Treasury Yields AMC on Wednesday 05 October, 2011:
• 2 Year Note 0.25% unch
• 5 Year Note 0.96% +0.06
• 10 Year Note 1.92% +0.11
• 30 Year Bond 2.87% +0.10
2/30 Spread : 262bps ( +10 ) ... 2/10 Spread : 167bps ( +11 )


If the risk market was bullish as the closing price suggests, then bonds surely didn't agree with that. The session was actually bullish as invested flooded more money into fixed income for most of the session and returned unchanged at the close. Behind the facade of a bullish close on the benchmark indices, Fear is still very alive and well.

An interesting development will take place Thursday when the Fed begins to sell its shorter dated paper as part of its ‘twist.' Till now, shorter yields have climbed about 10 bps off their early August lows with the 2- and 3-yr yields now hovering near 25 and 42 bps respectively. Tomorrow's sale of 2012 maturities is somewhat in unchartered waters as the Fed has only been buying Treasuries as part of its recent operations. The yield curve has seen significant flattening over the past two months with the 2-10-yr spread narrowing almost 100 bps from late July levels to its current 167 bps.

Will the further flattening be overlooked as "artificial" or will the market still use the curve as a forward indicator? It could be said that the curve is still valid as it displays the attitude of the public AND the central bank and will show if the public has more leverage than the fed. This was the case between 2009 and 2010 as the fed bought 10yr bonds without having any effect on the yield as the public sold it out faster than the fed could buy.


___________________________________________

PREVIEW FOR THURSDAY 06 OCTOBER, 2011

Thursday will see just initial and continuing claims (8:30). Curve watchers will be following tomorrow's developments closely as the Fed will sell $8.00-9.00 bln worth of 2012 maturities through its ‘twist.

Earnings Highlights
BMO: STZ, HELE, ISCA, and RBN.
AMC: ANGO.

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
10:30 am Natural Gas Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- Craig-Hallum 2nd Annual Alpha Select Conference
- ECB Rate Announcement
- SMTC at Semtech Corporation Analyst Day


___________________________________________

SUMMARY

I'm staying bear and will continue to be on the lookout for opening Vertical Calls. Why not? Japan by its own admission is expecting worse (severe) to come ... Europe is deteriorating further in spite of its rhetoric to recapitalize the banks - while they dither, Europe withers ... Bernanke is screwing China up for screwing up the prospects of a global recovery by screwing up the currency markets with its untimely and deliberate intervention while Ben himself is screwing up America's economy which has the dollar all screwed up to screw up the global economy ... AAPL frustrates the world by not having a 5 but a 4S instead ... Shanghai continues its slow bleed with no fix in sight ... and Greece pulls up their deck-chairs to get the last few rays of the sun before the cold season comes while the rest of Europe bust their asses to figure out a way to save those sun-tanned Grecian butts.

And to top it all off, NYSE could be erased by Hackers on 10/10/11 (http://www.cnbc.com/id/44776749)!!!

Claims will be the focus for today as well as tech M&As (MSFT making a bid for YHOO) and reactions to Jobs' passing. Volumes should be muted ahead of Friday's Non-Farm Payrolls so expect some volatility at the open that should flatten out in the second half of the trading session.

Direction for Thursday 06 October, 2011; ∆ Up

2011 Daily Directional Accuracy: 108/177 (61.02%)

I gave back Tuesday's call and brought the DDA percentage down.

Conrad
10-07-2011, 07:07 AM
U.S. MARKETS - Thursday 06 October, 2011 AMC

http://img412.imageshack.us/img412/2444/dexs.jpg (http://imageshack.us/photo/my-images/412/dexs.jpg/)

Claims will be the focus for today as well as tech M&As (MSFT making a bid for YHOO) and reactions to Jobs' passing. Volumes should be muted ahead of Friday's Non-Farm Payrolls so expect some volatility at the open that should flatten out in the second half of the trading session.

Direction for Thursday 06 October, 2011; ∆ Up

As bullish as the session was, I have lost confidence that this is the rally that brings the market back. Read the technical analysis section for more.


___________________________________________

MARKET SUMMARY - Thursday 06 October, 2011


BRIEFING.COM - Thursday 06 October, 2011 AMC
Daily Sector Wrap: Three In A Row

Stocks overcame intraday resistance to settle at session highs for another big gain. The stock market has now scored three strong gains in just as many days.

Financials fueled today's rally, but only after the sector overcame early selling pressure. Following a relatively lackluster performance in the prior session, financials faltered this morning, falling to a loss well in excess of 1%. But bank stocks brought the sector back from the red. Bank of America (BAC 6.28, +0.51), one of the most actively traded names by share volume, rallied nearly 9% to its weekly high. It drove the KBW Bank Index to a 4.5% gain and led the financial sector to a 3.2% gain.

Consumer discretionary stocks also scored strong gains, finishing 2.2% for the better. Retailers were in focus amid a relatively mixed round of same-store sales reports for September. J.C. Penney (JCP 28.42, +0.78) managed to stage a strong gain, even though the company cut its earnings forecast.

While financials drove most of the action for the day, it was a broad push into the close that helped the S&P 500 overcome resistance at the 1160 line, which had rebuffed the broad market measure several times throughout the trading session. Stocks didn't breach the line until the final 30 minutes of action.

Strength among stocks put pressure on Treasuries. The corresponding rise in yields took that of the 10-year Note back to 2.00%.

The dollar dove to a loss of about 0.6% against a basket of major foreign currencies. Its tumble came after the euro rallied out of the red to end the day with a 0.6% gain at $1.344. The sterling pound slashed a loss of more than 1% to settle at $1.544 for a loss of only 0.2%. The pound's initial punishment came in response to a decision by the Bank of England (BoE) to increase its asset purchase plan by 75 billion to 275 billion pounds. The BoE kept its benchmark interest rate at 0.50%, though. The European Central Bank (ECB) kept its target at 1.50%, which surprised many since some sort of accommodative measure had become widely expected among market pundits.

Data had little impact on today's trade. The only item on the docket was the latest weekly initial jobless claims count, which increased by 6,000 week-over-week to 401,000. It barely differed from the Briefing.com consensus call for 402,000 initial claims.

Tomorrow brings the always pivotal official non-farm payrolls report. Participants were given a glimpse of the September number by a better-than-expected ADP Employment Change earlier this week, although the ADP is not always statistically identical. No matter the number, though, the reaction to the report should be telling of market sentiment, especially since stocks have rallied 6% during the course of the past three sessions.

Sector Leaders/Laggards for Thursday 06 October, 2011 AMC
Leading Sectors: Financials +3.2%, Materials +2.5%, Consumer Discretionary +2.2%, Industrials +2.2%, Tech +1.7%, Energy +1.6%, Utilities +1.6%, Health Care +1.1%, Consumer Staples +1.0%, Telecom +0.6%
Leading Industries/ETFs : Solar- TAN +5.6%, .Silver- SLV +5.2%, Junior gold miners- GDXJ +4.7%, Steel- SLX +4.5%, Bank- KBE +4.5%, energy- UGA +4.4%, Oil Service OIH +4.1%, Copper- JJC +3.9%, WTI crude oil- OIL +3.8%, Reg bank- RKH +3.7%, WTI oil- USO +3.7%, Ag/chem.- MOO +3.4%.

Lagging Sectors: None.
Lagging Industries/ETFs : Treasuries- TLT -1.9%, Vix- VXX -1.8%, Grains- JJG -0.6%, Dollar index- UUP -0.6%, Sugar- SGG -0.3%.

Other Market Moving Factors:
• Financials rebound from early slide
• ECB stands pat on rates
• Bank of England expands asset purchase plan, but keeps rates unchanged at 0.50%
• Monthly same-store sales prove relatively mixed
• Weekly initial jobless claims move just above 400,000, as expected

Companies trading higher in after hours in reaction to news:
• SREV +14.6% (ServiceSource Intl sees Q3 revenues of 'greater than $49 mln'; forecast was $45-46 mln; raises 2011 rev guidance)
• AOB +9.4% (American Oriental Bioengineering announced that the co submitted its plan to cure stock price deficiency with respect to the listing standard of the New York Stock Exchange on Oct 5, 2011).

Companies trading lower in after hours in reaction to news:
• ILMN -24% (Illumina sees Q3 revs of $235 mln vs $277.3 mln Capital IQ Consensus Estimate; sees Q4 revs guidance higher than Q3; suspends FY11 guidance)
• ANEN -16.1% (Anaren Microwave lowers Q1 revs guidance to ~$38.7 mln vs. $44 mln Capital IQ Consensus Estimates, from prior guidance of $40-46 mln; lowers EPS to $0.19-0.21 vs. $0.25 consensus, from $0.27-0.32).
• AFFX -7.7% (Affymetrix announced commercialization 18 new microarrays for gene expression analysis)
• RGP -4.2% (Regency Energy Partners LP announced commencement of underwritten public offering of 10 mln common units representing limited partner interests in Regency)
• MWE -3.6% (MarkWest Energy commences a 5 mln common unit offering)
• ORCL -1.9% (Oracle: CNBC reporting that ORCL has agreed to pay $199.5 mln to resolve false claims suit)
• EGO -4.0% (Eldorado Gold announces exploration programs update)
• LLY -0.5% (Eli Lilly reports that the FDA approves Cialis).


___________________________________________

ECONOMIC COMMENTARY - Thursday 06 October, 2011

• Switzerland Economic Data

- Sep Foreign Currency Reserves (in CHF) 282.0 bln vs 253.4 bln in Aug
- Sep CPI +0.3% vs -0.3% in Aug

• UK Jul Index of Services +0.2% vs -0.3% in Jun

• U.S. Economic Data

- Initial Claims 401K vs 402K Briefing.com consensus; prior revised to 395K from 391K
- Continuing Claims falls from 3.752 mln to 3.700 mln

Initial Claims Inch Higher, Stay Below the Upper Bound in Our "Recovery Zone"
The initial claims level increased from 395,000 for the week ending September 24 to 401,000 for the week ending October 1. That was in-line with the Briefing.com consensus expectation of 402,000 new filings. For the second consecutive week, the initial claims level remained below the upper bound (410,000) of our "Recovery Zone." At this level, payroll growth in excess of the 100,000 needed to support normal labor force growth is expected. Unlike the drop in initial claims last week, which the Department of Labor attributed to a mistiming in its seasonal adjustment factors, there were no special factors that influenced the claims report this week. Therefore, even though claims inched higher this week, the current level is indicative of an improving labor sector. The continuing claims level declined from an upwardly revised 3.752 mln (from 3.729 mln) for the week ending September 17 to 3.700 mln for the week ending September 24. The consensus expected the continuing claims level to decline to 3.725 mln

• Natural Gas Inventory Data

Natural gas inventory showed a build of 97 bcf vs expectations for a build of 100 bcf.
Working gas in storage was 3,409 Bcf as of Friday, September 30, 2011, according to EIA estimates. This represents a net increase of 97 Bcf from the previous week. Stocks were 78 Bcf less than last year at this time and 28 Bcf above the 5-year average of 3,381 Bcf. In the East Region, stocks were 33 Bcf below the 5-year average following net injections of 61 Bcf. Stocks in the Producing Region were 54 Bcf above the 5-year average of 1,006 Bcf after a net injection of 24 Bcf. Stocks in the West Region were 7 Bcf above the 5-year average after a net addition of 12 Bcf. At 3,409 Bcf, total working gas is within the 5-year historical range.

• Asian Markets Close; Nikkei +1.7%, Hang Seng +5.7%, Shanghai CLOSED, Sensex CLOSED
It was a sea of green across Asia as markets soared following yesterday's strong gains in Europe and in the U.S. Some slightly better than expected economic data in the U.S. and some signs of European leaders working together in an effort to combat the debt crisis was all investors needed to go on a buying spree. Hong Kong made up for lost time following yesterday's holiday with a robust gain of 5.7%. Other markets that have been hit hard lately saw incredible gains as Thailand's Stock Exchange of Thai soared 5.9%, to lead the region higher, while Indonesia's Jakarta Composite surged 4.6%. Markets in China and India were closed for holiday. Taiwan saw its CPI tick up to 1.35% YoY (1.40% YoY expected, 1.34% YoY previous). Looking at the currencies...USDJPY is unchanged at 76.80.

In Japan, the Nikkei closed +1.7% as trading companies saw solid gains on the heels of a jump in commodity prices. Mitsubishi Corp and Mitsui & Co gained 2.7% and 2.2% respectively. Shares of Sony added 4.7% and continue to climb off a 25-yr low that was set earlier in the week.

In Hong Kong, the Hang Seng finished +5.7% commodity names led the advance. Jiangxi Copper soared 11% and offshore oil producer CNOOC rallied 8.5% as commodities surged as the risk trade gained momentum. Casino stocks gained following an October 4th report (Hang Seng was closed October 5th) that showed gaming revenues in Macau climbed 39% in September. Galaxy Entertainment saw the biggest advance in the space, shooting up 18.0%.

In China, the Shanghai Composite remained closed for the Golden Week.

In India, the Sensex was closed for Dassera.

• European Markets Closing Prices
UK's FTSE: + 3.4%
Germany's DAX: + 2.9%
France's CAC: + 3.1%
Spain's IBEX: + 2.7%
Portugal's PSI: + 1.6%
Italy's MIB Index: + 3.1%
Irish Ovrl Index: + 2.6%
Greece FTSE/ASE 20: + 0.7%

EARNINGS CALL

• Before market open

Constellation Brands (STZ) beats by $0.11, beats on revs; guides FY12 EPS above consensus
Reports Q2 (Aug) earnings of $0.77 per share, $0.11 better than the Capital IQ Consensus Estimate of $0.66; revenues fell 20.0% year/year to $690 mln vs the $664.7 mln consensus. Co issues upside guidance for FY12, raises EPS to $2.00-2.10 from $1.90-2.00 vs. $1.95 Capital IQ Consensus Estimate. Reported consolidated net sales decreased 20% due primarily to the divestiture of the Australian and U.K. wine business. North American net sales on an organic constant currency basis were even with the prior year quarter and reflected favorable product mix offset by a decrease in volume and higher promotion costs in the U.S. The minimal decrease in consolidated comparable basis operating income was driven primarily by higher marketing and promotional spend combined with higher transportation costs in North America, partially offset by lower corporate expenses. During second quarter 2012, the company repurchased 9.8 mln shares of common stock at a cost of $188 mln. Subsequent to the end of the second quarter through Sept. 30, 2011, the co repurchased an additional 3.5 mln shares at a cost of $63 mln.

IN OTHER NEWS ...

• Bank of England keeps its benchmark interest rate steady at 0.50%; increases asset purchase program by GBP75 bln to GBP275 bln
The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by 75 billion pounds to a total of 275 billion pounds. The pace of global expansion has slackened, especially in the United Kingdom's main export markets. Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery... CPI inflation rose to 4.5% in August. The present elevated rate of inflation primarily reflects the increase in the standard rate of VAT in January and the impact of higher energy and import prices. Inflation is likely to rise to above 5% in the next month or so, boosted by already announced increases in utility prices. But measures of domestically generated inflation remain contained and inflation is likely to fall back sharply next year as the influence of the factors temporarily raising inflation diminishes and downward pressure from unemployment and spare capacity persists. The deterioration in the outlook has made it more likely that inflation will undershoot the 2% target in the medium term. In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the Committee judged that it was necessary to inject further monetary stimulus into the economy.

• European Central Bank leaves rates unchanged at 1.50%


___________________________________________

TECHNICAL UPDATE - Thursday 06 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,123.33 +183.38 (+1.68%)
Volume: 190,039,982 from 226,439,413 the previous day
Range: 10,858.67 – 11,132.60

http://img850.imageshack.us/img850/1821/dowq.jpg (http://imageshack.us/photo/my-images/850/dowq.jpg/)

Forget the usual technicals. All I am watching for is a break in the trend. Watch for the indices to make New Highs after this New Low. On the DOW, that would be a break and close above 11,190, NASDAQ needs to get above 2,560 and SPX above 1,175.

This is a Falling Three Method;
http://img11.imageshack.us/img11/7393/ftml.jpg (http://imageshack.us/photo/my-images/11/ftml.jpg/)

The DOW, NASDAQ and SPX are all wearing three bullish candles that have failed to break above the previous high. Technically, this is a failure to confirm an uptrend. Although the FTM is based on the fourth (bullish) candle breaking above the first (bearish) candle's open to confirm a break in the downside continuation, the current patterns on the indices have proven in the last couple of months that a failure to break above the previous high/low (within three candles) has led into a continuation of the current trend.

Long story short - the last three sessions have failed to break above the previous highs of 11,190, 2,560 and 1,175. So even if the next few sessions are bullish, they are not likely to break above a new high and reverse the trend. To further strengthen this analysis, volumes on up days have weaken with every up-tick. Conclusion: more downside to come.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,506.82 +46.31 (+1.88%)
Volume: 581,006,541 from 652,267,901 the previous day
Range: 2,446.72 – 2,507.44

S&P 500 INDEX (SPX: CBOE)
1,164.97 +20.94 (+1.83%)
Volume: 851,180 from 973,757 the previous day
Range: 1,134.95 – 1,165.55


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MARKET INTERNALS - Thursday 06 October, 2011 AMC

NYSE :
Lower than avg volume @ 1120 mln, vs. 1302 mln
Advancers outpaced Decliners (adv/dec): 2589/465
New lows outpaced new highs (hi/lo): 5/20

NASDAQ :
Lower than avg volume @ 2158 mln, vs. 2226 mln
Advancers outpaced Decliners (adv/dec): 1932/598
New lows outpaced new highs (hi/lo): 10/49


Advancers outpaced Decliners by an average 2.44 to 1 on higher average volumes (-5.98%) on Wednesday (avg +1.77%).

What started out as bearish in the first 90 minutes slowly but surely turned bullish by the afternoon with no divergence whatsoever. Volumes were the only blip but given the fact that we're heading into NFP Friday and earnings season next week, this was expected.

Advancers outpaced Decliners by an average 4.25 to 1 on lower average volumes (-7.09%) on Thursday (avg +1.79%).

It was bullish again. Undeniably bullish. But the commitment as displayed by volumes is waning with each rising session. I can't buy into this rally when divergence is so obvious.

http://img694.imageshack.us/img694/7708/intc.jpg (http://imageshack.us/photo/my-images/694/intc.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude oil extends rally to second session

Crude oil futures extended their rally to a second consecutive session after posting a gain of 3.7% to close at $82.59 per barrel. Over the past two sessions futures have now gained 9%, and have recouped close to all of their losses from the recent three session pullback. Strength in equities helped crude oil futures trade to the upside today. Natural gas ended higher by 1% at $3.60 per MMBtu. Futures sold off following this morning's inventory data, which more-or-less came in line with expectations, but managed to rally off of lows to finish the day in positive territory. Heating oil rallied for 8 cents to close at $2.86, while RBOB gasoline gained 11 cents to end at $2.68 (all Nov contracts).

Following the volatile trade in gold this morning, it was a relatively quiet session for the precious metal. Futures chopped around the flat line for a majority of the day but managed to push into positive territory heading into the close of pit trade to post gains of 0.7% at $1653.20 per ounce. Silver futures, which gained 5% to close at $32 per ounce, traded steadily higher throughout the session to close near highs. Dec copper futures ended up a penny at $3.26.

Commodities AMC on Thursday 06 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 82.59 +2.91 (+3.65%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,653.20 +11.60 (+0.71%)

Treasuries ended the session at their worst levels as a third day of gains for equities extended the complex's slide. The sell off intensified following the Fed's POMO which saw the sale of 2012 maturities as part of its ‘twist.' Today's operation saw a bid/cover of more than 27x as dealers looked to gobble up the paper. Yields along the curve ended higher except for the 2-yr which dropped close to 2 bps and finished near 0.27%. Selling was most severe in longer dated paper as the 10-yr tacked on 8 bps and the 30-yr added 6 bps to finish at their respective 1.986% and 2.949%. The 5-yr yield saw its highest in two months with today's 1.006% settlement. A steeper yield curve played out today as the 2-10-yr spread widened to 171.5 bps.

Treasury Yields AMC on Thursday 06 October, 2011:
• 2 Year Note 0.29% +0.04
• 5 Year Note 1.01% +0.05
• 10 Year Note 2.01% +0.09
• 30 Year Bond 2.96% +0.09
2/30 Spread : 267bps ( +5 ) ... 2/10 Spread : 172bps ( +5 )


An interesting development will take place Thursday when the Fed begins to sell its shorter dated paper as part of its ‘twist.' Till now, shorter yields have climbed about 10 bps off their early August lows with the 2- and 3-yr yields now hovering near 25 and 42 bps respectively. Tomorrow's sale of 2012 maturities is somewhat in unchartered waters as the Fed has only been buying Treasuries as part of its recent operations. The yield curve has seen significant flattening over the past two months with the 2-10-yr spread narrowing almost 100 bps from late July levels to its current 167 bps.

Will the further flattening be overlooked as "artificial" or will the market still use the curve as a forward indicator? It could be said that the curve is still valid as it displays the attitude of the public AND the central bank and will show if the public has more leverage than the fed. This was the case between 2009 and 2010 as the fed bought 10yr bonds without having any effect on the yield as the public sold it out faster than the fed could buy.

So the curve predictably steepens. I will not be reading into this too much now because the Fed hasn't started their buying of the 30yr yet. For now, I will taking this curve with a pinch of salt unless the public sentiment over-runs the Fed's buying power.


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PREVIEW FOR FRIDAY 07 OCTOBER, 2011

Friday's data is the most anticipated of the week with nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, the average workweek (8:30), wholesale inventories (10), and consumer credit (15) all being released. The Fed's ‘twist' purchases continue with the buying of $1.50-2.00 bln worth of 2021-2031 maturities.

Earnings Highlights
No companies are confirmed.

Economic Events
08:30 am Nonfarm Payrolls Sep
08:30 am Nonfarm Private Payrolls Sep
08:30 am Unemployment Rate Sep
08:30 am Hourly Earnings Sep
08:30 am Average Workweek Sep
10:00 am Wholesale Inventories Aug
15:00 am Consumer Credit

Conferences and Shareholder/Analyst Meetings of Interest
- Atlanta Fed President Lockhart to speak at 10:45


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SUMMARY

I can't deny the bullishness of Wednesday's session but I doubt the sustainability. Volumes were weaker for an up-day (again) and the under-lying fear is still very present. Wednesday's rally may have been nothing more than a reaction to data - lagging data - and we know that won't last.

It is going to take a major catalyst to drive this market up to new highs to break above 11,190 on the DOW, 2,560 on NASDAQ and SPX above 1,175. I will be very surprised if Non-Farms can produce a number that will provide that catalyst given that the month of September saw more people lose jobs than gain employment. The level of confidence and complacency in the market has returned too quickly and presents the perfect set-up for another one of those major sell-down days if NFP turns the market south.

I am prepared to take it on the chin if this goes against me. But I'd rather be cautiously pessimistic than gung-ho confident especially given that there is still not much to be cheerful about domestically and globally.

Direction for Friday 07 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 109/178 (61.24%)


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FOOTNOTE

I started a forum on trading around mid 2005 at patterntrader.proboards.com. That forum became a wealth of information and my personal archive. Upon teaching at AKLTG, the forum was migrated to www.wealthacademyinvestor.com/forum towards the end of 2007 to facilitate the growing number of members as well as the Investors from Wealth Academy (WA) and later on, Traders from Wealth Academy Forex (WAF).

In early 2008, six months after the market started falling as a result of the Sub-Prime debacle, our then new forum (www.wealthacademyinvestor.com/forum) crashed and much of the data was lost forever. But thanks to our dedicated and selfless community, many traders re-posted whatever they had saved to revive the forum again. Many had backed-up certain parts of the forum for personal reasons and were able to restore up to 70% of what was lost. I was also able to retrieve some of the data from the old proboards forum and all these combined efforts brought our forum back online in no time at all. It was like it never crashed.

The forum has since migrated and it is almost one year to the day that this PatternTraderTools forum was born. This was to facilitate the ever-growing number of graduates from the Pattern Trader Tutorial and to make it absolutely private and exclusive. Looking back through all those forums is like a going back in a time machine to see its evolution and the growth of the success of what we've built. It also reveals how each and everyone of us has evolved from amateur traders to savvy financiers in the way we asked and answered questions.

And one truly amazing fact is that it has captured our outlooks on the market to vindicate the accuracy of our analyses since 2006 through to the current situation. It sends a chill down my spine that we could have been this accurate during a time when we were simple, unsophisticated and used simple common sense analysis to prepare us for the worst to come.

In October of 2007, before the market started sliding, I mentioned in the WA forum that the market was going to take a huge slide and that it wouldn't be far-fetched to imagine getting from from 14,000 to 9,500 within the coming year. Of course I was slammed and ridiculed. But I kept my focus regardless if that analysis turned out right or wrong.

Then the forum crashed before the market tanked in January of 2008.

Upon restoration, after the market made its spectacular drop from 14,000 to 12,000, I made this first posting ...


Its a pity the forum got slammed because at the start of October last year, this is exactly what I said was going to happen. Going back further (in my old forum) I mentioned that the end of 2007 was going to be soft and this softness would carry into the middle of 2008. The longer term future, if you think all this is bad news, is that we are going to be soft for the long term ... how long? I suspect till 2010. Any sort of recovery will probably be around mid to late 2011 to mid 2012.

Visionary or smart analysis? ... Or blind luck?

Either way, every one of my analyses have panned out accurately in the last five years. My only regret is that I wish I wasn't so damn accurate.

Going forward, I am still keeping the view that this pain is going to get worse before it gets better. This will drag into next year and will probably find a bottom by the middle of 2012, give or take a quarter. And the low? ... well, its a long shot but the call in 2007 was also a long shot - 9,500 on the DOW. And if the world doesn't end by 21 December 2012, we should get into a massive rally that will go all the way into 2016.

I am not a fortune teller and there is no way I can guarantee that this will be the actual outcome. This analysis, as with all my analysis, is based on macroeconomics, technical analysis, historical patterns and economic models, market time-lines and plain ol' common sense.

And just to scare the living shit out of everyone, I will leave you with these two charts from 2008 and the current one.

http://img716.imageshack.us/img716/2955/2008uq.jpg (http://imageshack.us/photo/my-images/716/2008uq.jpg/)

Sweet Dreams, Have a lovely weekend and Happy Hunting!

Conrad
10-10-2011, 03:07 AM
U.S. MARKET RECAP - Monday 03 October, 2011 to Friday 07 October, 2011 AMC
http://img191.imageshack.us/img191/1385/dexweek.jpg (http://imageshack.us/photo/my-images/191/dexweek.jpg/)


The week is filled with all sorts of data that spell trouble for the bulls. Friday will be the mother of all the reports this week. Given that the employment front in the US hasn't been getting worse according the Initial Claims, the market could get some respite at the end of the week. The mid-week ADP report will be keenly watch for any indication that Friday's NFP may turn south so I'll be wary on both days just in case. The first week of October is one of the most horrible weeks in the trading calendar because of all the historical sell-downs and crashes. I won't be tempting fate and will keep straight puts for insurance.

Direction for the week Monday 03 October, 2011 to Friday 07 October, 2011; ∇ Down

As quoted, employment numbers did not get worse. In fact, they surprised all week with the ADP on Wednesday, Claims on Thursday and Non-Farm Payrolls on Friday. But despite the good returns on jobs, employment remained unchanged and on the high side at 9.1%. But a headline sensitive market is always going to get a volatile reaction especially when the hawkish news is about Europe. And that is what kept the market from gaining higher highs this week.


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Dow Jones Industrial Average - Friday 07 October, 2011 AMC
http://img249.imageshack.us/img249/4499/dexsz.jpg (http://imageshack.us/photo/my-images/249/dexsz.jpg/)


It is going to take a major catalyst to drive this market up to new highs to break above 11,190 on the DOW, 2,560 on NASDAQ and SPX above 1,175. I will be very surprised if Non-Farms can produce a number that will provide that catalyst given that the month of September saw more people lose jobs than gain employment. The level of confidence and complacency in the market has returned too quickly and presents the perfect set-up for another one of those major sell-down days if NFP turns the market south ... I am prepared to take it on the chin if this goes against me. But I'd rather be cautiously pessimistic than gung-ho confident especially given that there is still not much to be cheerful about domestically and globally.

Direction for Friday 07 October, 2011; ∇ Down

What a busy day!! In spite of a surprise in the NFP numbers and some optimistic economic numbers all week, the market proved to still be highly sensitive to headline news. At the top of the day, Fitch downgraded Italy and downgraded Spain't debt and this promptly reversed the market.


__________________________________________________ ________

MARKET SUMMARY - Friday 07 October, 2011


BRIEFING.COM - Friday 07 October, 2011
Daily Sector Wrap: Late Slide Snaps Recent Win Streak

Failure to sustain a rebound from midday losses left stocks to roll into the red during the final hour. They still made it out with week 2% higher than where they started.

The major equity averages lacked direction this morning, even though premarket participants had cheered the September jobs report. Nonfarm payrolls grew by 103,000, up from an upwardly revised 57,000 in August. However, the upside surprise is mostly due to the end of a strike at Verizon. Excluding those workers, payrolls increased by 58,000, which is on par with the 60,000 new jobs that had been generally expected among economists polled by Briefing.com. Meanwhile, private payrolls increased by 137,000, which came on top of the upwardly revised 42,000 jobs that were added during the prior month. An increase of 83,000 had been broadly expected.

The number of people entering the workforce was roughly the same as the number of workers who found jobs in September, so the unemployment rate remained at 9.1%, which is exactly what had been expected. However, job gains were mostly part-time, resulting in an increase in underemployment that took the "real" unemployment rate up to 16.5% from 16.2% in the prior month.

Even though the payrolls report proved better-than-expected, stocks lacked leadership at the open of trade. That made it difficult for the major equity averages to extend their streak of gains to a fourth straight session. The listlessness of early trade left stocks to slide into negative territory. Selling intensified in response to news that analysts at Fitch cut their ratings on Italy and Spain. At its low, the stock market was down more than 1%.

Stocks managed to stage a steady afternoon rebound that took the market back to a modest gain, but the move ultimately broke down in the final few minutes of trade. Although the late dive took all three major equity averages into negative territory, losses were steepest for the Nasdaq, which was hurt by weakness among biotech plays. Strength among a few blue chips helped limit the extent of the Dow's decline.

Financials were a drag all session. The sector descended to a 3.7% loss as bank stocks buckled. Banks were likely imbued by news that analysts at Moody's downgraded a dozen banks in the United Kingdom and a handful of others in Portugal.

Sector Leaders/Laggards for Friday 07 October, 2011
Leading Sectors: Consumer Staples +0.6%, Utilities +0.4%
Leading Industries/ETFs : Sugar +2.2%, Vix- VXX +1.7%, Semis- SMH +0.8%, Retailers_ RTH +0.7%.

Lagging Sectors: Health Care -0.1%, Consumer Discretionary -0.2%, Telecom -0.3%, Tech -0.5%, Industrials -0.5%, Energy -1.2%, Materials -1.5%, Financials -3.7%
Lagging Industries/ETFs : Reg Bank KRE -4.9%, Clean energy- PBW -4.2%, Financials- KBE -4.1%, XLF -3.6%, KIE -3.5%, Solar- TAN -4.1%, Reg Bank RKH -3.9%, capital mkts. & broker dealers- KCE -3.6%.

Other Market Moving Factors:
• Financials falter
• Job gains for September exceed expectations; prior months see substantial upward revisions
• Moody's downgrades multiple UK banks and financial institutions
• Fitch downgrades Italy and Spain


BRIEFING.COM - Friday 07 October, 2011
After-Hours Report: Weekly Wrap

Financials actually fueled broad market gains in the prior session, but only after the sector rallied back from an early loss. Their leadership yesterday helped the S&P 500 push through resistance at the 1160 line. Of course, the late slide on Friday caused the S&P 500 to finish the week below that mark.

Shares of retailers were also in play yesterday. The attention came after a relatively mixed batch of same-store sales results for September.

Initial weekly jobless claims on Thursday didn't have much of an influence on the mood of market participants, mostly because the 401,000 initial claims essentially matched what had been widely expected. That tally was indicative of an improving labor sector since it stayed at a level that is within the Briefing.com "Recovery Zone."

Europe was in close focus yesterday, too. Participants were generally surprised at the lack of accommodative action taken by the European Central Bank, which opted to keep its benchmark lending rate at 1.50%. The Bank of England opted to keep its target rate at 0.50%, but it increased its asset purchase plan to 275 billion pounds from 200 billion pounds. That news initially put pressure on the pound, but it eventually rallied back and even finished the week on a positive note.

Tuesday and Wednesday saw stocks climb sharply for the broad market's best back-to-back performance in more than a month. On Wednesday, participants were given insight into the official September payrolls number by an ADP Employment Change report that showed that private payrolls increased by 91,000. The Briefing.com consensus had called for an increase of 45,000. Although the report doesn't always accurately forecast the exact payrolls number, it is often directionally accurate relative to expectations. The ISM Services Index for September was shrugged off; it slipped to 53.0 from 53.3 in the prior month, but still narrowly exceeded the 52.8 that had been widely expected.

Trade on Tuesday may have kicked off a three-day rally, which took stocks 6% higher, but what's more impressive is that stocks had to crawl out of a hole that had the S&P 500 at a 52-week low and more than 20% below its May high. The rally from those depths came once participants opted, for the time being, to look past the threat that Greece could default on its debt, let alone meet its deficit reduction targets, and the systemic troubles of the broader eurozone.

Such threats had weighed heavily on trade in the first session of the week, overshadowing an improvement in the ISM Manufacturing Index to 51.6 from 50.6 when it had been expected to slip to 50.5. The increase came amid solid growth in new orders, which actually played a part in the first increase in order backlogs since early summer. Weakness on Monday marked an extension of the selling that caused stocks to slide so sharply in the fourth quarter -- the worst quarter for the market in almost three years. That weakness had many seeking the safety of the benchmark 10-year Note. The Note's yield was down to 1.75% at the start of the week, but climbed back 2.00 by week's end. The bond market will be closed on Monday in observance of Columbus Day.


http://img854.imageshack.us/img854/7096/dexsummb.jpg (http://imageshack.us/photo/my-images/854/dexsummb.jpg/)

This week's biggest % gainers/losers
The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

• This week's top 20 % gainers
Technology: IPGP (55.02 +26.66%), VIT (8.35 +24.07%), ASIA (8.86 +20.05%), TZOO (26.36 +19.87%), XRTX (11.11 +19.85%), FFIV (85.01 +19.65%)
Services: FMCN (22.97 +36.4%), STMP (24.72 +20.94%), ZUMZ (21.13 +20.67%), EDU (27.3 +18.85%), ASGN (8.34 +17.96%), GBX (13.72 +17.77%)
Industrial Goods: MDR (13.95 +29.65%)
Healthcare: PPDI (32.12 +25.18%)
Financial: FBC (0.6 +23.02%)
Consumer Goods: EK (1.39 +78.21%)
Basic Materials: NAK (6.6 +23.13%), MON (70.93 +18.69%), IVN (16.25 +18.61%), XG (6.98 +18.31%)

• This week's top 20 % losers
Utilities: DYN (3.43 -16.75%)
Technology: CLWR (1.39 -40.34%), SIFY (2.87 -28.07%), S (2.41 -20.72%), LEAP (5.83 -15.63%)
Services: WAIR (8.95 -18.12%), AMR (2.5 -15.54%), NTSP (4.5 -12.45%)
Healthcare: ILMN (27.18 -33.58%), AMED (11.83 -20.18%), AMRS (17.11 -15.51%), VHS (8.8 -13.39%)
Financial: CRIC (3.75 -23.78%), NBG (0.6 -23.06%), NOAH (7.46 -18.91%), CISG (6.01 -14.14%)
Consumer Goods: AGRO (7.44 -13.69%)
Basic Materials: FST (10.19 -29.24%), VQ (7.43 -15.66%), IOC (42.52 -12.82%)


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ECONOMIC COMMENTARY - Friday 07 October, 2011

• Australia Sep AiG Performance of Construction Index 30.0 vs 32.1 in Aug

• Japan Economic Data

- Aug Leading Index 103.8 vs 104.6 in Jul
- Aug Coincident Index 107.4 vs 107.1 in Jul
- Sep Official Reserves $1200.6 bln vs $1218.5 bln in Aug

• France Aug Trade Balance (in EUR) -4967 mln vs revised -6363 mln in Jul (prior -6460 mln)

• UK Economic Data

- Sep PPI data
- Sep PPI Output +0.3% vs +0.1% in Aug
- Sep PPI Input +1.7% vs revised -1.8% in Aug (prior -1.9%)

• U.S. Economic Data

- September Unemployment Rate 9.1% vs 9.1%
- September Nonfarm Private Payrolls 137K vs 83K
- September Nonfarm Payrolls 103K vs 60K; August revised to 57K from 0K
- September Hourly Earnings 0.2% vs +0.2%
- July Nonfarm Payrolls revised to 127K from 20K
- September Average Workweek 34.3 vs 34.2
- August Wholesale Inventories +0.4% vs +0.5%
- August Consumer Credit -$9.5 bln vs +$7.0 bln

Nonfarm Payroll Beat Expectations in September as Verizon Workers Boost Employment Levels
Nonfarm payrolls added 103,000 new jobs in September, up from an upwardly revised 57,000 (from 0) in August. The Briefing.com consensus expected payrolls to increase by 60,000. The upside surprise in payrolls mostly reflects the end of the Verizon strike in August. That strike reduced the August employment numbers by roughly 45,000 jobs, which were all added back in September. Excluding the Verizon workers, payrolls increased by 58,000 in September and were in-line with consensus expectations. Private payrolls added 137,000 jobs in September on top of an upwardly revised 42,000 jobs (from 17,000) in August. The consensus expected a private payroll gain of 83,000. The gains in private payrolls mirror the growth in the September ADP report. That report already showed private payrolls increased by 91,000, but did not include the additional 45,000 workers from the Verizon strike. After adding these workers into the data, the ADP report actually predicted September payrolls to increase by 136,000. Income growth was sizable in September. Average hourly earnings increased 0.2% while weekly hours increased from 34.2 in August to 34.3 in September. After taking into account the payroll gains, aggregate weekly income increased 0.6% in September. Even adjusting for the Verizon strike, aggregate wages increased 0.5%. The gains in income are enough to support stable consumption growth. The unemployment rate remained at 9.1%, exactly what the consensus expected. The number of people entering the workforce was roughly the same as the number of workers who found jobs in September. The job gains, however, were mostly part-time employment. This led to an increase in underemployment. As a result, the "real" unemployment rate crept up to 16.5% in September from 16.2%.

Wholesale Inventories Continued to Expand in August
Wholesale inventories increased 0.4% in August after increasing 0.8% in July. The Briefing.com consensus expected wholesale inventories to increase 0.5%. The inventory to sales ratio remained at 1.16. Unlike June and July, the inventory gains in August were the likely the result of planned inventory growth. Weak sales in June and July caused consumers to leave more goods on the shelves than merchant wholesalers expected. This led to larger-than-intended inventory levels over the previous two months. Sales in August jumped 1.0% as just about every sector saw substantial growth. Since inventories increased in tandem with the strong sales gains, it is likely that merchant wholesalers expected the sales to prosper in August and purchased the inventories to match the sales gains.

Consumer Credit Contracts in August for the First Time Since September 2010
After 10 consecutive months of expansion, consumer credit turned lower in August. Credit fell $9.5 bln in August after increasing $11.9 bln in July. The was the largest drop in credit since April 2010. The Briefing.com consensus expected consumer credit to increase by $7.0 bln. The consumer credit report suffers from some extremely large revisions, making it difficult to grasp the credit situation until three months after the data is released. Typically, the data have overstated the actual credit situation in the original release. Therefore, the weakness seen in August may actually be worse than the report suggests. The reversal in August does not signal an end to the credit expansion cycle, and growth can easily return in September. It does, however, add a sense of uneasiness that consumption growth may not be as stable as we hoped. Revolving credit contracted for a second consecutive month, declining by $2.2 bln in August after falling by $3.6 bln in July. Nonrevolving credit decreased by $7.3 bln in August. That was the first contraction in nonrevolving credit since July 2010.

• Asian Markets Close: Nikkei +1.0%, Hang Seng +3.1%, Shanghai CLOSED, Sensex +2.8%
The major Asian indices closed mostly higher as investors took their cue from the strong gains in Europe and the U.S. The Hang Seng (+3.1%) led the advance in Asia, and has now gained 9.0% over the past two sessions. The Bank of Japan announced its decision to keep its benchmark interest rate unchanged at less than 0.1%. The central bank also left its asset purchase program unchanged, and extended a loan program in areas affected by the earthquake. Chinese markets remained closed for the Golden Week and will reopen on Monday. Looking at the currencies...USDJPY is little changed at 76.65 while AUDUSD is stronger near .9790.

In Japan, the Nikkei closed +1.0% as banking shares gained on hopes a solution would soon be rendered in Europe. Mitsubishi UFJ Financial Group and Sumitomo Financial Group both ended up 0.6%. Telecom provider Softbank surged 6.5% after announcing it would charge a lower monthly fee for the new iPhone 4s than rival KDDI.

In Hong Kong, the Hang Seng finished +3.1% and continues to rally off its 29-month low that was hit earlier in the week. Conglomerate Hutchinson Whampoa surged 10.5% on heavy volume on hopes of a solution to the European debt crisis. According to Credit Suisse approximately 45% of the cos assets are tied to Europe.

In China, the Shanghai Composite was closed for the Golden Week and will reopen on Monday.

In India, the Sensex settled +2.8% as financials saw some relief after two days of heavy selling. State Bank of India gained 2.0% after losing 4% in each of the previous two sessions following its credit downgrade earlier in the week. Rivals ICICI Bank and HDFC Bank added 5.8% and 2.3% respectively.

• European Markets Closing Prices
UK's FTSE: + 0.2%
Germany's DAX: + 0.5%
France's CAC: + 0.6%
Spain's IBEX: + 1.1%
Portugal's PSI: + 1.1%
Italy's MIB Index: + 1.1%
Irish Ovrl Index: + 0.4%
Greece FTSE/ASE 20: + 0.8%

IN OTHER NEWS ...

• Bank of Japan leaves overnight call rate unchanged at 0.1%; leaves monetary policy, stimulus unchanged (9.43 )
For details of this release, click here (http://www.boj.or.jp/en/announcements/release_2011/k111007a.pdf)

• London newsource reports Moody's will cut ratings of of 14 UK banks
Click here (http://www.cityam.com/news-and-analysis/exclusive-moody-s-slashes-ratings-uk-banks) for Cityam story

• Moody's downgrades rating on Portuguese banks; outlook negative
For details of this release, click here (http://www.moodys.com/research/Moodys-takes-rating-actions-on-Portuguese-banks-outlook-negative--PR_227631)

• Moody's downgrades 12 UK institutions
The rating actions include a one-notch downgrade of Lloyds TSB Bank plc (to A1 from Aa3), Santander UK plc (to A1 from Aa3), Co-Operative Bank plc (to A3 from A2), a two-notch downgrade of RBS plc (to A2 from Aa3) and Nationwide Building Society (to A2 from Aa3); and downgrades of one to five notches of 7 smaller building societies. The ratings of Clydesdale Bank were confirmed at A2 (negative outlook).
Click here (http://www.moodys.com/research/Moodys-downgrades-12-UK-financial-institutions-concluding-review-of-systemic--PR_227067) for details.

• Fitch Downgrades Italy to A+; Outlook Negative
Fitch Ratings has downgraded the Italian Republic's (Italy) foreign and local currency Long-term Issuer Default Ratings (IDRs) from 'AA-' (AA minus) to 'A+' (A plus) and the short-term rating from 'F1+' to 'F1'. The Outlook on the long-term ratings is Negative. The Country Ceiling of 'AAA' has also been affirmed.

-- The downgrade reflects the intensification of the Euro zone crisis that constitutes a significant financial and economic shock which has weakened Italy's sovereign risk profile. As Fitch has cautioned previously, a credible and comprehensive solution to the crisis is politically and technically complex and will take time to put in place and to earn the trust of investors.

-- Italy's sovereign credit profile remains relatively strong and is supported by a budgetary position that compares favourably to several European and high-grade peers. As a sovereign and nation it is solvent. Moreover, as the third largest economy in the euro zone, Italy is a 'core' member of EMU and the rating incorporates Fitch's judgement that, in extremis, the ECB and/or EFSF/IMF will provide support to prevent a self-fulfilling liquidity crisis.

-- Fitch's own fiscal projections reflecting weaker macroeconomic assumptions (see Fitch's latest 'Global Economic Outlook' published 3 October) and potential for slippage imply that the government's target of a balanced budget in 2013 may not be realised, and Fitch's baseline forecast is for a primary surplus of around 4% which, if sustained over several years, would be sufficient to reduce government debt to GDP ratio to below 110% by the end of the decade. Based on government projections to 2014 and assuming a balanced budget over the rest of the decade, debt would fall below 100% of GDP for the first time since 1991.

-- However, while the near-term budget deficit targets are achievable, the fiscal measures fall short of a more fundamental reform of public finances and imply a shift from expenditure to revenue-led fiscal adjustment.

-- A key relative strength of Italy versus several high-grade peers has been its resilient banking system that is not exposed to an excessively leveraged domestic private sector or to the euro zone 'crisis countries' of Greece, Ireland and Portugal. However, the banking sector's recent increased cost of funding will place further pressure on already strained profitability as will some worsening of asset quality in the wake of the weakening of the economy. Italian banks also need to further raise their capital ratios to bring themselves in line with international peers as well as Basel III regulations and shore up confidence in wholesale markets. Of greater concern to Fitch is the small but no longer negligible tail risk that a further worsening of the euro zone debt crisis and volatility in the value of Italian government bonds will further erode confidence in the banking system.

• Fitch Comments on Spain; Downgraded L-T rating two notches to AA-
Fitch Ratings has downgraded Spain's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'AA-' from 'AA+'. The rating Outlook is Negative. Fitch has simultaneously affirmed Spain's Short-term rating at 'F1+' and the Country Ceiling at 'AAA'.

-- The downgrade primarily reflects two factors: the intensification of the euro area crisis and secondly, risks to the fiscal consolidation effort arising from the budgetary performance of some regions and downward revision by Fitch of Spain's medium-term growth prospects. While gross external debt (169% of GDP in 2010) is not high by euro area comparison, the net external debt of the economy (91% of GDP in 2010) is one of the highest in the world, reflecting a relative lack of Spanish foreign financial assets. This leaves the Spanish external finances sensitive to interest rate increases. While the current account adjustment has been significant, falling from 10% of GDP in 2007 to 4.5% of GDP in 2010 and a forecast 3.2% in 2011, further adjustment over the medium is necessary to improve the external balance sheet.

-- The intensification of the euro area crisis was identified as a negative rating trigger on 4 March 2011 when Spain's rating Outlook was revised to Negative. With large fiscal and external financing needs, heightened volatility has adversely impacted market financing conditions for Spain as illustrated by the Eurosystem's intervention in the secondary market. However, Spain's 'AA-' rating incorporates Fitch's judgement that as a solvent and systemically important sovereign, in extremis, the ECB and/or EFSF/IMF will provide support to prevent a self-fulfilling liquidity crisis.

-- The second principal driver of the downgrade of Spain's sovereign ratings is the budgetary performance of some regional governments, which in Fitch's opinion, poses a risk to fiscal consolidation. In September 2011, the agency downgraded five autonomous communities and maintains a Negative Outlook on the sector reflecting the still difficult fiscal and economic environment and the execution risks in implementing some of the cost cutting measures announced.

-- The process of rebalancing the Spanish economy is well underway but is not yet complete and Fitch expects it to weigh more heavily on economic growth over the medium term.

-- Despite the weakened risk profile, Fitch views Spanish sovereign solvency as secure.

-- The Negative Outlook reflects the risks associated with a further intensification of the euro area financial crisis, as well as possible material fiscal slippage and to a lesser extent contingent liabilities from the financial sector.

• Moody's places Belgium's Aa1 rating under review
Click here for Bloomberg.com story (http://www.bloomberg.com/news/2011-10-07/belgium-s-ratings-under-review-by-moody-s.html).


___________________________________________

TECHNICAL UPDATE - Friday 07 October, 2011 - AMC


... the last three sessions have failed to break above the previous highs of 11,190, 2,560 and 1,175. So even if the next few sessions are bullish, they are not likely to break above a new high and reverse the trend. To further strengthen this analysis, volumes on up days have weaken with every up-tick. Conclusion: more downside to come.

Still no new highs. So the odds of the market breaking down just got higher. That the benchmarks were rejected at their critical levels just shows how nervous and uncommitted the market is in spite of dovish economic data. Follow through on Monday will be critical in deciding if this market can make a new high to build on this rally or if it breaks down to complete a second consecutive DFDM and resume the downtrend.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img534.imageshack.us/img534/8867/dowr.jpg (http://imageshack.us/photo/my-images/534/dowr.jpg/)
11,103.12 -20.21 (-0.18%)
Volume: 188,078,713 from 190,039,982 the previous day
Range: 11,051.13 – 11,232.05

Candlestick Pattern (Daily): Spinning Top Doji
Candlestick Pattern (Weekly): N.A.
Resistance: 11,180 ... 11,400
Support: 11,000 ... 10,800

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img714.imageshack.us/img714/7250/ndxrl.jpg (http://imageshack.us/photo/my-images/714/ndxrl.jpg/)
2,479.35 -27.47 (-1.10%)
Volume: 548,212,330 from 581,006,541 the previous day
Range: 2,468.60 – 2,512.14

Candlestick Pattern (Daily): Dark Cloud
Candlestick Pattern (Weekly): Piercing Line
Resistance: 2,510 ... 2,550
Support: 2,425 ... 2,340

S&P 500 INDEX (SPX: CBOE)
http://img406.imageshack.us/img406/9143/spxa.jpg (http://imageshack.us/photo/my-images/406/spxa.jpg/)
1,155.46 -9.51 (-0.82%)
Volume: 881,987 from 851,180 the previous day
Range: 1,150.26 – 1,171.40

Candlestick Pattern (Daily): N.A.
Candlestick Pattern (Weekly): N.A.
Resistance: 1,162 to 1,173 ... 1,180
Support: 1,140 ... 1,121


___________________________________________

MARKET INTERNALS - Friday 07 October, 2011

NYSE :
Lower than avg volume @ 1140 mln, vs. 1305 mln
Decliners outpaced Advancers (adv/dec): 863/2150
New lows outpaced new highs (hi/lo): 9/32

NASDAQ :
Lower than avg volume @ 2050 mln, vs. 2227 mln
Decliners outpaced Advancers (adv/dec): 618/1920
New lows outpaced new highs (hi/lo): 10/60


Advancers outpaced Decliners by an average 4.25 to 1 on lower average volumes (-7.09%) on Thursday (avg +1.79%).

It was bullish again. Undeniably bullish. But the commitment as displayed by volumes is waning with each rising session. I can't buy into this rally when divergence is so obvious.

Decliners outpaced Advancers by an average 3.75 to 1 on lower volumes (-9.68%) on Friday (avg -0.70%).

The bears had a hard time of keeping the bulls out of the game. I wonder if the bears' reemergence was mistimed or if the bulls are really that resilient. Then again, with data on their side, why were the bulls so uncommitted to their cause? I seriously doubt the bulls' conviction and prefer to ride on the backs of the bears. We'll get follow through in the coming week then we'll know for sure.

http://img171.imageshack.us/img171/1276/ints.jpg (http://imageshack.us/photo/my-images/171/ints.jpg/)


___________________________________________

COMMODITIES & BONDS - Summary for Friday 07 October, 2011

Losses Eat Into Weekly Gains - from Briefing.com

Several closely tracked commodities succumbed to selling pressure this session. Specifically, oil prices ended pit trade at $82.79 per barrel for a 0.2% loss. For the week, though, they advanced 4.5%. Elsewhere in the energy complex, natural gas prices tumbled 3.1% to $3.49 per MMbtu. The decline fueled a weekly loss of almost 5%. Heating oil was unch at $2.86, while RBOB gasoline was also unch at $2.65.

Precious metals failed to find favor amid a downturn among equities. In turn, gold prices gave up 1.1% to end the day at $1635.50 per ounce, but they managed to muster a 0.8% gain for the week. As for silver, it slid 3.0% to $31.05 per ounce for the session, but still scored a 3.2% gain for the week. Dec copper ended up 3.35 cents at $3.28.

Corn settled lower by 2 cents to $6.03, wheat lost 7 cents to end at $6.09, soybeans were 3 cents lower at $11.61, ethanol fell 0.12% to close at $2.40, while sugar rose 0.36% at $0.25.

Commodities AMC on Friday 07 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 82.98 +0.39 (+0.47%)
Natural Gas (NYMEX) November 11 ($US per mmbtu.) : 3.48 -0.117 (-3.25%)
Unleaded Gas (NYMEX) November 11 ($US per gal.) : 2.65 -0.0384 (-1.43%)

Gold (NYMEX) December 11 ($US per Troy oz.) : 1,635.80 -17.40 (-1.05%)
Silver (NYMEX) December 11 ($US per Troy oz.) : 30.99 -1.012 (-3.16%)
Copper (NYMEX) December 11 ($US per lb.) : 3.27 +0.027 (+0.83%)

Corn (CBT) December 11 (cents per bu.) : 600.00 -5.50 (-0.91%)
Soyabeans (CBT) November 11 (cents per bu.) : 1,158.25 -5.50 (-0.47%)
Wheat (CBT) December 11 (cents per bu.) : 607.50 -8.50 (-1.38%)

Cocoa (NYMEX) December 11 ($ per metric ton) : 2,652.00 -8.00 (-0.30%)
Coffee (NYMEX) December 11 (cents per pound) : 224.35 -10.05 (-4.29%)
Cotton (NYMEX) December 11 (cents per pound) : 101.98 -0.75 (-0.73%)
Sugar #11 (NYMEX) March 11 (cents per pound) : 24.91 -0.25 (-0.99%)

BONDS - Weekly Summary for Monday 03 October, 2011 to Friday 07 October, 2011
10-yr Yield Tops 2.00%

Treasuries saw a wild week end with yields closing at their highest levels in quite some time. The 5-yr crossed the 1.00% threshold on Thursday and ended Friday's session at 1.073% as it saw its highest close in two months. The 10-yr yield settled above the 2.00% threshold for the first time in two weeks and ended Friday's trade at 2.068%, its highest level since mid-September. Yields along the curve saw significant reversals off of the week's lows as both the 10- and 30-yr yields climbed more than 40 bps from Tuesday's levels.

The Fed's ‘Operation Twist' began this week and traders witnessed the selling of some of its holdings for the first time in recent memory. Thursday's sale of $8.87 bln worth of 2012 maturities was met with tremendous demand as dealers looked to snap up $242.66 bln worth.

The yield curve steepened from last week's closing level as the 2-10-yr spread widened to 179 bps. However, flattening occurred in the knob of the curve as the 10-30-yr spread tightened to 93.5 bps.

Treasury Yields AMC on Friday 07 October, 2011:
• 2 Year Note 0.30% +0.01
• 5 Year Note 1.08% +0.07
• 10 Year Note 2.10% +0.09
• 30 Year Bond 3.02% +0.06
2/30 Spread : 272bps ( +5 ) ... 2/10 Spread : 180bps ( +8 )

http://img7.imageshack.us/img7/2609/64046451.jpg (http://imageshack.us/photo/my-images/7/64046451.jpg/)


So the curve predictably steepens. I will not be reading into this too much now because the Fed hasn't started their buying of the 30yr yet. For now, I will taking this curve with a pinch of salt unless the public sentiment over-runs the Fed's buying power.

As you can see, the curve looks a lot better than it was two weeks ago. Although the 5yr stayed above 1%, the 10yr yield closed above 2% and the 30yr above 3%, the whole curve still remains under par. The whole curve is going to have to move up by at least 99bps to be back to normal. That is going to be a long tough fight.


___________________________________________

PREVIEW FOR THE WEEK - MONDAY 10 OCTOBER, 2011 TO FRIDAY 14 OCTOBER, 2011


ECONOMIC VIEW
Strong Economic Data Continue to Show Potential Growth in the Third Quarter

Even as the data strengthens, economists and politicians have increased their rhetoric on the supposed weakness with economy. President Obama continues to stump for support of another stimulus package. However, that may not be needed. The truth is that the economy remains on a stable, but moderate, growth path and a second recession is unlikely. New stimulus may not help as much as economists expect.

Due to the lagged nature of economic reporting, there tends to be a mistiming in the implementation of fiscal stimulus. Instead of supporting the economy on the downturn, stimulus often starts after the economy starts to pick up. This can work to weaken the benefits of the stimulus by crowding out private spending.

Our analyses tend to follow closely with Keynesian economic theory, but with the economy on an upswing, any new stimulus needs to be targeted specifically at weak sectors in order to prevent the choking off of private demand in the sectors that are recovering. Targeting construction, for example, instead of blanket payroll tax cuts will provide much more of an economic boost.

Our forecast for Q3 2011 real GDP growth was revised down slightly from 2.9% to 2.8% as most of the data were in-line with our expectations.

There is no data on Monday. The U.S. Treasury market will be closed in observance of Columbus Day.

Tuesday is limited to the Fed's FOMC Minutes (14). Treasury will auction $32 bln 3-yr notes. The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities as part of the ?twist.'

Wednesday will see just the weekly MBA Mortgage Index (7). Treasury will hold a $21 bln 10-yr reopening. The Fed's ?twist' continues with the sale of $8.00-9.00 bln worth of 2013 maturities. Fed speak picks up as Philly Fed President Plosser hits the mic at the Wharton School of Business to give his economic outlook (13:30) and continues when Cleveland Fed President Pianalto speaks on leadership during challenging times at the University of Akron (14:15).

Data picks up a bit on Thursday with initial and continuing claims, the trade balance (8:30), and the Treasury Budget (14). Treasury will auction $13 bln 30-yr bonds in a reopening. The Fed's ?twist' will see the buying of $4.25-5.00 bln worth of 2017-2019 maturities. Fed speak concludes for the week with Minneapolis Fed President Kocherlakota speaking in front of business leaders in Montana (14:30).

Friday's data is the most anticipated of the week as retail sales, retail sales ex-auto, import/export prices (8:30), Michigan Sentiment (9:55), and business inventories (10) are released.

Earnings Highlights
Monday: No companies are currently scheduled to report.
Tuesday: ADTN, AA, EXFO, JOEZ, and SURG
Wednesday: ASML, HST, INFY, PEP, PGR, and UFPI.
Thursday: CBSH, FCS, FAST, JPM, LNN, MTOX, SWY, WGO, and GOOG.
Friday: MAT and WBS.

Economic Events
Monday:
None Scheduled
Tuesday:
14:00 pm FOMC Minutes
Wednesday:
07:00 am MBA Mortgage Index
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am Trade Balance
10:30 am Crude Inventories
10:30 am Natural Gas Inventories
14:00 pm Treasury Budget
Friday:
08:30 am Retail Sales
08:30 am Retail Sales ex-auto
08:30 am Export Prices ex-ag.
08:30 am Import Prices ex-oil
09:55 am Mich Sentiment
10:00 am Business Inventories

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- Hart Energy DUG Eagle Ford Conference
- KRC at Kilroy Realty Corporation Investor Day
- JDAS at Government Aerospace and Defense Industry Forum
Tuesday:
- COWN at Cowen and Company Therapeutics Conference
- AEN At NYC Medtech Forum
- SYMM at Carrier Ethernet World Congress 2011
Wednesday:
- Dell World 2011
- HOLL, CSIQ at BNP Paribas 18th Annual China Conference
- EFII at Fall Leadership Conference
Thursday:
- GPS at Gap Inc Investor Meeting
- MUN at Mead Johnson Nutrition Company Investor Day
- PETM at PetSmart Analyst Day Webcast
Friday:
- AVEO at International Kidney Cancer Symposium
- GREN at NIH/NHLBI Cardiovascular Regenerative Medicine Symposium


___________________________________________

SUMMARY

As bullish as the session was, I have lost confidence that this is the rally that brings the market back.

Monday 10 October is a Bond trading holiday in observance of Columbus Day. The second week of October is typically bearish but tends to ends bullishly. This bullish end usually carries into the third week.

Earnings Season starts this week with the announcement of Alcoa's (AA) numbers on Tuesday AMC. If recent earnings are any indication, I suspect this season might just provide some upside surprises. But that doesn't mean I'll be switching into a bull suit anytime soon. With the market still very sensitive to headline news out of Europe and the Asian economies on a continued slide south, I doubt very much that one good earnings season will make a sustainable rally.

I'm staying bear and heavily hedged. If Monday does end down, it will be the second consecutive DFDM and the 6th in 10 weeks.

Direction for Monday 10 October, 2011; ∇ Down

Direction for the week Monday 10 October, 2011 to Friday 14 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 110/179 (61.45%)

2011 Weekly Directional Accuracy Year-To-Date: 24/39 (61.54%)

Conrad
10-11-2011, 05:44 AM
U.S. MARKETS - Monday 10 October, 2011 AMC

http://img835.imageshack.us/img835/3721/dexsb.jpg (http://imageshack.us/photo/my-images/835/dexsb.jpg/)

With the market still very sensitive to headline news out of Europe and the Asian economies on a continued slide south, I doubt very much that one good earnings season will make a sustainable rally ... I'm staying bear and heavily hedged. If Monday does end down, it will be the second consecutive DFDM and the 6th in 10 weeks.

Direction for Monday 10 October, 2011; ∇ Down

Another one of those sessions that gap up massively at the open, rally a little and go nowhere for six hours. But having said that, leadership was just about right for the first time in a long time with Financials, Materials and Industrials leading the way ... but what was Energy doing up there too and why was Tech lagging? The laggers were more convincing as all four defensive sectors were behind the train.


___________________________________________

MARKET SUMMARY - Monday 10 October, 2011


BRIEFING.COM - Monday 10 October, 2011 AMC
Daily Sector Wrap: Market Rallies In Response To Europe

The stock market scored its best single-session percentage gain in almost seven weeks. The effort was broad based and came on the back of a commitment by leading officials in Europe to recapitalize the region's flagging financial institutions.

Early participants focused on news that over the weekend Germany's Chancellor Merkel and France's President Sarkozy pledged to support a plan intended to shore up capital at European banks and financial outfits. Their commitment came across as more unified than what had been previously displayed by the pair. The notion that eurozone leaders will be more concerted in their efforts to stabilize the region's precarious financial conditions, thereby reducing the risk of contagion, emboldened buyers, who engaged in an aggressive bout of buying.

The S&P 500 rallied more than 3% for its best one-day jump since August. That helped the broad market measure push through its 50-day moving average and close above that technical trend line for the first time since July.

No specifics regarding plans to improve financial conditions in Europe are currently available, but bank stocks and financial issues performed as if the risks inherent to their positions in Europe were reduced dramatically. That gave both the KBW Bank Index and the broader financial sector gains of more than 5%.

The euro also won support from traders. The currency rallied 2.0% to $1.365 for one of its best single-session percentage gains since July.

The euro's bounce put pressure on the dollar, helping to amplify buying interest among commodities. Oil was an especially strong performer in the commodity complex. The energy component climbed almost 3% to close pit trade at $85.41 per barrel.

The combination of higher oil prices and a stronger equity market helped energy stocks rally to a 4.5% gain. They were second only to financials. Materials plays, also helped by higher commodity prices, swung to a 4.2% gain.

Bonds will re-open for regular trading hours tomorrow. The market was closed today in observance of Columbus Day.

Sector Leaders/Laggards for Monday 10 October, 2011 AMC
Leading Sectors: Financials +5.1%, Energy +4.5%, Materials +4.2%, Industrials +3.6%, Consumer Discretionary +3.5%, Tech +3.4%, Health Care +2.5%, Telecom +2.1%, Utilities +2.0%, Consumer Staples +1.6%
Leading Industries/ETFs : energy services- XOP -3.5%, Junior gold miners- GDXJ +6.4$, Steel- SLX +5.9%, coal- KOL +5.8%, financials & banks- KRE +5.6%, Reg Bank RKH +5.3%, Financials- KCE +5.3%, XLF +5.2%, Oil Service OIH +5.2%, Bank KBE +5.1%, Broker- IAI +4.9%, Housing XHB +4.8%.

Lagging Sectors: None
Lagging Industries/ETFs : Vix- VXX -7.2%, Dollar index- UUP -1.6%, livestock & meat futures- COW -1.4%, Treasuries- TLT -1.4%.

Other Market Moving Factors:
• Europe officials offer concerted, unified commitment to bank recapitalization plan
• Bond market is closed for Columbus Day
• No economic data on tap

Companies trading higher in after hours in reaction to news:
• MAXY +3.2% (Maxygen announces final rejection of all claims of Amgen '804 patent in inter partes reexamination proceeding).

trading lower in after hours in reaction to earnings:
Companies trading lower in after hours in reaction to news:
• SBH -3.4% (Sally Beauty announces a 15 mln share common stock offering by selling shareholders).


___________________________________________

ECONOMIC COMMENTARY - Monday 10 October, 2011

• UK Sep Lloyds Employment Confidence -67 vs -66 in Aug

• Australia Sep ANZ Job Advertisements -2.1% vs -0.7% in Aug

• Germany Economic Data

- Aug Trade Balance (in EUR) 11.8 bln vs 10.5 bln in Jul
- Aug Exports +3.5% vs -1.2% in Jul
- Aug Imports 0.0% vs +0.5% in Jul

• France Economic Data

- Sep Bank of France Business Sentiment 97 vs 98 in Aug
- Aug Ind. Prod +0.5% vs +1.8% in Jul
- Aug Manf. Prod +0.7% vs +1.8% in Jul

• Eurozone Sentix Investor Conf -18.5 vs -15.4 in Sep

• Asian Markets Close; Nikkei Closed; Hang Seng Unch, Shanghai -0.6%; Sensex +2.0%
The Asian markets had a mostly higher session. Over the weekend, Germany's Merkel and France's Sarkozy united (again) and pledged to unveil a plan, to recapitalize banks, by the end of October. With out details of the official plan, perhaps sentiment is positive on hope resolution is closer. The Shanghai opened higher, then closed lower, but recall it was closed all last week, thus missing the swings of the week prior. The China Securities Journal suggested that the chances that China will increase interest rates and the reserve requirements for banks in Q4 is very small while the PBOC may take a wait and see approach.Real estate sales in China were said to be down ~40% from the prior week, which apparently dampened market sentiment. China also cut domestic fuel prices over the weekend.

Japan was closed in honor of Health and Sports day. Looking at currencies...the yuan appreciated vs the dollar 0.4% to 6.3475...the yen is little changed to 76.69... In Japan, as mentioned above, the Nikkei was closed for public Holiday.

In China, stocks re-opened after its week long Golden Week Holiday session to see the Shanghai down 0.6%. Banks and real-estate stocks saw the brunt of the weakness as Minsheng Bank dropped 2.2% and Poly RE (-3.5%) and China Vanke (-3.3%) saw declines over 3%.

In Hong Kong, shares finished unchanged on the day. There was a slightly better fairing in the banking sector in in HK as Bank of China posted a gain of 2.1%.

In India, the Sensex closed strong, up 2.0%. Highlighting the trading session was Tata Coffee gaining 10.9% after Starbucks commented it is in talks with a potential Indian co for a potential JV.

• European Markets Closing Prices
UK's FTSE: + 1.8%
Germany's DAX: + 3.0%
France's CAC: + 2.1%
Spain's IBEX: + 1.1%
Portugal's PSI: + 2.4%
Italy's MIB Index: + 3.7%
Irish Ovrl Index: + 0.9%
Greece FTSE/ASE 20: -1.9%

IN OTHER NEWS ...

• S&P affirms France's AAA rating; outlook stable

• S&P also affirms Belgium's AA+ rating and neg outlook


___________________________________________

TECHNICAL UPDATE - Monday 10 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,433.18 +330.06 (+2.97%)
Volume: 144,268,111 from 188,078,713 the previous day
Range: 11,104.56 – 11,433.33

http://img841.imageshack.us/img841/6901/dowuh.jpg (http://imageshack.us/photo/my-images/841/dowuh.jpg/)

Still no new highs. So the odds of the market breaking down just got higher. That the benchmarks were rejected at their critical levels just shows how nervous and uncommitted the market is in spite of dovish economic data. Follow through on Monday will be critical in deciding if this market can make a new high to build on this rally or if it breaks down to complete a second consecutive DFDM and resume the downtrend.

This changes everything. With the benchmarks breaking out of their respective downside flags, this could be another serious spike for new highs. The only problem will be the volumes that get weaker with each up tick. Also, DOW seldom makes a bullish 1,000 range in five days and whenever it did, it gave it all back in a hurry.

In the last five years, DOW has made only three bullish 1,000 ranges in a week including the current one. The other two times were in October 2008 and the resultant trend was obvious ...

http://img717.imageshack.us/img717/7889/1kragne.jpg (http://imageshack.us/photo/my-images/717/1kragne.jpg/)

Another uncanny similarity from the 2008 1,000 point weeks is the dip in volumes every time the market made gains.

http://img528.imageshack.us/img528/917/1kragneb.jpg (http://imageshack.us/photo/my-images/528/1kragneb.jpg/)

You will see the significance of this when you read the Market Internals below.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,566.05 +86.70 (+3.50%)
Volume: 422,228,891 from 548,212,330 the previous day
Range: 2,519.78 – 2,566.05

S&P 500 INDEX (SPX: CBOE)
1,194.89 +39.43 (+3.41%)
Volume: 654,900 from 881,987 the previous day
Range: 1,158.15 – 1,194.91


___________________________________________

MARKET INTERNALS - Monday 10 October, 2011 AMC

NYSE :
Lower than avg volume @ 888 mln, vs. 1298 mln
Advancers outpaced Decliners (adv/dec): 2788/256
New highs outpaced new lows (hi/lo): 23/10

NASDAQ :
Lower than avg volume @ 1540 mln, vs. 2213 mln
Advancers outpaced Decliners (adv/dec): 2124/437
New highs outpaced new lows (hi/lo): 14/70


Decliners outpaced Advancers by an average 3.75 to 1 on lower volumes (-9.68%) on Friday (avg -0.70%).

The bears had a hard time of keeping the bulls out of the game. I wonder if the bears' reemergence was mistimed or if the bulls are really that resilient. Then again, with data on their side, why were the bulls so uncommitted to their cause? I seriously doubt the bulls' conviction and prefer to ride on the backs of the bears. We'll get follow through in the coming week then we'll know for sure.

Advancers totally outpaced Decliners by an average 7.09 to 1 on significantly lower average volumes (-30.85%) on Monday (avg 3.29%).

Once again I remain stubborn that this "rally" is not sustainable. Need proof?
http://img255.imageshack.us/img255/4065/ptoddivergence.jpg (http://imageshack.us/photo/my-images/255/ptoddivergence.jpg/)

If you didn't know Price-to-Volumes Divergence, now you do. You've seen the results of this from October 2008 and that is why I will not be convinced to reduce my hedge, let alone turn Bull as long as volumes stay unconvincing and sector leadership stays inconsistent. The VIX is still at heightened fear levels (above 30 points) and it didn't help matters that the bond market was closed Monday. With no bond trades to counter-check the "buying" in the risk market, investors stayed sidelined as evidenced by the drop in volumes.

http://img28.imageshack.us/img28/2582/intse.jpg (http://imageshack.us/photo/my-images/28/intse.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, crude oil rally on dollar weakness

Weakness in the dollar and corresponding strength in the euro, following commentary from French President Sarkozy and German Chancellor Merkel, was the focus of commodities today. The two leaders met in Berlin this weekend for a bilateral summit, and they set a deadline at the end of Oct to reach an agreement on a comprehensive package of measures to stabilize the eurozone.

Precious metals rallied on the dollar weakness. Gold posted gains of 2.2% to close at $1670.80 per ounce, while silver prices added 3.2% to finish at $31.98 per ounce. Dec copper prices ended up a penny at $3.37.

Crude oil futures rallied on the dollar's weakness, as well as the strength in equity markets. Futures gained 2.9% to close at $85.41 per barrel. Crude put in highs at $86.09, its best levels since Sept 21. Natural gas ended up 1.7% at $3.54 per MMBtu. Heating oil ended up 5 cents at $2.91, while RBOB gasoline finished higher by 5 cents at $2.70 (all Nov contracts).

Corn settled higher by 4 cents to $6.04, wheat rose 4 cents to end at $6.11, soybeans were 21 cents higher at $11.80, ethanol rose 3 cents to close at $2.42, while sugar fell 0.49% at $0.26.

Commodities AMC on Monday 10 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 85.41 +2.43 (+2.93%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,670.80 +35.00 (+2.14%)

Bond Market was closed Monday 10 October, 2011 in observance of Columbus Day.

Treasury Yields AMC on Friday 07 October, 2011:
• 2 Year Note 0.30% +0.01
• 5 Year Note 1.08% +0.07
• 10 Year Note 2.10% +0.09
• 30 Year Bond 3.02% +0.06
2/30 Spread : 272bps ( +5 ) ... 2/10 Spread : 180bps ( +8 )


___________________________________________

PREVIEW FOR TUESDAY 11 OCTOBER, 2011

Earnings Highlights
BMO: None Scheduled
AMC: ADTN, AA, EXFO, JOEZ, and SURG

Economic Events
14:00 pm FOMC Minutes

Conferences and Shareholder/Analyst Meetings of Interest
- COWN at Cowen and Company Therapeutics Conference
- AEN At NYC Medtech Forum
- SYMM at Carrier Ethernet World Congress 2011


___________________________________________

SUMMARY

Earnings Season starts this week with the announcement of Alcoa's (AA) numbers on Tuesday AMC. If recent earnings are any indication, I suspect this season might just provide some upside surprises. But that doesn't mean I'll be switching into a bull suit anytime soon.

With earnings season kicking off AMC and the FOMC minutes due out at 14:00, I reckon Tuesday will be a low activity day and is likely to consolidate. Monday was nothing more than an excuse to price-in what is likely to come for the rest of the week. If we do get a consolidation, I will be tempted to sell into this rally again.

Direction for Tuesday 11 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 110/180 (61.11%)

Conrad
10-12-2011, 06:51 AM
U.S. MARKETS - Tuesday 11 October, 2011 AMC

http://img809.imageshack.us/img809/8388/dexsn.jpg (http://imageshack.us/photo/my-images/809/dexsn.jpg/)

I reckon Tuesday will be a low activity day and is likely to consolidate. Monday was nothing more than an excuse to price-in what is likely to come for the rest of the week. If we do get a consolidation, I will be tempted to sell into this rally again.

Direction for Tuesday 11 October, 2011; ∇ Down

I'll take that result, thank you. If that isn't a consolidation, then the only other thing you can call it is a constipation in a very narrow range not seen since early July this year.


___________________________________________

MARKET SUMMARY - Tuesday 11 October, 2011


BRIEFING.COM - Tuesday 11 October, 2011 AMC
Daily Sector Wrap: Nasdaq Outpaces Counterparts

Tech helped lead the Nasdaq to a strong gain, but the broader market finished only fractionally above the flat line.

Participants opted to take a breather after the aggressive bout of buying in the prior session. Action was also subdued as participants awaited the EFSF vote by Slovakia and traders showed continued concern about the specter of a default by Greece, despite the Troika's decision to make another disbursement of financial aid to flagging country.

A lack of enthusiasm in Europe also left the euro to drift lower. It eventually rebounded against the greenback to end the day with a marginal gain at $1.364.

The Nasdaq scored another solid gain with help from the tech sector, which ended the day with a 0.6% gain. That has the tech-rich Index at a 10-day high.

Alcoa (AA 10.30, +0.21) offered leadership to the Dow ahead of its latest quarterly report, which unofficially marks the start of earnings season, but the blue chip average stayed close to the flat line all session. The broad-based S&P 500 did the same.

Treasuries stayed under heavy pressure all session. That took the yield on the benchmark 10-year Note is up to almost 2.20%. Since the U.S. bond market was closed yesterday in observance of Columbus Day, Treasuries were left to price in the stock market's prior session surge, which was actually its best single-day jump since August. They didn't really benefit from results of a $32 billion auction of 3-year Notes. The auction drew a yield of 0.544% on a bid-to-cover ratio of 3.30. The indirect bidder participation rate came in at almost 38%.

Sector Leaders/Laggards for Tuesday 11 October, 2011 AMC
Leading Sectors: Tech +0.6%, Industrials +0.4%, Consumer Discretionary +0.3%, Materials +0.2%, Energy +0.1%
Leading Industries/ETFs : Grains- JJG +5.9%, Airlines- FAA +2.3%, coal- KOL +2.0%, Ag/Chem MOO +1.9%, Internet-HHH +1.5%, ag. & food futures-DBA +1.4%, Nat gas- UNG +1.1%, energy services- OIH +1.1%.

Lagging Sectors: Financials -0.1%, Consumer Staples -0.2%, Health Care -0.4%, Telecom -1.0%, Utilities -1.1%
Lagging Industries/ETFs : Copper- JJC -2.6%, REITS and real estate- IYR -1.9%, Solar- TAN -1.8%, Vix- VXX -1.2%.

Other Market Moving Factors:
• Tech trades with leadership
• Troika's disbursement to Greece does little to quell concerns over long-term stability for flagging country
• Slovakia becomes a point of contention with regard to EFSF agreement
• Treasuries turn lower in catch-up action (Bond market was closed on Monday)

Companies trading higher in after hours in reaction to earnings: NSR +3.8%
Companies trading higher in after hours in reaction to news:
• NSR +3.8% (Neustar to acquire TARGUSinfo; network addressing, routing and policy management company for ~ $650 mln in cash; expected to be at least $0.20 accretive to Neustar's EPS in 20120.

Companies trading lower in after hours in reaction to earnings: AA -4.6%, EXFO -4.2%.
Companies trading lower in after hours in reaction to news:
• PTP -5.8% (Platinum Underwriters expects losses from major catastrophes in Q3 and increases to its loss estimates for major catastrophes in the Q1 and Q2 will have a net negative impact of ~ $112.4 mln on Q3 results)
• AHT -1.7% (Ashford Hospitality Trust announces an offering of 9.00% Series E Cumulative Preferred Stock, pursuant to an effective registration statement)
• CLF -1.3% (Cliffs Natural Resources Pinnacle mine resumes longwall operations).


___________________________________________

ECONOMIC COMMENTARY - Tuesday 11 October, 2011

• New Zealand Sep Card Spending - Retail +0.4% vs -0.5% in Aug

• UK Sep RICS House Price Balance -23% vs -23% in Aug

• Australia Sep NAB Business Conf -2 vs -9 in Aug

• Japan Economic Data

- Aug Trade Balance - BOP Basis (in JPY) 694.7 bln vs 123.3 bln in Jul
- Aug Adjusted Current Account Total (in JPY) 652.6 bln vs 752.5 bln in Jul
- Sep Bankruptcies -9.2% vs -3.6% in Sep 2010

• UK Economic Data

- Aug Ind. Prod +0.2% vs -0.2% in Jul
- Aug Manufacturing Output -0.3% vs revised -0.2% in Jul

• Asian Markets Close; Nikkei +2.0%, Hang Seng +2.4%, Shanghai +0.1%, Sensex -0.1%
It was a sea of green across Asia as only India's Sensex (-0.1%) finished lower. Chinese financials were strong after an arm of China's sovereign wealth fund announced it was purchasing shares of the country's four largest banks. Bank Indonesia announced a surprise 25 bp cut to 6.50% as global growth concerns and the belief that inflation is tame were grounds for the move. Data in the region saw South Korean PPI ease to 5.7% YoY (6.6% YoY previous) while Australia's NAB Business Confidence rose to -2 (previous -9). Malaysian industrial production beat (3.0% YoY actual v. -0.6% YoY previous) and manufacturing sales were in-line at 10.8%. Looking at the currencies...USDCNY weakened to 6.3755 while USDJPY is little changed near 76.60.

In Japan, the Nikkei closed +2.0% as exporters gained on hopes Europe is finally going to have a solution to the debt crisis. Sony gained 5.7% while Honda Motor added 5.5%. Robotics maker Fanuc surged 4.3% on word that it would replace embattled Tokyo Electric Power Co in the Topix Core 30.

In Hong Kong, the Hang Seng finished +2.4% to finish near its best levels in three weeks. Financials lead the way higher after China's sovereign wealth fund snapped up shares in the country's four largest banks. Agricultural Bank of China jumped 13% to lead the advance while competitor ICBC climbed 6.7%. Resource stocks were lead by copper and aluminum producer MinMetals Resources which gained 4.0%.

In China, the Shanghai Composite settled +0.1% as gains in financials on the mainland were more muted. Agricultural Bank of China added just 2.0% and ICBC gained 1.5%. Coal stocks were under pressure after the extension of a resources tax as Yanzhou Coal Mining fell 4.9%.

In India, the Sensex closed -0.1% as technology shares fell ahead of Infosys Technologies' Q2 earnings. The heavyweight fell more than 3.0% to lead the sector lower while competitor Wipro shed 2.3%.

• European Markets Closing Prices
UK's FTSE: -0.3%
Germany's DAX: + 0.1%
France's CAC: -0.5%
Spain's IBEX: -0.5%
Portugal's PSI: -1.1%
Italy's MIB Index: -0.5%
Irish Ovrl Index: -1.1%
Greece FTSE/ASE 20: -3.9%

EARNINGS CALL

• After market close

Alcoa misses Q3 ests on the bottom line, beats on revs; reaffirms FY11 global aluminum demand
Reports Q3 (Sep) earnings of $0.15 per share, or $172 mln, including items, may not be comparable to the Capital IQ Consensus Estimate of $0.23, special items included the positive impact of mark-to-market changes on certain energy contracts and a net discrete income tax benefit, partially offset by the negative impact of net costs associated with restructuring and uninsured losses, including losses related to flood damage at Alcoa's Bloomsburg, PA, plant; adjusted earnings were $164 mln; revenues rose 21.4% year/year to $6.42 bln vs the $6.24 bln consensus. Looking forward, Alcoa continues to project aluminum demand will grow 12% in 2011 on top of the 13 percent growth seen in 2010. Increasing demand in China, where the co has raised its 2011 growth projection two-percentage points to 17%, will mostly offset declines in Europe and other regions... Growing demand for aluminum beverage cans in China, Europe, and the Middle East will offset flat to declining markets in the United States and drive overall packaging market growth of 2 to 3 percent in 2011 compared to 2010. The recovery in the industrial gas turbine market continues to support a brighter long-term outlook and a 2011 growth projection of 5 to 10 percent. The building and construction market continues to struggle in North America and Europe, leading to a growth projection of 1 to 3 percent, primarily due to continued strength in non-residential construction in China. The outlook for commercial transportation is mixed, with a weaker second half of 2011, driven primarily by lower sales in Europe and China, offsetting strong first-half results and continued gains in the North American market. Alcoa projects heavy truck and trailer sales will range from flat to 2 percent growth over 2010.

IN OTHER NEWS ...

• BOJ Oct Monthly Report of Recent Economic and Financial Developments;
Japan's economic activity has continued picking up
For details of this release, click here (http://www.boj.or.jp/en/mopo/gp_2011/gp1110a.pdf)

• EC, ECB, IMF on Fifth Review Mission of Greece
Click here (http://www.ecb.europa.eu/press/pr/date/2011/html/pr111011.en.html) for release.

• Key Comments from Troika Statement

-- Once the Eurogroup and the IMF's Executive Board have approved the conclusions of the fifth review, the next tranche of EUR 8 billion (EUR 5.8 billion by the euro area Member States, and EUR 2.2 billion by the IMF) will become available, most likely, in early November.

-- Regarding the outlook, the recession will be deeper than was anticipated in June and a recovery is now expected only from 2013 onwards. There is no evidence yet of improvement in investor sentiment and the related increase in investments, in part because the reform momentum has not gained the critical mass necessary to begin transforming the investment climate.

-- In the fiscal area, the government has achieved a major reduction in the deficit since the start of the program despite a deep recession. However, the achievement of the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures.

-- As for 2012, the mission believes that the additional measures announced by the government, in combination with a determined implementation of the adjusted Medium-Term Fiscal Strategy, should be sufficient to bring the fiscal program back on track.

-- Looking to 2013-14, additional measures are likely to be needed to meet program targets.

-- In the area of privatisation, progress has been achieved with the creation of a professionally managed privatisation fund. However, delays in the preparation of the assets for privatisation, and to some extent worse market conditions, mean that revenues in 2011 will be significantly lower than expected.

-- Banks have improved their capital base through market-based means.

-- As to structural reforms, areas of progress include the transport sector, licensing procedures, and regulated professions. As overall progress has been uneven, a reinvigoration of reforms remains the overarching challenge facing the authorities.


___________________________________________

TECHNICAL UPDATE - Tuesday 11 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,416.30 -16.88 (-0.15%)
Volume: 133,364,019 from 144,268,111 the previous day
Range: 11,365.67 – 11,447.86

http://img3.imageshack.us/img3/9566/dowbz.jpg (http://imageshack.us/photo/my-images/3/dowbz.jpg/)


This changes everything. With the benchmarks breaking out of their respective downside flags, this could be another serious spike for new highs. The only problem will be the volumes that get weaker with each up tick. Also, DOW seldom makes a bullish 1,000 range in five days and whenever it did, it gave it all back in a hurry. In the last five years, DOW has made only three bullish 1,000 ranges in a week including the current one. The other two times were in October 2008 and the resultant trend was obvious.

As expected, the benchmarks stall just below critical levels and the bulls don't push further. DOW got stuck below 11,440 and finished with a Doji and S&P500 couldn't get above 1,200 and also wears a Doji now. NASDAQ was the only stand out but its leadership was not from Tech companies. Instead, NASDAQ100 was led by retail, education, machinery, etc. Now the tech heavy index faces the possibility of a Third Candle Reversal.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,583.03 +16.98 (+0.66%)
Volume: 419,959,877 from 422,228,891 the previous day
Range: 2,551.94 – 2,587.28

S&P 500 INDEX (SPX: CBOE)
1,195.54 +0.65 (+0.05%)
Volume: 650,495 from 654,900 the previous day
Range: 1,187.300 – 1,199.24


___________________________________________

MARKET INTERNALS - Tuesday 11 October, 2011 AMC

NYSE :
Lower than avg volume @ 882 mln, vs. 1294 mln
Advancers outpaced Decliners (adv/dec): 1650/1336
New highs outpaced new lows (hi/lo): 17/9

NASDAQ :
Lower than avg volume @ 1620 mln, vs. 2203 mln
Advancers outpaced Decliners (adv/dec): 1528/994
New lows outpaced new highs (hi/lo): 20/49


Advancers totally outpaced Decliners by an average 7.09 to 1 on significantly lower average volumes (-30.85%) on Monday (avg 3.29%).

Once again I remain stubborn that this "rally" is not sustainable ... If you didn't know Price-to-Volumes Divergence, now you do. You've seen the results of this from October 2008 and that is why I will not be convinced to reduce my hedge, let alone turn Bull as long as volumes stay unconvincing and sector leadership stays inconsistent. The VIX is still at heightened fear levels (above 30 points) and it didn't help matters that the bond market was closed Monday. With no bond trades to counter-check the "buying" in the risk market, investors stayed sidelined as evidenced by the drop in volumes.

Advancers outpaced Decliners by an average 1.36 to 1 on woefully lower average volumes (-28.45%) on Tuesday (avg +0.19%).

Volumes go lower suggesting that the buying is slowing down ... if the buying was ever there in the first place. For now, that is the only internals that concern me and will keep me on the bear side.

http://img855.imageshack.us/img855/1276/ints.jpg (http://imageshack.us/photo/my-images/855/ints.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Precious metals quiet as markets await EFSF vote in Slovakia

It was a quiet session for the precious metals, as the markets continued to wait for the EFSF vote in Slovakia, the final and maybe most contested of the 17 EU members. Gold ended lower by 0.5% at $1661 per ounce, while silver finished up 0.3% at $32 per ounce. Dec copper shed 8.2 cents to close at $3.286.

Crude oil futures, which ended higher by 0.5% at $85.81 per barrel, also had a relatively quiet session. Futures were able to recoup overnight losses after the dollar gave up earlier gains. They traded to $86.64 in afternoon trade, but pulled back from those highs heading into the close. Natural gas ended up 1.9% at $3.61 per MMBtu. Heating oil ended off a penny at $2.90, while RBOB gasoline rallied for 5 cents to finish at $2.75 (all Nov contracts).

Corn settled higher by 40 cents (or +6.6%) to $6.45, wheat rose 50 cents (or +8.3%) to end at $6.62, soybeans were 57 cents higher (or +4.8%) at $12.35, ethanol rose 12 cents (or +5.1%) to close at $2.55, while sugar was unchanged at $0.26.

Commodities AMC on Tuesday 11 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 85.81 +0.40 (+0.47%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,661.00 -9.80 (-0.59%)

Treasuries ended near their worst levels of the session despite the solid $32 bln 3-yr note auction. The auction drew 0.544% and saw a solid 3.30x bid/cover (12-auction average 3.16x) as indirect bidders took down a better than average 37.8% of the offering. Sellers were in control all session long as the 30-yr bond lost two handles to lead the way lower. Yields in the back of the curve finished the day higher by more than 8 bps each as the 10-yr settled at 2.16% and the 30-yr finished above 3.11%. A steeper yield curve was once again in the cards as the 2-10-yr spread widened to 186 bps.

Treasury Yields AMC on Tuesday 11 October, 2011:
• 2 Year Note 0.32% +0.02
• 5 Year Note 1.14% +0.06
• 10 Year Note 2.18% +0.08
• 30 Year Bond 3.11% +0.09
2/30 Spread : 279bps ( +7 ) ... 2/10 Spread : 186bps ( +6 )

The curve continues to steepen and is only averagely 20bps from getting back to a normal curve, albeit entirely under par values. For the record, the 2/30 spread is supposed to be around 300bps and the 2/10 spread should be around 200bps.


___________________________________________

PREVIEW FOR WEDNESDAY 12 OCTOBER, 2011

Wednesday will see just the weekly MBA Mortgage Index (7:00) and the Fed's FOMC Minutes (14:00). Treasury will hold a $21 bln 10-yr reopening. The Fed's ‘twist' continues with the sale of $8.00-9.00 bln worth of 2013 maturities. Fed speak picks up as Philly Fed President Plosser hits the mic at the Wharton School of Business to give his economic outlook (13:30) and continues when Cleveland Fed President Pianalto speaks on leadership during challenging times at the University of Akron (14:15).

Earnings Highlights
BMO: ASML, HST, INFY, PEP, and PGR.
AMC: UFPI.

Economic Events
07:00 am MBA Mortgage Index
14:00 pm FOMC Minutes

Conferences and Shareholder/Analyst Meetings of Interest
- Dell World 2011
- HOLL, CSIQ at BNP Paribas 18th Annual China Conference
- EFII at Fall Leadership Conference


___________________________________________

SUMMARY

... leadership (on Monday) was just about right for the first time in a long time with Financials, Materials and Industrials leading the way ... but what was Energy doing up there too and why was Tech lagging? The laggers were more convincing as all four defensive sectors were behind the train.

Its not just because AA missed but more about its CEO's statement on a seriously slowing Chinese demand for raw materials that I have become more bearish about the global economy. Now that earnings season has started, expect things to get crazier as the market gets more divided between news out of Europe and earnings calls and a massive slew of key economic data coming out in the next eight sessions. Its time to buckle up and keep a close eye on your positions. Gyrations are about to take on a new meaning and Volatility is about to take on new heights.

Direction for Wednesday 12 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 111/181 (61.33%)

Conrad
10-13-2011, 02:10 AM
U.S. MARKETS - Wednesday 12 October, 2011 AMC

http://img52.imageshack.us/img52/2444/dexs.jpg (http://imageshack.us/photo/my-images/52/dexs.jpg/)

Its not just because AA missed but more about its CEO's statement on a seriously slowing Chinese demand for raw materials that I have become more bearish about the global economy. Now that earnings season has started, expect things to get crazier as the market gets more divided between news out of Europe and earnings calls and a massive slew of key economic data coming out in the next eight sessions. Its time to buckle up and keep a close eye on your positions. Gyrations are about to take on a new meaning and Volatility is about to take on new heights.

Direction for Wednesday 12 October, 2011; ∇ Down

This rally is really taking the mickey outta me. Is this for real? Its times like these when you start second guessing yourself that you get caught out. Then you question your second guess and miss out. I will stay stubborn until the next correction and see how that correction ends before deciding what to do next. Depending on how Thursday goes, I may or may not adjust the size of my hedge.


___________________________________________

MARKET SUMMARY - Wednesday 12 October, 2011


BRIEFING.COM - Wednesday 12 October, 2011 AMC
Daily Sector Wrap: Climb Continues

Late selling ate into gains, but the stock market still scored its sixth advance in seven sessions.

Stocks were bid higher in the early going as market participants continued to take their cues from Europe, where the region's major bourses resumed their uptrend amid speculation that Slovakia will eventually vote in favor of the EFSF. The decision by the country's officials to vote down the plan last evening came in conjunction with a vote of no confidence for the country's prime minister.

The belief that plans to improve financial conditions in Europe are moving closer to completion and implementation has helped diminish the perception of risk in the region. That has quelled concern about the exposure of diversified banks and financial services providers. In turn, financials were today's top performers.

Financials were out in front for the entire session, but surrendered some of their gains into the close. Still, the sector ended the day with a 2.7% gain. JPMorgan Chase (JPM 33.20, +0.90) garnered a great deal of buying interest ahead of its latest quarterly report tomorrow morning. Bank of America (BAC 6.58, +0.21) was also among the best performers, but it isn't scheduled to report until next week.

Last evening fellow blue chip Alcoa (AA 10.05, -0.25) announced its latest quarterly results, which came short of what Wall Street had commonly expected. The Dow component's announcement marked the unofficial start of earnings season.

Strength in shares of the two financial giants helped take the Dow above 11,600, which put it in positive territory for the year. However, late selling stole about 100 points from the blue chip average, so the Dow slid back to negative territory for the year.

The weak finish came after the S&P 500 stalled near its two-month closing high and the Dow failed to sustain enough momentum to move meaningfully above its own two-month closing high. Still, blue chips booked their fifth gain in seven sessions while the broader market booked its sixth gain in seven sessions. In that time the Dow is up more than 8%, but the S&P 500 is up almost 10%.

Market participants showed no real reaction to minutes from the most recent FOMC meeting, mostly because the minutes failed to offer any new insight into the mindset of the monetary policy setting committee.

Treasuries also showed little reaction to the FOMC minutes, but news of low dollar demand at the latest auction of 10-year Notes induced additional selling. The benchmark 10-year Note ended the day off of its lows, but its yield remained above 2.20%. That's more than 40 basis points above the depths that it probed less than 10 days ago.

The dollar extended its descent today, mostly driven by 1% gains by both the sterling pound and euro. Their climb has been underpinned by improved sentiment in the eurozone.

Sector Leaders/Laggards for Wednesday 12 October, 2011 AMC
Leading Sectors: Financials +2.7%, Industrials +1.3%, Consumer Discretionary +1.1%, Telecom +1.0%, Materials +1.0%, Consumer Staples +0.8%, Energy +0.8%, Tech +0.5%, Health Care +0.2%, Utilities -0.1%
Leading Industries/ETFs : Financials- PBW +3.6%, Reg banks- RKH +3.2%, KRE +2.6%, Banks: KBE +3.2%, Steel- SLX +2.9%, Airlines- FAA +2.8%, Coal- KOL +2.8%, Solar- TAN +2.7%, Finance XLF +2.5%, KCE +2.4%, Broker- IAI +2.4%.

Lagging Sectors: None.
Lagging Industries/ETFs : Vix- VXX -6.7%, Nat gas- UNG -3.2%, Treasuries- TLT -1.5%, Grains- JJG -1.4%, Biotech- IBB -0.8%, Dollar index- UUP -0.6%.

Other Market Moving Factors:
• S&P 500 and Dow lose momentum near two-month closing highs
• Financials offer leadership
• Alcoa (AA) comes short of consensus as earnings season gets its unofficial start
• Dollar declines as euro rallies
• FOMC minutes offer little new information to trade

Companies trading higher in after hours in reaction to news:
• AKAM +2.4% (Akamai Tech spikes $1.50 in after hours, strength attributed to rumor of Google (GOOG) for AKAM).

Companies trading lower in after hours in reaction to earnings: UFPI -7.5%
Companies trading lower in after hours in reaction to news:
• SNH -3.3% (Senior Housing announces proposed public offering of 6,000,000 common shares)
• TXI -2.4% (Texas Industries quarterly dividend suspended).


___________________________________________

ECONOMIC COMMENTARY - Wednesday 12 October, 2011

• Japan Aug Machine Tool Orders +11.0% vs -8.2% in Jul

• New Zealand Sep REINZ House Sales +21.1% vs +21.1% in Sep 2010

• Australia Economic Data

- Oct Westpac Consumer Confidence +0.4% vs +8.1% in Sep
- Aug Home Loans +1.2% vs +1.9% in Jul
- Aug Investment Lending +1.8% vs +1.9% in Jul

• Germany Sep Wholesale Price Index +0.3% vs +0.1% in Aug

• France Sep CPI +2.2% vs +2.2% in Sep 2010
This came in lower than expected

• UK Economic Data

- Aug Unemployment Rate 8.1% vs 7.9% in Jul
- Aug Avg Weekly Earnings +2.8% vs revised +2.9% in Jul (prior +2.8%)
- Sep Claimant Count 5.0% vs 4.9% in Aug
- Sep Jobless Claims Change 17.5K vs revised 19.1K in Aug (prior 20.3K)

• Eurozone Aug Industrial Prodcution +1.2% vs revised +1.1% in Jul (prior +1.0%)

• U.S. Economic Data

- MBA Mortgage Applications of +1.3% vs -4.3% Prior

• FOMC Minutes
See full document here (http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20110921.pdf)

Discussion of asset purchases from minutes

"A number of participants saw large-scale asset purchases as potentially a more potent tool that should be retained as an option in the event that further policy action to support a stronger economic recovery was warranted. Some judged that large-scale asset purchases and the resulting expansion of the Federal Reserve's balance sheet would be more likely to raise inflation and inflation expectations than to stimulate economic activity and argued that such tools should be reserved for circumstances in which the risk of deflation was elevated."
Exerpts from the FOMC minutes

Policy Tools: A number of participants saw large-scale asset purchases as potentially a more potent tool that should be retained as an option in the event that further policy action to support a stronger economic recovery was warranted. Some judged that large-scale asset purchases and the resulting expansion of the Federal Reserve's balance sheet would be more likely to raise inflation and inflation expectations than to stimulate economic activity and argued that such tools should be reserved for circumstances in which the risk of deflation was elevated. In commenting on the implications of a maturity extension program or another large-scale asset purchase program, several participants noted that the System should avoid holding a very large proportion of the outstanding stock of longer- term Treasury securities in its portfolio because the result could be a deterioration in market functioning. A number of participants suggested directing some purchases or reinvestments into agency MBS; however, a couple of participants saw such actions as unlikely to have benefits, or as a form of credit allocation.
Participants discussed whether to reduce the IOR rate, weighing potential benefits and costs. Participants generally agreed that they needed more information on the likely effects of a reduction in the IOR rate in order to judge its usefulness as a policy tool in the current environment.
Economic situation and outlook: The participants agreed that the information received during the intermeeting period indicated that economic growth remained slow but did not suggest a contraction in activity. Recent indicators pointed to continuing weakness in overall labor market conditions, and the unemployment rate remained elevated. Looking ahead, participants continued to expect some pickup in the pace of recovery over coming quarters but anticipated that the unemployment rate would decline only gradually. They generally judged that risks to the growth outlook, including strains in global financial markets, were significant and tilted to the downside; moreover, slow growth left the recovery more vulnerable to negative shocks. With longer-term inflation expectations remaining stable and the effects of past increases in energy and commodity prices continuing to dissipate, most participants saw both core and headline inflation as likely to settle, over coming quarters, at or below the levels they see as most consistent with their dual mandate. Participants continued to see the outlook for growth and inflation as more uncertain than usual.
Contacts in the banking sector reported that U.S. banks remained willing to lend to qualified customers, but that loan demand was weak... Most participants anticipated that, with stable inflation expectations, significant slack in labor and product markets, slow wage growth, and little evidence of pricing power among firms, inflation was likely to decline moderately over time.
Most members also supported a change in the Committee's reinvestment policy. One member who opposed the maturity extension program also opposed the change in reinvestment policy because he judged that it would not benefit housing markets.
Click here (http://federalreserve.gov/monetarypolicy/files/fomcminutes20110921.pdf) for complete text.

• Asian Markets Close; Nikkei -0.4%, Hang Seng +1.0%, Shanghai +3.1%, Sensex +2.6%
The major Asian indices closed mostly higher as markets shrugged off the weak results from aluminum maker Alcoa and the failure of Slovakia to pass the EFSF extension. Chinese bank stocks continued their rally following Monday's announcement by China's sovereign wealth fund that it had begun purchasing shares in the space. The passage of the currency manipulation bill by the U.S. Senate drew a stern reaction from Beijing who said if it were passed into law it would seriously damage U.S.-Sino relations. Severe flooding in Thailand continues to wreak havoc across most of the country and has caused the finance ministry to cut its GDP forecast to 3.7% from 4.0%. Data in the region was mostly better than expectations as Japanese core machinery orders (11.0% MoM actual v. 4.7% MoM expected) and Australian home loans (1.2% MoM actual v. 1.1% MoM expected) beat. Australia's Westpac Consumer Sentiment rose 0.2% while India's industrial production climbed 4.1% and South Korea's unemployment rate ticked up to 3.2% (3.1% previous). Looking at the currencies...USDCNY settled weaker at 6.3590 while USDJPY is stronger at 76.95.

In Japan, the Nikkei closed -0.4% as the flooding in Thailand has forced many Japanese manufacturers to close their factories in the country. Honda Motor fell 2.2% while competitor Toyota Motor dropped 0.3% as both cos were forced to shutter factories due to the flooding.

In Hong Kong, the Hang Seng finished +1.0% on strength in property stocks following the government's pledge to build subsidized homes. Cheung Kong added 1.9% while competitor Sun Hung Kai Properties gained 2.3%. European retailer Esprit plunged 7.5% on a report from a Chinese magazine that the co overstated its number of stores in China.

In China, the Shanghai Composite settled +3.1% as financials led the way. Insurance giant Ping An climbed 5.6% and China Merchants Bank rose 3.4%.

In India, the Sensex closed +2.6% as technology shares led the way following solid earnings from Infosys Technologies. Heavyweight Infosys surged 7.0% after announcing a smaller than expected cut to its FY sales forecast.

• European Markets Closing Prices
UK's FTSE: + 0.7%
Germany's DAX: + 2.2%
France's CAC: + 2.4%
Spain's IBEX: + 1.9%
Portugal's PSI: + 2.3%
Italy's MIB Index: + 2.9%
Irish Ovrl Index: + 1.9%
Greece FTSE/ASE 20: + 6.2%

EARNINGS CALL

• Before market open

PepsiCo (PEP) beats by $0.02, beats on revs; reaffirms high single digit FY11 core EPS growth, reduces FX tailwind by 100 bps
Reports Q3 (Sep) earnings of $1.31 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $1.29; revenues rose 13.3% year/year to $17.58 bln vs the $17.15 bln consensus, reflecting the benefits of volume growth, effective net pricing and favorable foreign exchange. Reported net revenue grew 33 percent in emerging markets. Excluding the WBD acquisition, net revenue grew 9% worldwide and 18% in emerging markets. Worldwide snacks volume increased 8% reflecting broad-based gains in the snacks portfolio and the impact of the WBD acquisition. Excluding the impact of the WBD acquisition, snacks volume grew 3%. Worldwide beverage volume increased 4%, including a 3-percentage-point impact from the WBD acquisition. Volume performance was led by growth in emerging markets, where organic volume increased 8% in snacks and 3% in beverages. PEP reaffirms its target for high-single-digit EPS growth (consensus +6.9%) on a core, 52-week basis, including an estimated foreign exchange translation benefit of ~1 percentage point (down from 2 % pts), from its fiscal 2010 core EPS of $4.13.

IN OTHER NEWS ...

• US Sentate votes down US jobs bill
Click here (http://www.thestatesman.net/index.php?option=com_content&view=article&id=386263&catid=35) for Thestatesman.com article

• IMF Releases Updated Economic Outlook for Asia and the Pacific

-- While the outlook for advanced economies is for a continuing, although weak, expansion over the remainder of 2011 and 2012, the risk of a renewed slowdown is greater now than six months ago, especially if structural fragilities remain unresolved.

-- Growth in Asia has also moderated since the second quarter of 2011, mainly as a result of weakening external demand. Domestic demand has been generally resilient, and overheating pressures remain elevated in a number of economies, with credit growth still robust and inflation momentum generally high.

-- In line with the weaker global outlook, growth in Asia is expected to be slightly lower in 2011-12 than forecast in April 2011, but the expansion should remain healthy, supported by domestic demand, and inflation is expected to recede modestly after peaking in 2011. Nevertheless, risks for the Asia and Pacific region are also decidedly tilted to the downside.

-- If the downside risks to the global outlook were to materialize, Asian economies have the scope to reverse course and use a range of measures to cushion the impact on economic activity, as many did in response to the global crisis in 2008.

• European Commission releases 'Roadmap for Stability and Growth'
President Barroso said, "This roadmap charts Europe's way out of the economic crisis. Reactive and piecemeal responses to different aspects of the crisis are no longer sufficient. We now need to get ahead of the curve. Confidence can be restored through an immediate deployment of all the elements needed to solve the crisis. Only in this way we will be able to convince our citizens, our global partners and the markets that we have the solutions that measure up to the challenges all economies are facing. We need to reach agreement at the European Council on the 23rd October".

The roadmap calls for:

1) Decisive action on Greece -- so that all doubt is removed about Greece's economic sustainability. This must include disbursement of the sixth tranche, a second adjustment programme, based on adequate financing through public sector and private sector involvement and continued support from the Commission Task Force.

2) Completing Euro area intervention -- including making the decisions agreed on 21 July 2011 operational, maximising the effectiveness of the EFSF, accelerating the launch of the European Stability Mechanism to mid 2012 and the provision of sufficient liquidity by the European Central Bank.

3) A fully coordinated approach to strengthen Europe's banks - this should be based on a reassessment by the supervising authorities using a temporary significantly higher capital ratio of highest quality capital after accounting for exposure. Banks should first use private sources of capital, with national governments providing support if necessary. If this support is not available, recapitalisation should be funded via a loan from the EFSF. Pending this recapitalisation, these banks would be prevented by national supervisors from distributing dividends or bonuses.

4) Speeding up stability and growth-enhancing policies -- including rapid implementation of existing commitments on services, energy and free trade agreements; swift adoption of pending proposals to enhance growth such as tax initiatives, fast-tracking forthcoming proposals, especially those that extend the benefits of the Single Market and targeted investment at the European Union level, including through project bonds.

5) Building robust and integrated economic governance for the future, based on the existing treaties (Article 136), reinforcing the Community approach. Building on the reinforced "six pack" on economic governance and the European semester already adopted, the proposals seek to integrate the European Stability Mechanism and the Stability & Growth Pact into the same fully integrated governance system to increase coherence and efficiency. This would provide new powers for the Commission/Council to intervene in the preparation of national budgets and monitor their execution. Enhanced cooperation should be envisaged in all cases where otherwise decisive action would be held back.


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TECHNICAL UPDATE - Wednesday 12 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,518.85 +102.55 (+0.90%)
Volume: 188,134,388 from 133,364,019 the previous day
Range: 11,417.280 – 11,625.30

http://img803.imageshack.us/img803/4499/dow.jpg (http://imageshack.us/photo/my-images/803/dow.jpg/)

As expected, the benchmarks stall just below critical levels and the bulls don't push further. DOW got stuck below 11,440 and finished with a Doji and S&P500 couldn't get above 1,200 and also wears a Doji now. NASDAQ was the only stand out but its leadership was not from Tech companies. Instead, NASDAQ100 was led by retail, education, machinery, etc. Now the tech heavy index faces the possibility of a Third Candle Reversal.

DOW failed to close above the year's open in its best opportunity to do so since 31 August 2011. After failing to stay above its 100DSMA, NASDAQ now wears an Inverted Dragonfly Doji. S&P500 managed to keep above 1,200 and held its close within its upside flag. Volumes on the benchmarks improved while broader market volumes fell yet again. All three benchmarks have also established higher highs which breaks the down trend pattern.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,604.73 +21.70 (+0.84%)
Volume: 507,938,537 from 419,959,877 the previous day
Range: 2,602.31 – 2,629.49

S&P 500 INDEX (SPX: CBOE)
1,207.25 +11.71 (+0.98%)
Volume: 805,996 from 650,495 the previous day
Range: 1,196.19 – 1,220.25


___________________________________________

MARKET INTERNALS - Wednesday 12 October, 2011 AMC

NYSE :
Lower than avg volume @ 1070 mln, vs. 1290 mln
Advancers outpaced Decliners (adv/dec): 2311/715
New highs outpaced new lows (hi/lo): 17/6

NASDAQ :
Lower than avg volume @ 2195 mln, vs. 2203 mln
Advancers outpaced Decliners (adv/dec): 1874/689
New lows outpaced new highs (hi/lo): 25/30


Advancers outpaced Decliners by an average 1.36 to 1 on woefully lower average volumes (-28.45%) on Tuesday (avg +0.19%).

Volumes go lower suggesting that the buying is slowing down ... if the buying was ever there in the first place. For now, that is the only internals that concern me and will keep me on the bear side.

Advancers outpaced Decliners by an average 2.98 to 1 on lower average volumes (-6.53%) on Wednesday (avg +0.91%).

Volumes across the broader market were marginally weaker. Apart from that, there is little to fault about this rally. The weakness in the last hour would be a worrying reminder as it confirms a still high level of fear as players book profits as and when they have it. Technicals are still a key factor as the market reacts to key levels and book profits just in case.

http://img20.imageshack.us/img20/5353/intgm.jpg (http://imageshack.us/photo/my-images/20/intgm.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

USDA releases October WASDE report, which is bearish for bearish for grains and related ag stocks
The USDA releases its October WASDE report, which showed a build in 2011/12 corn and wheat ending stocks. This data is bearish for ag stocks including, Fertilizer stocks (POT, MOS, CF, AGU), Seed names (MON, SYT) and farm equipment names (CNH, DE, AGCO, TITN).
Click here to see the full WASDE report for September 12. (http://www.usda.gov/oce/commodity/wasde/latest.pdf)

Dept. of Agriculture forecasts prices higher for cattle, lower for hogs, and lower for broilers
Cattle prices are forecast higher for the remainder of 2011 and through 2012. Demand remains stronger-than-expected and the strength is expected to carry into 2012. Hog prices are lowered for the last quarter of 2011 and into 2012 as hog supplies and slaughter are forecast higher. Broiler prices are lowered for 2011 as supplies remain relatively large and demand relatively weak. The pace of price recovery in 2012 is expected to be slower than forecast last month.

Crude oil ends five session rally

Crude oil futures ended their recent five session rally today after posting modest declines of 0.3% to end at $85.57 per barrel. Trade in crude oil was relatively quiet today as prices moved sideways around the flat line ahead of tomorrow's inventory data. Natural gas ended lower by 3.5% at $3.49 per MMBtu. Prices were pressured by mild temperatures across the country, as well as bearish expectations for tomorrow's inventory data. Heating oil rallied for 3.63 cents to close at $2.94, RBOB gasoline settled higher by 5.4 cents at $2.753 (all Nov contracts).

After their initial rally in overnight trade, it was a relatively uneventful session for gold and silver futures. Both metals pulled back slowly from their respective highs throughout the morning session. Futures were able to halt that pull back heading into the afternoon and recoup some of their earlier gains. Gold ended higher by 1.3% at $1682.60 per ounce, while silver futures gained 2.4% to finish at $32.79 per ounce. Dec copper rallied for 10 cents to finish at $3.391.

Corn settled lower by 2 cents to $6.43, wheat fell 33 cents or -5.0% to end at $6.28, soybeans were 4 cents higher at $12.40, ethanol rose 1 cent to close at $2.55, while sugar fell 0.31% to $0.26.

Commodities AMC on Wednesday 12 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 85.57 -0.24 (-0.28%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,682.60 +21.60 (+1.30%)

Treasuries finished off their worst levels of the session, but still saw sizable losses as continued strength in equities and a poor $21 bln 10-yr reopening kept the complex under fire all session long. Today's weak reopening drew 2.271% and saw a weaker than average 2.86x bid/cover. Dollar demand for the auction was the weakest since December 2009. Selling in longer dated paper saw yields climb significantly as the 10-yr hit a high of 2.269% before easing to 2.226% at the close of trade. Both the 10- and 30-yr yields have climbed more than 50 bps off of last week's lows. A steeper yield curve has persisted as of late with the 2-10-yr spread widening to 192 bps during today's session.

Treasury Yields AMC on Wednesday 12 October, 2011:
• 2 Year Note 0.29% -0.03
• 5 Year Note 1.17% +0.03
• 10 Year Note 2.24% +0.06
• 30 Year Bond 3.19% +0.08
2/30 Spread : 290bps ( +11 ) ... 2/10 Spread : 195bps ( +9 )


The curve continues to steepen and is only averagely 20bps from getting back to a normal curve, albeit entirely under par values. For the record, the 2/30 spread is supposed to be around 300bps and the 2/10 spread should be around 200bps.

The spreads are now less than 10bps from par. Looks like the Twist is working to get the market running in the right direction ... for now. Wait till they start buying the 30yr.


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PREVIEW FOR THURSDAY 13 OCTOBER, 2011

Data picks up a bit on Thursday with initial and continuing claims, the trade balance (8:30), and the Treasury Budget (14:00). Treasury will auction $13 bln 30-yr bonds in a reopening. The Fed's ‘twist' will see the buying of $4.25-5.00 bln worth of 2017-2019 maturities. Fed speak concludes for the week with Minneapolis Fed President Kocherlakota speaking in front of business leaders in Montana (14:30).

Earnings Highlights
BMO: CMN, CBSH, FCS, FAST, JPM, LNN, MTOX, SWY, and WGO.
AMC: GOOG.

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am Trade Balance
10:30 am Crude Inventories
10:30 am Natural Gas Inventories
14:00 pm Treasury Budget

Conferences and Shareholder/Analyst Meetings of Interest
- GPS at Gap Inc Investor Meeting
- MUN at Mead Johnson Nutrition Company Investor Day
- PETM at PetSmart Analyst Day Webcast


___________________________________________

SUMMARY

If that (Tuesday) isn't a consolidation, then the only other thing you can call it is a constipation in a very narrow range not seen since early July this year.

Now I am second guessing myself. The FOMC minutes told me nothing new and only reaffirmed the hawkishness of the situation ... earnings so far have not been that great with the disappointments outweighing the surprises ... leadership is still all over the place ... fear is still high as evidenced in the last hour of trading Wednesday ... volumes are no better on the broader market ... the yield curve is so artificial that it makes Pamela Anderson's chest look real ...

We have to correct. And soon. This market has become over-bought too quickly and for no apparent reason. Thus I will not change my stance.

Direction for Thursday 13 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 111/182 (60.99%)

Conrad
10-14-2011, 04:42 AM
U.S. MARKETS - Thursday 13 October, 2011 AMC

http://img511.imageshack.us/img511/2444/dexs.jpg (http://imageshack.us/photo/my-images/511/dexs.jpg/)

Now I am second guessing myself. The FOMC minutes told me nothing new and only reaffirmed the hawkishness of the situation ... earnings so far have not been that great with the disappointments outweighing the surprises ... leadership is still all over the place ... fear is still high as evidenced in the last hour of trading Wednesday ... volumes are no better on the broader market ... the yield curve is so artificial that it makes Pamela Anderson's chest look real ...

We have to correct. And soon. This market has become over-bought too quickly and for no apparent reason. Thus I will not change my stance.

Direction for Thursday 13 October, 2011; ∇ Down

That's not good enough. Once again, leadership was divergent. This time, extremely divergent with Financials going one way as if implying the future (GS is a good leading indicator of the market) and Tech going the other way. Defensive sectors were the safest bet ... again.


___________________________________________

MARKET SUMMARY - Thursday 13 October, 2011


BRIEFING.COM - Thursday 13 October, 2011 AMC
Daily Sector Wrap: Tech and Financials Tug-of-War

Tech led the Nasdaq to an enviable gain, but the broad market booked a loss as bank stocks and financial services plays succumbed to aggressive selling pressure.

The mood among market participants this morning was dampened by renewed weakness among Europe's major bourses, which moved lower after Asia's major averages staged strong gains in overnight action. Worries about the quality of third quarter bank earnings also weighed on early sentiment.

JPMorgan Chase (JPM 31.23, -1.97), widely regarded as one of the best run and most fundamentally sound banks in the business, posted this morning an upside earnings surprise, but the results were helped by deterioration in the company's own debt prices. Uncertainty about what other banks and financial services firms may report took the KBW Bank Index down almost 5% and the broader financial sector more than 3% lower before losses were trimmed in afternoon trade.

Pressure eased, but didn't exactly evaporate, in afternoon action. That helped the S&P 500 climb to the neutral line after it had been down more than 1% at its session low. Resistance at the flat line kept the broad market measure in negative territory. The Dow followed suit.

The Nasdaq was more successful in its effort. In turn, it scored another gain, which is actually its seventh in eight sessions. The Nasdaq's strength was owed to tech issues, which collectively climbed 1.0% while almost every other sector failed to either logged a loss or remained mired at the neutral line. Internet search giant Google (GOOG 558.99, +10.49) provided leadership ahead of its quarterly report.

Treasuries advanced, but surrendered some of their gains as the stock market recovered into the close. Results from an auction of 30-year Bonds didn't really have an impact on trade. The auction drew a bid-to-cover of 2.94, dollar demand of $38.2 billion, and an indirect bidder participation rate of 28.7%.

As for today's data, the latest initial jobless claims tally declined by 1,000 week over week to 404,000, which is on par with the 406,000 initial claims that had been broadly expected.

The trade deficit for August came in at $45.6 billion, which is slightly less than the $46.1 billion deficit that had been generally anticipated among economists polled by Briefing.com.

Sector Leaders/Laggards for Thursday 13 October, 2011 AMC
Leading Sectors: Tech +1.0%, Telecom +0.6%
Leading Industries/ETFs : Sugar- SGG +4.0%, Semi Equip XSD +3.7%, Semi Equip XSD +2.2%, biotechnology- XBI -1.8%, IBB +1.6%, Airlines- FAA +1.8%, Natural gas- UNG +1.3%.

Unchanged Sectors: Utilities (unch.)

Lagging Sectors: Health Care -0.1%, Consumer Staples -0.1%, Consumer Discretionary -0.2%, Energy -0.3%, Materials -0.5%, Industrials -0.9%, Financials -2.4%
Lagging Industries/ETFs : Bank KBE -2.9%, Reg Bank RKH -2.9%, KRE -2.1%, Silver- SLV -2.6%, Finance- XLF -2.3%, IYF 1.7%, IYF -1.7%, Gold miners- GDX -1.9%, Junior gold miners- GDXJ -1.6%, Insurance KIE -1.5%, Broker IAI -1.5%.

Other Market Moving Factors:
• Financials fall even though JPMorgan Chase (JPM) exceeds consensus earnings estimate
• Tech trades with strength
• Initial weekly jobless claims change little week over week, as expected

Companies trading higher in after hours in reaction to earnings: GOOG +6.1%.

Companies trading lower in after hours in reaction to news:
• DEPO -26.8% (DepoMed says announces results from Serada Phase 3 trial; says efficacy data from the trial were positive and statistically significant for three of the four pre-specified primary endpoints, but data for the key secondary endpoints of frequency and severity at 24 weeks did not achieve statistical significance).
• NCMI -16.6% (National Cinemedia reaffirms Q3 outlook and lowered its fourth quarter and full year 2011 revenue below consensus)
• MCHP -2.3% (Microchip sees Q2 revs of $340.6 mln vs. $360.2 mln Capital IQ Consensus Estimates; sees EPS of $0.45-0.47 vs. $0.52 consensus)
• HAR -2.2% (Harman: Relational Investors disclose 5.5% stake in 13D filing)
• AUQ -0.7% (AuRico Gold reports strong operational results with a 42% increase in cash position to $145 mln).


___________________________________________

ECONOMIC COMMENTARY - Thursday 13 October, 2011

• Bank of Korea leaves key interest rates unchanged, as expected

• BOJ Minutes from Sep 6-7 meeting released
For details of this release, click here (http://www.boj.or.jp/en/mopo/mpmsche_minu/minu_2011/g110907.pdf)

• New Zealand Sep Business Performance of Manufacturing Index 50.8 vs 52.7 in Aug

• Australia Economic Data

- Employment Change +20.4K vs -10.5K in Aug
- Unemployment Rate 5.2% vs 5.3% in Aug
- Full Time Employment Change +10.8K vs -13.5K in Aug
- Participation Rate 65.6% vs 65.6% in Aug

• China Economic Data

- Sep Trade Balance (in USD) "4.51 bln vs "7.76 bln in Sep 2010
- Sep Exports +17.1% vs +24.5% in Sep 2010
- Sep Imports +20.9% vs +30.2% in Sep 2010
- Q3 Business Climate Index 133.4 vs 135.6 in Q2

• Germany Sep final CPI +2.6% vs +2.6% prelim

• UK Aug Visible Trade Balance (in GBP) -7768 mln vs revised -8800 mln in Jul (prior 8922 mln)

• U.S. Economic Data

- Initial Claims 404K vs 406K; prior revised to 405K from 401K
- Contnuing Claims falls to 3.67 mln from 3.725 mln
- August Trade Balance -$45.6 bln vs -$46.1 bln

Trade Deficit Remains at July Levels in August
An upward revision to the July trade balance (from $44.8 bln) left the trade deficit unchanged at $45.6 bln in August. The Briefing.com consensus expected the trade deficit to expand to $46.1 bln. Both imports and exports fell by less than $0.1 bln in August. The goods deficit increased by $0.1 bln and the services surplus decreased by $0.2 bln. The August trade report was fairly static. There were no export or import sectors that saw gains or losses in excess of $1.0 bln. Surprisingly, the petroleum deficit widened in August from $25.7 bln to $26.1 bln even though prices had fallen significantly. This is an area that may see a downward revision next month.

Initial Claims Level Holds Steady, Still Points Toward Job Growth in October
The initial claims level declined slightly from 405,000 for the week ending October 1 to 404,000 for the week ending October 10. The Briefing.com consensus expected the initial claims level to increase to 406,000. We anticipated that poor seasonal adjustment factors might cause an unexpected decline in the claims level, but that turned out to be unfounded. The Department of Labor reported that there were no special factors influencing the claims level for the second consecutive week. For the third consecutive week, the initial claims level remained below the upper bound (410,000) of our "Recovery Zone." At this level, payroll growth in excess of the 100,000 needed to support normal labor force growth is expected. The continuing claims level declined from an upwardly revised 3.725 mln (from 3.700 mln) for the week ending September 24 to $3.670 mln for the week ending October 1. The consensus expected the continuing claims level to fall to 3.700 mln.

• Natural Gas Inventory Data

Natural gas inventory showed a build of 112 bcf vs expectations for a build of 100 bcf.

Working gas in storage was 3,521 Bcf as of Friday, October 7, 2011, according to EIA estimates. This represents a net increase of 112 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 68 Bcf above the 5-year average of 3,453 Bcf. In the East Region, stocks were 19 Bcf below the 5-year average following net injections of 54 Bcf. Stocks in the Producing Region were 74 Bcf above the 5-year average of 1,030 Bcf after a net injection of 44 Bcf. Stocks in the West Region were 13 Bcf above the 5-year average after a net addition of 14 Bcf. At 3,521 Bcf, total working gas is within the 5-year historical range.

• Oil Inventory Data

Dept of Energy reports that:
- Crude oil inventories had a build of 1.3 mln (consensus is a build of 0.8 mln).
- Gasoline inventories had a draw of 4.1 mln (consensus is for no change).
- Distillate inventories had a draw of 2.9 mln (consensus is a draw of 0.5 mln).
- Change in refinery utilization was -3.5% (vs consensus of -0.5%)

Summary of Weekly Petroleum Data for the week ending Oct 7

Production: U.S. crude oil refinery inputs averaged 14.5 mln barrels per day during the week ending October 7, 563 thousand barrels per day below the previous week's average. Refineries operated at 84.2%of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 mln barrels per day. Distillate fuel production decreased last week, averaging 4.4 mln barrels per day.

Imports: U.S. crude oil imports averaged nearly 9.1 mln barrels per day last week, up by 386 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged about 9.0 mln barrels per day, 115 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 418 thousand barrels per day. Distillate fuel imports averaged 117 thousand barrels per day last week.

Inventory: At 337.6 mln barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 4.1 mln barrels last week and are in the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 2.9 mln barrels last week and are in the upper limit of the average range for this time of year. Propane/propylene inventories increased by 0.4 mln barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 1.4 mln barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged 8.9 mln barrels per day, down by 0.7%from the same period last year. Distillate fuel product supplied has averaged about 4.0 mln barrels per day over the last four weeks, up by 5.6%from the same period last year.

Finished Motor Gasoline (Implied Demand): Finished motor gasoline demand for the week ended 10/7 was 9,010K bpd, higher than last week's 8,959K, and above the yr ago period of 8,812K.

• Asian Markets Close; Nikkei +1.0%, Hang Seng +2.3%, Shanghai +0.8%, Sensex -0.4%
The major Asian indices finished mostly higher as investors continued to pile into equities on hopes that a solution to the European debt crisis is on the horizon. The U.S. finally ratified its trade agreement with South Korea, a deal which is the largest for the U.S. since NAFTA was agreed upon on 1994. Meanwhile, Bank of Korea kept its benchmark interest rate unchanged, as expected, at 3.25%. The Bank of Japan's Monetary Policy Minutes were released overnight and showed some members believed further easing was necessary. Data in the region was mixed as China's trade balance fell short of estimates ($14.5 bln actual v. 17.1 bln expected) while the Australian economy added 20.4K jobs (10.1K expected) and saw its unemployment rate tick down to 5.2% (5.3% expected, 5.3% previous). Looking at the currencies...USDCNY weakened to 6.3825 while USDJPY is weaker at 76.87.

In Japan, the Nikkei closed +1.0% and closed at a one-month high as the yen weakened to a one-month low against the dollar. Exporters gained on the weaker yen as TDK gained 4.3% and Panasonic added 2.0%.

In Hong Kong, the Hang Seng finished +2.3% as developers surged on expectations that the government would not tighten policy further to stabilize land values. China Resources Land surged 11.9% and China Overseas Land jumped 7.7% to lead the space higher. Retailer Esprit climbed 15.7% after yesterday's 7.5% plunge after the co admitted the number of stores it operates in China was wrong on its website but that its earnings for the fiscal year were accurate.

In China, the Shanghai Composite settled +0.8% ahead of tonight's inflation data. Aluminum stocks gained as Jilin Liyuan Aluminum and Henan Mingtai Al added 5.6% and 4.9% respectively.

In India, the Sensex closed -0.4% as automakers were among the worst performers. Tata Motors and Maruti Suzuki lost 3.6% and 3.3% respectively.

• European Markets Closing Prices
UK's FTSE: -0.7%
Germany's DAX: -1.3%
France's CAC: -1.3%
Spain's IBEX: -0.9%
Portugal's PSI: -1.7%
Italy's MIB Index: -3.7%
Irish Ovrl Index: -1.2%
Greece FTSE/ASE 20: + 1.7%

EARNINGS CALL

• Before market open

JPMorgan Chase (JPM) beats by $0.08, beats on revs (33.20 )
Reports Q3 (Sep) earnings of $1.02 per share, $0.08 better than the Capital IQ Consensus Estimate of $0.94; revenues rose 0.1% year/year to $24.37 bln vs the $23.27 bln consensus. Co reported third-quarter 2011 net income of $4.3 bln, compared with net income of $4.4 billion in the third quarter of 2010, representing a 13% return on tangible common equity.

Several significant items including a $542 million pretax loss in Private Equity, $1.0 billion pretax of additional litigation expense in Corporate and a $1.9 billion pretax DVA gain ($0.29). Jamie Dimon said, 'The DVA gain reflects an adjustment for the widening of the Firm's credit spreads which could reverse in future periods and does not relate to the underlying operations of the company. All things considered, we believe the Firm's returns were reasonable given the current environment'.

The impact on the bottom line for these results were as follows: $1.9 billion pretax ($0.29 per share after-tax) benefit from debit valuation adjustment ("DVA") gains in the Investment Bank, resulting from widening of the Firm's credit spreads $542 million pretax ($0.09 per share after-tax) Private Equity loss $1.0 billion pretax ($0.15 per share after-tax) additional litigation expense, predominantly for mortgage-related matters, in Corporate.

Fortress Balance Sheet: Basel I Tier 1 Common1of $120 billion, ratio of 9.9%; estimated Basel III Tier 1 Common ratio of 7.7%... JPM repurchased $4.4 billion of common stock during the third quarter; Credit reserves at $29.0 billion; loan loss coverage ratio 3.74% of total loans.

Loan Activity: Over $1.3 trillion in new and renewed credit provided to and capital raised for consumers, corporations, small businesses, municipalities and not-for-profits year-to-date: Small business loan originations of $12.6 billion, up 71% compared with prior year-to-date and 133% compared with the same period in 2009; Middle-market loans of $41.5 billion, up 18% compared with prior year; Trade finance loans of $30.1 billion, up 69% compared with prior year.

Investment Banking: Net income was $1.6 billion, up 27% from the prior year. Higher net revenue was partially offset by an increased provision for credit losses and higher noninterest expense. Net revenue included a $1.9 billion gain from debit valuation adjustments ("DVA") on certain structured and derivative liabilities, resulting from the widening of the Firm's credit spreads. This was partially offset by a $691 million net loss, including hedges, from credit valuation adjustments ("CVA") on derivative assets within Credit Portfolio, due to the widening of credit spreads for the Firm's counterparties. Net revenue was $6.4 billion, compared with $5.4 billion in the prior year. Investment banking fees were down 31% to $1.0 billion, consisting of debt underwriting fees of $496 million (down 37%), equity underwriting fees of $178 million (down 47%) and advisory fees of $365 million (down 5%). Fixed Income Markets revenue was $3.3 billion, up 7% (down 14% excluding DVA gains of $529 million). These results reflected solid revenue from rates and currency-related products, partially offset by lower results in credit-related products. Equity Markets revenue was $1.4 billion, up 25% (down 15% excluding DVA gains of $377 million). These results reflected solid client revenue, partially offset by the impact of challenging market conditions. Credit Portfolio revenue was $578 million, including DVA gains of $979 million and net interest income and fees on retained loans, largely offset by net CVA losses of $691 million.

RFS: The provision for credit losses was $1.0 billion, a decrease of $370 million from the prior year and an increase of $33 million from the prior quarter.

• After market close

Google beats by $0.95, beats on revs
Reports Q3 (Sep) earnings of $9.72 per share, excluding non-recurring items, $0.95 better than the Capital IQ Consensus Estimate of $8.77; net rev (subtracting traffic acquisition costs -- TAC) rose 37% YoY to $7.51 bln vs. the $7.21 bln consensus; gross revs rose 33.4% year/year to $9.72 bln vs the $9.45 bln consensus. Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased ~28% over the third quarter of 2010 and increased ~13% over the second quarter of 2011. Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, increased ~5% over the third quarter of 2010 and decreased ~5% over the second quarter of 2011. Operating expenses, other than cost of revenues, were $3.28 billion in 3Q11, or 34% of revenues, compared to $2.19 billion in the third quarter of 2010, or 30% of revenues. As of Sept 30, 2011, cash, cash equivalents, and short-term marketable securities were $42.6 bln. On a worldwide basis, Google employed 31,353 full-time employees as of September 30, 2011, up from 28,768 full-time employees as of June 30, 2011. Google+ is now open to everyone and we just passed the 40 mln user mark.

IN OTHER NEWS ...

• ECB Monthly Bulletin released; sees public sector involvement having negative impact on EU currency areas
For details of this release, click here (http://www.ecb.int/pub/pdf/mobu/mb201110en.pdf)


___________________________________________

TECHNICAL UPDATE - Thursday 13 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,478.13 -40.72 (-0.35%)
Volume: 143,993,575 from 188,134,388 the previous day
Range: 11,377.82 – 11,518.09

http://img190.imageshack.us/img190/2196/dowyg.jpg (http://imageshack.us/photo/my-images/190/dowyg.jpg/)

DOW failed to close above the year's open in its best opportunity to do so since 31 August 2011. After failing to stay above its 100DSMA, NASDAQ now wears an Inverted Dragonfly Doji. S&P500 managed to keep above 1,200 and held its close within its upside flag. Volumes on the benchmarks improved while broader market volumes fell yet again. All three benchmarks have also established higher highs which breaks the down trend pattern.

Hanging Man on DOW and S&P500 suggesting that there's no more upside. 11,500 and 1,205 continue to reject the DOW and SPX respectively. NASDAQ's wayward behavior on Thursday on served to create a Price-to-Price divergence that will only encourage the bears.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,620.24 +15.51 (+0.60%)
Volume: 437,742,740 from 507,938,537 the previous day
Range: 2,588.710 – 2,625.22

S&P 500 INDEX (SPX: CBOE)
1,203.66 -3.59 (-0.30%)
Volume: 678,085 from 805,996 the previous day
Range: 1,190.58 – 1,207.46


___________________________________________

MARKET INTERNALS - Thursday 13 October, 2011 AMC

NYSE :
Lower than avg volume @ 898 mln, vs. 1281 mln
Decliners outpaced Advancers (adv/dec): 1156/1847
New highs outpaced new lows (hi/lo): 17/6

NASDAQ :
Lower than avg volume @ 1630 mln, vs. 2176 mln
Decliners outpaced Advancers (adv/dec): 1225/1271
New lows outpaced new highs (hi/lo): 25/30


Advancers outpaced Decliners by an average 2.98 to 1 on lower average volumes (-6.53%) on Wednesday (avg +0.91%).

Volumes across the broader market were marginally weaker. Apart from that, there is little to fault about this rally. The weakness in the last hour would be a worrying reminder as it confirms a still high level of fear as players book profits as and when they have it. Technicals are still a key factor as the market reacts to key levels and book profits just in case.

Decliners outpaced Advancers by an average 1.31 to 1 on lower average volumes (-26.87%) on Thursday (avg -0.02%).

Needless to say, it wasn't a convincing performance from the bears but in spite of that, the bulls couldn't muster enough gumption to pull off another rally. I reckon the bulls over-cooked the rally and exhausted themselves prematurely. Thursday was about the bears prodding the bulls to see if they had anything left. Maybe they did judging by the last hour of trading. But it won't be enough.

http://img11.imageshack.us/img11/8127/intig.jpg (http://imageshack.us/photo/my-images/11/intig.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, crude oil both end lower on the day

It was a busy morning in the energy sector, with both natural gas and crude oil inventory data. Crude oil futures, which ended lower by 1.6% at $84.23, saw a rather muted reaction to the inline inventory data. Futures did spike back toward the flat line in afternoon trade, but after failing to take out overnight highs they pulled back to below the $85 mark. Natural gas, which posted gains of 1.2% to finish at $3.53, spiked sharply lower following inventory data. Futures put in lows at $3.45, their lowest levels in just over 1 yr. Futures managed to bounce off those lows to end with modest gains. Heating oil ended up 4 cents at $2.97, while RBOB gasoline finished higher by a penny at $2.76 (all Nov contracts).

It was another quiet session for the precious metals after their initial move lower in overnight trade. Gold ended lower by 0.8% at $1668.50 per ounce, while silver shed 3% to close at $31.66 per ounce. Neither metal saw much of reaction to news that Slovakia passed its vote on expanded EFSF fund. Dec copper gained a penny to close at $3.32.

Corn settled lower by 4 cents to $6.38, wheat fell 8 cents to end at $6.18, soybeans were 14 cents higher at $12.54, ethanol rose 1 cent to close at $2.55, while sugar fell 0.29% to $0.27.

Commodities AMC on Thursday 13 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 84.23 -1.34 (-1.57%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,668.50 -14.10 (-0.84%)

Treasuries finished with gains, but off their best levels as an afternoon rally in equities caused outflows from the complex. Treasuries briefly ran back to their best levels of the session after the $13 bln 30-yr bond reopening drew a record low 3.120% and saw a strong 2.94x bid/cover. Direct bidders provided the support for the auction, taking down 29.5% of the offering (12-auction average 11.9%). Buying was once again led by the long bond as it traded up over two full points at its session highs. The 10-yr yield fell to a session low 2.123% before afternoon selling ran it up to 2.17% into the close. Slight steepening took place along the yield curve as the 2-10-yr spread flattened to 191 bps.

Treasury Yields AMC on Thursday 13 October, 2011:
• 2 Year Note 0.29% unch
• 5 Year Note 1.11% -0.06
• 10 Year Note 2.19% -0.05
• 30 Year Bond 3.15% -0.04
2/30 Spread : 286bps ( -4 ) ... 2/10 Spread : 190bps ( -5 )


The spreads are now less than 10bps from par. Looks like the Twist is working to get the market running in the right direction ... for now. Wait till they start buying the 30yr.

It had to happen sometime. But relative to the gains over the previous three sessions, Thursday's dip in yields were a minor blip. Will more fear drive the yields down or will the Fed be able to keep this curve artificially steep? I believe that no matter what the Fed does, like in 2009 and 2010, the curve will do its own thing and over-run the Fed's efforts.


___________________________________________

PREVIEW FOR FRIDAY 14 OCTOBER, 2011

Friday's data is the most anticipated of the week as retail sales, retail sales ex-auto, import/export prices (8:30), Michigan Sentiment (9:55), business inventories (10:00), and the Treasury Budget (14:00) are released. The Fed's ‘twist' continues with the purchase of $4.25-5.00 bln worth of 2019-2021 maturities.

Earnings Highlights
BMO: MAT and WBS

Economic Events
08:30 am Retail Sales
08:30 am Retail Sales ex-auto
08:30 am Export Prices ex-ag.
08:30 am Import Prices ex-oil
09:55 am Mich Sentiment
10:00 am Business Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- AVEO at International Kidney Cancer Symposium
- GREN at NIH/NHLBI Cardiovascular Regenerative Medicine Symposium
- G-20 Finance Ministers Meeting.


___________________________________________

SUMMARY

This rally is really taking the mickey outta me. Is this for real? Its times like these when you start second guessing yourself that you get caught out. Then you question your second guess and miss out. I will stay stubborn until the next correction and see how that correction ends before deciding what to do next. Depending on how Thursday goes, I may or may not adjust the size of my hedge.

This is supposed to be a bullish day on record. Somehow, I don't think tradition is going to prevail today. I have a funny feeling its going to be one of those Fridays that will lead us into a very nervous weekend ahead of next week's heavy earnings calls and a deluge of data. Tighten your seat belts - I thinks its going to be a rough ride.

Direction for Friday 14 October, 2011; ∇ Down

I'm leaving Penang now for KL for tonight's Mega Gathering. I'm really looking forward to sharing the stage with GM Teoh.

*I got a feeling ... that tonite's gonna be a good night ...*

Have a great weekend y'all!!

2011 Daily Directional Accuracy: 112/183 (61.20%)

Conrad
10-17-2011, 04:45 AM
U.S. MARKET RECAP - Monday 10 October, 2011 to Friday 14 October, 2011 AMC
http://img802.imageshack.us/img802/1385/dexweek.jpg (http://imageshack.us/photo/my-images/802/dexweek.jpg/)


The second week of October is typically bearish but tends to ends bullishly. This bullish end usually carries into the third week ... If recent earnings are any indication, I suspect this season might just provide some upside surprises. But that doesn't mean I'll be switching into a bull suit anytime soon. With the market still very sensitive to headline news out of Europe and the Asian economies on a continued slide south, I doubt very much that one good earnings season will make a sustainable rally ... I'm staying bear and heavily hedged.

Direction for the week Monday 10 October, 2011 to Friday 14 October, 2011; ∇ Down

If this was supposed to be a bearish week, this means tradition goes right out the window. Thus, if the coming week is supposed to be bullish .... well, .... I haven't adjusted my hedge yet and if tradition returns in the coming week, I may have to make some drastic moves. This is so tiresome. I should have just taken my own advice at the start of September and stayed sidelined altogether.


__________________________________________________ ________

Dow Jones Industrial Average - Friday 14 October, 2011 AMC
http://img600.imageshack.us/img600/2444/dexs.jpg (http://imageshack.us/photo/my-images/600/dexs.jpg/)


This is supposed to be a bullish day on record. Somehow, I don't think tradition is going to prevail today. I have a funny feeling its going to be one of those Fridays that will lead us into a very nervous weekend ahead of next week's heavy earnings calls and a deluge of data. Tighten your seat belts - I thinks its going to be a rough ride.

Direction for Friday 14 October, 2011; ∇ Down

Yup, it was a tough ride ... if you're a Bear. Damn. I am getting so tired and waiting. One of the toughest things to do is to sit on your hands, waiting for the market to make some sense while it continues to defy logic. Friday's session puts the DOW and NASDAQ back in positive territory for the year.


__________________________________________________ ________

MARKET SUMMARY - Friday 14 October, 2011


BRIEFING.COM - Friday 14 October, 2011
Daily Sector Wrap: Strong Finish to Best Week in More than Two Years

The S&P 500 overcame resistance on Friday to score another strong gain, contributing to the broad market's best weekly performance since July 2009.

A positive tone among market participants was perpetuated by more buying in Europe, where the continent's major bourses extended their recent rally. On Friday, Britain's FTSE advanced 1.2%, but gained more than 3% for the week. France's CAC clmbed 1.0% in the week's final session, but 4% over the past five trading days. A 0.9% advance by the Germany's DAX on Friday helped fuel a 5% weekly gain. Such strength reflected improved sentiment in the eurozone, where concerns about fiscal and financial conditions in both the peripheral and core constituents have threatened confidence for months.

A superior report from Google (GOOG 591.68, +32.69) helped close out the week on a strong note. Both the top and bottom line bested what had been expected. That sent the stock to its highest level in more than one month and inspired buying in other large-cap tech issues. Collectively, tech stocks climbed 2.1% on Friday.

Since tech is the largest sector by market weight, its strength helped the S&P 500 stage a late climb that took it past the 1220 line, which had been a point of formidable resistance at the start of the session and earlier in the week.

Energy stocks were the best performers on Friday. Their 3.6% climb was helped along by a 3.2% spike in oil prices to almost $87 per barrel. Oil prices ended the week about 5% above where they began it.

In the backdrop of Friday's action were some encouraging retail sales numbers. Overall retail sales for September increased by 1.1%, while sales less autos increased by 0.6%. Economists surveyed by Briefing.com had expected respective increases of 0.6% and 0.3%. Not only did the September numbers exceed expectations, but they also marked the strongest increases since the first quarter.

Friday's advance marked the fourth gain in five sessions, helping the S&P 500 score a 6% weekly gain. Perhaps more impressive is that the stock market has now advanced in seven of the past nine sessions for a cumulative gain of more than 11%.

Sector Leaders/Laggards for Friday 14 October, 2011
Leading Sectors: Energy +3.6%, Materials +2.6%, Tech +2.1%, Industrials +1.8%, Consumer Discretionary +1.7%, Financials +1.4%, Health Care +0.9%, Utilities +0.9%, Consumer Staples +0.7%, Telecom +0.6%
Leading Industries/ETFs : Energy services & energy products- XOP +5.6%, OIH +5.0%, UHN +4.4%, XLE +4.0%, Natural gas- UNG +4.2%, Sugar- SGG +3.8%, Crude oil- Oil- OIL +3.8%, USO +3.7%, Internet- HHH +3.1%, Coal- KOL +3.1%, Copper- JJC +3.0%.

Lagging Sectors: None.
Lagging Industries/ETFs : Vix- VXX -5.6%, Treasuries- TLT -1.5%, Airlines- FAA -0.5%.

Other Market Moving Factors:
• S&P 500 overcomes 1220 line with late push
• Tech trades with strength after Google (GOOG) posts strong quarterly report
• September retail sales exceed expectations


BRIEFING.COM - Friday 14 October, 2011
After-Hours Report: Weekly Wrap

A commitment early this week by leading eurozone officials to develop a comprehensive plan intended to stabilize precarious conditions and shore up capital at European banks sent a strong signal to global investors. It also got the week started on a strong note -- the stock market rallied more than 3% on Monday for its best single-session percentage gain in almost seven weeks.

Following that heady move, trade became more subdued on Tuesday. Participants kept their focus on Europe as Slovakia moved to vote on the European Financial Stability Facility (EFSF). Country officials actually voted down the plan Tuesday night in conjunction with a no confidence vote for Slovakia's prime minister, but there remained a belief that the EFSF will eventually win approval. Tuesday also ushered in the unofficial start of earnings season when Dow component Alcoa (AA 10.26, +0.16) announced its latest quarterly results after the close. Some regarded the fact that the company came short of the consensus earnings estimate as an ominous sign.

Minutes from the most recent FOMC meeting were released Wednesday, but the release was essentially a non-event since it offered no new insight into the mindset of the monetary policy setting committee.

JPMorgan Chase (JPM 31.89, +0.29) was bid up aggressively ahead of its quarterly announcement on Thursday morning. The diversified financial services giant posted earnings that exceeded what Wall Street had widely expected, but the dubious quality of that beat was a focus of analysts. Concerted selling caused the stock to drop sharply. Given that JPMorgan Chase is widely regarded as the best in its class, many other banks were implicated.

The result was a near 5% drop for the KBW Bank Index, which only made a half-hearted attempt to rebound on Friday, when it advanced a relatively tame 0.7%. Another weekly initial jobless claims count narrowly above 400,000 -- 404,000 to be specific -- had little impact on action during Thursday's trade, but that's mostly because the tally was right in stride with the 406,000 claims that had been widely expected.


http://img827.imageshack.us/img827/7672/dexsumm.jpg (http://imageshack.us/photo/my-images/827/dexsumm.jpg/)

This week's biggest % gainers/losers
The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

• This week's top 20 % gainers
Technology: TQNT (7.19 +28.3%), IO (7.06 +27.48%), VIT (11.2 +24.77%), MEDH (8.94 +22.24%)
Services: GNK (9.29 +26.65%), TEU (9.46 +26.53%), FRO (5.41 +24.32%), SAVE (15.63 +21%)
Industrial Goods: CX (3.75 +25.42%)
Healthcare: DVAX (2.39 +29.1%), MITI (6.09 +24.95%)
Financial: EJ (6.64 +24.81%)
Consumer Goods: LIZ (7.6 +52.27%), SWFT (8.28 +22.62%), HOGS (8.9 +22.04%)
Basic Materials: CPX (31.23 +43.64%), AXAS (3.77 +34.39%), IVAN (1.38 +28.18%), END (9.34 +27.9%), MHR (4.13 +24.52%)

• This week's top 20 % losers
Technology: CLWR (1.59 -19.51%), IDT (18.04 -15.77%), DMD (7.57 -14.37%), FSLR (56.23 -12.17%), FNSR (18.22 -11.34%), JASO (1.87 -9.13%), GTAT (7.69 -8.56%)
Services: VSI (36.7 -9.54%)
Healthcare: ILMN (26.91 -32.01%), VOLC (25.49 -15.73%), AMRS (15.67 -13.92%), HGSI (11.12 -13.71%), HTWR (62.37 -10.14%), SQNM (5.32 -8.55%)
Financial: IRE (0.83 -21.57%), PTP (28.38 -12.54%)
Consumer Goods: ZEP (14.96 -15.24%), EK (1.24 -11.72%), FN (18.18 -8.73%)
Basic Materials: SPN (26.62 -11.66%)


___________________________________________

ECONOMIC COMMENTARY - Friday 14 October, 2011

• China Economic Data

- Sep CPI +6.1% vs 6.2% in Sep 2010
- Sep PPI +6.5% vs +7.3% in Sep 2010

• Japan Economic Data

- Sep Domestic Corporate Goods Price Index -0.1% vs -0.2% in Aug
- Sep Money Stock M3 +2.3% vs +2.2% in Aug

• New Zealand Oct ANZ Consumer Conf 112.2 vs 112.6 in Sep

• Eurozone Economic Data

- Sep Core CPI +1.6% vs +1.5% prelim
- Sep CPI +3.0% vs +3.0% prelim

• U.S. Economic Data

- September Export Prices ex-ag +0.3%; Prior +0.3%
- September Import Prices +0.2%; Prior +0.2%
- September Retail Sales +1.1% vs +0.6%; Prior revised to +0.3% from 0.0%
- September Retail Sales ex-auto +0.6% vs +0.3%; Prior revised to +0.5% from +0.1%
- October Michigan Sentiment 57.5 vs 60.0; September 59.4
- August Business Inventories +0.5% vs +0.4%; Prior +0.4%
- September Treasury Budget -$64.6 bln vs -$67.0 bln

Retail Sales Beat Expectations, Increase by Its Strongest Rate Since February
Retail sales grew by its fastest rate since February in September. Sales jumped 1.1% after increasing an upwardly revised 0.3% (from 0.0%) in August. The Briefing.com consensus expected retail sales to increase 0.6%. The motor vehicle sector provided the bulk of the September gains. Auto sales exceeded 13 mln SAAR in September for the first time since April as sales increased from 12.12 mln SAAR in August to 13.10 mln SAAR. That translated into a 3.6% increase in motor vehicle and parts sales in September. Outside of the motor vehicle sector, retail sales increased a steady 0.6%. That was the strongest increase since March and easily outperformed the consensus expectation of 0.3% growth. Core sales -- which exclude the highly volatile motor vehicle dealers, building materials and supply dealers, and gasoline stations -- also posted its strongest gain since March as sales increased 0.6%. Just about every sector had sales gains in September. The sectors that declined in September -- beverage stores, building material and supply dealers, and sporting goods and hobby stores -- each fell by less than 0.3%. Unfortunately, sales may not remain as strong in October. A surge in back-to-school purchases -- highlighted by 1.3% and 1.1% increases in clothing and department store sales -- may see demand declines net month.

Business Inventories Continued to Expand in August
Total business inventories increased 0.5% in August, the same growth rate as July. The Briefing.com consensus expected inventories to increase 0.4%. Inventory growth for both manufacturers (0.4%) and merchant wholesalers (0.4%) was known prior to the release. The only piece of new information was that retailer inventories increased 0.8% in August after increasing 0.1% in July. Business sales increased 0.3% in August, down from 0.7% growth in July. The inventory/sales ratio remained at 1.28 in August.

Consumer Sentiment Falls in September, Outlook on the Economy Weakens
The preliminary reading of the October University of Michigan Consumer Sentiment Index dropped from 59.4 in September to 57.5 in October. The Briefing.com consensus expected consumer sentiment to increase modestly to 60.0. The consumer expectations index fell to its lowest level since May 1980, dropping from 49.4 in September to 47.0 in October. To put that into perspective, when the U.S. was in its worst recession since the Great Depression, consumers were less concerned about the future than they are today. This is most likely the result of media reports constantly flashing high probabilities of another recession and not from economic fundamentals. The current economic conditions index fell to 73.8 in October from 74.9 in September. While the drop in current conditions is disappointing, it follows an unexpected, and undeserved, increase in September. The current level is close to where we expect it to be considering weakness in equity prices and employment growth. Fortunately, the drag on sentiment will most likely not have an adverse effect on consumption. Consumption tends to follow income, and income growth, while weak, remains positive.

Treasury Budget In-Line with Expectations
The federal deficit increased from $34.6 bln in September 2010 to $64.6 bln in September 2011. Since the Treasury budget data are not seasonally adjusted, the results cannot be compared with the levels from August. The Briefing.com consensus expected the deficit to widen to $67.0 bln. Total outlays increased from $279.8 bln in September 2010 to $304.7 bln in September 2011. Receipts decreased from $245.2 bln in September 2010 to $240.2 bln in September 2011. September ended the 2011 fiscal year. The federal deficit increased from $1,294.2 bln FY 2010 to $1,298.6 bln FY 2011.

• Asian Markets Close: Nikkei -0.9%, Hang Seng -1.4%, Shanghai -0.3%, Sensex +1.2%
The major Asian indices closed mostly lower after China's latest inflation data held above 6.0%. The reading of 6.1% YoY shows that inflation still remains a problem in the middle kingdom. Singapore announced GDP rose 1.3% QoQ after the 6.3% QoQ decline last quarter. The Monetary Authority of Singapore eased policy by reducing the slope of appreciation of the Singapore dollar basket while keeping the width of the trading band unchanged. The central bank is the fourth in the region to hold policy steady or ease in the past week. Data in the region showed Chinese PPI fall to 6.5% YoY (7.3% YoY previous) while new loans in the middle kingdom dropped to CNY470 bln (CNY 551 bln expected, CNY 549 bln previous). Elsewhere, Singapore's retail sales (nominal) rose 3.3% YoY. Looking at the currencies...USDCNY weakened to 6.3796 while USDJPY is stronger at 77.10.

In Japan, the Nikkei closed -0.9% as investors remain worried over the problems in Europe. Camera market Olympus tumbled 18% after firing its CEO. Suzuki Motor Corp. shed 3.0% after saying Volkswagen breached a partnership agreement.

In Hong Kong, the Hang Seng finished -1.4% as financial real estate shares paced the decline. China Overseas Land lost 4.2% while ICBC shed 4.3%.

In China, the Shanghai Composite settled -0.3% as property stocks were among the worst performers. Gemdale fell 1.2% to lead the sector lower.

In India, the Sensex closed +1.2% as heavyweight Reliance Industries climbed 2.4% ahead of Saturday's earnings announcement.

• European Markets Closing Prices
UK's FTSE: + 0.9%
Germany's DAX: + 0.8%
France's CAC: + 1.0%
Spain's IBEX: + 0.4%
Portugal's PSI: + 0.9%
Italy's MIB Index: + 2.5%
Irish Ovrl Index: + 1.5%
Greece FTSE/ASE 20: + 0.2%

IN OTHER NEWS ...

• S&P downgrades Spain one notch to AA-; outlook negative


___________________________________________

TECHNICAL UPDATE - Friday 14 October, 2011 - AMC


Hanging Man on DOW and S&P500 suggesting that there's no more upside. 11,500 and 1,205 continue to reject the DOW and SPX respectively. NASDAQ's wayward behavior on Thursday on served to create a Price-to-Price divergence that will only encourage the bears.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img213.imageshack.us/img213/4064/dowsb.jpg (http://imageshack.us/photo/my-images/213/dowsb.jpg/)
11,644.49 +166.36 (+1.45%)
Volume: 133,568,075 from 143,993,575 the previous day
Range: 11,478.66 – 11,646.83

DOW managed to break above and hold above 11,600 after being rejected in the early part of the session. Next resistance going up will be the August/September high of 11,710.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img3.imageshack.us/img3/8522/ndxy.jpg (http://imageshack.us/photo/my-images/3/ndxy.jpg/)
2,667.85 +47.61 (+1.82%)
Volume: 412,190,841 from 437,742,740 the previous day
Range: 2,636.00 – 2,667.85

NASDAQ is really wild but it closed out Friday in a two month high and wears a Hanging Man suggesting a pause in the making Monday.

S&P 500 INDEX (SPX: CBOE)
http://img687.imageshack.us/img687/916/spxdb.jpg (http://imageshack.us/photo/my-images/687/spxdb.jpg/)
1,224.58 +20.92 (+1.74%)
Volume: 627,756 from 678,085 the previous day
Range: 1,205.65 – 1,224.61

SPX remains the only benchmark still negative for the year. It hasn't broken to new highs yet, the same with DOW. Resistance will be August/September high of 1,230.


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MARKET INTERNALS - Friday 14 October, 2011

NYSE :
Lower than avg volume @ 847 mln, vs. 1262 mln
Advancers outpaced Decliners (adv/dec): 2528/494
New highs outpaced new lows (hi/lo): 25/11

NASDAQ :
Lower than avg volume @ 1620 mln, vs. 2144 mln
Advancers outpaced Decliners (adv/dec): 1897/632
New highs outpaced new lows (hi/lo): 32/25


Decliners outpaced Advancers by an average 1.31 to 1 on lower average volumes (-26.87%) on Thursday (avg -0.02%).

Needless to say, it wasn't a convincing performance from the bears but in spite of that, the bulls couldn't muster enough gumption to pull off another rally. I reckon the bulls over-cooked the rally and exhausted themselves prematurely. Thursday was about the bears prodding the bulls to see if they had anything left. Maybe they did judging by the last hour of trading. But it won't be enough.

Advancers outpaced Decliners by an average 3.65 to 1 on lower volumes (+27.57%) on Friday (avg +1.67%).

Lower volumes on an up day again. This was also evident on the benchmarks too. But for the first time in more than two months, New Highs on the NASDAQ finally outpaced the New Lows ... barely though. The real bullish news is that the VIX has closed below 30 points for the first time in two months.

http://img805.imageshack.us/img805/7290/inty.jpg (http://imageshack.us/photo/my-images/805/inty.jpg/)


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COMMODITIES & BONDS - Summary for Friday 14 October, 2011

Commodities Close: Strong Finish to Strong Week - from Briefing.com

Commodities closed out the week on a strong note. Specifically, crude oil prices climbed 3.2% to $86.89 per barrel. More impressive is that oil prices settled with a weekly gain of 5.0%. Elsewhere in the energy complex, natural gas prices spiked 4.8% today and 6.0% for the week. Heating oil ended up 9 cents at $3.06, while RBOB gasoline finished higher by 7 cents at $2.83.

Among precious metals, gold prices settled pit trade at 1683.20 per ounce, which makes for a 0.9% gain this session. It advanced 2.9% for the week, though. Silver prices scored a 1.6% gain by advancing to $32.17 per ounce. The ended the week 3.6% higher than where they started. Dec copper gained a penny to close at $3.42.

Corn settled higher by 2 cents to $6.40, wheat rose 5 cents to end at $6.23, soybeans were 12 cents higher at $12.69, ethanol rose 4 cent to close at $2.59, while sugar fell 0.18% to $0.28.

Commodities AMC on Friday 14 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 86.80 +2.57 (+3.05%)
Natural Gas (NYMEX) November 11 ($US per mmbtu.) : 3.70 +0.172 (+4.87%)
Unleaded Gas (NYMEX) November 11 ($US per gal.) : 2.82 +0.0672 (+2.44%)

Gold (NYMEX) December 11 ($US per Troy oz.) : 1,683.00 +14.50 (+0.87%)
Silver (NYMEX) December 11 ($US per Troy oz.) : 32.17 +0.506 (+1.60%)
Copper (NYMEX) December 11 ($US per lb.) : 3.41 +0.1015 (+3.07%)

Corn (CBT) December 11 (cents per bu.) : 640.00 +1.75 (+0.27%)
Soyabeans (CBT) November 11 (cents per bu.) : 1,270.00 +13.00 (+1.03%)
Wheat (CBT) December 11 (cents per bu.) : 622.75 +4.75 (+0.77%)

Cocoa (NYMEX) December 11 ($ per metric ton) : 2,630.00 0.00 (0.00%)
Coffee (NYMEX) December 11 (cents per pound) : 235.00 -4.55 (-1.90%)
Cotton (NYMEX) December 11 (cents per pound) : 101.94 +0.38 (+0.37%)
Sugar #11 (NYMEX) March 11 (cents per pound) : 27.80 -0.13 (-0.47%)

BONDS - Weekly Summary for Monday 10 October, 2011 to Friday 14 October, 2011
Rough Week: 10-yr: -18/32..2.240%..USD/JPY: 77.21..EUR/USD: 1.3876

Maturities across most of the complex finished the week lower as money rotated out of Treasuries and into equities amid the continued rush back into riskier assets. Sellers hammered away at the long bond and forced the 30-yr yield up another 20 bps on the week to 3.209%. The 30-yr yield has tacked on 50 bps from last week's low near 2.70%. Selling of the 10-yr drove its yield up 16 bps as it settled at 2.232% and is now 53 bps off of last Tuesday's low. Those who did participate in the complex preferred shorter dated paper as buying in the 2-yr dropped its yield 6 bps to 0.269%. The G20 will continue its meetings tomorrow and will be brainstorming ideas as to how to combat the European debt crisis. However, no plans are expected to be finalized until the October 23 EU Leaders Summit. The yield curve saw significant steepening over the past week as the 2-10-yr spread widened almost 20 bps to 197.5 bps. The knob of the curve also steepened this week with the 10-30-yr spread widening to 98.5 bps.

Treasury Yields AMC on Friday 14 October, 2011:
• 2 Year Note 0.28% -0.01
• 5 Year Note 1.12% +0.01
• 10 Year Note 2.26% +0.07
• 30 Year Bond 3.22% +0.07
2/30 Spread : 294bps ( +8 ) ... 2/10 Spread : 198bps ( +8 )


It had to happen sometime. But relative to the gains over the previous three sessions, Thursday's dip in yields were a minor blip. Will more fear drive the yields down or will the Fed be able to keep this curve artificially steep? I believe that no matter what the Fed does, like in 2009 and 2010, the curve will do its own thing and over-run the Fed's efforts.

Spreads continue to languish just below par as the curve steepens more as the 2 and 5 year stay low and the 10 and 30 year yields climb.Regardless of the Fed's activity, the steepening of the curve and the rising of the risk market does make it look like everything is returning to normal and greed eases its way back into markets. Do we buy this? Or is this like I said it might be - the market being lulled into a state of complacency?


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PREVIEW FOR THE WEEK - MONDAY 17 OCTOBER, 2011 TO FRIDAY 21 OCTOBER, 2011

Monday will see the release of Empire Manufacturing (8:30), industrial production, and capacity utilization (9:15). The Fed will sell $1.00-1.50 bln worth of 2012-2014 TIPS as part of its ‘twist.’ Fed speak begins for the week with Richmond’s Lacker giving his economic outlook (19:30) and will continue with Chicago’s Evans speaking in Michigan on monetary policy and his economic outlook (20).

Tuesday’s data includes PPI, Core PPI (8:30), Net Long-Term TIC Flows (9), and the NAHB Housing Market Index (10). The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities through it Permanent Open Market Operations. Chairman Bernanke will speak in Boston on the long-term effects of the Great Recession (13:15).

Wednesday’s data slate is full with the weekly MBA Mortgage Index (7), CPI, Core CPI, housing starts and building permits (8:30), and the Fed’s Beige Book. The Fed’s POMO continues with the buying of $4.25-5.00 bln worth of 2017-2019 maturities. Boston’s Rosengren will speak on the long-term effects of the Great Recession (8:30).

Data concludes for the week on Thursday with initial and continuing claims (8:30), existing home sales, the Philly Fed, and leading indicators (10). The Fed will sell $8.00-9.00 bln worth of 2012-2013 maturities as part of its ‘twist.” Cleveland’s Pianalto will speak on the Midwest economy, STL’s Bullard will give opening remarks at the Fall Research Policy Conference (10:15), and Minny’s Kocherlakota will talk in front of the Minnesota Council on Economic Education (20).

There is no data on Friday. The Fed will buy $2.25-2.75 bln worth of 2019-2021 maturities through POMO. Minny’s Kocherlakota will speak at the Harvard Club of Minnesota (13).

Earnings Highlights
Monday:
BMO: C, HAL, HAS, WFC.
AMC: IBM, SWK, STLD, WDFC
Tuesday:
BMO: BAC, KO, GS, JNJ, UNH
AMC: AAPL, CSX, INTC, IRSG, JNPR, YHOO
Wednesday:
BMO: ABT, APOL, BK, BLK, FCX, MS, PJC, TRV, UTX, USB
AMC: AXP, AMLN, CAKE, EBAY, WDC
Thursday:
BMO: T, BSX, DO, LLY, NUE, NVR, PM, UNP, UAL, USG
AMC: COF, MSFT, RMBS, SNDK, SCHN, STX
Friday:
BMO: GE, HON, MCD, SLB, VZ

Economic Events
Monday:
08:30 am Empire Manufacturing
09:15 am Industrial Production
09:15 am Capacity Utilization
Tuesday:
08:30 am PPI
08:30 am Core PPI
09:00 am Net Long-Term TIC Flows
10:00 am NAHB Housing Market Index
Wednesday:
07:00 am MBA Mortgage Index
08:30 am CPI
08:30 am Core CPI
08:30 am Housing Starts
08:30 am Building Permits
10:30 am Crude Inventories
14:00 pm Fed's Beige Book
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
10:00 am Existing Home Sales
10:00 am Philadelphia Fed
10:00 am Leading Indicators
10:30 am Natural Gas Inventories
Friday:
None Scheduled

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- INO at Vaccines Renaissance Conference
- MLAB at PDA Global Conference on Pharmaceutical Microbiology
- MGPI at Global Plastics Enviromental Conference
Tuesday:
- BRCM at International Coverage and Transmission Conference (ICTC)
- CSIQ at UBS AG Global Solar One-on-One Conference
- RFMD at Ultrasonics Symposium 2011
Wednesday:
- KNOT at M2Moms - The Marketing to Moms Conference
- FNDT at China Supply Chain Finance Summit
- PRGS 1 on 1's with Progress Software - FBN Securities
Thursday:
- Silver Summit Investment Conference
- MELI at MercadoLibre Investor Day
- Fed's Kocherlakota
Friday:
- BlizzCon 2011
- BioCentury NewsMakers Conference
- World Economic Forum Special Meeting on Economic Growth and Job Creation in the Arab World


___________________________________________

SUMMARY

Once again, leadership was divergent. This time, extremely divergent with Financials going one way as if implying the future (GS is a good leading indicator of the market) and Tech going the other way. Defensive sectors were the safest bet ... again.

The Monday before Expiration Friday has been up on the DOW 25 of the last 40. October 19 is the anniversary of the Crash of 1987 (DOW went down 22.6% in a single session). October Expiration Friday has been bearish 7 of the last 8.

Earning Season starts hotting up this coming week with no less than 13 DOW components on the line and some big hitters like HON, AAPL, YHOO, HAL, SLB, WFC, LLY and SNDK. I have to concede that earnings so far has been surprising and if this keeps up especially amongst the big hitters, this could be a genuine start of a rally that could see all those prophecies (Jan Barometer, December Low, Valentine's Day Indicator, Pre-Olympic Year, President's Third Year) fulfilled by year's end.

For Monday, I'm sticking with tradition (after getting by butt kicked on Friday) and the possibility of good news out of Europe.

Direction for Monday 17 October, 2011; ∆ Up

Direction for the week Monday 17 October, 2011 to Friday 21 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 112/184 (60.87%)

2011 Weekly Directional Accuracy Year-To-Date: 24/40 (60.00%%)

Conrad
10-18-2011, 05:42 AM
U.S. MARKETS - Monday 17 October, 2011 AMC

http://img441.imageshack.us/img441/2742/dexsu.jpg (http://imageshack.us/photo/my-images/441/dexsu.jpg/)

The Monday before Expiration Friday has been up on the DOW 25 of the last 40 ... For Monday, I'm sticking with tradition (after getting by butt kicked on Friday) and the possibility of good news out of Europe.

Direction for Monday 17 October, 2011; ∆ Up

Hahaha!! I just knew it!! The moment I call it up, the moment I follow tradition, the market skews the other way! Thank goodness I kept my faith in my hedge and didn't change the weightage yet. Just like that, the market falls into negative for the year again.


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MARKET SUMMARY - Monday 17 October, 2011


BRIEFING.COM - Monday 17 October, 2011 AMC
Daily Sector Wrap: Sellers Return

Broad-based selling took the stock market roughly 2% lower for its worst performance in two weeks. Only on a few occasions did sellers let up, leaving stocks to settle at or near session lows.

Ripe for profit taking after a 6% weekly climb, stocks endured a steady descent today. The push lower began ahead of the open as early participants watched Europe's major bourses falter. Despite all the recent talk about comprehensive eurozone stability plans and deadlines, nothing of substance has been unveiled. Concern that fiscal and financial problems there could continue caused the region's major bourses to log losses well in excess of 1%. Meanwhile, the euro dropped 1.1% to $1.373.

Europe continues to take precedence over corporate headlines. Even a better-than-expected quarterly report from Citigroup (C 27.93, -0.47) couldn't keep the financial services giant from succumbing to broad market weakness. The stock settled near its session low after it had been up markedly in morning trade. Wells Fargo (WFC 24.42, -2.25) suffered its worst single-session percentage loss in two months, or its second worst in two years, after the lender's earnings came short of the consensus estimate. Concerted selling took financials down 3.3%, which is worse than what any other sector suffered, but marquee investment bank and brokerage outfit Goldman Sachs (GS 96.90, +0.17) managed to remain near the neutral line ahead of its report tomorrow morning.

Shares of Halliburton (HAL 34.48, -2.95) surged this past Friday, but the stock gave it all up as analysts shrugged off an upside earnings surprise to scrutinize the line items on the company's latest quarterly report. Several other oil and gas services stocks traded lower in sympathy.

Broad market weakness couldn't completely detract from the enthusiastic response made for a $38 billion merger between Kinder Morgan (KMI 28.19, +1.30) and El Paso (EP 24.45, +4.86). Shares of EP were able to set a new multi-year high.

Tech stocks failed to offer the same leadership that they have in recent sessions. Imbued by broad market weakness, the sector slid to a 1.8% loss. Heavyweight IBM (IBM 186.59, -3.94) was hit hard ahead of its quarterly report. The stock just set a new record high this past Friday.

Utilities were today's strongest performers. The defensive-oriented sector limited its loss to only 0.3%. Many electric utilities, most of which operate regulated businesses, were even able to produce positive returns today.

Although participants were decidedly pessimistic in their approach today, sending the Volatility Index more than 18% higher as of the close, there wasn't a great deal of share volume behind the effort. In fact, share volume on the NYSE failed to break 1 billion.

Sector Leaders/Laggards for Monday 17 October, 2011 AMC
Leading Sectors: None at all ... but at the 15:00 hour bounce, relative sector strength on this upside move (outperforming the S&P) was noted in Transports/Airline/Rail IYT/FAA, Housing XHB and Retail XRT.
Leading Industries/ETFs : Vix +10.4%, Treasuries- TLT +1.7%, Dollar index- UUP +0.7%.

Lagging Sectors: Financials -3.3%, Materials -3.1%, Industrials -2.7%, Consumer Discretionary -1.9%, Tech -1.8%, Energy -1.7%, Health Care -1.7%, Consumer Staples -0.9%, Telecom -0.7%, Utilities -0.3%
Lagging Industries/ETFs : Steel- SLX -5.3%, Solar- TAN -4.9%, Reg Bank RKH -4.5%, KRE -4.2%, Junior gold miners- GDXK -4.4%, Oil Service OIH -4.4%, Bank KBE -3.9%, Homebuilding- ITB -3.7%, XHB -3.6%, clean energy- PBW -3.6%.

Other Market Moving Factors:
• Europe's bourses slip as investors show skepticism over likelihood of comprehensive financial plan
• Financials falter -- Citigroup (C) exceeds earnings consensus, but Wells Fargo (WFC) comes short
• Volatility Index spikes

Companies trading higher in after hours in reaction to earnings: SFSF +7.7%, WDFC +5.4%, STLD +2.6%, ICUI +1.9%, PKG +1.4%.
Companies trading higher in after hours in reaction to news:
• HGSI +16.9% (Human Genome: GlaxoSmithKline may bid $25/share for HGSI - Daily Mail).

Companies trading lower in after hours in reaction to earnings: VMW -3.9%, IBM -3.8%.
Companies trading lower in after hours in reaction to news:
• CROX -38.1% (Crocs sees Q3 $0.31-0.33 vs $0.40 Capital IQ Consensus Estimate; revs $273-275 mln vs $280.42 mln Capital IQ Consensus Estimate)
• STRI -14.8% (STR Holdings expects Q3 revenue to in line and EPS $0.01-0.02 lower than previously published guidance; withdrawing 2011 guidance)
• REGN -5.2% (Regeneron Pharms announces that it intends to offer, $400 million aggregate principal amount of convertible senior notes due 2016 in a private placement).

After-Hours Report
Futures are lower 90mins after the close: S&P 500 futures are -5.86 from fair value of 1196.26 and Nasdaq100 futures are -13.29 from fair value of 2329.79.


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ECONOMIC COMMENTARY - Monday 17 October, 2011

• New Zealand Sep Performance Services Index 53.2 vs 53.8 in Aug

• UK Oct Rightmove House Prices +2.8% vs +0.7% in Aug

• Australia Sep New Motor Vehicle Sales -1.5% vs +3.4% in Aug

• Japan Aug Industrial Production +0.4% vs +0.6% in Aug 2010

• U.S. Economic Data

- October Empire Manufacturing -8.5 vs -4.0; September -8.82
- September Industrial Production +0.2% vs +0.2%; Prior revised to 0.0% from +0.2%
- September Capacity Utilization 77.4% vs 77.5%; Prior revised to 77.3% from 77.4%

Industrial Production Strengthens Amid Weak Regional Manufacturing Reports
Industrial production increased 0.2% in September, exactly what the Briefing.com consensus expected. Production growth in August was revised down from 0.2% to 0.0%. Utilities production remained on a downward trend for the second consecutive month following the July heat wave as production dipped 1.8% in September after falling 2.9% in August. Mining production increased 0.8% for the second consecutive month. Manufacturing production remained strong in light of weak regional Fed manufacturing surveys. Production increased 0.4% in September, up slightly from 0.3% growth in August. Motor vehicle assemblies increased slightly from 8.75 mln SAAR in August to 8.76 mln SAAR in September. Auto assemblies fell from 3.03 mln SAAR in August to 2.91 mln SAAR in September while truck assemblies increased from 5.71 mln SAAR to 5.86 mln SAAR.

• Asian Markets Close; Nikkei +1.5%, Hang Seng +2.0%, Shanghai +0.4%, Sensex -0.3%
It was a sea of green across Asia as only India's Sensex closed in negative territory. Gains from Friday's session on Wall Street buoyed the Asian markets as a 2.0% advance in Hong Kong led the way. Data in the region was quiet; however, participants will be focused on China's GDP which is due out overnight. Looking at the currencies...USDCNY weakened to 6.3705 while USDJPY is stronger at 77.25.

In Japan, the Nikkei closed +1.5% to finish at its best level in six weeks. Exporters continue to see gains as investors place bets on the hope that the European debt crisis will soon be resolved. Sony surged 5.0% and Komatsu gained 2.9% as the two exporters saw some of the best performance. Camera maker Olympus tumbled another 24% as the fallout from the resignation of its CEO continues.

In Hong Kong, the Hang Seng finished +2.0% as strong gains in commodity-relates names led the advance. Energy giant CNOOC added 3.3% while Jiangxi Copper surged 6.2% to finish among the best performers in the space. Embattled retailer Esprit soared 7.9% after announcing it could close its North American stores if it does not find a buyer.

In China, the Shanghai Composite settled +0.4% as financials were the best performing sector. Shenzhen Developmental Bank gained 1.1% after the co announced it is looking for net profit to grow 70-80% versus a year ago.

In India, the Sensex closed -0.3% after heavyweight Reliance Industries announced disappointing earnings. The oil refiner shed 4.0% after announcing the disappointing results and receiving a downgrade from CLSA. Tata Motors saw a gain 4.5% of after announcing September sales jumped 24% YoY.

• European Markets Closing Prices
UK's FTSE: -0.7%
Germany's DAX: -1.8%
France's CAC: -1.6%
Spain's IBEX: -1.2%
Portugal's PSI: -1.4%
Italy's MIB Index: -2.3%
Irish Ovrl Index: -0.4%
Greece FTSE/ASE 20: -4.1%

EARNINGS CALL

• Before market open

Halliburton (HAL) beats by $0.02, beats on revs
Reports Q3 (Sep) earnings of $0.94 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.92; revenues rose 40.4% year/year to $6.55 bln vs the $6.38 bln consensus. Project delays in Iraq and the shutdown in Libya continued to have a negative impact on results in the third quarter. In Iraq, we started operating three rigs near the end of the quarter, and we expect to have six rigs by the end of the fourth quarter. Libya is in an assessment phase and is expected to make a positive contribution in 2012. Other Eastern Hemisphere markets continue to show gradual progress primarily as a result of volume increases, as international pricing remains very competitive.

Wells Fargo (WFC) misses by $0.01, misses on revs
Reports Q3 (Sep) earnings of $0.72 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.73; revenues fell 6.0% year/year to $19.63 bln vs the $20.34 bln consensus. Capital increased with Tier 1 common equity reaching $91.9 billion under Basel I, or 9.35% of risk-weighted assets. Under current Basel III proposals, the Tier 1 common equity ratio was an estimated 7.41%. "The economic recovery has been more sluggish and uneven than anyone anticipated... We can't change the economic environment, yet we have worked hard to control the variables we can -- making our products and services more relevant to individuals and businesses, focusing on the customer, making as many loans as possible and growing new relationships -- as well as fostering longtime ones. We see the results of this focus in growing cross-sell, deposits, and loans. Customers need a trusted financial partner, especially in challenging economic times. Wells Fargo has proven to be that partner over and over again... This was a strong quarter for Wells Fargo, with solid growth in loans, deposits, investment securities and capital, along with improved credit quality and lower expenses... Credit quality continued to improve in the third quarter, our seventh consecutive quarter of declining loan losses and the fourth consecutive quarter of lower nonperforming assets." Third quarter net charge-offs were $2.6 billion, or 1.37 percent (annualized) of average loans, down $227 million from second quarter net charge-offs of $2.8 billion (1.52 percent). Return on average assets of 1.26%.

Citigroup (C) reports Q3 (Sep) results, beats on revs
Reports Q3 (Sep) earnings of $0.84 per share, excluding benefit from CVA of approx $0.39 per share which may not be comparable to the Capital IQ Consensus Estimate of $0.81; revenues rose 0.4% year/year to $20.83 bln vs the $19 bln consensus. Third quarter revenues included $1.9 billion of credit valuation adjustment (CVA) reflecting the widening of Citi's credit spreads during the third quarter. Excluding CVA, third quarter 2011 revenues were $18.9 billion, 8% below the prior year period and 8% below the second quarter 2011.

The year-over-year decline in Citigroup revenues, excluding CVA, was driven by lower revenues in both Citicorp and Citi Holdings. Citicorp revenues of $17.7 billion in the third quarter 2011 included $1.9 billion of CVA. Excluding the CVA, Citicorp revenues of $15.8 billion were 2% lower than the third quarter 2010. The decline was largely due to lower revenues in Securities and Banking, which were 12% below the prior year period and more than offset 2% growth in RCB revenues and 7% growth in Transaction Services revenues from the prior year period. Citi Holdings revenues of $2.8 billion were 27% below the prior year period. The decline in Citi Holdings revenues was principally due to the continuing reduction in assets, which fell $132 billion, or 31%, from the prior year period. Citi Holdings assets of $289 billion at the end of the third quarter 2011 represented approximately 15% of total Citigroup assets.

C had a loan loss reserve release of $1.4 Billion in Third Quarter, Down from $2.0 Billion in Each of Second Quarter 2011 and Third Quarter 2010. "In addition, over the past few years we have significantly strengthened our retail partner cards business and it has earned $2.2 billion pre-tax through the first three quarters. After a careful review of the business, which took into account current trends in credit and technology, we have decided that it makes strategic sense to move retail partner cards and a vast majority of its assets from Citi Holdings into Citicorp. The transition will be completed by the end of this year." Citigroup's capital levels and book value continued to increase versus the prior year period.

Book value per share was $60.56 and tangible book value per share4 was $49.50, 8% and 11% increases, respectively, versus the prior year period. Citigroup's Tier 1 Capital Ratio was 13.5% and its Tier 1 Common Ratio was 11.7%.

• After market close

Stanley Black & Decker (SWK) reports EPS in-line, beats on revs; guides Q4 EPS below consensus; guides FY12 EPS in-line
Reports Q3 (Sep) earnings of $1.34 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $1.34; revenues rose 11.3% year/year to $2.64 bln vs the $2.58 bln consensus. Co issues downside guidance for Q4, sees EPS of ~$1.30, ex-charges, vs. $1.34 Capital IQ Consensus Estimate. Co issues guidance for FY12, sees EPS of at or near $6.00 vs. $5.98 Capital IQ Consensus Estimate.

Steel Dynamics (STLD) reports Q3 (Sep) results, misses on revs
Reports Q3 (Sep) earnings of $0.20 per share, incl. multuple charges, may not be comparable to the Capital IQ Consensus Estimate of $0.20; revenues rose 29.1% year/year to $2 bln vs the $1955.4 mln consensus. "Looking ahead to Q4 of 2011, we believe the economic climate will remain challenging in light of decreased consumer confidence, the uncertain domestic political landscape and the European debt crisis. To a large degree these elements are out of our control; however, we remain confident that with our low-cost manufacturing structure, exceptional employee base, and superior operating culture, we are prepared to capitalize on all opportunities presented. We will provide more definitive quantitative guidance regarding Q4 in December."

IBM (IBM) beats by $0.06, reports revs in-line; raises FY11 EPS above consensus
Reports Q3 (Sep) earnings of $3.28 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $3.22; revenues rose 7.8% year/year to $26.16 bln vs the $26.25 bln consensus. Co issues upside guidance for FY11, raises EPS to at least $13.35, excluding non-recurring items, from at least $13.25, vs. $13.30 Capital IQ Consensus Estimate. Gross margin +140 bps YoY to 46.8%. Total Global Services revenues increased 8% (2%, adjusting for currency). Global Technology Services segment revenues increased 9% (3%, adjusting for currency) to $10.3 billion. Global Business Services segment revenues were up 6% (flat, adjusting for currency) at $4.8 billion. Revenues from the Software segment were $5.8 billion, an increase of 13% (8%, adjusting for currency). Software pre-tax income of $2.2 billion was up 12% year over year. Revenues from the Systems and Technology segment totaled $4.5 billion for the quarter, up 4% (1%, adjusting for currency) from the third quarter of 2010. Systems and Technology pre-tax income was $318 million, an increase of 8% year over year. The Americas' third-quarter revenues were $10.9 billion, an increase of 7% (6%, adjusting for currency) from the 2010 period. Revenues from Europe/Middle East/Africa were $8.0 billion, up 9% (flat, adjusting for currency). Asia-Pacific revenues increased 10% (1%, adjusting for currency) to $6.5 billion.

WD-40 (WDFC) beats by $0.09, beats on revs; guides FY12 EPS in-line, revs in-line
Reports Q4 (Aug) earnings of $0.61 per share, $0.09 better than the Capital IQ Consensus Estimate of $0.52; revenues rose 12.4% year/year to $90.7 mln vs the $87.9 mln consensus. Co issues in-line guidance for FY12, sees EPS of $2.28-2.40 vs. $2.32 Capital IQ Consensus Estimate; sees FY12 revs of $353-370 mln vs. $353.74 mln Capital IQ Consensus Estimate.


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TECHNICAL UPDATE - Monday 17 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,397.00 -247.49 (-2.13%)
Volume: 140,364,492 from 133,568,075 the previous day
Range: 11,378.35 – 11,643.35

http://img42.imageshack.us/img42/6687/dowel.jpg (http://imageshack.us/photo/my-images/42/dowel.jpg/)

DOW managed to break above and hold above 11,600 after being rejected in the early part of the session. Next resistance going up will be the August/September high of 11,710. NASDAQ is really wild but it closed out Friday in a two month high and wears a Hanging Man suggesting a pause in the making Monday. SPX remains the only benchmark still negative for the year. It hasn't broken to new highs yet, the same with DOW. Resistance will be August/September high of 1,230.

DOW has fallen below its critical support of 11,400 and S&P sits right there on its critical 1,200 support. NASDAQ is precariously perched above its 2.600 support from March and June. At these levels, any failure to hold or break above will surely start another downside. If the DOW could muster 1,242 points in nine sessions, it can lose just as much, if not more, in much less time.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,614.92 -52.93 (-1.98%)
Volume: 441,892,406 from 412,190,841 the previous day
Range: 2,606.91 – 2,658.25

S&P 500 INDEX (SPX: CBOE)
1,200.86 -23.72 (-1.94%)
Volume: 679,194 from 627,756 the previous day
Range: 1,198.55 – 1,224.47


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MARKET INTERNALS - Monday 17 October, 2011 AMC

NYSE :
Lower than avg volume @ 906 mln, vs. 1235 mln avg
Decliners outpaced Advancers (adv/dec): 572/2456
New highs outpaced new lows (hi/lo): 19/16

NASDAQ :
Lower than avg volume @ 1630 mln, vs. 2103 mln
Decliners outpaced Advancers (adv/dec): 464/2076
New lows outpaced new highs (hi/lo): 19/34


Advancers outpaced Decliners by an average 3.65 to 1 on lower volumes (+27.57%) on Friday (avg +1.67%).

Lower volumes on an up day again. This was also evident on the benchmarks too. But for the first time in more than two months, New Highs on the NASDAQ finally outpaced the New Lows ... barely though. The real bullish news is that the VIX has closed below 30 points for the first time in two months.

Decliners outpaced Advancers by an average 4.37 to 1 on Lower average volumes (-24.03%) on Monday (avg -2.02%).

When volumes are usually weaker on Mondays, this Monday's volumes were up. This was a true blue sell-off and not some profit taking as the market tanked lower and lower throughout the session. Leadership to the downside were amongst the usual strength sectors; Financials, Industrials and Materials while defensive sectors lagged; Healthcare, Staples, Telecommunications and Utilities. The VIX spiked and settled high in fear territory (above 30 points) after Friday's brief lull into complacency.

http://img805.imageshack.us/img805/3431/intg.jpg (http://imageshack.us/photo/my-images/805/intg.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, silver end with losses in quiet Monday trade

It was a relatively quiet start to the week for commodity futures. Gold, which ended lower by 0.4% at $1676.60 per ounce, and silver, which finished lower by 1.1% at $31.83 per ounce, sold off in late morning trade, dropping from the flat line down to respective lows at $1665.40 and $31.48. Both metals were able to bounce off those lows to end with modest declines on the day. In afterhours trade, metals have traded back toward lows. Note that the pullback in the precious metals did not correlate with any specific move in the dollar. Dec copper finished down 3.1 cents at $3.377.

Crude oil finished lower by 0.4% at $86.38 per barrel, after it spent the session chopping around the flat line. Natural gas shed 0.7% to close at $3.68 per MMBtu. Heating oil ended lower by 4 cents at $3.01, while RBOB gasoline shed 8 cents to close at $2.74.

Commodities AMC on Monday 17 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 86.00 0.00 (0.00%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,676.60 -6.40 (-0.38%)

Treasuries closed at their best levels of the session as a disappointing Empire Manufacturing number coupled with a murky outlook for the resolution of the European debt crisis caused investors to move into the safety of the complex. The long bond was the best performer today, finishing with a gain of two full points. The rush into the long bond dropped its yield 7 bps from last week's cash close as the 30-yr yield settled at 3.136%. Aggressive buying could also be found in the 10-yr as its yield finished down more than 7 bps at 2.155%. After widening to 197.5 bps early in the session the 2-10-yr spread finished the day tighter at 189 bps.

Treasury Yields AMC on Monday 17 October, 2011:
• 2 Year Note 0.28% unch
• 5 Year Note 1.08% -0.04
• 10 Year Note 2.18% -0.08
• 30 Year Bond 3.13% -0.09
2/30 Spread : 285bps ( -9 ) ... 2/10 Spread : 190bps ( -8 )


Spreads continue to languish just below par as the curve steepens more as the 2 and 5 year stay low and the 10 and 30 year yields climb.Regardless of the Fed's activity, the steepening of the curve and the rising of the risk market does make it look like everything is returning to normal and greed eases its way back into markets. Do we buy this? Or is this like I said it might be - the market being lulled into a state of complacency?

The curve falls but remains just one-below par. Having said that, the 5, 10 and 30 year yields are closer to falling back below two-under par ... again.


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PREVIEW FOR TUESDAY 18 OCTOBER, 2011

Tuesday’s data includes PPI, Core PPI (8:30), Net Long-Term TIC Flows (9:00), and the NAHB Housing Market Index (10:00). The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities through it Permanent Open Market Operations. Chairman Bernanke will speak in Boston on the long-term effects of the Great Recession (13:15).

Earnings Highlights
BMO: BAC, CHKP, DPZ, EDU, EMC, FRX, GPC, GS, GWW, HOG, JAKK, JNJ, KO, OMC, PH, PTI, PII, STT, UNH and UNF.
AMC: AAPL, CSX, INTC, IRSG, JNPR and YHOO.

Economic Events
08:30 am PPI
08:30 am Core PPI
09:00 am Net Long-Term TIC Flows
10:00 am NAHB Housing Market Index

Conferences and Shareholder/Analyst Meetings of Interest
- BRCM at International Coverage and Transmission Conference (ICTC)
- CSIQ at UBS AG Global Solar One-on-One Conference
- RFMD at Ultrasonics Symposium 2011


___________________________________________

SUMMARY

I am getting so tired and waiting. One of the toughest things to do is to sit on your hands, waiting for the market to make some sense while it continues to defy logic. Friday's session puts the DOW and NASDAQ back in positive territory for the year.

Looks like I'll be sitting on my hands some more. That one session has put my hedged portfolio back on track and there's not much I want to do to change anything yet. Now for the million dollar question ... do I call an up-day for a continuation down or a down-day and risk getting screwed again? I'm going to call it down based on the poor reactions to earnings AMC and that the PPI and Bernanke's "Great Recession" talk might just generate more negativity.

Direction for Tuesday 18 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 112/186 (60.21%)

Conrad
10-19-2011, 04:56 AM
U.S. MARKETS - Tuesday 18 October, 2011 AMC

http://img546.imageshack.us/img546/9276/dexst.jpg (http://imageshack.us/photo/my-images/546/dexst.jpg/)

Looks like I'll be sitting on my hands some more. That one session has put my hedged portfolio back on track and there's not much I want to do to change anything yet. Now for the million dollar question ... do I call an up-day for a continuation down or a down-day and risk getting screwed again? I'm going to call it down based on the poor reactions to earnings AMC and that the PPI and Bernanke's "Great Recession" talk might just generate more negativity.

Direction for Tuesday 18 October, 2011; ∇ Down

Only two things will move stocks - Earnings & News ... and both of them moved the market on Tuesday in a 350 range on the DOW. Earnings set the tone half an hour into the session. Then at 3pm, News out of Europe made for a dramatic close - apparently, a report suggested that France and Germany were ready to agree to a 2 trillion euro rescue fund. DOW jumped over 150 points on this news. But the EFSF can't get to 2 trillion because of prior commitments for half of it, and that bank recap is just 100 bln euros, rather than 200 bln euros, which could be a disappointment. DOW stalls and retreats 100 points. Then in truly dramatic cliff-hanging style, the market went bonkers as headlines crossed the wires that the whole story about the bailout was in doubt.

Now the DOW sits at 11,577.05 ... just 0.38 points below the year's open of 11,577.43. This is impossible. This is ridiculous. This is earnings season Q4.


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MARKET SUMMARY - Tuesday 18 October, 2011


BRIEFING.COM - Tuesday 18 October, 2011 AMC
Daily Sector Wrap: Buyers Step Back In

Stocks extended their prior session slide in the opening minutes of trade, but a combination of technical support and leadership from financials led stocks back to higher ground. The effort was extended in response to word that eurozone officials agreed to boost bailout funds, although that story was called into question at the close.

The stock market scored a 2.0% gain today, offsetting a move of similar degree to the downside yesterday. Participants were initially inclined to cut down stocks this morning. Negative sentiment was stirred by news that China, which carries the burden of being the primary supporter of global growth amid tenuous macro conditions, experienced a slowdown in economic growth during the third quarter. The 9.1% growth rate was also less than the 9.3% clip that many had anticipated.

Early selling interest was also ushered in by the threat of a future downgrade of France's pristine debt rating, which was put on negative watch by analysts at Moody's. The notion that the countries in the core of the eurozone, not just those in the region's periphery, face precarious fiscal and financial conditions put pressure on Europe's major bourses and further undermined the morning mood.

The S&P 500 was down about 1% within the first 30 minutes of trade, but it was able to bring buyers back in by holding steady at its 50-day exponential moving average.

Financials also offered leadership. The sector's refusal to turn negative in conjunction with the broad market's early dive convinced many that the sector's strength was sustainable, prompting many to push back into the space. Financials finished the session with a 5% gain. Bank of America (BAC 6.64, +0.61) was one of the strongest performers. Not only did the stock boast the most robust share volume on the Big Board, but it also swung to a 10% gain. The move made for the stock's best one-day bounce in almost two months. The stock's surge came even though the company's latest quarterly report was muddled with numerous items. Even Goldman Sachs (GS 102.25, +5.35) staged an enviable gain, although the company reported a loss that was worse than what most of Wall Street had expected.

While financials offered leadership, the broad market got an additional boost amid news that leaders from France and Germany agreed to balloon the region's rescue fund to 2 trillion euros, although specifics continue to elude the leaders. Some doubt was cast on the report shortly before the close, causing stocks to surrender a portion of their gains.

The broad market's late bounce failed to carry shares of IBM (IBM 178.90, -7.69) to higher ground. The stock's loss came in the face of an upside earnings surprise and strong forecast. Fellow large-cap tech plays like Intel (INTC 23.40, +0.12) and Apple (AAPL 422.24, +2.25) stayed out of the red, but also lagged ahead of their latest reports.

Not to be ignored, Dow components Johnson & Johnson (JNJ 64.42, +0.63) and Coca-Cola (KO 66.74, -0.26) both bested bottom line expectations, but only JNJ shares were bid higher at the end of the day.

No sector logged a loss, but defensive-oriented issues like utilities, telecom, consumer staples, and health care were the only groups that failed to generate gains greater than 1%. Such relative weakness came as market participants showed an increased appetite for risk.

Sector Leaders/Laggards for Tuesday 18 October, 2011 AMC
Leading Sectors: Financials +5.0%, Energy +3.0%, Industrials +2.9%, Materials +2.4%, Consumer Discretionary +1.8%, Tech +1.0%, Health Care +0.8%, Consumer Staples +0.8%, Telecom +0.8%, Utilities +0.7%
Leading Industries/ETFs : homebuilders & home const- ITB +7.6%, Financials- KRE +6.1%, Reg Bank RKH +5.7%, Financials & Banks- XLF +4.8%, KIE +4.5%, IYF +4.4%, KCE +4.4%, IAI +3.8%, Energy- XOP +3.9%, REITs- ICF +3.8%, Oil Service OIH +3.7%.

Lagging Sectors: None.
Lagging Industries/ETFs : Vix- VXX +3.7%, Natural gas- UNG -2.9%, Treasuries- TLT -0.6%, Gold- GLD -0.5%.

Other Market Moving Factors:
• Headlines about increased eurozone bailout drive late buying, but report is later questioned
• Financials offer leadership after Goldman Sachs (GS) reports steep loss and Bank of America (BAC) posts messy report featuring many items
• S&P 500 finds support at 50-day exponential moving average
• Europe's bourses move lower amid threat of negative outlook for France's debt rating
• China reports growth slowed in third quarter

Companies trading higher in after hours in reaction to earnings: ISRG +7.6%, INTC +3.7%, YHOO +2.3%, JNPR +0.8%.
Companies trading higher in after hours in reaction to news:
• WMB +1.7% (Williams Cos prepares for full tax-free spinoff of E&P business by year-end 2011).

Companies trading lower in after hours in reaction to earnings: AAPL -6.6%, CREE -4.6%, LLTC -3.9%.
Companies trading lower in after hours in reaction to news:
• PWAV -38.1% (Powerwave sees Q3 rev of $75-79 mln vs $170.11 mln Capital IQ Consensus Estimate)
• CWTR -8.1% (Coldwater Creek announces proposed public offering of common stock).


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ECONOMIC COMMENTARY - Tuesday 18 October, 2011

• China Economic Data

- Sep Industrial Production +13.8% vs 13.5% in Sep 2010
- Sep Retail Sales +17.7% vs +17.0% in Sep 2010

• Japan Sep Nationwide Dept Store Sales -2.4% vs -2.9% in Sep 2010

• UK Sep CPI +5.2% vs +4.5% in Sep 2010
This is regarded as much higher than expected; a 3 year high

• Germany Oct ZEW Economic Sentiment -48.3 vs -43.3 in Sep

• U.S. Economic Data

- September PPI +0.8% vs +0.2%
- September Core PPI +0.2% vs +0.1%
- August Net long-term TIC FLows $57.9 bln; July $9.5 bln
- October NAHB Housing Market Index 18 vs 15, Prior 14

PPI Spikes in September on Temporary Increase in Energy Costs
Producer prices jumped 0.8% in September after being unchanged in August. The Briefing.com consensus expected the PPI to increase 0.2%. The spike in producer prices should not be a cause for concern and most likely will turn negative next month. The average oil and gasoline price in September was substantially lower than August levels. However, the Bureau of Labor Statistics does not use monthly averages to calculate inflation. Instead, it surveys businesses on one day during the month. It just so happened that the day used to compare inflation between September and August was during a mini surge in oil prices where crude prices were 13.7% higher than their respective August level and gasoline prices were up 1.4%. This spike in energy prices translated into a 2.3% increase in energy costs in the PPI index, the largest increase since the North African/Middle East uprisings pushed oil prices higher during the first quarter of the year. Since oil and gasoline prices have moderated since the BLS survey date, the energy index should reverse in October and put downward pressure on inflation. Food prices increased 0.6% in September as fresh and dry vegetable prices were up 10.0%. Outside of food and energy prices, core prices increased 0.2% in September, up from 0.1% in August. The consensus expected core prices to increase 0.1%. A 0.6% increase in light truck prices accounted for one-third of the increase in core prices.

• Asian Markets Close; Nikkei -1.6%, Hang Seng -4.2%, Shanghai -2.4%, Sensex -1.6%
It was a sea of red across Asia as all of the major indices saw losses. Weakness was especially profound in Hong Kong where the Hang Seng plunged 4.2% following the Chinese GDP miss (9.1% YoY actual v. 9.3% YoY expected). Other data out in the middle kingdom showed industrial output grow 13.8% YoY, retail sales climb 17.7% YoY, and fixed investment rise 24.9% YoY. Elsewhere, Hong Kong's unemployment held steady at a 13-month low of 3.2%. Looking at the currencies...USDCNY strengthened to 6.3812 while USDJPY is weaker at 76.75.

In Japan, the Nikkei closed -1.6% and eased off its best level in six weeks. Shares of camera maker Olympus continued their freefall, tumbling another 9.0% during today's session as the fallout from the CEO's departure continues. The stock has lost 43% over the past couple of sessions on the news. KDDI and Softbank lost 4.3% and 2.9% respectively on reports that rival NTT DoCoMo is considering a 20% reduction in its smartphone fees.

In Hong Kong, the Hang Seng finished -4.2% as stocks were hit hard following the Chinese GDP miss. Aluminum Corp. of China tumbled 11.0% on global growth fears while energy giant CNOOC fell 5.0% as investors dumped commodity-related names. Financials were under duress with ICBC losing 6.1% and Agricultural Bank of China sinking 7.9%.

In China, the Shanghai Composite settled -2.4% as miners saw heavy losses. Jiangxi Copper lost 4.3% and Shangdong gold fell 3.9%.

In India, the Sensex closed -1.6% after Tata Consultancy Services shed 7.7% after announcing lower than expected quarterly earnings. HCL Technologies tumbled 8.8% despite a 50% surge in quarterly profit after the company gave a dismal outlook for the sector.

• European Markets Closing Prices
UK's FTSE: -0.7%
Germany's DAX: + 0.1%
France's CAC: -0.9%
Spain's IBEX: -0.6%
Portugal's PSI: -0.2%
Italy's MIB Index: + 0.4%
Irish Ovrl Index: + 0.3%
Greece FTSE/ASE 20: -2.1%

EARNINGS CALL

• Before market open

UnitedHealth (UNH) beats by $0.05, reports revs in-line; guides FY11 EPS above consensus, revs in-line
Reports Q3 (Sep) earnings of $1.17 per share, $0.05 better than the Capital IQ Consensus Estimate of $1.12; revenues rose 6.8% year/year to $25.28 bln vs the $25.43 bln consensus. Co issues upside EPS guidance for FY11, sees EPS of $4.40-4.45 vs. $4.38 Capital IQ Consensus Estimate; sees FY11 revs of to exceed $101 bln vs. $101.51 bln Capital IQ Consensus Estimate. Co's quarter-end debt to debt-plus-equity ratio of 30% was consistent year-over-year. Year-to-date, annualized return on equity was 19.2%. UnitedHealth Group paid $172 mln in dividends in the third quarter of 2011, an increase of 24% year-over-year. The third quarter 2011 medical care ratio of 80.7% increased 60 basis points year-over-year. Favorable reserve development of $200 mln in third quarter 2011 included $90 mln from prior years as compared to $230 mln in the third quarter of 2010, $80 mln of which related to prior years. Medical cost trends continue to be driven principally by unit cost increases. Co repurchased nearly 18 mln shares for $839 mln in the third quarter, bringing year-to-date repurchase activity to 46 mln shares for $2.1 bln.

EMC (EMC) beats by $0.01, beats on revs; guides FY11 EPS above consensus, revs in-line
Reports Q3 (Sep) earnings of $0.37 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.36; revenues rose 18.2% year/year to $4.98 bln vs the $4.93 bln consensus. Co issues upside EPS guidance for FY11, sees EPS of to exceed $1.48 vs. $1.48 Capital IQ Consensus Estimate; sees FY11 revs of to exceed $19.8 bln vs. $19.88 bln Capital IQ Consensus Estimate. Co expects to repurchase $2 bln of the common stock in 2011.

Bank of America (BAC) reports Q3 (Sep) results, beats on revs
Reports Q3 (Sep) earnings of $0.56 per share, including a number of items, may not be comparable to the Capital IQ Consensus Estimate of $0.22; revenues net of interest expense rose 6.4% year/year to $28.7 bln vs the $25.69 bln consensus. The most recent quarter included, among other things, $4.5 bln (pretax) in positive fair value adjustments on structured liabilities, a pretax gain of $3.6 bln from the sale of shares of China Construction Bank (CCB), $1.7 bln pretax gain in trading Debit Valuation Adjustments (DVA), and a pretax loss of $2.2 bln related to private equity and strategic investments, excluding CCB. The fair value adjustment on structured liabilities reflects the widening of the company's credit spreads and does not impact regulatory capital ratios. The year-ago quarter included a $10.4 bln goodwill impairment charge.

Net interest income on an FTE basis decreased 16 percent from a year earlier. The net interest yield fell 40 bps YoY, driven by hedge ineffectiveness and the acceleration of amortization of premiums on securities due to faster prepayment expectations. Noninterest income increased $3.7 bln from the year-ago quarter largely due to higher other income and equity investment income, partially offset by lower trading account profits. This was partially offset by the losses in Global Principal Investments and a write-down of a strategic investment. Trading account profits were lower due to adverse market conditions throughout the quarter. Excluding the goodwill impairment charge of $1.4 bln, noninterest expense increased by $797 mln, reflecting increased personnel costs. Global Banking and Markets reported a net loss of $302 mln, down from net income of $1.5 bln in the year-ago quarter Sales and trading revenue was $2.8 bln, a decrease of 37% YoY. The current period includes DVA gains of $1.7 bln compared to losses of $34 mln in the third quarter of 2010, as the co's credit spreads widened throughout the quarter.

Credit quality improved YoY in the third quarter, with net charge-offs declining across most portfolios.

TBV $13.22, up from $12.65 QoQ, down from $12.91 YoY. Regulatory capital ratios increased significantly QoQ during the third quarter, with the Tier 1 capital ratio at 11.48%, the Tier 1 common equity ratio at 8.65%, and the Tangible common equity ratio at 6.25%.

Goldman Sachs (GS) misses by $0.68, misses on revs
Reports Q3 (Sep) loss of $0.84 per share, $0.68 worse than the Capital IQ Consensus Estimate of ($0.16); revenues fell 60% year/year to $3.59 bln vs the $4.31 bln consensus. "CEO and investor confidence as well as asset prices across markets were lower in the third quarter given the uncertain macroeconomic and market conditions. Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter," said Lloyd C. Blankfein, Chairman and Chief Executive Officer.

Net revenues in Investment Banking were $781 million, 33% lower than the third quarter of 2010 and 46% lower than the second quarter of 2011. Net revenues in Financial Advisory were $523 million, up slightly from the third quarter of 2010. Net revenues in the firm's Underwriting business were $258 million, 61% lower than the third quarter of 2010. Net revenues in both equity underwriting and debt underwriting were significantly lower than the third quarter of 2010, reflecting a significant decline in industry-wide activity. The firm's investment banking transaction backlog increased compared with the end of the second quarter of 2011.

Net revenues in Institutional Client Services were $4.06 billion, 13% lower than the third quarter of 2010 and 16% higher than the second quarter of 2011. Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.73 billion, 36% lower than the third quarter of 2010. During the quarter, global economic uncertainty intensified, resulting in volatile markets and significantly wider credit spreads. Although these factors contributed to difficult market-making conditions, particularly in credit products, mortgages and currencies, activity levels were generally consistent with the prior quarter. The decline in net revenues compared with the third quarter of 2010 reflected significantly lower results in credit products, mortgages and, to a lesser extent, currencies. Net revenues in Equities were $2.33 billion, 18% higher than the third quarter of 2010. This increase was primarily due to significantly higher commissions and fees, reflecting higher transaction volumes.

Operating expenses were $4.32 billion, 29% lower than the third quarter of 2010 and 24% lower than the second quarter of 2011. The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $1.58 billion for the third quarter of 2011, a 59% decline compared with the third quarter of 2010. The ratio of compensation and benefits to net revenues for the first nine months of 2011 was 44.0%.

As of September 30, 2011, total capital was $245.74 billion, consisting of $70.09 billion in total shareholders' equity (common shareholders' equity of $66.99 billion and preferred stock of $3.10 billion) and $175.65 billion in unsecured long-term borrowings. Book value per common share was $131.09 and tangible book value per common share (9) was $120.41, both essentially unchanged compared with the end of the second quarter of 2011.

Coca-Cola beats by $0.01, beats on revs
Reports Q3 (Sep) earnings of $1.03 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $1.02; revenues rose 45.4% year/year to $12.25 bln vs the $12.02 bln consensus. with comparable net revenue also up 45%. This reflects a 5% increase in concentrate sales, a 5% currency benefit, positive price/mix and the acquisition of CCE's former North America operations, partially offset by the effect of structural changes. Concentrate sales in the quarter were in line with unit case sales and were slightly ahead of unit case sales year-to-date. The positive price/mix in the quarter reflects international and Bottling Investments Group price/mix of 2%. In North America, we achieved 2% positive pricing to retailers in the quarter, driven by 3% positive pricing on sparkling beverages. This reflects our fundamental belief in executing pricing within a disciplined commercial framework that considers rate increases in concert with occasion-based package mix levers, balancing overall category health with volume, value and pricing growth. As a result, we grew global NARTD value share for the 17th consecutive quarter, driven by global share growth across sparkling and still beverages. Reported cost of goods sold was up 67% in the quarter. Q3 reported operating income increased 17%, with comparable operating income up 21%. Coca-Cola Refreshments integration efforts are on plan, with expected 2011 net cost synergies of $140 to $150 million. Co-wide productivity initiatives are well on track to exceed the upper end of the original target range of $400-500 mln in annualized savings by year-end 2011, the final year of the four-year program. "On a year-to-date basis, our net share repurchases stand at $2.2 bln. We are now planning to increase our share repurchase program with a plan to purchase at least $2.5 bln to $3.0 bln in net shares by year end."

Johnson & Johnson (JNJ) beats by $0.03, reports revs in-line; raises FY11 EPS, in-line
Reports Q3 (Sep) earnings of $1.24 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $1.21; revenues rose 6.8% year/year to $16 bln vs the $16.02 bln consensus. Co issues in-line guidance for FY11, raises EPS to $4.95-5.00, excluding non-recurring items, from $4.90-5.00 vs. $4.96 Capital IQ Consensus Estimate. Worldwide Consumer sales of $3.7 bln for the third quarter represented an increase of 4.9% vs. the prior year consisting of an operational increase of 0.5% and a positive impact from currency of 4.4%. Domestic sales declined 4.5%. International sales increased 10.1%, which reflected an operational increase of 3.3% and a positive currency impact of 6.8%. Worldwide Pharmaceutical sales of $6.0 bln for the third quarter represented an increase of 8.9% vs. the prior year with operational growth of 4.9% and a positive impact from currency of 4.0%. Domestic sales declined 6.1%. International sales increased 27.5%, which reflected an operational increase of 18.5% and a positive currency impact of 9.0%.

• After market close

Apple (AAPL) misses by $0.22, misses on revs; guides Q1 EPS, revs above consensus
Reports Q4 (Sep) earnings of $7.05 per share, $0.22 worse than the Capital IQ Consensus Estimate of $7.27; revenues rose 39.0% year/year to $28.27 bln vs the $29.28 bln consensus, 63% of rev from outside U.S. Co issues upside guidance for Q1, sees EPS of $9.30 vs. $8.97 Capital IQ Consensus Estimate; sees Q1 revs of $37.0 bln vs. $36.64 bln Capital IQ Consensus Estimate. Q4 gross margins of 40.3% vs Street est of 39.9% and 38.0% guidance; 17.07 mln iPhones sold in Q4 vs Street est of ~21 mln; 11.12 mln iPads sold in Q4 vs Street est of ~12 mln; reports 4.89 mln Macs sold in Q4 vs Street est of ~4.5 mln. "Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline."
Apple earnings call update
The call begins with Tim Cook with a statement about the loss of Steve Jobs. Macs grew 26% YoY, which outpaced the 4% industry growth. MacBook Airs and Pros were bright spots in the quarter, as well as record desktop sales. The CFO stated that the company saw a decline in iPhone sales after its developer conference in anticipation of the new iPhone launch... The co ended the qtr with iPad inventory up 1.45 mln sequentially in targeted range of 4-6 weeks... On call the CFO says that gross margins were 230 bps higher than guidance due almost entirely to lower component costs... The co ended the qtr with $81.6 bln in cash and equivalents... Q1 will contain 14 weeks... The co guides Q1 gross margins to approx 40.0% vs 39.7% consensus... In Q&A, when asked about iPhone 4S supply, the CEO Cook says that demand is extremely high, but he is confident that it will set all-time iPhone records in the Dec. qtr... When asked about gross margin guidance of 40% in the qtr, the co says it to be relatively flat because the component costs will be favorable and high iPhone 4S sales, but offset by stronger US dollar, higher cost structure, and reduced price pts... On China, CEO Cook says China is its fastest growing region by far and accounted for $4.5 bln in revs in the qtr. Co is placing add'l investment in that country.

Intel (INTC) beats by $0.06, beats on revs; guides Q4 revs above consensus; increases buyback by $10 bln to $14.2 bln
Reports Q3 (Sep) earnings of $0.69 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $0.63; revenues rose 28.2% year/year to $14.23 bln vs the $13.84 bln consensus; non-GAAP gross margin -170 bps YoY to 64.4%. Co issues upside guidance for Q4, sees Q4 revs of $14.2-15.2 bln vs. $14.21 bln Capital IQ Consensus Estimate; gross margin percentage: 65%, plus or minus a couple percentage points. Q3 PC Client Group revenue of $9.4 bln, up 22 percent YoY. Data Center Group revenue of $2.5 bln, up 15% YoY. The co generated ~$6.3 bln in cash from operations, paid cash dividends of $1.1 bln, and used $4.0 bln to repurchase 186 mln shares of common stock. Intel's board of directors also voted to increase the co's buyback authorization by $10.0 bln, raising the total unused balance to $14.2 bln at the end of the third quarter. The co also completed a senior notes offering of $5.0 bln primarily for the purpose of repurchasing stock.

Yahoo! (YHOO) beats by $0.04, reports revs in-line; guides Q4 revs in-line
Reports Q3 (Sep) earnings of $0.21 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.17; revenues fell 4.6% year/year to $1.07 bln vs the $1.07 bln consensus. Co issues in-line guidance for Q4, sees Q4 revs of $1125-1235 vs. $1.21 bln Capital IQ Consensus Estimate... In order to create more financial certainty, Microsoft (MSFT) and Yahoo! recently agreed to extend the RPS Guarantee in the U.S. and Canada through March 2013.

IN OTHER NEWS ...

• Telegraph Story making the rounds suggesting France and Germany have reached an agreement on a bailout plan
Click here for story (http://www.guardian.co.uk/business/2011/oct/18/france-and-germany-move-towards-2tn-euro-fund).

• EWA Reserve Bank of Australia Minutes released
For details, click here (http://www.rba.gov.au/monetary-policy/rba-board-minutes/2011/04102011.html)

• Moody’s downgrades Spanish government bond ratings to A1 from AA2 (two notches)
Moody's Investors Service has today downgraded Spain's government bond ratings to A1 from Aa2. This rating action concludes the review for possible downgrade that Moody's had initiated for Spain's rating on 29 July. The ratings carry a negative outlook. The main drivers that prompted the rating downgrade are as follow:

(1) Spain continues to be vulnerable to market stress and event risk. Since placing the ratings under review in late July 2011, no credible resolution of the current sovereign debt crisis has emerged and it will in any event take time for confidence in the area's political cohesion and growth prospects to be fully restored. In the meantime, Spain's large sovereign borrowing needs as well as the high external indebtedness of the Spanish banking and corporate sectors render it vulnerable to further funding stress.

(2) The already moderate growth prospects for Spain have been scaled back further in view of (i) the worsening global and European growth outlook and (ii) the difficult funding situation for the banking sector and its impact on the wider economy. Specifically, Moody's now expects Spain's real GDP growth in 2012 to be 1% at best, compared with earlier expectations of 1.8%, with risks mainly to the downside. Over the following years, the rating agency continues to expect a very moderate pace of growth of around 1.5% on average per annum.

(3) Lower economic growth in turn will make the achievement of the ambitious fiscal targets even more challenging for Spain. Moody's expects the budget deficits for the general government sector to be above target both this year and next. In particular, Moody's continues to have serious concerns regarding the funding situation of the regional governments and their ability to reduce their budget deficits according to targets.

Moody's is maintaining a negative outlook on Spain's rating to reflect the downside risks from a potential further escalation of the euro area crisis. The rating agency expects that the next government to emerge after Spain's parliamentary elections on 20 November will be strongly committed to continued fiscal consolidation. Spain's rating would face further downward pressure if this expectation did not materialise.


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TECHNICAL UPDATE - Tuesday 18 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,577.05 +180.05 (+1.58%)
Volume: 201,407,891 from 140,364,492 the previous day
Range: 11,296.12 – 11,652.74

http://img191.imageshack.us/img191/6730/dowgo.jpg (http://imageshack.us/photo/my-images/191/dowgo.jpg/)

DOW has fallen below its critical support of 11,400 and S&P sits right there on its critical 1,200 support. NASDAQ is precariously perched above its 2.600 support from March and June. At these levels, any failure to hold or break above will surely start another downside. If the DOW could muster 1,242 points in nine sessions, it can lose just as much, if not more, in much less time.

As ridiculous as the close was, one thing was clear - 11,650, 2,665 and 1,230 are going to be tough to break. NASDAQ now sits 19.22 points below the year's open of 2,767.65 while DOW, as previously mentioned, is only 0.38 points short. There is little TA to analyze apart from those resistance levels. Get above that first and then we'll talk. For now, irrationality rules.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,657.43 +42.51 (+1.63%)
Volume: 526,087,456 from 441,892,406 the previous day
Range: 2,586.31 – 2,667.57

S&P 500 INDEX (SPX: CBOE)
1,225.38 +24.52 (+2.04%)
Volume: 853,336 from 679,194 the previous day
Range: 1,191.48 – 1,233.10


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MARKET INTERNALS - Tuesday 18 October, 2011 AMC

NYSE :
Lower than avg volume @ 1090 mln, vs. 1206 mln
Advancers outpaced Decliners (adv/dec): 2560/489
New highs outpaced new lows (hi/lo): 31/20

NASDAQ :
Lower than avg volume @ 1880 mln, vs. 2062 mln
Advancers outpaced Decliners (adv/dec): 1982/595
New lows outpaced new highs (hi/lo): 21/46


Decliners outpaced Advancers by an average 4.37 to 1 on Lower average volumes (-24.03%) on Monday (avg -2.02%).

When volumes are usually weaker on Mondays, this Monday's volumes were up. This was a true blue sell-off and not some profit taking as the market tanked lower and lower throughout the session. Leadership to the downside were amongst the usual strength sectors; Financials, Industrials and Materials while defensive sectors lagged; Healthcare, Staples, Telecommunications and Utilities. The VIX spiked and settled high in fear territory (above 30 points) after Friday's brief lull into complacency.

Advancers outpaced Decliners by an average 4.19 to 1 on Lower average volumes (-9.12%) on Tuesday (avg +1.75%).

Leadership was impressive and volumes on the benchmarks indices did improve, although most of it was from the big hitters on earnings calls. The broader market volumes, however, were lower across the board. The price-to-volumes divergence continues, albeit at a lesser divergence.

http://img69.imageshack.us/img69/7708/intc.jpg (http://imageshack.us/photo/my-images/69/intc.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, silver rebound as euro stabilizes

Stabilization in the euro allowed for commodities to move higher throughout the session. Gold, which shed 1.3% to finish at $1652.80 per ounce, and silver, which finished near flat at $31.83 per ounce, rallied off morning lows throughout the session. Gold futures managed to trade back to the $1660 mark, a key level, while silver futures were able to recoup all of their losses and end just above flat on the day. Dec copper shed 1.8 cents to finish at $3.36.

Crude oil, which settled higher by 2.3% at $88.34 per barrel, rallied off of the $85.50 mark in mid-morning trade and never looked back. Futures traded as high as $88.6 heading into the close and ended just shy of those levels. A pullback in the dollar, coupled with strength in equities, helped crude end higher ahead of tomorrow's inventory data. Natural gas fell 3.6% at $3.55 per MMBtu , finished sharply lower today, pressured by expectations for milder weather forecasts. Heating oil ended higher by a penny at $3.03, while RBOB gasoline closed near flat at $2.75 (all Nov contracts).

Corn settled higher by 3 cents to $6.44, wheat rose 2 cents to end at $6.26, soybeans were 3 cents lower at $12.50, ethanol fell 1 cent to close at $2.61, while sugar fell 0.68% to $0.28.

Commodities AMC on Tuesday 18 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 88.34 +1.96 (+2.27%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,652.80 -23.80 (-1.42%)

Asian yields finished mostly lower today as weakness in equity markets provided a bid. Indonesian paper continues to generate heavy interest as investors look to emerging economies for more robust yields. A strong bid in the Indonesian 5-yr dropped its yield 23 bps to 5.72%. Meanwhile, a plunge of more than 4.0% in the Hang Seng drove investors into the long end of the Hong Kong curve, forcing the 10-yr yield down 10 bps to 1.380%.

US Bond Yields finished the cash market little changed, but they surged in the final hour of trading for equities as the latest rumors of a European rescue plan were floated out by the Guardian. The latest headlines indicate France and Germany have reached an agreement on a EUR 2 trln bailout, however, details remain murky. Regardless, longer dated paper saw heavy selling and caused the 10-yr yield to surge to 2.20% and the 30-yr yield to climb to 3.21%. Yields have since come back in and the 10- and 30-yr yields have fallen back to 2.17% and 3.17% respectively. The yield curve swung steeper on the news with the 2-10-yr spread now trading 190 bps.

Treasury Yields AMC on Tuesday 18 October, 2011:
• 2 Year Note 0.28% unch
• 5 Year Note 1.07% -0.01
• 10 Year Note 2.19% +0.01
• 30 Year Bond 3.17% +0.04
2/30 Spread : 289bps ( +4 ) ... 2/10 Spread : 191bps ( +1 )


The curve falls but remains just one-below par. Having said that, the 5, 10 and 30 year yields are closer to falling back below two-under par ... again.

Status Quo. After a major rock 'n' roll session the curve remains largely unchanged, if not, a little steeper.


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PREVIEW FOR WEDNESDAY 19 OCTOBER, 2011

Wednesday's data slate is full with the weekly MBA Mortgage Index (7:00), CPI, Core CPI, housing starts and building permits (8:30), and the Fed's Beige Book. The Fed's POMO continues with the buying of $4.25-5.00 bln worth of 2017-2019 maturities. Boston's Rosengren will speak on the long-term effects of the Great Recession (8:30).

Earnings Highlights
BMO: ABT, APH, AMR, APOL, ATMI, BK, BLK, CMA, DRH, FCX, MS, PJC, TRV, UTX, USB
AMC: AXP, AMLN, CAKE, EBAY, WDC

Economic Events
07:00 am MBA Mortgage Index
08:30 am CPI
08:30 am Core CPI
08:30 am Housing Starts
08:30 am Building Permits
10:30 am Crude Inventories
14:00 pm Fed's Beige Book

Conferences and Shareholder/Analyst Meetings of Interest
- KNOT at M2Moms - The Marketing to Moms Conference
- FNDT at China Supply Chain Finance Summit
- PRGS 1 on 1's with Progress Software - FBN Securities


___________________________________________

SUMMARY

The moment I call it up, the moment I follow tradition, the market skews the other way! Thank goodness I kept my faith in my hedge and didn't change the weightage yet. Just like that, the market falls into negative for the year again.

As long as this market remains tough to call, I will remain hedged. This must be my worst streak on calling the market because it is also the longest streak that I have stubbornly held on to my hedges ever. And I am glad I did. The only other way to not have suffered the volatility of this market is to have stayed away altogether - something I chose not to do early in September but hedged instead.

Earnings have been undeniably good. But its much too soon to decide if I should adjust my hedge because it is still very obvious that this market is still headline sensitive and nothing good is coming out of Europe ... yet and at all.

Direction for Wednesday 19 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 112/187 (59.89%)

Conrad
10-20-2011, 04:23 AM
U.S. MARKETS - Wednesday 19 October, 2011 AMC

http://img856.imageshack.us/img856/5186/dexsi.jpg (http://imageshack.us/photo/my-images/856/dexsi.jpg/)

As long as this market remains tough to call, I will remain hedged. This must be my worst streak on calling the market because it is also the longest streak that I have stubbornly held on to my hedges ever. And I am glad I did. The only other way to not have suffered the volatility of this market is to have stayed away altogether - something I chose not to do early in September but hedged instead.

Earnings have been undeniably good. But its much too soon to decide if I should adjust my hedge because it is still very obvious that this market is still headline sensitive and nothing good is coming out of Europe ... yet and at all.

Direction for Wednesday 19 October, 2011; ∇ Down

This was not the prettiest start to a session. In spite of some knock-out earnings and positive economic data, it was flat, ugly and directionless. The players absolutely did not have any objectives until the Beige Book came out at 2pm. Then the market really took on some clarity.


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MARKET SUMMARY - Wednesday 19 October, 2011


BRIEFING.COM - Wednesday 19 October, 2011 AMC
Daily Sector Wrap: Stocks Settle Near Session Lows

The major equity averages descended to varied losses after they had spent the first half of the session chopping along listlessly in mixed fashion.

Momentum from the prior session's broad-based bounce was lost this morning as reports regarding plans to boost bailout funds in the EFSF were contradicted. Headlines indicative of conflicting goings on at meetings between eurozone officials played a part in an afternoon sell-off that left stocks to end the session at lows.

Of the major averages, the Nasdaq suffered the worst loss today. Its outsized decline came as Apple (AAPL 398.62, -23.62) shares dove in response to an earnings miss, which has been a rare occurrence in recent years. Shares of AAPL booked their worst percentage loss in three years. Given the weight of AAPL shares in the Nasdaq, its weakness offset strength in shares of Intel (INTC 24.24, +0.84) and Yahoo! (YHOO 15.94, +0.47), both of which reported a better-than-expected bottom line for the latest quarter.
Materials stocks were actually the worst performers. Challenged to find support, the sector slumped to a 3.0% loss.

Morgan Stanley (MS 16.64, +0.01) posted an upside surprise for the latest quarter, but its shares ended the day only a penny above where they began. In contrast, Travelers (TRV 54.39, +2.93) came short of the consensus earnings estimate, but its shares still rallied to a two-month high. Following its 5% spike yesterday, the financial sector failed to sustain an early bounce that left them to trade flat before descending alongside the rest of the market in late trade. They finished with a collective loss of 1.7%.

Homebuilders failed to sustain buying interest that had the SPDR S&P Homebuilders ETF (XHB 15.18, -0.17) up nicely on the back of news that housing starts climbed in September to an annualized clip of 658,000, which is the fastest pace since April 2010. The consensus among economists polled by Briefing.com had called for a slower rate more on the order of 595,000. Meanwhile, building permits slid to a rate of 594,000 from 610,000 in the prior month. An annualized rate of 610,000 permits had been generally expected.

There weren't any surprises to consumer price data for September. Overall consumer prices increased by 0.3%, just as had been broadly expected, while core prices increased by 0.1%, which is even less than the consensus call for a 0.2% increase. Just yesterday it was learned that overall producer prices increased by 0.8% in September, while core producer prices increased by 0.2% for the month.

There were no surprises to the Fed's latest Beige Book, which indicated that economic activity in many districts expanded at a modest or slight pace during September. A weaker or less certain outlook for business conditions was also generally noted.

Just as stocks wrestled with sellers this afternoon, oil futures came under pronounced pressure. The energy component benefited from an unexpected draw in weekly inventories and even traded as high as $89.69 per barrel before it dropped to $86.11 per barrel for a 2.5% loss. Other commodities were also clipped, resulting in a 1.3% loss for the CRB Commodity Index.

Amid the afternoon selling, the Volatility Index, often euphemistically labeled the Fear Gauge, spiked. At the close it was up more than 9% to trade above 34.

Sector Leaders/Laggards for Wednesday 19 October, 2011 AMC
Leading Sectors: Utilities +0.1%.
Leading Industries/ETFs : Vix- VXX +6.7%, Natural gas- UNG +0.5%.

Lagging Sectors: Health Care -0.3%, Consumer Staples -0.4%, Telecom -0.6%, Energy -0.9%, Industrials -1.2%, Consumer Discretionary -1.5%, Financials -1.7%, Materials -3.0%.
Lagging Industries/ETFs : Junior gold miners- GDXJ -6.9%, Gold miners- GDX -6.0%, Copper- JJC -4.8%, Solar- TAN -4.7%, Steel- SLX -4.0%, Silver- SLV -3.5%, Semi Equip XSD --3.5%, Financials- PBW -3.4%, Sugar- SGG -3.4%.

Other Market Moving Factors:
• Skepticism accompanies headlines about bigger eurozone bailout and negotiations between officials
• Apple (AAPL) comes short of consensus earnings estimate, but Intel (INTC) and Yahoo! (YHOO) both beat
• Consumer prices increase only incrementally in September
• New home sales accelerate in September

Companies trading higher in after hours in reaction to earnings: SCSS +9.2%, BWLD +4.7%, TSCO +4.1%.
Companies trading higher in after hours in reaction to news:
• NEOP +19.4% (Neoprobe receives FDA acceptance of lymphoseek (tilmanocept) new drug application)
• TSON +11.2% (Trans1 confirmed with Horizon that CPT codes 0195T and 0196T, which are the CPT codes associated with the Co's pre-sacral AxiaLIF procedure, will be deemed eligible for coverage)
• CMC +5.9% (Commercial Metals: Carl Icahn discloses intent to nominate members to the board in letter to mgmt - amended 13D filing).

Companies trading lower in after hours in reaction to earnings: CRUS -13.1%, AF -9.6%, MKSI -8.9%, WDC -5.0%, WYNN -4.7%, LRCX -4.5%, FNF -4.3%, EBAY -4.0%.


___________________________________________

ECONOMIC COMMENTARY - Wednesday 19 October, 2011

• Australia Economic Data

- Aug Westpac Leading Index +0.8% vs +0.6% in Jul
- Sep DEWR Internet Skilled Vacancies -1.3% vs -0.6% in Aug

• China Economic Data

- Sep Actual FDI +7.9% vs +11.1% in Sep 2010
- Aug Conference Board China Leading Economic Index 159.5 vs 158.7 in Jul

• Japan Aug All Industry Activity Index -0.5% vs +0.4% in Jul

• Eurozone Aug Construction Output +0.2% vs revised +1.8% in Jul (prior +1.4%)

• U.S. Economic Data

- September Housing Starts 658K vs 595K
- September Building Permits 594K vs 610K ; Prior revised to 625K from 620K
- September CPI M/M +0.3% vs +0.3%
- September Core CPI M/M +0.1% vs +0.2%
- September CPI Y/Y +3.9%, Core CPI Y/Y +2.0%
- MBA Mortgage Applications of -14.9% vs +1.3% Prior

Housing Starts Reach Highest Level Since April 2010
Housing starts jumped 15% in September, rising from 572,000 in August to 658,000. That is the highest level of new home construction since the home buyers tax credit artificially boosted production in April 2010. The Briefing.com consensus expected housing starts to increase to 595,000. The gains in construction, however, do not seem to be sustainable. Single family construction, which tends to be very stable, increased only 1.7%. That was the first increase in starts in two months and was in-line with the modest increase in overall housing starts expected by the consensus. Multi-family construction, which is highly volatile, jumped 51.3% to 233,000 homes in September. Prior to the September gain, multi-family construction had averaged roughly 150,000 new starts each month since January. The number of multi-family starts in September was well outside the normal volatility range. This most likely will result in a sharp pull back in October. It would not be surprising to see multi-family starts fall well below the long-term average in October to make up for the sizable September gain. The number of homes under construction increased from 409,000 in August to 412,000 in September. That was the first increase since May 2006. Since GDP is calculated from put-in-place construction expenditures, the increase in the number of homes currently under construction will put upward pressure on our third quarter GDP forecast.

Consumer Prices Rise on Higher Energy Costs
The CPI increased 0.3% in September, exactly what the Briefing.com consensus expected. The September increase was slower than the 0.4% growth in August and was the smallest increase since June when CPI declined 0.2%. Like the September PPI, the inflation level was boosted by statistical rather than real price increases. Even though the average oil and gasoline price in September was substantially lower than August levels, the Bureau of Labor Statistics does not use monthly averages to calculate inflation. Instead, it surveys consumers for a week during the month. It just so happened that the time period used to compare inflation between September and August was during a mini surge in oil prices. Thus, instead of energy prices falling in September, the CPI showed a 2.0% increase in costs. These gains will be completely offset next month when the CPI compares the relatively high September energy level with a much lower October number. Food prices increased 0.4% in September as all grocery store categories saw price increases for the month. Outside of the food and energy sector, core CPI increased 0.1%. That was the smallest increase since March 2011 and below the consensus expectation of a 0.2% increase.

• Oil Inventory Data

Dept of Energy reports that:

Crude oil inventories had a draw of 4.7 mln (consensus is a build of 2.0 mln).
Gasoline inventories had a draw of 3.3 mln (consensus is a draw of 1.5 mln).
Distillate inventories had a draw of 4.3 mln (consensus is a draw of 1.5 mln).
Change in refinery utilization was -1.1% (vs consensus of -0.5%).
Summary of Weekly Petroleum Data for the week ending Oct 14

Production: U.S. crude oil refinery inputs averaged 14.4 mln bpd during the week ending October 14, 134 thousand bpd below the previous week's average. Refineries operated at 83.1 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.3 mln bpd. Distillate fuel production decreased last week, averaging about 4.4 mln bpd.

Imports: U.S. crude oil imports averaged 7.9 mln bpd last week, down by about 1.2 mln bpd from the previous week. Over the last four weeks, crude oil imports have averaged just under 8.9 mln bpd, 187 thousand bpd above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 458 thousand bpd. Distillate fuel imports averaged 107 thousand bpd last week.

Inventory: At 332.9 mln barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 3.3 mln barrels last week and are in the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 4.3 mln barrels last week and are near the upper limit of the average range for this time of year. Propane/propylene inventories increased by 1.0 mln barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 10.9 mln barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged nearly 8.9 mln bpd, down by 1.5 percent from the same period last year. Distillate fuel product supplied has averaged 4.0 mln bpd over the last four weeks, up by 5.8 percent from the same period last year.

Finished Motor Gasoline (Implied Demand): Finished motor gasoline demand for the week ended 10/14 was 8,598K bpd, well below last week's 9,010K, and lower than the yr ago period of 8,891K.

• Asian Markets Close; Nikkei +0.4%, Hang Seng +1.3%, Shanghai -0.2%, Sensex +2.0%
The major Asian indices saw a mixed session as markets remain optimistic ahead of this weekend's summit that is supposed to resolve the European debt crisis. In an expected move, the Bank of Thailand held its benchmark interest rate steady at 3.50%. Data in the region was quiet with nothing of importance crossing the wires. Looking at the currencies...USDCNY weakened to 6.3780 while USDJPY is stronger at 76.80.

In Japan, the Nikkei closed +0.4% despite weakness in chip stocks after Elpida Memory was downgraded to ‘underperform' from ‘neutral' at Mitsubishi UFJ Morgan Stanley. The stock slid 5.3% on the news. Embattled Olympus sank another 2.0% as the fallout continues from the board's removal of the co's CEO.

In Hong Kong, the Hang Seng finished +1.3% as financials rallied on speculation the People's Bank of China will provide stimulus if a slowdown in growth is apparent. ICBC added 2.0% while China Construction Bank gained 2.2%. Conglomerate Hutchinson Whampoa advanced 2.8% on hope the European debt crisis will soon be resolved.

In China, the Shanghai Composite settled -0.2% as mining stocks remained under pressure. Rare earth miner Inner Mongolia Baotou Steel declined 4.7% while Zijin Mining dropped 1.2%. Property developers slid on reports that some banks were raising mortgage rates for first-time home buyers with Poly Real Estate falling 2.5%.

In India, the Sensex closed +2.0% as investors gobbled up financials following HDFC Bank's strong earnings. The co announced a 31.5% surge in quarterly profit and shares responded with a gain of almost 3.0%. Rivals State Bank of India and ICICI Bank gained 2.8% and 3.2% respectively.

• European Markets Closing Prices
UK's FTSE: + 0.7%
Germany's DAX: + 0.6%
France's CAC: + 0.5%
Spain's IBEX: + 0.4%
Portugal's PSI: -0.2%
Italy's MIB Index: + 2.0%
Irish Ovrl Index: + 0.5%
Greece FTSE/ASE 20: + 0.5%

EARNINGS CALL

• Before market open

Travelers (TRV) misses by $0.15, beats on revs
Reports Q3 (Sep) earnings of $0.79 per share, $0.15 worse than the Capital IQ Consensus Estimate of $0.94; revenues rose 3.4% year/year to $5.61 bln vs the $5.52 bln consensus. Net written premiums of $5.672 billion in the current quarter increased 4 percent from the prior year quarter, reflecting continued renewal price gains across all three business segments and Business Insurance customers purchasing more insurance. Retention rates remained high across all three business segments.

U.S. Bancorp (USB) beats by $0.02, beats on revs
Reports Q3 (Sep) earnings of $0.64 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.62; revenues rose 4.5% year/year to $4.8 bln vs the $4.74 bln consensus. Reports new lending activity of $59.5 billion (12.9% increase on a linked quarter basis) during the third quarter; Growth in average total loans of 5.0% (4.5% excluding acquisitions) over the third quarter of 2010. Net charge-offs declined 10.4% from the second quarter of 2011 Nonperforming assets (excluding covered assets) decreased 6.9% from the second quarter of 2011 (6.7% including covered assets). Allowance to nonperforming assets (excluding covered assets) was 166% at September 30, 2011, compared with 159% at June 30, 2011, and 153% at September 30, 2010. Co's Tier 1 common equity ratio of 8.5% Tier 1 capital ratio of 10.8%; Total risk based capital ratio of 13.5%; Tier 1 common ratio of 8.2% under anticipated Basel III guidelines; Additionally, co repurchased 13 mln shares of common stock during the current quarter.

United Tech (UTX) reports Q3, beats on revs; raises FY11 EPS, in-line, reaffirms FY11 revs guidance
Reports Q3 (Sep) earnings of $1.47 per share, including items, may not compare to the Capital IQ Consensus Estimate of $1.44; revenues rose 8.7% year/year to $14.8 bln vs the $14.54 bln consensus, including 6 points of organic growth and 4 points of favorable foreign currency translation. Cash flow from operations was $2.0 billion and capital expenditures were $215 million in the quarter. Co issues guidance for FY11, raises EPS to $5.47 from $5.35-5.45 vs. $5.46 Capital IQ Consensus Estimate; reaffirms FY11 revs of $58 bln vs. $58.31 bln Capital IQ Consensus Estimate. New equipment orders at Otis were up 19 percent over the year ago third quarter including favorable foreign exchange of 7 percentage points. Commercial HVAC new equipment orders at Carrier grew 11 percent including favorable foreign exchange of 4 points. Commercial spares orders at Hamilton Sundstrand were up 24 percent and at Pratt & Whitney's large engine business grew 3 percent, after growing 35 percent in the year ago third quarter.

Morgan Stanley (MS) reports Q3 (Sep) results, DVA adds $3.4 bln in revs and $1.12 to EPS
Reports Q3 (Sep) earnings of $1.14 per share, may not be comparable to the Capital IQ Consensus Estimate of $0.32; revenues rose 45.6% year/year to $9.9 bln vs the $7.25 bln consensus. Results included revenues of $3.4 Billion, or $1.12 per diluted share, from the widening of Morgan Stanley's debt-related credit spreads.

The Firm's compensation expense for the current quarter was $3.7 billion with a compensation to net revenue ratio of 37%. This ratio was affected by DVA which increased net revenues in the current period. Non-compensation expenses of $2.5 billion reflected higher levels of business activity and costs associated with the U.K. bank levy.

Investment Banking revenues were $864 million. Sales and trading net revenues were $5.4 billion and included positive revenue of $3.4 billion related to DVA. Global Wealth Management Group delivered net revenues of $3.3 billion, with net new assets for the quarter of $15.5 billion, a record since the inception of the Morgan Stanley Smith Barney joint venture (MSSB), and net flows in fee-based accounts of $10.1 billion. Morgan Stanley successfully completed its inaugural offering of JPY 46.5 billion (approximately $600 million) Uridashi bonds leveraging the strength of our partnership with Mitsubishi UFJ Financial Group, Inc. (MUFG).

Advisory revenues of $413 million increased 11% from a year ago reflecting higher levels of completed activity. Underwriting revenues of $451 million declined 29% from last year's third quarter on lower levels of market activity. Equity underwriting revenues of $239 million declined 8% from a year ago. Fixed income underwriting revenues of $212 million declined 44% from last year's third quarter primarily reflecting lower high yield and investment grade bond issuance volumes.

Fixed Income and Commodities sales and trading net revenues were $3.9 billion and included positive revenue of $2.8 billion related to DVA. Equity sales and trading net revenues were $2.0 billion and included positive revenue of $620 million related to DVA. Results in the cash and derivatives businesses reflected high levels of client activity and market volumes. Other sales and trading net losses of $443 million, primarily reflected writedowns associated with corporate lending activity. Morgan Stanley's average trading Value-at-Risk measured at the 95% confidence level was $130 million compared with $145 million in the second quarter of 2011 and $142 million in the third quarter of the prior year.

Freeport-McMoRan (FCX) beats by $0.03, beats on revs
Reports Q3 (Sep) earnings of $1.10 per share, $0.03 better than the Capital IQ Consensus Estimate of $1.07; revenues rose 0.8% year/year to $5.2 bln vs the $4.76 bln consensus. Consolidated sales from mines for third-quarter 2011 totaled 947 mln pounds of copper, 409 thousand ounces of gold and 19 mln pounds of molybdenum, compared with 1.1 bln pounds of copper, 497 thousand ounces of gold and 17 mln pounds of molybdenum for third-quarter 2010. Consolidated unit net cash costs (net of by-product credits) averaged $0.80 per pound of copper for third-quarter 2011, compared with $0.82 per pound for third-quarter 2010. Based on current 2011 sales volume and cost estimates and assuming average prices of $1,600 per ounce for gold and $14 per pound for molybdenum for fourth-quarter 2011, consolidated unit net cash costs (net of by-product credits) are estimated to average $0.95 per pound of copper for the year 2011. Q3 OCF $1.8 bln vs. $1.3 bln YoY.

• After market close

American Express (AXP) beats by $0.09, reports revs in-line
Reports Q3 (Sep) earnings of $1.03 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus Estimate of $0.94; revenues rose 8.6% year/year to $7.57 bln vs the $7.58 bln consensus. The increase largely reflects continued strong growth in cardmember spending across all business segments and net interest income that was level with a year ago, following several quarters of declines. Consolidated provisions for losses totaled $249 million compared to $373 million in the year-ago period reflecting continued improvement in credit quality. Overall expense growth slowed significantly from the growth rates of recent quarters. Consolidated expenses totaled $5.6 billion, up 13 percent from $5.0 billion a year ago, reflecting higher rewards costs, which were partially offset by lower marketing and promotion expenses. ROE +28%. "Cardmember spending was strong during the period, growing 16 percent to record levels and again outpacing most of the major bank card issuers. Credit quality continued to be excellent, with key lending metrics improving from the historically strong levels we achieved earlier in the year. The growth in operating expenses moderated this quarter, as planned, and we expect to further slow that growth towards the end of this year and into next."

Western Digital (WD) beats by $0.13, beats on revs
Reports Q1 (Sep) earnings of $1.10 per share, excluding expenses of $21 mln associated with the planned acquisition of Hitachi Global Storage Technologies announced Mar. 7, 2011 and unrelated litigation accruals, $0.13 better than the Capital IQ Consensus Estimate of $0.97; revenues rose 12.4% year/year to $2.69 bln vs the $2.49 bln consensus.

eBay (EBAY) reports EPS in-line, beats on revs; guides Q4 EPS in-line, revs in-line; guides FY11 EPS in-line, revs in-line
Reports Q3 (Sep) earnings of $0.48 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.48; revenues rose 31.9% year/year to $2.97 bln vs the $2.91 bln consensus. Co issues in-line guidance for Q4, sees EPS of $0.55-0.58, excluding non-recurring items, vs. $0.58 Capital IQ Consensus Estimate; sees Q4 revs of $3.20-3.35 vs. $3.31 bln Capital IQ Consensus Estimate. Co issues in-line guidance for FY11, sees EPS of $1.98-2.01, excluding non-recurring items, vs. $2.00 Capital IQ Consensus Estimate; sees FY11 revs of $11500-11600 vs. $11.52 bln Capital IQ Consensus Estimate.

IN OTHER NEWS ...

• BOE minutes released; MPC voted 9-0 to increase asset purchases by GBP75 bln
For details of this release, click here (http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2011/mpc1109.pdf)

• Fed's Beige Book
Economic activity continued to expand in Sep, although many Districts described the pace of growth as "modest" or "slight" and contacts generally noted weaker or less certain outlooks for business conditions

Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to expand in September, although many Districts described the pace of growth as "modest" or "slight" and contacts generally noted weaker or less certain outlooks for business conditions. The reports suggest that consumer spending was up slightly in most Districts, with auto sales and tourism leading the way in several of them. Business spending increased somewhat, particularly for construction and mining equipment and auto dealer inventories, but many Districts noted restraint in hiring and capital spending plans. By sector, manufacturing and transportation activity was reported to have increased on balance. A few Districts also reported slight improvements in construction and real estate activity; nonetheless, overall conditions for both residential and commercial real estate remained weak. Districts reporting on nonfinancial services cited mixed results with activity varying widely by industry. Loan demand by and large moved lower, with the exception of an increase in mortgage refinancing in many Districts. Crop conditions at harvest were generally less favorable than a year ago. In contrast, energy and mining activity continued to strengthen in several Districts, with the exception of some storm-related slowdowns in the Gulf of Mexico. Cost pressures eased in the majority of Districts, though there was some further pass-through of earlier increases to downstream prices. Wage pressures remained subdued outside of a few exceptions in which firms noted having difficulty finding appropriately skilled workers.
See full report here (http://www.federalreserve.gov/FOMC/BeigeBook/2011/20111019/fullreport20111019.pdf).


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TECHNICAL UPDATE - Wednesday 19 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,504.62 -72.43 (-0.63%)
Volume: 169,575,997 from 201,407,891 the previous day
Range: 11,469.17 – 11,633.70

http://img20.imageshack.us/img20/1311/dowys.jpg (http://imageshack.us/photo/my-images/20/dowys.jpg/)

As ridiculous as the close was, one thing was clear - 11,650, 2,665 and 1,230 are going to be tough to break. NASDAQ now sits 19.22 points below the year's open of 2,767.65 while DOW, as previously mentioned, is only 0.38 points short. There is little TA to analyze apart from those resistance levels. Get above that first and then we'll talk. For now, irrationality rules.

So, I stand corrected ... irrationality doesn't rule - 11,650, 2,665 and 1,230 dogged the bulls again. Now, do we have a Double Top?

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,604.04 -53.39 (-2.01%)
Volume: 506,352,357 from 526,087,456 the previous day
Range: 2,597.77 – 2,651.88

S&P 500 INDEX (SPX: CBOE)
1,209.88 -15.50 (-1.26%)
Volume: 776,277 from 853,336 the previous day
Range: 1,206.31 – 1,229.64


___________________________________________

MARKET INTERNALS - Wednesday 19 October, 2011 AMC

NYSE :
Lower than avg volume @ 964 mln, vs. 1177 mln
Decliners outpaced Advancers (adv/dec): 821/2204
New lows outpaced new highs (hi/lo): 47/12

NASDAQ :
Lower than avg volume @ 1930 mln, vs. 2026 mln
Decliners outpaced Advancers (adv/dec): 618/1944
New lows outpaced new highs (hi/lo): 35/32


Advancers outpaced Decliners by an average 4.19 to 1 on Lower average volumes (-9.12%) on Tuesday (avg +1.75%).

Leadership was impressive and volumes on the benchmarks indices did improve, although most of it was from the big hitters on earnings calls. The broader market volumes, however, were lower across the board. The price-to-volumes divergence continues, albeit at a lesser divergence.

Decliners outpaced Advancers by an average 2.90 to 1 on lower average volumes (-9.65%) on Wednesday (avg -1.30%).

Average volumes were very weak for the first four hours but after the Beige Book release, volumes jumped above average. Although the session ended with lower average volumes, it was an impressive showing from the bears who only needed two hours to bring up the activity and volumes. The TRIN and the VIX (on intraday charts) will make any bear proud.

http://img717.imageshack.us/img717/6278/intw.jpg (http://imageshack.us/photo/my-images/717/intw.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude plunges heading into the close

It was a volatile session for crude oil, which posted a loss of 2.5% to finish at $86.11 per barrel. Crude oil rallied on the back of this morning's bearish inventory data, which showed a sizeable draw down versus expectations for a build. Futures, however, reversed off of highs at $89.69 and proceeded to trade back to the flat line, where they remained heading into the last 20 minutes of pit trade. Futures proceeded to fall on the back of the headlines pertaining to the euro zone and the role of the ECB, shedding approximately 2 points to trade to lows at $86.45 and ended just above that low.

Natural gas posted a gain of 1.1% to settle at $3.59 per MMBtu. Futures rallied sharply heading into afternoon trade, notching highs at $3.63. They were unable to maintain that upward move and pulled back slightly into the close. Nov heating oil ended lower by 5 cents at $2.98, while Nov RBOB gasoline shed 8 cents to finish at $2.37.

Precious metals pulled back heading into afternoon trade, after spending the majority of the morning chopping around the unchanged mark. Gold futures posted a decline of 0.4% to settle at $1647 per ounce, while silver shed 1.9% to end at $31.28 per ounce. Dec copper lost a penny to close at $3.25.

Commodities AMC on Wednesday 19 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 86.11 -2.23 (-2.52%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,647.00 -5.80 (-0.35%)

Treasuries finished with small gains in a relatively subdued session as headlines continue to swirl as to how European leaders are planning to solve the ongoing debt crisis. Maturities across the complex ended fractionally in the green as they pushed into positive territory following the Fed’s somewhat tepid assessment of the U.S. economy. Today’s Beige Book indicated "overall economic activity continued to expand in September, although many Districts described the pace of growth as "modest" or "slight." A touch of underperformance came from the long bond as the small gain for the 30-yr was unable to drop its yield into negative territory as it finished little changed at 3.169%. The 10-yr yield hit a session low of 2.134% before a small amount of late day selling ran it back up to 2.159% at the cash market close. A flatter yield curve played out as the 2-10-yr spread tightened to 188.5 bps.

Treasury Yields AMC on Wednesday 19 October, 2011:
• 2 Year Note 0.28% unch
• 5 Year Note 1.05% -0.02
• 10 Year Note 2.18% -0.01
• 30 Year Bond 3.17% unch
2/30 Spread : 289bps ( unch ) ... 2/10 Spread : 190bps ( -1 )


Status Quo. After a major rock 'n' roll session the curve remains largely unchanged, if not, a little steeper.

The bond space was as uneventful as the risk space with the only the last hour of trading providing any sort of movement. Once again, status quo as the 2 year remains unchanged for the fourth straight session.


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PREVIEW FOR THURSDAY 20 OCTOBER, 2011

Data concludes for the week on Thursday with initial and continuing claims (8:30), existing home sales, the Philly Fed, and leading indicators (10:00). The Fed will sell $8.00-9.00 bln worth of 2012-2013 maturities as part of its ‘twist.” Cleveland’s Pianalto will speak on the Midwest economy, STL’s Bullard will give opening remarks at the Fall Research Policy Conference (10:15), and Minny’s Kocherlakota will talk in front of the Minnesota Council on Economic Education (20:00).

Earnings Highlights
BMO: T, BSX, DO, LLY, NUE, NVR, PM, UNP, UAL, USG
AMC: COF, MSFT, RMBS, SNDK, SCHN, STX

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
10:00 am Existing Home Sales
10:00 am Philadelphia Fed
10:00 am Leading Indicators
10:30 am Natural Gas Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- Silver Summit Investment Conference
- MELI at MercadoLibre Investor Day
- Fed's Kocherlakota


___________________________________________

SUMMARY

Only two things will move stocks - Earnings & News ... and both of them moved the market on Tuesday in a 350 range on the DOW ... Now the DOW sits at 11,577.05 ... just 0.38 points below the year's open of 11,577.43. This is impossible. This is ridiculous. This is earnings season Q4.

Still sticking to my guns simply because I can't find anything to be cheerful about yet. Yes, I'll admit earnings have been impressive but guidance has not been encouraging going forward. Another ominous sign is Goldman's and Apple's earnings - the market has never done well in the following quarter when either of these companies have not done well. Believe it or not, I am not taking any chances and would prefer to be wrong than to assume otherwise.

Direction for Thursday 20 October, 2011; ∇ Down

2011 Daily Directional Accuracy: 113/188 (60.11%)

Conrad
10-21-2011, 04:41 AM
U.S. MARKETS - Thursday 20 October, 2011 AMC

http://img193.imageshack.us/img193/5097/dexsp.jpg (http://imageshack.us/photo/my-images/193/dexsp.jpg/)

Still sticking to my guns simply because I can't find anything to be cheerful about yet. Yes, I'll admit earnings have been impressive but guidance has not been encouraging going forward. Another ominous sign is Goldman's and Apple's earnings - the market has never done well in the following quarter when either of these companies have not done well. Believe it or not, I am not taking any chances and would prefer to be wrong than to assume otherwise.

Direction for Thursday 20 October, 2011; ∇ Down

What does the market want? You give it good earnings, and it doesn't go up. You give it a continuous barrage of recessionary news from Europe and Bernanke's "Great Recession" and it won't go down. You throw all sorts of economic data at it and it won't budge. You kill Gaddafi and it won't go either way. Eight straight sessions stuck within a range (DOW 11,400 - 11,650) and not keen to make a move for any reason. What will it take to get this market moving again because it obviously doesn't want to go anywhere for any reason.


___________________________________________

MARKET SUMMARY - Thursday 20 October, 2011


BRIEFING.COM - Thursday 20 October, 2011 AMC
Daily Sector Wrap: Mixed Finish

Movements in the stock market today were closely correlated with comments about debt talks in the eurozone, even if headlines suggested that officials there are doing little more that paying lip service to the topic.

The major equity averages spent the first part of the session chopping along listlessly before participants were prompted to send stocks lower. Their efforts came in response to reports about the possibility that an EU Summit this coming weekend could be postponed. Any delay would only underscore the lack of progress in eurozone debt talks.

However, word that leaders of France and Germany will meet in coming days began to bring buyers back into the fold. That headline came right about the time that the S&P 500 was able to find technical support just below the psychologically-significant 1200 line.

Financials emerged as leaders, but the broad market was initially slow to follow the sector's lead. Financials finished near their session high with a 1.8% gain. Regional lender Fifth Third (FITB 11.63, +0.97) was especially strong on the back of a better-than-expected quarterly report. In contrast, American Express (AXP 46.19, +0.06) only found higher ground in the final minutes, despite an upside earnings surprise of its own.

eBay (EBAY 32.15, -1.03) matched the consensus earnings estimate, but its shares still traded sharply lower, making the stock one of the worst performers in the Nasdaq, which lagged its counterparts for the second straight session. Tech was the real source of weakness for the Nasdaq, though. The sector logged a 0.5% loss for the session, adding to the 2% decline that it suffered yesterday.

There was deluge of data today, including initial jobless claims for the week ended October 15. Claims totaled 403,000, which is spot on with what had been expected, among economists polled by Briefing.com. The latest tally is also little changed from the upwardly revised count of 409,000 claims recorded for the prior week.

The latest Philadelphia Fed Survey improved to 8.7 for October from the -17.5 that was posted in September. The October reading had been expected to remain negative, but improve to merely -8.8.

Existing home sales set an annualized rate in September of 4.91 million units, which is only slightly less than the pace of 4.92 million units that had been generally anticipated among economists surveyed by Briefing.com. The pace recorded for September marked a slowdown from the rate of 5.06 million units posted for the prior month.

Leading Indicators increased by 0.2%, which narrowly missed the 0.3% increase that had been broadly expected.

Sector Leaders/Laggards for Thursday 20 October, 2011 AMC
Leading Sectors: Financials +1.8%, Materials +1.0%, Energy +0.7%, Utilities +0.6%, Industrials +0.6%, Consumer Staples +0.5%, Consumer Discretionary +0.4%, Health Care +0.1%.
Leading Industries/ETFs : Reg Bank RKH -2.9%, Solar- TAN +1.9%, Insurance KIE +1.8%, Bank KBE -3.9%, financials- KCE +1.6%, 1.5 transportation- IYT +1.6%, CRB Index ag. & food futures- JJG +1.5%, homebuilders- XHB +1.5%.

Lagging Sectors: Telecom -0.1%, Tech -0.5%.
Lagging Industries/ETFs : Copper- JJC -4.3%, base metals- DBB -3.6%, heating oil- UHN -1.8%, Silver, SLV -1.7%, Semis- SMH -1.4%, Gold- GLD -1.3.

Other Market Moving Factors:
• Reports suggest eurozone officials remain challenged in EFSF discussions; although France and Germany officials will meet, a delay in the EU Summit isn't improbable
• Latest round of earnings reports generally exceeds expectations
• Weekly jobless claims hold steady narrowly above 400,000, as expected
• Philly Fed Survey stages unexpectedly strong rise

Companies trading higher in after hours in reaction to earnings: SYNA +8.3%, ACTG +6.5%, IBKR +5.9%, CMG +2.8%, RMBS +1.9%, COF +0.3%.

Companies trading lower in after hours in reaction to earnings: HITT -11.8%, TPX -7.2%, APKT -6.9%, INFA -4.4%, RRR -2.3%, MSFT -0.5%.


___________________________________________

ECONOMIC COMMENTARY - Thursday 20 October, 2011

• Australia NAB Business Conf -4 vs 5 in Q2

• Japan Economic Data

- Aug Leading Index 104.3 vs 103.8 in Jul
- Aug Coincident Index 107.6 vs 107.4 in Jul

• Germany Economic Data

- Sep PPI +5.5% vs +5.5% in Sep 2010
- Sep PPI +0.3% vs -0.3% in Aug

• Switzerland Economic Data

- Sep Trade Balance (in CHF) 1.858 bln vs revised 0.818 bln in Aug (prior 0.768 bln)
- Exports +3.4% vs revised -6.9% in Aug (prior -7.0%)
- Imports +1.3% vs revised -0.3% in Aug (prior +0.9%)

• UK Sep Retail Sales +0.6% vs -0.1% in Sep 2010

• U.S. Economic Data

- Initial Claims 403K vs 403K; Prior revised to 409K from 404K
- Continuing Claims rises to 3.719 mln from 3.694 mln
- September Leading Indicators +0.2% vs +0.3%
- September Existing Home Sales 4.91 mln vs 4.92 mln; Prior revised to 5.06 mln from 5.03 mln
- October Philadelphia Fed 8.7 vs -8.8; September -17.5

Initial Claims Continue to Move Sideways, Remain Within our "Recovery Zone"
The initial claims level declined from an upwardly revised 409,000 (from 404,000) for the week ending October 8 to 403,000 for the week ending October 15. That was exactly what the Briefing.com consensus expected. There were no special factors affecting the claims data. For the past four weeks, the initial claims level has remained below the upper bound (410,000) of our "Recovery Zone." At this level, nonfarm payroll growth in excess of the 100,000 needed to support normal labor force growth is expected. The continuing claims level increased from an upwardly revised 3.694 mln (from 3.670 mln) for the week ending October 1 to 3.719 mln for the week ending October 8. The consensus expected the continuing claims level to fall to 3.690 mln.

Home Sales Fall in September
Existing home sales fell from an upwardly revised 5.06 mln (from 5.03 mln) in August to 4.91 mln in September and were in-line with the Briefing.com consensus estimate. The drop in sales was due partially to the lowering of conventional loan limits. Conventional loan limits had been boosted in an effort to lower interest rates for homes that had been previously classified as needing jumbo loans. The increased conforming loan limit, however, expired at the end of September. Many buyers were concerned that they would not close on their home before the limits expired. This caused a surge in sales in August that tallied off in September. With the lower limits now active, sales in areas that contain a large number of relatively expensive homes -- such as California -- will most likely remain depressed. The adverse weather conditions from Hurricane Irene were influential in boosting sales in the Northeast. Many buyers were unable to close in August, which pushed sales into September. This is an artificial increase and will weaken in October. Even without these extraordinary factors, the housing sector isn't showing any signs of positive traction. With the exception of the positive boost from Hurricane Irene in the Northeast, every U.S. region saw sales decline. Contract cancelations, mostly due to bank required appraisals being lower than the agreed upon price, were reported by 18% of NAR members in September. That was unchanged from August levels but is more than twice as high as normal selling periods. Inventory levels increased modestly from 8.4 months in August to 8.5 months in September. The median home price fell 3.5% y/y to $165,400.

Manufacturing Growth in the Philly Region Unexpectedly Expands
The Philadelphia Fed's Business Outlook returned to positive territory in October as the index increased from -17.5 in September to 8.7. The Briefing.com consensus expected the index to improve from September, but to remain negative at -8.8. Solid gains were sen in just about every area of the report. New orders reentered an expansion cycle as the respective index increased from -11.3 in September to 7.8 in October. The gain in new orders put upward pressure on production. The business shipments index rebounded from -22.8 in September to 13.6 in October. Unfilled orders also returned to positive territory, increasing from -10.4 in September to 3.4 in October. An expansion in unfilled orders will help keep shipments positive in the event of weaker new orders next month. The number of employees declined slightly, but remained in an expansion mode. The number of employees index fell from 5.8 in October to 1.4 in September. Those workers, however, worked a longer workweek as the respective index increased from -13.7 in September to 3.1 in October.

Leading Indicators Remain Positive, No Sign of an Impending Recession
The Conference Board's Leading Economic Indicators Index increased 0.2% in September after a 0.3% increase in August. That was the weakest gain in the leading indicators report since it declined 0.3% in April. The Briefing.com consensus expected the index to increase 0.3%. Since seven of the 10 components are known prior to the release, the difference between the consensus and the actual data normally comes from the three estimated components: manufacturing orders of consumer goods, manufacturing orders of business capital, and M2 money supply. In this case, the Conference Board expects orders of nondefense capital goods to decline substantially, which caused a -0.04 percentage point reduction in the leading indicators. Orders for consumer goods and M2 money supply were within normal ranges.

• Natural Gas Inventory Data

Natural gas inventory showed a build of 103 bcf vs expectations for a build of 110 bcf.
Working gas in storage was 3,624 Bcf as of Friday, October 14, 2011, according to EIA estimates. This represents a net increase of 103 Bcf from the previous week. Stocks were 46 Bcf less than last year at this time and 113 Bcf above the 5-year average of 3,511 Bcf. In the East Region, stocks were 5 Bcf above the 5-year average following net injections of 58 Bcf. Stocks in the Producing Region were 90 Bcf above the 5-year average of 1,050 Bcf after a net injection of 36 Bcf. Stocks in the West Region were 18 Bcf above the 5-year average after a net addition of 9 Bcf. At 3,624 Bcf, total working gas is within the 5-year historical range.

• Asian Markets Close; Nikkei -1.0%, Hang Seng -1.8%, Shanghai -1.9%, Sensex -0.9%
It was a sea of red across Asia as all of the major averages closed in negative territory. Weakness came following yesterday's tepid Beige Book from the Fed and more mixed headlines from an indecisive Eurozone. China's Shanghai Composite was among the worst performers and finished at a 2.5-yr low. In an expected move, the Philippine Central Bank held its overnight borrowing rate steady at 4.50%. There was no notable data released in the region. Looking at the currencies...USDCNY strengthened to 6.3836 while USDJPY is stronger at 77.04.

In Japan, the Nikkei closed -1.0% as automakers continue to struggle as a result of the flooding in Thailand. Japan's Automobile Manufacturers Association said that the flooding has resulted in a production loss of roughly 6000 units per day. Camera maker Olympus tumbled another 4.9% and is down 47% since the removal of its CEO.

In Hong Kong, the Hang Seng finished -1.8% as companies with exposure to Europe saw selling pressure. Retailer Esprit plunged 7.8% while exporter Li & Fung fell 2.8%. Casino-related names were under pressure after Wynn Macau disappointed after failing to announce a special dividend. The stock dropped 3.7%.

In China, the Shanghai Composite settled -1.9% as commodity stocks were hit hard. Jiangxi Copper fell another 4.4% as the red metal has slid close to 9.0% over the past couple of sessions. Property stocks remained weak with Gemdale Corp. shedding 3.1%.

In India, the Sensex closed -0.9% as financials were hit in anticipation of another rate hike by the Reserve Bank of India when it opines next week. ICICI Bank and Housing Development Finance Corp. were the worst performers in the space, closing down 2.9% and 4.3% respectively.

• European Markets Closing Prices
UK's FTSE: -1.2%
Germany's DAX: -2.3%
France's CAC: -2.2%
Spain's IBEX: -2.7%
Portugal's PSI: -1.3%
Italy's MIB Index: -3.6%
Irish Ovrl Index: -0.6%
Greece FTSE/ASE 20: + 1.6%

EARNINGS CALL

• Before market open

Diamond Offshore (DO) beats by $0.38, beats on revs; declares special dividend of $0.75 per share
Reports Q3 (Sep) earnings of $1.85 per share, $0.38 better than the Capital IQ Consensus Estimate of $1.47; revenues rose 9.8% year/year to $878.2 mln vs the $819.3 mln consensus. Additionally, co declares a special quarterly cash dividend of $0.75 per share of common stock

Eli Lilly (LLY) beats by $0.01, beats on revs; raises low end of FY11 EPS, in-line; reaffirms FY11 rev
Reports Q3 (Sep) earnings of $1.13 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $1.12; revenues rose 8.7% year/year to $6.15 bln vs the $6.05 bln consensus. Co issues in-line guidance for FY11, sees EPS of $4.30-4.35, excluding non-recurring items, vs. $4.33 Capital IQ Consensus Estimate and $4.25-4.35 previously. The co still expects total revenue to grow in the mid-single digits (cons: +3.9%). The co still anticipates that the impact of U.S. health care reform will lower 2011 revenue by $400 million to $500 million. 2011 revenue guidance assumes rapid and severe erosion of global Zyprexa sales after patent expirations in major markets, including the U.S. starting in October 2011, and the continued erosion of U.S. Gemzar sales. The co expects these reductions in revenue to be offset by sales growth of Alimta, Cialis, Cymbalta, Effient, Humalog and animal health products. The company still anticipates that gross margin as a percent of revenue will decline between 2 and 3 percentage points.

Philip Morris International (PM) beats by $0.13, beats on revs; raises FY11 EPS
Reports Q3 (Sep) earnings of $1.37 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus Estimate of $1.24; revenues (ex-excise tax) rose 26.4% year/year to $8.36 bln vs the $7.53 bln consensus. Co issues upside guidance for FY11, raises EPS to $4.75-4.80, excluding non-recurring items, from $4.70-4.80 vs. $4.75 Capital IQ Consensus Estimate. During the third quarter, PMI spent $1.4 billion to repurchase 21.2 million shares of its common stock, as shown in the table below.

Boston Scientific (BSX) beats by $0.06, misses on revs; guides Q4 EPS above consensus, revs below consensus; repurchased 30 mln shares
Reports Q3 (Sep) earnings of $0.15 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $0.09; revenues fell 2.2% year/year to $1.87 bln vs the $1.91 bln consensus. Co issues mixed guidance for Q4, sees EPS of $0.13-0.16 vs. $0.10 Capital IQ Consensus Estimate; sees Q4 revs of $1.85-1.95 bln vs. $1.97 bln Capital IQ Consensus Estimate. Compared to sales for the fourth quarter of 2010, this range assumes a $64 million negative impact from the divestiture of the Neurovascular business. Recent acquisitions are not expected to contribute significantly to fourth quarter sales. Recent acquisitions are expected to dilute fourth quarter 2011 adjusted earnings by ~$0.01 per share as compared to the prior year, and the divestiture of the Neurovascular business is expected to dilute fourth quarter 2011 adjusted earnings by $0.01 per share. Co also announced that they invested $192 mln to purchase 30 mln shares under the co's estimated $1.25 bln combined share repurchase authorizations.

AT&T (T) reports EPS in-line, revs in-line
Reports Q3 (Sep) earnings of $0.61 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.61; revenues fell 0.3% year/year to $31.48 bln vs the $31.57 bln consensus. Compared with results for the third quarter of 2010, AT&T's operating income margin was 19.8 percent, compared to 17.2 percent; operating expenses were $25.2 billion versus $26.2 billion; and operating income was $6.2 billion, up from $5.4 billion. AT&T posted a net gain in total wireless subscribers of 2.1 million, to reach 100.7 million in service. This included gains in every customer category. Net adds for the quarter include postpaid net adds of 319,000. Total churn declined to 1.28 percent versus 1.32 percent in the third quarter of 2010 and 1.43 percent in the second quarter of 2011. Postpaid churn was 1.15 percent, compared to 1.14 percent in the year-ago third quarter and 1.15 percent in the second quarter of 2011. Total wireless revenues, which include equipment sales, were up 2.8 percent year over year to $15.6 billion. Wireless service revenues increased 4.3 percent, to $14.3 billion, in the third quarter.

Nucor (NUE) beats by $0.04, beats on revs; guides Q4 EPS down QoQ
Reports Q3 (Sep) earnings of $0.57 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.53; revenues rose 26.9% year/year to $5.25 bln vs the $4.85 bln consensus. Co issues guidance for Q4, sees EPS of lower than Q3's $0.57 vs. $0.50 Capital IQ Consensus Estimate. "deterioration from the second quarter reflects lower steel prices and significantly lower metal margins for sheet mill products due to increases in the supply/demand imbalances from both new domestic supply and increased imports. We continue to benefit from our diversified product mix as our other steel mills delivered a solid improvement quarter over quarter. Scrap prices remained relatively high and stable in the third quarter. This price stability, combined with generally low service center inventories, has minimized volatility in order rates and pricing in our long product business. End markets such as automotive, heavy equipment, energy and general manufacturing have continued to show the most strength compared to 2010 but have shown very little improvement compared to the first half of 2011. Although we have seen only minimal improvement in non-residential construction markets and expect to see only slight improvement in demand through the end of 2011, our combined construction businesses (steel mills and downstream facilities) will continue to operate profitably. We expect further margin compression in the sheet market in the fourth quarter. We also expect a smaller compression in plate margins due to imports."

• After market close

Microsoft (MSFT) reports EPS in-line, beats on revs
Reports Q1 (Sep) earnings of $0.68 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.68; revenues rose 7.3% year/year to $17.37 bln vs the $17.19 bln consensus. The Microsoft Business Division reported $5.62 billion in first quarter revenue, an 8% increase from the prior year period which included the launch of Office 2010. The Server & Tools segment posted $4.25 billion in first quarter revenue, a 10% increase over the prior year period and the sixth consecutive quarter of double-digit revenue growth. Windows and Windows Live Division revenue was $4.87 billion, a 2% increase over the prior period, in line with the PC market. The co offers updated fiscal 2012 operating expense guidance, including Skype and the associated acquisition-related expenses, of $28.6 billion to $29.2 billion. "We saw customer demand across the breadth of our products, resulting in record first-quarter revenue and another quarter of solid EPS growth."

Seagate Tech (STX) beats by $0.03, misses on revs
Reports Q1 (Sep) earnings of $0.34 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.31; revenues rose 4.2% year/year to $2.81 bln vs the $2.9 bln consensus. Co announces the European Commission announced on October 19, 2011 that they have approved under the EU Merger Regulation, Seagate's proposed acquisition of Samsung's hard disk drive assets. The company will continue to work with other regulatory bodies to secure additional approvals in the coming weeks. Seagate believes the transaction will close by the end of calendar year 2011.

Chipotle Mexican Grill (CMG) beats by $0.06, beats on revs; raises FY11 comparable restaurant sales growth
Reports Q3 (Sep) earnings of $1.90 per share, $0.06 better than the Capital IQ Consensus Estimate of $1.84; revenues rose 24.1% year/year to $591.9 mln vs the $585.2 mln consensus. Co raises FY11 guidance; co now sees FY11 low double digit comparable restaurant sales growth for the full year, up from high single to low double digit comparable restaurant sales growth. For FY12, co sees low single digit comparable restaurant sales growth.

SanDisk (SNDK) beats by $0.13, reports revs in-line
Reports Q3 (Sep) earnings of $1.20 per share, $0.13 better than the Capital IQ Consensus Estimate of $1.07; revenues rose 14.8% year/year to $1.42 bln vs the $1.42 bln consensus. Co reports Q3 non-GAAP gross profit margin of 44.3% vs. 42-44% guidance. "We again delivered record revenue and strong profitability, driven by robust demand in our diversified end markets... Our broad portfolio of innovative storage solutions positions us exceedingly well to capitalize on our numerous growth opportunities in smart mobile devices and consumer and enterprise computing platforms."

IN OTHER NEWS ...

• Germany cuts 2012 growth forecast
See Reuters.com Article Here (http://www.reuters.com/article/2011/10/20/us-germany-forecasts-idUSTRE79J2C520111020)

• Reuters report indicates that Gaddafi died of wounds suffered in his capture
See story here (http://www.reuters.com/article/2011/10/20/us-libya-idUSTRE79F1FK20111020)


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TECHNICAL UPDATE - Thursday 20 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,541.78 +37.16 (+0.32%)
Volume: 166,099,158 from 169,575,997 the previous day
Range: 11,391.14 – 11,581.25

http://img854.imageshack.us/img854/4799/dowj.jpg (http://imageshack.us/photo/my-images/854/dowj.jpg/)

So, I stand corrected ... irrationality doesn't rule - 11,650, 2,665 and 1,230 dogged the bulls again. Now, do we have a Double Top?

Hammer on NASDAQ implying upside on Friday. Shooting Star on the VIX implying fear will decline on Friday. The opening price for the year continues to dog down the DOW while 11,400 seems to support it. This market needs a fire lit under it.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,598.62 -5.42 (-0.21%)
Volume: 517,230,519 from 506,352,357 the previous day
Range: 2,557.17 – 2,606.39

S&P 500 INDEX (SPX: CBOE)
1,215.39 +5.51 (+0.46%)
Volume: 768,757 from 776,277the previous day
Range: 1,197.34 – 1,219.53


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MARKET INTERNALS - Thursday 20 October, 2011 AMC

NYSE :
Lower than avg volume @ 958 mln, vs. 1153 mln
Advancers outpaced Decliners (adv/dec): 1800/1183
New highs outpaced new lows (hi/lo): 31/20

NASDAQ :
Higher than avg volume @ 1990 mln, vs. 1985 mln
Decliners outpaced Advancers (adv/dec): 1191/1290
New lows outpaced new highs (hi/lo): 21/46


Decliners outpaced Advancers by an average 2.90 to 1 on lower average volumes (-9.65%) on Wednesday (avg -1.30%).

Average volumes were very weak for the first four hours but after the Beige Book release, volumes jumped above average. Although the session ended with lower average volumes, it was an impressive showing from the bears who only needed two hours to bring up the activity and volumes. The TRIN and the VIX (on intraday charts) will make any bear proud.

Advancers outpaced Decliners by an average 1.21 to 1 on lower average volumes (-6.05%) on Thursday (avg +0.19%).

No way. That was not a victorious day for the bulls. Especially when they had the better part of the news and earnings. This is rubbish. Plus the bears weren't even bothering to make an effort in the second half of the session.

http://img684.imageshack.us/img684/7126/intlr.jpg (http://imageshack.us/photo/my-images/684/intlr.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Dollar strength, on euro zone concerns, pressures gold, crude

There was plenty of headline risk today for commodities as uncertainty about what exactly will happen next in the euro zone took center stage. In late-morning trade, the euro fell sharply on reports that German Ruling Coalition sources said the EU Summit will not reach a decision on EFSF leveraging. This headlined followed reports that the EU Summit might be delayed. These headlines, and numerous other, caused confusion as to what exactly was going to happen and when, and in turn pressured the euro.

Gold shed 2% to close at $1612.90 while silver ended down 2.9% at $30.25 per ounce. Both metals sold off sharply on the back of the rally in the dollar/sell-off in the euro. Gold put in lows at $1604.70, while silver broke below $30 to put in lows at $29.93. Both metals bounced modestly off those lows heading into the close. Dec copper dropped 17 cents to finish at $3.05.

Natural gas, which ended up 1.2% at $3.63 per MMBtu, surged on the back of this morning's inventory data, which showed a smaller-than-expected build. Futures jumped approximately 10 cents to session highs at $3.72, but pulled back from those highs to give a majority of gains back. Crude oil finished lower by 0.9% at $85.30 per barrel. Prices were pressured by the rally in dollar. They put in lows at $84.22, but managed to rally off those lows to end with a 0.9% decline. Nov heating oil gained 5 cents to close at $3.03, while Nov RBOB gasoline finished higher by a penny at $2.67.

Corn settled higher by 12 cents to $6.50, wheat rose 12 cents to end at $6.32, soybeans were 3 cents lower at $12.22, ethanol fell 3 cents to close at $2.56, while sugar rose 0.34% to $0.27.

Commodities AMC on Thursday 20 October, 2011:
Light Crude (NYMEX) November 11 ($US per bbl.) : 85.30 -0.81 (-0.94%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,612.90 -34.10 (-2.07%)

Treasuries ended the day with small losses during what turned out to be a volatile, headline driven session. Conflicting reports as to whether or not the EU Summit would take place this weekend as scheduled dictated today's movements as light selling across the complex forced yields to tick higher by a couple of bps. Selling caused the 5-yr yield to climb less than 2 bps to 1.057%. Early buying saw its yield touch the 1.00% mark, but support held the sellers ran it back above 1.05% into the close. Slight steepening of the yield curve occurred as a result of today’s trade as the 2-10-yr spread widened to 191.5 bps.

Treasury Yields AMC on Thursday 20 October, 2011:
• 2 Year Note 0.28% unch
• 5 Year Note 1.07% +0.02
• 10 Year Note 2.20% +0.02
• 30 Year Bond 3.19% +0.02
2/30 Spread : 291bps ( +2 ) ... 2/10 Spread : 192bps ( +2 )


The bond space was as uneventful as the risk space with the only the last hour of trading providing any sort of movement. Once again, status quo as the 2 year remains unchanged for the fourth straight session.

Status quo ... much like the risk market. Ho-hum ... waiting, waiting ...


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PREVIEW FOR FRIDAY 21 OCTOBER, 2011

There is no data on Friday. The Fed will buy $2.25-2.75 bln worth of 2019-2021 maturities through POMO. Minny’s Kocherlakota will speak at the Harvard Club of Minnesota (13).

Earnings Highlights
BMO: GE, HON, MCD, SLB, VZ

Economic Events
None Scheduled

Conferences and Shareholder/Analyst Meetings of Interest
- BlizzCon 2011
- BioCentury NewsMakers Conference
- World Economic Forum Special Meeting on Economic Growth and Job Creation in the Arab World


___________________________________________

SUMMARY

In spite of some knock-out earnings and positive economic data, it was flat, ugly and directionless. The players absolutely did not have any objectives until the Beige Book came out at 2pm. Then the market really took on some clarity.

October Expiration Friday has been bearish 7 of the last 8. With statistics like that and a stalling market in spite of dovish data and bullish earnings, I am keeping my hedge and my bearish outlook still. And I am likely to hold that view into the following week too.

With no economic data to lead the market, earnings from GE, HON, MCD and VZ will be the key driver in Friday's session ... that and more news out of Europe. Not that it matters anymore - this is fast becoming a farce and the market seems to be getting rather blase about it already. I reckon the market to looking for something else to entertain it now. You have a multiple-choice question for this;

What will move the market first?
A. America starts a war
B. Bernanke's shennanigans
C. China's capitulation
D. Depressionary affirmations
E. Europe's & Euro's demise
F. FOMC Rate Decision on 2 Nov.
G. Global financial meltdown
H. Hell freezes over

I think I'll put this up for a vote on Facebook!

Direction for Friday 21 October, 2011; ∇ Down

Tonight is Gathering Night and boy do we have a great program in store. I am all excited because we're having it at our favorite venue, Klapson's!!

Remember that we are starting at 7:30pm but registrations begin at 7:00pm. Rain or not, this show will go on!! See you all there!!

2011 Daily Directional Accuracy: 113/189 (59.79%)

Conrad
10-24-2011, 04:24 AM
U.S. MARKET RECAP - Monday 17 October, 2011 to Friday 21 October, 2011 AMC
http://img17.imageshack.us/img17/1385/dexweek.jpg (http://imageshack.us/photo/my-images/17/dexweek.jpg/)


The Monday before Expiration Friday has been up on the DOW 25 of the last 40. October 19 is the anniversary of the Crash of 1987 (DOW went down 22.6% in a single session). October Expiration Friday has been bearish 7 of the last 8 ... Earning Season starts hotting up this coming week with no less than 13 DOW components on the line and some big hitters like HON, AAPL, YHOO, HAL, SLB, WFC, LLY and SNDK. I have to concede that earnings so far has been surprising and if this keeps up especially amongst the big hitters, this could be a genuine start of a rally that could see all those prophecies (Jan Barometer, December Low, Valentine's Day Indicator, Pre-Olympic Year, President's Third Year) fulfilled by year's end.

Direction for the week Monday 17 October, 2011 to Friday 21 October, 2011; ∇ Down

Looks like we might just get that bullish close for the year ... if the earnings keep coming in on the upside and if the EU get their act together - not just about the money thing but simply on the way their news breaks - its damn sickening to get this rumors flying all around one minute after the other. If they can't even organize their press releases, how the hell are they going to organize their entire Union?


__________________________________________________ ________

Dow Jones Industrial Average - Friday 21 October, 2011 AMC
http://img849.imageshack.us/img849/2444/dexs.jpg (http://imageshack.us/photo/my-images/849/dexs.jpg/)


October Expiration Friday has been bearish 7 of the last 8. With statistics like that and a stalling market in spite of dovish data and bullish earnings, I am keeping my hedge and my bearish outlook still. And I am likely to hold that view into the following week too ... With no economic data to lead the market, earnings from GE, HON, MCD and VZ will be the key driver in Friday's session ... that and more news out of Europe. Not that it matters anymore - this is fast becoming a farce and the market seems to be getting rather blase about it already. I reckon the market will be looking for something else to entertain it now.

Direction for Friday 21 October, 2011; ∇ Down

Once again, tradition flies out the window. The big hitters did exceedingly well on their earnings calls and the market hardly gave a damn about the nonsense going on in Europe ... for now.


__________________________________________________ ________

MARKET SUMMARY - Friday 21 October, 2011


BRIEFING.COM - Friday 21 October, 2011
Daily Sector Wrap: Another Volatile Week

After another volatile week, stocks are closing the week out with a strong +1.9% gain, bringing the S&P 500 +1% vs. last Friday's close. Although earnings season picked up this week, the market remains preoccupied with Europe and the steady stream of back-and-forth headlines from various "officials" that flow out of the region. While a definitive plan remains to be seen, market participants seem to be giving policymakers the benefit of the doubt that they are making progress towards one. This weekend brings the first of two upcoming EU summits, although EU leaders have managed to lower expectations for this meeting and a plan is not expected until the follow-up summit midweek next week.

This week's swings have been heavily influenced by Europe. The markets sold off Monday and early on Tuesday, with weak Chinese data and a Goldman (GS) earnings miss weighing. However, late Tuesday stocks rallied on reports that Germany and France were looking to increase the size of the EFSF. Wednesday was less eventful, and then yesterday stocks saw another late-day rally. That strength is continuing today after reports indicated that Germany and France are on the same page with regard to a European bailout plan.

Outside of Europe, earnings remained the next most important topic of interest during the week. Overall the Q3 earnings season has gotten off to a decent start, with about 70% of companies beating EPS estimates. However, the stock reactions to the reports have been more mixed. It is reasonable to expect the percentage of companies beating expectations to decline somewhat as we progress through earnings season, as the size of companies reporting tends to decline.

Sector Leaders/Laggards for Friday 21 October, 2011
Leading Industries/ETFs : Copper- JJC +5.3%, Housing XHB +3.1%, Home construction- ITB +3.7%, Base metals- DBB +3.7%, Realty majors- ICF +3.4%, Steel- SLX +3.4%, Insurance- KIE +3.3%, Basic materials- IYM +3.0%, Oil and Gas Explorer and Production- XOP +3.0%.

Lagging Industries/ETFs : Vix- VXX -5.5%, Sugar- SGG -1.7%, Treasuries- TLT -1.1%, Dollar index- UUP -0.9%, Solar- TAN -0.6%.

Other Market Moving Factors:
• Markets ready for this weekend's EU Summit
• Dow, S&P 500 hit best levels since August 4


BRIEFING.COM - Friday 21 October, 2011
After-Hours Report: Some earnings highlights from the week include the following

Monday afternoon IBM (IBM) beat and raised EPS expectations but also reported a slight miss on the top line. The stock fell 4% on Tuesday and is down 3.5% on the week vs. a 1.2% gain in the S&P 500. Apple (AAPL) surprised the Street on Tuesday afternoon when it missed Q3 EPS estimates and issued an upside Q4 outlook. The company usually blows out estimates and gives very conservative guidance. iPhone 4 sales came up short as consumers held off for the iPhones 4S, released late last week.

Looking at the financials, Monday was a tale of two banks. Citi (C) reported a solid quarter which sent the stock 7% higher, while Wells Fargo (WFC) missed and fell 8%. On Tuesday morning, BofA (BAC) reported a noisy quarter while Goldman Sachs (GS) missed expectations and reported its second ever quarterly loss as a public company. Ironically, both stocks rallied and the financial sector led the broader market higher that day with a 4.8% gain. In general, forward estimates have come down for the money center banks, but seasonal loan growth and continued favorable loss trends have allayed some fears.

Industrial companies have further eased fears that we are on the verge of a recession. W. W. Grainger (GWW), Parker Hannifin (PH), CSX (CSX), Union Pacific (UNP) and this morning Honeywell (HON) all provided relatively upbeat outlooks.

There are hundreds of earnings reports due out next week, including results from Caterpillar (CAT), Netflix (NFLX), Amgen (AMGN), United Steel (X), UBS (UBS), F5 Networks (FFIV), Rightnow Technologies (RNOW), Broadcom (BRCM), Novellus (NVLS), Aflac (AFL), Akamai (AKAM), Triquint Semi (TQNT), Visa (V), Moody's (MCO) and Potash Corp (POT), among others. Please view our earnings calendar for a full schedule of dates/times and related expectations.


http://img16.imageshack.us/img16/7672/dexsumm.jpg (http://imageshack.us/photo/my-images/16/dexsumm.jpg/)

This week's biggest % gainers/losers
The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

• This week's top 20 % gainers
Utilities: ATLS (23.88 +25.82%)
Technology: STX (15.42 +30.68%), TKLC (9.15 +28.69%), OCZ (6.54 +23.4%), SNDA (39.18 +17.03%), NTCT (15.79 +16.45%)
Services: GLP (18.96 +24.9%), CHRS (3.54 +16.83%)
Industrial Goods: SPF (3.19 +16%)
Healthcare: HALO (8.22 +34.98%), HGSI (13.37 +20.23%), AMRS (18.46 +17.8%)
Financial: PNFP (14.82 +17.25%), BRO (21.5 +16.59%), MSB (27.55 +15.8%)
Consumer Goods: SCSS (21.57 +32.98%)
Basic Materials: EP (24.99 +27.57%), KOG (6.32 +23.44%), KOS (15.31 +21.03%), BEXP (36.54 +20.36%)

• This week's top 20 % losers
Technology: PLCM (16.51 -27.04%), APKT (30.37 -26.38%), CALX (6.82 -24.64%), CRUS (14.54 -20.63%), ONNN (6.57 -19.52%), DMD (6.14 -18.89%), BMI (28.56 -18.38%), CREE (24.67 -17.02%), SREV (12.19 -15.29%)
Services: CKP (11.96 -18.81%), APEI (32.12 -16.85%)
Industrial Goods: AIXG (13.02 -16%)
Healthcare: HSP (29.39 -22.8%)
Financial: IRE (5.7 -31.33%)
Consumer Goods: CROX (15.25 -43.46%), GMCR (67.85 -26.32%)
Basic Materials: AEM (43.84 -26.03%), JAG (4.07 -24.63%), LSG (1.28 -20.99%), NSU (4.67 -14.63%)


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ECONOMIC COMMENTARY - Friday 21 October, 2011

• Australia Economic Data

- Q3 Export Price Index +4.0% vs +6.0% in Q2
- Q3 Import Price Index 0.0% vs +0.8% in Q2

• China MNI Oct Flash Business Sentiment Survey 58.5 vs 59.8 in Sep

• New Zealand Sep Credit Card Spending +1.6% vs -1.4% in Aug

• Germany Economic Data

- Oct IFO Bus. Climate 106.4 vs revised 107.4 in Sep (prior 107.5)
- Oct Current Assessment 116.7 vs 117.9 in Sep
- Oct Expectations 97.0 vs revised 97.9 in Sep (prior 98.0)

• Asian Markets Summary
Asian markets (Nikkei UNCH, Hang Seng +0.2%, Shanghai -0.6%) saw a choppy session as traders remained cautious ahead of this weekend's European Union Summit. The Shanghai Composite fell for a fifth consecutive session and to a 2.5-year low. Miners were once again hit hard with Shangdong Gold-Mining declining 4.0%. Japanese camera maker Olympus tumbled another 6.8% as the fallout from the removal of its CEO has caused the stock to plummet 50% over the past week. Shares in Hong Kong inched up in quiet trade as traders remained optimistic heading into this weekend's critical EU meetings. Inflation data in the region ran slightly hotter than expected as both Hong Kong and Malaysia saw an uptick in prices.

• European Markets Closing Prices
UK's FTSE: + 1.9%
Germany's DAX: + 3.5%
France's CAC: + 2.8%
Spain's IBEX: + 2.8%
Portugal's PSI: + 1.1%
Italy's MIB Index: + 2.8%
Irish Ovrl Index: + 1.2%
Greece FTSE/ASE 20: + 6.2%

EARNINGS CALL

• Before market open

General Electric (GE) reports EPS in-line, beats on revs
Reports Q3 (Sep) earnings of $0.31 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.31. During the quarter, GE gave notice of redemption for the preferred stock held by Berkshire Hathaway, and subsequently redeemed the shares on October 17, 2011 for $3.3 bln. As expected, the redemption resulted in a $0.08 per share one-time impact. GAAP EPS was $0.22. Revenues were unchanged from the year-ago period at $35.37 bln (+12% ex-NBCU). Co sees FY12 operating EPS growth in the double digits vs. estimates calling for growth of 15.2% over FY11 consensus. Industrial orders grew 16% YoY, which is the fourth straight quarter of double-digit growth. GE also announced more than $3 bln in new customer wins across its Energy business during the quarter. GE's third quarter Industrial segment revenues were $23.4 bln, up 19%. GE's Industrial segments experienced double-digit revenue growth both domestically and internationally with international revenues up 25% driven by strong double-digit growth in Brazil, Russia, China, India, Canada, Mexico and the Middle East. "GE Capital executed across all of its businesses, earning $1.5 bln after tax, an increase of 79% YoY. We grew GE Capital volume to $43 bln, up 15%. GE Capital's margins remained strong at 5.4% year-to-date and the business continues to benefit from the credit cycle recovery. GE Capital continued to strengthen its capital ratios and liquidity during the quarter. GECC and GECS Tier 1 common ratios were up to 11.0% and 9.6% and we have reduced leverage across the portfolio." Total segment profit was up 15% to $4.7 bln. Margins declined from a year-ago primarily driven by Wind pricing in Energy. GE expects Industrial margins to improve sequentially in Q4. At quarter-end GE had $91 bln of consolidated cash. GE's cash position enabled the co to repurchase $1 bln of common stock during the third quarter and has enabled $3.7 bln in stock repurchases since the buyback program was restarted in 3Q10.

Honeywell (HON) reports Q3 (Sep) results, revs in-line; raises FY11 EPS above consensus, raises revs, below consensus
Reports Q3 (Sep) earnings of $1.10 per share, may not be comparable to the Capital IQ Consensus Estimate of $1.00; revenues rose 14.2% year/year to $9.3 bln vs the $9.26 bln consensus. Includes $0.04 benefit from lower tax rate; tax rate favorability expected to be offset in 4Q11 Includes $0.33 repositioning and other actions funded by the gain on sale of the divested Consumer Products Group (CPG) business ($0.23, discontinued operations) and OPEB curtailment ($0.10) in the quarter, which will better position the company for 2012 and beyond. Co issues mixed guidance for FY11, raises EPS to $4.00-4.05 from $3.85-4.00 vs. $3.94 Capital IQ Consensus Estimate; raises FY11 revs to $36.5-36.7 bln from $36.1-36.7 bln vs. $36.81 bln Capital IQ Consensus Estimate. HON had segment profit growth and margin expansion in all segments "Honeywell's strong third quarter results are a continuation of the momentum we've seen across our businesses in 2011. Our third quarter sales growth reflects a particularly robust Commercial Aerospace upcycle, with growth in both original equipment and aftermarket sales. It also highlights the company's extensive innovation pipeline and increasing presence in high growth regions in all our businesses. Our long-cycle backlog continues at near record levels, with sustained strong orders growth particularly at UOP, ACS Solutions, and Commercial Aerospace. Further, our short-cycle businesses, such as Turbo Technologies, Advanced Materials, and ACS Products are performing well overall. Despite signals of slower economic growth, we expect positive organic growth to continue the rest of this year and into 2012."

Verizon (VZ) reports EPS in-line, revs in-line; reaffirms FY11 guidance
Reports Q3 (Sep) earnings of $0.56 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.56; revenues rose 5.4% year/year to $27.91 bln vs the $27.89 bln consensus. Co reaffirms guidance for FY11, sees EPS of +5-8% to ~$2.18-2.25 vs. $2.21 Capital IQ Consensus Estimate, with comp rev +4-8%, not comparable to +3.9% as reported rev growth consensus. Wireless: Service revenues in third-quarter 2011 totaled $15.0 bln, up 6.1% YoY. Data revenues were $6.1 bln, up more than $1.0 bln or 20.5 percent year over year, and represent 40.6 percent of all service revenues. Total revenues were $17.7 bln, up 9.1% YoY. Retail postpaid ARPU grew 2.4% YoY, to $54.89. Retail postpaid data ARPU increased to $22.22, up 15.7 percent year over year. Retail service ARPU also grew 2.4 percent, to $53.21. Verizon Wireless added 1.3 mln total connections in third-quarter 2011, including 882,000 retail postpaid customers, and 367,000 wholesale and other connections. These additions exclude acquisitions and adjustments. At the end of the third quarter, the company had 107.7 mln total connections, an increase of 6.5 percent year over year, consisting of 90.7 mln retail customers and 17.0 mln wholesale and other connections. At the end of the third quarter, smartphones accounted for 39 percent of the Verizon Wireless retail postpaid customer phone base, up from 36 percent at the end of second-quarter 2011. Retail postpaid churn was 0.94 percent in third-quarter 2011, an improvement of 13 bps YoY. Total retail churn was 1.26 percent, an improvement of 17 bps YoY.

McDonald's (MCD) beats by $0.02, beats on revs; guides global Oct comps +4-5%
Reports Q3 (Sep) earnings of $1.45 per share, $0.02 better than the Capital IQ Consensus Estimate of $1.43; revenues rose 13.7% year/year to $7.17 bln vs the $7.04 bln consensus. Global comparable sales increased 5.0%, with the U.S. up 4.4%, Europe up 4.9% and Asia/Pacific, Middle East and Africa up 3.4% Consolidated operating income increased 14% (8% in constant currencies). In Europe had s 15% (6% in constant currencies) rise in operating income. France, Russia, Germany and the U.K. led the segment's sales and operating income growth. Asia/Pacific, Middle East and Africa (APMEA) generated positive comparable sales and guest count growth across most markets, somewhat offset by Japan, against robust prior year results. For the quarter, APMEA's operating income grew 26% (15% in constant currencies) as emphasis on daypart value offerings, unique menu options and customer conveniences continue to fuel the segment's results. Co sees Oct comps +4-5%.


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TECHNICAL UPDATE - Friday 21 October, 2011 - AMC


Hammer on NASDAQ implying upside on Friday. Shooting Star on the VIX implying fear will decline on Friday. The opening price for the year continues to dog down the DOW while 11,400 seems to support it. This market needs a fire lit under it.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img812.imageshack.us/img812/9739/dowti.jpg (http://imageshack.us/photo/my-images/812/dowti.jpg/)
11,808.79 +267.01 (+2.31%)
Volume: 264,002,007 from 166,099,158 the previous day
Range: 11,542.84 – 11,812.46

Four weekly (candle) sessions straight up and a Hanging Man at the top of this trend suggesting a pause or stall in the coming week.
Resistance 2: 12,000
Resistance 1: 11,900
Support 1: 11,650
Support 2: 11,577

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img233.imageshack.us/img233/5944/ndx.jpg (http://imageshack.us/photo/my-images/233/ndx.jpg/)
2,637.46 +38.84 (+1.49%)
Volume: 621,652,853 from 517,230,519 the previous day
Range: 2,611.11 – 2,646.92

NASDAQ is still negative for the year and not looking strong enough for a break out to the upside yet. The good news is that with six sessions left for the month, the tech heavy index is wearing a Bullish Engulfing Pattern on monthly candles. A close like this bodes well for the coming months.
Resistance 2: 2,675
Resistance 1: 2,650
Support 1: 2,610
Support 2: 2,580

S&P 500 INDEX (SPX: CBOE)
http://img231.imageshack.us/img231/4705/spxj.jpg (http://imageshack.us/photo/my-images/231/spxj.jpg/)
1,238.25 +22.86 (+1.88%)
Volume: 1,039,907 from 768,757 the previous day
Range: 1,215.39 – 1,239.03

Hanging Man on weeklies implying a pause to the uptrend in the coming week.
Resistance 2: 1,265
Resistance 1: 1,250
Support 1: 1,230 - 1,225
Support 2: 1,210 - 1,205


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MARKET INTERNALS - Friday 21 October, 2011

NYSE :
Higher than avg volume @ 1190 mln, vs. 1140 mln
Advancers outpaced Decliners (adv/dec): 2628/392
New highs outpaced new lows (hi/lo): 60/9

NASDAQ :
Lower than avg volume @ 1950 mln, vs. 1985 mln
Advancers outpaced Decliners (adv/dec): 1953/561
New highs outpaced new lows (hi/lo): 39/24


Advancers outpaced Decliners by an average 1.21 to 1 on lower average volumes (-6.05%) on Thursday (avg +0.19%).

No way. That was not a victorious day for the bulls. Especially when they had the better part of the news and earnings. This is rubbish. Plus the bears weren't even bothering to make an effort in the second half of the session.

Advancers outpaced Decliners by an average 4.81 to 1 on higher volumes (+0.48%) on Friday (avg +1.89%).

That's more like it. That's the kind of bullish commitment I need to convince me that there is indeed some hope to close out the year in the back. Follow through on Monday will confirm a return to the upside if volumes and earnings stay on the dovish track.

http://img23.imageshack.us/img23/6033/intb.jpg (http://imageshack.us/photo/my-images/23/intb.jpg/)


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COMMODITIES & BONDS - Summary for Friday 21 October, 2011

Commodities End Higher on Weak Dollar Index - from Briefing.com

Commodities traded higher today, largely on weakness in the dollar index. The index fell as low as 76.25 and is currently just above that level.

Crude oil futures lost steam after hitting its session high of $88.89/barrel. It continued to trade lower before consolidating in afternoon activity, but did finish the day with notable gains; up $1.39 to $87.46/barrel. Natural gas fell as low as $3.55/MMBtu in today's action, shortly after floor trading began, but trended higher for the rest of today's session, ending 1.4 cents higher at $3.64/MMBtu. Nov heating oil fell .51 cents to close at $3.025, while Nov RBOB gasoline finished up 1.05 cents at $2.686.

Precious metals were higher all session with gold touching as high as $1649.50/oz and silver rose to a session high of $31.51/oz. By the end of the session, gold was up $23.30 to $1636.20/oz, while silver ended $0.90 higher at $31.18/oz. Dec copper surged 16.3 cents to close at $3.22.

Commodities AMC on Friday 21 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 87.40 +1.33 (+1.55%)
Natural Gas (NYMEX) November 11 ($US per mmbtu.) : 3.63 -0.001 (-0.03%)
Unleaded Gas (NYMEX) November 11 ($US per gal.) : 2.68 +0.0091 (+0.34%)

Gold (NYMEX) December 11 ($US per Troy oz.) : 1,636.10 +23.20 (+1.44%)
Silver (NYMEX) December 11 ($US per Troy oz.) : 31.19 +0.912 (+3.01%)
Copper (NYMEX) December 11 ($US per lb.) : 3.22 +0.1655 (+5.41%)

Corn (CBT) December 11 (cents per bu.) : 649.25 -0.25 (-0.04%)
Soyabeans (CBT) January 11 (cents per bu.) : 1,220.75 -9.75 (-0.79%)
Wheat (CBT) December 11 (cents per bu.) : 632.00 +1.25 (+0.20%)

Cocoa (NYMEX) December 11 ($ per metric ton) : 2,566.00 +4.00 (+0.16%)
Coffee (NYMEX) December 11 (cents per pound) : 244.45 -0.40 (-0.16%)
Cotton (NYMEX) December 11 (cents per pound) : 97.10 +0.24 (+0.25%)
Sugar #11 (NYMEX) March 11 (cents per pound) : 26.48 -0.32 (-1.19%)

BONDS - Weekly Summary for Monday 17 October, 2011 to Friday 21 October, 2011
Quiet: 10-yr: -04/32..2.206%..USD/JPY: 76.14..EUR/USD: 1.3871

Treasuries ended the week with a quiet session on Friday as traders prepared for this weekend's EU Summit. A flat trade on Friday caused 2-, 3-, 5-, and 7-yr yields to settle little changed on the week while some selling in the back of the curve ran the 10-yr yield up 2 bps to 2.203% and the 30-yr up 5 bps to 3.252%. While shorter dated yields were relatively stable this week, longer dated ones did see a rise as the 10-yr added 3 bps and the 30-yr gained 8 bps. This weekend's EU Summit is sure to provide for an interesting session start to next week with official details of the plan set to be released on Wednesday. The yield curve flattened versus last week's closing level with the 2-10-yr spread tightening to 192.5 bps.

Treasury Yields AMC on Friday 21 October, 2011:
• 2 Year Note 0.30% +0.02
• 5 Year Note 1.08% +0.01
• 10 Year Note 2.23% +0.03
• 30 Year Bond 3.26% +0.07
2/30 Spread : 296bps ( +5 ) ... 2/10 Spread : 193bps ( +1 )


Status quo ... much like the risk market. Ho-hum ... waiting, waiting ...

At least the sell off on the longer maturities had more commitment this time. The steepening to the upside puts the whole curve closer to par values on its spreads with the 2/10 just off by 7bps and the 2/30 closer by just 4bps under par. Greed is returning to the risk table.


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PREVIEW FOR THE WEEK - MONDAY 24 OCTOBER, 2011 TO FRIDAY 28 OCTOBER, 2011

There is no data on Monday. Dallas Fed President Fisher will speak in Toronto on the challenges to economic growth. The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities through POMO.

Tuesday will see the release of the Case-Schiller 20-city Index (9), consumer confidence, and the FHFA Housing Market Index (10). The Fed’s POMO continues with the purchase of $4.25-5.00 bln worth of 2017-2019 maturities. Treasury will auction $35 bln 2-yr notes.

Wednesday’s data includes the weekly MBA Mortgage Index (7), durable orders, durable orders ex-transportation (8:30), and new home sales (10). Treasury will hold a $35 bln 5-yr note auction. The Fed will sell $8.00-9.00 bln worth of 2014 maturities through its ‘twist.’

Thursday’s data is the most anticipated of the week as initial and continuing claims will accompany the first look at Q3 GDP (8:30) with that data being followed by pending home sales (10). The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities through its Permanent Open Market Operations. Treasury will auction $29 bln 7-yr notes.

Data wraps up for the week on Friday with personal income, personal spending, PCE Prices – Core, the Employment Cost Index (8:30), and Michigan Sentiment – Final (9:55). The Fed will look to sell $8.00-9.00 bln worth of 2013/2014 maturities as part of its ‘twist.’

Earnings Highlights
Monday: PETS, LSTR, VFC, CAT, BOH, KMB, LO, PCH, ZION, AMGN, NFLX, PCL, and VECO.
Tuesday: MMM, AKS, AUO, BYD, BP, CP, CPLA, CRDN, COH, DD, MOLX, NVS, NUS, ODP, RAI, RF, X, UBS, UA, WFT, AMZN, AJG, BRCM, CHRW, DV, FFIV, ESRX, PNRA, RFMD, SIMG, and WBSN.
Wednesday: AB, BEAV, BA, COP, GLW, DPS, EXC, FSRV, F, GD, ITRI, LMT, MDP, MYL, NDAQ, S, VSI, WLP, AFL, AEM, NSC, SFLY, TER, V, and WCAA.
Thursday: DDD, MO, AVP, ABX, CELG, CCE, CL, DOW, XOM, BEN, IMAX, IP, LAZ, LM, MJN, MSI, OMX, POT, PCP, PG, RTN, RCL, SIX, TWC, LCC, WM, ZMH, AMD, BIDU, CELL, CSTR, DECK, DRIV, ERTS, EXPE, GILD, IMGN, KLAC, NTGR, NUVA, STMP, VAR, VRSN, and VPRT.
Friday: AXL, AGP, AON, ACI, B, BIIB, D, GT, LEA, LPNT, NEM, MRK, WY, and WHR.

Economic Events
Monday:
None Scheduled.
Tuesday:
09:00 am Case-Shiller 20-city Index
10:00 am Consumer Confidence
10:00 am FHFA Housing Price Index
Wednesday:
07:00 am MBA Mortgage Index
08:30 am Durable Orders
08:30 am Durable Orders -ex Transportation
10:00 am New Home Sales
10:30 am Crude Inventories
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am GDP-Adv.
08:30 am GDP Deflator
10:00 am Pending Home Sales
10:30 am Natural Gas Inventories
Friday:
08:30 am Personal Income
08:30 am Personal Spending
08:30 am PCE Prices - Core
08:30 am Employment Cost Index
09:55 am Michigan Sentiment - Final

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- MENA Conference 2011 - Riyadh
- ITC International Telemetering Conference
- 4G World 2011
Tuesday:
- 2011 LatAm Growth Conference
- TelcoTV 2011
- Latin American Oil and Gas summit
Wednesday:
- Second EU Summit To Discuss EU Debt Problems
- MENA Conference 2011 - Dubai
- New Orleans Investment Conference
Thursday:
- FSX Investor Conference
- TD Ameritrade Institutional 2011 Fall Regional Conference
- Dynavax Analyst and Investor Day
Friday:
- Metso Corporation Analyst Presentation
- FBN sponsored 1 on 1's in NYC with VP
- Italian Bond Auction


___________________________________________

SUMMARY

What does the market want? You give it good earnings, and it doesn't go up. You give it a continuous barrage of recessionary news from Europe and Bernanke's "Great Recession" and it won't go down. You throw all sorts of economic data at it and it won't budge. You kill Gaddafi and it won't go either way. Eight straight sessions stuck within a range (DOW 11,400 - 11,650) and not keen to make a move for any reason. What will it take to get this market moving again because it obviously doesn't want to go anywhere for any reason.

Now that the market has made me eat my words, let's see if this rally has legs.

28 October is the anniversary of the 1929 Crash (DOW went down 23% in two days) and the last three days of October are traditionally bullish.

Third quarter growth is expected to return better than had been predicted at around 2.8% compared to 1.9% in September. Increases in auto sales are also seen as a sign of a rebound in process. This jacked up the consumer spending numbers but begs the question if this spending is sustainable given the high jobless rate and slow income growth. Manufacturing and production numbers have sustained decent levels suggesting that a bottom may have been reached.

Any downside could come from price hikes in commodities and more headline shenanigans out of the EU. But if earnings continue to flow in at this positive rate, I have little doubt that we may have turned the corner for a positive finish to the year ... but there stubbornly remains a little doubt.

Direction for Monday 24 October, 2011; ∆ Up

Direction for the week Monday 24 October, 2011 to Friday 28 October, 2011; ∆ Up

2011 Daily Directional Accuracy: 113/190 (59.47%)

2011 Weekly Directional Accuracy Year-To-Date: 24/41 (58.54%%)

Conrad
10-25-2011, 05:36 AM
U.S. MARKETS - Monday 24 October, 2011 AMC

http://img4.imageshack.us/img4/9751/dexsa.jpg (http://imageshack.us/photo/my-images/4/dexsa.jpg/)

Now that the market has made me eat my words, let's see if this rally has legs.

Direction for Monday 24 October, 2011; ∆ Up

Looks like a bit of a Pause about to ensue. Nevertheless, this run is impressive. Darryl Guppy could be right on the money again (http://www.conradalvinlim.com/2011/09/michael-kahn-vs-daryl-guppy/).


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MARKET SUMMARY - Monday 24 October, 2011


BRIEFING.COM - Monday 24 October, 2011 AMC
Daily Sector Wrap: Stocks Go Three In A Row

Strong buying today gave the stock market its third straight gain. In that time the S&P 500 has marched nearly 4% higher, crossing above the 1250 line for the first time in more than two months.

Trade ahead of the open was somewhat subdued. Participants appeared neither surprised nor disappointed that officials from Europe failed to unveil the makings of a comprehensive plan intended to restore the health of the region's financial conditions. Monthly manufacturing and services reports from the eurozone were also mixed at best, but some took encouragement that China reported overnight an increase in manufacturing activity, as measured by the HSBC Manufacturing PMI.

Corporate news flow was somewhat limited. Among the more notable announcements, Dow component Caterpillar (CAT 91.77, +4.38) posted earnings that exceeded what Wall Street had expected. The industrial machinery outfit complemented the report with a strong earnings forecast. The stock climbed to a two-month high, but its strength couldn't carry the Dow as high as the other major equity averages.

The Nasdaq staged the strongest gains of the primary indices. Its outsized gain was helped along by tech stocks, which settled the session 1.9% higher. Some merger and acquisition activity helped inspire interest for tech issues. Shares of RightNow Tech (RNOW 42.94, +6.98) surged in response to news that it will be purchased for $43 per share, a premium of 20% over last Friday's closing price, by Oracle (ORCL 32.87, +0.75). Owners of ORCL applauded the move, bidding the stock up to a three-month high.

On a related note, CIGNA (CI 45.34, +0.64) announced that it will pay $55 for each outstanding share of HealthSystems (HS 53.71, +13.55). The offer represents a premium of about 40% above where HS settled last week. News of the planned acquisition sent shares of SXC Health Solutions (SXCI 43.37, -13.05) down sharply due to concerns that the company's business may no longer be needed by HealthSystems.

Commodities also climbed today, giving the CRB Commodity Index a 2.4% gain. The move was led by oil, which surged to a two-month high and settled pit trade with a gain of more than 4% at $91.27 per barrel.

The greenback gave up an early gain to end the day on a down note. It had only been up modestly this morning, but a bounce by the euro undercut the dollar and left it to trade 0.2% below a currency-weighted basket by day's end.

Sector Leaders/Laggards for Monday 24 October, 2011 AMC
Leading Sectors: Materials +2.3%, Financials +2.2%, Tech +1.9%, Industrials +1.7%, Health Care +1.4%, Consumer Discretionary +1.4%, Energy +1.2%
Leading Industries/ETFs : Solar- TAN +7.4%, Copper- JJC +6.7%, Steel- SLX +6.0%, Junior gold miners- GDXJ +6.0%, Coal- KOL +5.0%, crude futures- OIL +4.7%, USO +4.5%, Semis- XSD +4.5%, base metals- DBB +4.4%, clean energy- PBW +4.1%, Gold miners- GDX +3.8%, Oil Service OIH -3.7%.

Lagging Sectors: Utilities -0.4%, Consumer Staples -0.6%, Telecom -0.9%
Lagging Industries/ETFs : Vix- VXX -6.0%, Natural gas- UNG -1.2%, Consumer staples- XLP -0.7%.

Other Market Moving Factors:
• Tech offers leadership with help from M&A activity
• Financials fire up
• EU leaders continue to work on financial stability plan
• Economic data from Europe was mixed, but China reported increased manufacturing activity

Companies trading higher in after hours in reaction to earnings: UIS +20.0%, FTNT +9.8%, HXL +7.9%, ETH +4.5%.
Companies trading higher in after hours in reaction to news:
• SPEX +23.1% (Spherix Announces positive drug news)
• EK +4.7% (Eastman Kodak is discussing up to $900 mln in rescue financing with a number of hedge funds -- CNBC).

Companies trading lower in after hours in reaction to earnings: NFLX -27.1%, UCTT -11.1%, VLTR -8.4%, ININ -8.3%, RMD -6.9%, MAS -5.9%, STM -5.9%, VECO -2.0%, TXN -1.4%.
Companies trading lower in after hours in reaction to news:
• EMKR -17.3% (EMCORE provides update on effect of Thailand floods: Primary contract manufacturer's site flooded; significant impact to December quarter),
• MNTA -17.3% (Momenta Pharmaceuticals announces that launch of authorized generic Lovenox triggers change in collaboration terms).


___________________________________________

ECONOMIC COMMENTARY - Monday 24 October, 2011

• China Oct HSBC Flash Manuf. PMI 51.1 vs 59.9 in Sep

• Japan Economic Data

- Sep Merchandise Trade Balance Total (in JPY) 300.4 bln vs -777.2 bln in Sep 2010
- Sep Merchandise Trade Exports +2.4% vs +2.8% in Sep 2010
- Sep Merchandise Trade Imports +12.1% vs +19.2% in Sep 2010
- Sep Supermarket Sales -3.6% vs -2.2% in Sep 2010

• Australia Q3 PPI +2.7% vs +3.4% in 3Q10

• France Economic Data

- Oct prelim Manuf. PMI 49.0 vs 48.2 in Sep
- Oct Serives PMI 46.0 vs 51.5 in Sep

• Germany Economic Data

- Oct Manuf. PMI 48.9 vs 50.3 in Sep
- Services PMI 52.1 vs 49.7 in Sep

• Euro-zone Economic Data

- Aug Industrial New Orders +6.2% vs +8.4% in Aug 2010
- Oct Manuf. PMI 47.3 vs 49.1 in Sep
- Services PMI 47.2 vs 49.7

• Asian Markets Close; Nikkei +1.9%, Hang Seng +4.1%, Shanghai +2.3%, Sensex +0.9%
The major Asian indices rallied following the strong Chinese HSBC Flash Manufacturing PMI (51.1 actual v. 49.9 expected) and on hopes that European leaders will be able to reach consensus as to the best path to solve the European debt crisis. Data out in the region showed Australian PPI ease to 0.6% QoQ (0.8% QoQ expected, 0.8% QoQ previous), Singaporean CPI fall to 5.5% YoY (5.7% YoY previous), and Taiwan's unemployment rate tick down to 4.27% (4.36% previous). Thailand's Taiex was closed for Chulalongkorn Day. Looking at the currencies...USDCNY weakened to 6.3754 while USDJPY is weaker at 76.10.

In Japan, the Nikkei closed +1.9% during another session that saw light volume. Embattled camera maker Olympus tumbled another 10.7% and continue its freefall that has occurred since the dismissal of its CEO. The stock is down more than 60% since October 14.

In Hong Kong, the Hang Seng finished +4.1% as real estate and financial-related names paced the advance. China Overseas Land and China Resources Land surged 9.0% and 10.0% respectively. Financials rallied ahead of earnings for the group which begin tomorrow. ICBC climbed 5.8% while rival Agricultural Bank of China gained 8.1%.

In China, the Shanghai Composite settled +2.3% as commodity-related names rallied in response to the expansion in HSBC Flash Manufacturing PMI. Jiangxi Copper climbed 4.1% while coal-based China Shenhua Energy jumped 3.3%.

In India, the Sensex closed +0.9% as financials lead the advance. State Bank of India added 1.4% while rival ICICI Bank gained 2.2%. The Reserve Bank of India will meet tomorrow with some analysts expecting more rate hikes.

• European Markets Closing Prices
UK's FTSE: + 1.1%
Germany's DAX: + 1.4%
France's CAC: + 1.6%
Spain's IBEX: + 1.2%
Portugal's PSI: -0.3%
Italy's MIB Index: + 0.7%
Irish Ovrl Index: + 2.4%
Greece FTSE/ASE 20: -4.5%

EARNINGS CALL

• Before market open

Caterpillar (CAT) beats by $0.07, beats on revs; raises FY11 guidance; guides FY12 revs in-line
Reports Q3 (Sep) earnings of $1.71 per share, $0.07 better than the Capital IQ Consensus Estimate of $1.64; revenues rose 41.2% year/year to $15.72 bln vs the $15.03 bln consensus. The improvement was largely a result of $2.829 bln higher sales volume. While sales for new equipment and after-market parts improved, the most significant increase was for new equipment. Price realization improved $129 mln, and currency impacts added $356 mln. Bucyrus, which was acquired during the third quarter of 2011, added a further $1.135 bln in sales. Sales for Electro-Motive Diesel (EMD), which was acquired during the third quarter of 2010, increased $122 mln. Financial Products revenues improved slightly. The improvement in sales volume occurred across the world in all geographic regions and in nearly all segments; figures include Bucyrus acq.

Co raises guidance for FY11, raises EPS to ~$6.75 from $6.25-6.75 vs. $6.85 Capital IQ Consensus Estimate; raises FY11 revs to ~$58 bln from $56-58 bln vs. $57.84 bln Capital IQ Consensus Estimate. Co issues in-line guidance for FY12, sees FY12 revs of $63.8-69.6 bln vs. $65.74 bln Capital IQ Consensus Estimate. "Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point. We believe continued economic recovery, albeit a slow recovery, is the most likely scenario as we move forward... We expect the world economy will continue to recover in 2012, with growth improving to about 3.5% (up from 3% in FY11). The United States and Japan should account for much of the improvement... Our order backlog has steadily increased throughout the year and is currently at a record level."

• After market close

Amgen (AMGN) beats by $0.11, beats on revs; updates FY11 EPS, rev guidance ranges; board authorized an increase to its stock repurchase program to a total amount of $10 bln
Reports Q3 (Sep) earnings of $1.40 per share, $0.11 better than the Capital IQ Consensus Estimate of $1.29; revenues rose 3.4% year/year to $3.94 bln vs the $3.88 bln consensus. Co updates guidance ranges for FY11, now sees EPS of $5.15-5.30 (vs. $5.22 Capital IQ Consensus Estimate) from prior range of $5.00-5.20; now sees FY11 revs of $15.4-15.6 bln (vs. $15.44 bln Capital IQ Consensus Estimate) from the previous range of $15.1-15.5 bln... Amgen's Board of Directors also authorized an increase to its stock repurchase program to a total amount of $10 bln.

Netflix (NFLZ) beats by $0.22, beats on revs; guides Q4 EPS below consensus, revs below consensus
Reports Q3 (Sep) earnings of $1.16 per share, $0.22 better than the Capital IQ Consensus Estimate of $0.94; revenues rose 48.6% year/year to $822 mln vs the $812.9 mln consensus. NFLX reports Q3 net subscribers of 23.79 mln vs approx 24 mln guidance. Total U.S. Subscribers is 23.79 mln up 42% y/y. Net Sub additions falls -0.81 mln down 145% y/y. Co issues downside guidance for Q4, sees EPS of $0.36-0.70 vs. $1.09 Capital IQ Consensus Estimate; sees Q4 revs of $841-875 mln vs. $923.19 mln Capital IQ Consensus Estimate.

Says DVD subs in Q4 will decline sharply which is reflected in guidance due to price change. Weekly rate of DVD cancellations is shrinking; expect future cancellation rates to shrink more modestly. Says that streaming net additions will be negative in october due to the cancellation wave. Expect levels to be flat in November. Overall expect slightly negative streaming net sub additions in Q4. Expects to double spending on content in 2012 from 2011.


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TECHNICAL UPDATE - Monday 24 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,913.62 +104.83 (+0.89%)
Volume: 161,870,011 from 264,002,007 the previous day
Range: 11,805.77 – 11,940.75

http://img849.imageshack.us/img849/764/dowf.jpg (http://imageshack.us/photo/my-images/849/dowf.jpg/)

(DOW) Four weekly (candle) sessions straight up and a Hanging Man at the top of this trend suggesting a pause or stall in the coming week ... NASDAQ is still negative for the year and not looking strong enough for a break out to the upside yet. The good news is that with six sessions left for the month, the tech heavy index is wearing a Bullish Engulfing Pattern on monthly candles. A close like this bodes well for the coming months ... (SPX) Hanging Man on weeklies implying a pause to the uptrend in the coming week.

NASDAQ rockets up into positive for the year, putting all three benchmarks in the black for the year. NASDAQ also broke through its 200DSMA but closes just shy of 2,700. DOW and SPX, however, look like pausing into a Stall after three consecutive gains. DOW was rejected just shy of its own 200DSMA.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,699.44 +61.98 (+2.35%)
Volume: 470,091,836 from 621,652,853 the previous day
Range: 2,643.94 – 2,703.07

S&P 500 INDEX (SPX: CBOE)
1,254.19 +15.94 (+1.29%)
Volume: 700,005 from 1,039,907 the previous day
Range: 1,238.72 – 1,256.55


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MARKET INTERNALS - Monday 24 October, 2011 AMC

NYSE :
Lower than avg volume @ 927 mln, vs. 1133 mln
Advancers outpaced Decliners (adv/dec): 2511/524
New highs outpaced new lows (hi/lo): 82/2

NASDAQ :
Lower than avg volume @ 1830 mln, vs. 1989 mln
Advancers outpaced Decliners (adv/dec): 2095/486
New highs outpaced new lows (hi/lo): 62/23


Advancers outpaced Decliners by an average 4.81 to 1 on higher volumes (+0.48%) on Friday (avg +1.89%).

That's more like it. That's the kind of bullish commitment I need to convince me that there is indeed some hope to close out the year in the back. Follow through on Monday will confirm a return to the upside if volumes and earnings stay on the dovish track.

Advancers outpaced Decliners by an average 4.56 to 1 on lower average volumes (-11.69%) on Monday (avg +1.51%).

Volumes predictably dipped but maintained a decent overall total. It should be noted that Monday's volumes were exceptional therefore this dip should be taken in perspective. More importantly, New Lows have fallen back quite dramatically and the small caps ($RUT and IWM) are showing signs of strength - they have been amongst the strongest in the past weeks - which is a good indicator of a recovery. The VIX is also showing signs of a return of the serious Bull by falling below 30 points in its second lowest close in 11 weeks, thus breaking its stranglehold support of 31 for the second time in seven sessions.

http://img194.imageshack.us/img194/3417/intvq.jpg (http://imageshack.us/photo/my-images/194/intvq.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude trades to best levels since early August; copper futures surge

Crude oil prices surged today, trading to their best levels since early August. On the session futures rallied 4.4% to close at $91.27 per barrel. Futures rallied on the better than expected econ data out in China, as well as strength in equities based on optimism for a deal getting done to help the euro-zone. Natural gas had a very quiet session, chopping around just shy of the flat line and posting declines of 0.8% to settle at $3.60 per MMBtu. Nov heating oil ended higher by 2.4 cents at $3.04, while Nov RBOB gasoline gained 2.3 cents to finish at $2.68.

Precious metals did the majority of their rallying in electronic trade. Both metals did manage to trade to their best levels, at $1663.30 and $32.04 respectively, in pit trade but closed below those highs. On the session gold ended up 1% at $1652.00 per ounce, while silver finished up 1.4% at $31.64 per ounce. Copper futures surged 7% to settle at $3.46. Better-than-expected econ data in China, coupled with optimism about a deal getting done in the euro zone, boosted prices today.

Corn settled higher by 3 cents to $6.52, wheat rose 10 cents to end at $6.42, soybeans were 15 cents higher at $12.28, ethanol rose 2 cents to close at $2.59, while sugar rose 0.18% to $0.27.

Commodities AMC on Monday 24 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 91.27 +3.87 (+4.43%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,652.30 +16.20 (+0.99%)

Treasuries finished the day little changed but lower as more talk of QE III from the Fed and further optimism over the European debt crisis provided further rotation out of Treasuries and into equities. Light selling took place across the Treasury complex and pushed yields up a couple bps as the 10-yr settled the cash session at 2.234% and near its highest levels of the day. Despite today's uptick, yields across the curve remain stuck in a tight range that has developed over the past two weeks with most seeing a range of 20 bps. Steepening of the yield curve continued as the 2-10-yr spread widened to 195.5 bps.

Treasury Yields AMC on Monday 24 October, 2011:
• 2 Year Note 0.30% unch
• 5 Year Note 1.10% +0.02
• 10 Year Note 2.25% +0.02
• 30 Year Bond 3.27% +0.01
2/30 Spread : 297bps ( +1 ) ... 2/10 Spread : 195bps ( +2 )


At least the sell off on the longer maturities had more commitment this time. The steepening to the upside puts the whole curve closer to par values on its spreads with the 2/10 just off by 7bps and the 2/30 closer by just 4bps under par. Greed is returning to the risk table.

A slow and gradual steepening. This is good. The whole curve needs to climb its spreads above and away from those par values. The 2/10 spread is now only 5bps from its fair value while the 2/30 spread is closer at only 3bps.


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PREVIEW FOR TUESDAY 25 OCTOBER, 2011

Tuesday will see the release of the Case-Schiller 20-city Index (9), consumer confidence, and the FHFA Housing Market Index (10). The Fed’s POMO continues with the purchase of $4.25-5.00 bln worth of 2017-2019 maturities. Treasury will auction $35 bln 2-yr notes.

Earnings Highlights
BMO: MMM, AKS, AUO, BYD, BP, BTU, CP, CPLA, CRDN, COH, DD, MOLX, NVS, NUS, ODP, RAI, RF, TROW, X, UBS, UA and WFT.
AMC: AMZN, AJG, BRCM, CHRW, DV, FFIV, ESRX, PNRA, RFMD, SIMG, and WBSN.

Economic Events
09:00 am Case-Shiller 20-city Index
10:00 am Consumer Confidence
10:00 am FHFA Housing Price Index

Conferences and Shareholder/Analyst Meetings of Interest
- 2011 LatAm Growth Conference
- TelcoTV 2011
- Latin American Oil and Gas summit


___________________________________________

SUMMARY

The big hitters did exceedingly well on their earnings calls and the market hardly gave a damn about the nonsense going on in Europe ... for now. Looks like we might just get that bullish close for the year.

As earnings continues to pour in with better-than-expected numbers and guidance, let's not take our eyes off the economic data. Consumer Confidence at 10EST will be a mover today and the Housing sector shouldn't react too negatively to the 9EST Case-Shiller and 10EST FHFA numbers - this sector has been sucking for a long time anyway so any bad news is expected but any good news is more than welcome.

Direction for Tuesday 25 October, 2011; ∆ Up

2011 Daily Directional Accuracy: 114/191 (59.69%)

Conrad
10-26-2011, 05:41 AM
U.S. MARKETS - Tuesday 25 October, 2011 AMC

http://img403.imageshack.us/img403/5912/dexsk.jpg (http://imageshack.us/photo/my-images/403/dexsk.jpg/)

As earnings continues to pour in with better-than-expected numbers and guidance, let's not take our eyes off the economic data. Consumer Confidence at 10EST will be a mover today and the Housing sector shouldn't react too negatively to the 9EST Case-Shiller and 10EST FHFA numbers - this sector has been sucking for a long time anyway so any bad news is expected but any good news is more than welcome.

Direction for Tuesday 25 October, 2011; ∆ Up

What a difference a day makes. The housing numbers didn't suck ... they were atrocious! And so was the consumer confidence number. And so was 3M's earnings. Did I speak too soon? Or is this a case of a typical day in the market during earnings season?


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MARKET SUMMARY - Tuesday 25 October, 2011


BRIEFING.COM - Tuesday 25 October, 2011 AMC
Daily Sector Wrap: Stocks Slump Ahead of EU Summit

The stock market's recent win streak was snapped by a concerted selling effort that left stocks to settle at session lows with steep losses. The sell-off precedes a highly anticipated European Union Summit.

Sellers made their presence felt in the first few minutes of action. Their push against stocks was made as headlines surfaced that a meeting between finance ministers of the European Union originally scheduled for Wednesday is cancelled. That caused concern that officials might also postpone an EU Summit scheduled for tomorrow. The Summit is expected to produce some definitive details on just how to improve financial conditions in Europe.

Although no delays to the Summit were announced, participants displayed concern that the meeting may not produce the results wanted by the market. That prompted many to pare their positions in stocks, thereby pocketing profits earned in the past three sessions, during which time the broad market climbed almost 4%. Pressure persisted into the close, leaving stocks to settle at session lows.

Financials were hit the hardest. The sector slumped to a loss of little more than 3%. Bank stocks fell sharply out of favor, primarily due to concerns about their exposure to Europe. However, European-based investment banks and brokerage plays Deutsche Bank (DB 39.44, -0.17) and UBS (UBS 12.57, -0.02) were able to limit losses after the pair posted upside earnings surprises for the latest quarter.

Most quarterly reports featured better-than-expected earnings. Texas Instruments (TXN 30.97, -0.72), BP Plc (BP 43.52, +1.68), Coach (COH 61.56, -1.10), DuPont (DD 44.94, -1.15), Illinois Tool (ITW 45.65, -2.58), UPS (UPS 69.35, -1.52), US Steel (X 22.40, -2.37), AK Steel (AKS 7.47, -1.18), and Netflix (NFLX 77.37, -41.47) all exceeded consensus earnings estimates, but concerns about the futures earnings of the final three names tore their prices down. 3M (MMM 77.04, -5.14) was a notable name on the short list of companies that came short of what Wall Street had expected. Weakness among stocks provoked interest in Treasuries.

Results from an auction of 2-year Notes also displayed strong demand for safety. The auction drew a bid-to-cover of 3.64, dollar demand of $127.4 billion, and an indirect bidder participation rate of 39.2%. For comparison, an average of the past six auctions results in a bid-to-cover of 3.33, dollar demand of $116.4 billion, and an indirect bidder rate of 31.2%.

Data today featured the August S&P/Case-Shiller 20-City Housing Price Index, which fell by 3.8%. A 3.5% decline had been expected, on average, among economists polled by Briefing.com. Still, the slide wasn't as steep as the 4.1% decline experienced in the prior month.

The Conference Board released its October Consumer Confidence Index, which fell to 39.8. Not only did that miss the 46.0 that had been expected, but it also proved to be the worst reading in more than two years.

Sector Leaders/Laggards for Tuesday 25 October, 2011 AMC
Leading Sectors: None.
Leading Industries/ETFs : Vix- VXX +6.4%, Silver-SLV +5.15, Gold- GLD +2.8%, Treasuries- TLT +2.5%, Gold miners- GDX +2.5%, Junior gold miners- GDXJ +2.3%, Natural gas- UNG +1.5%, Crude oil- OIL +1.4%, USO +1.2%.

Lagging Sectors: Consumer Staples -1.1%, Utilities -1.3%, Tech -1.7%, Telecom -1.8%, Health Care -2.0%, Energy -2.0%, Industrials -2.0%, Consumer Discretionary -2.2%, Materials -2.5%, Financials -3.1%
Lagging Industries/ETFs : Solar- TAN -8.0%, financials- KCE -4.8%, KRE -3.4%, KBE -3.3%, Broker- IAI -4.8%, Energy services- XOP -4.4%, Steel- SLX -3.9%, Coal- KOL -3.5%, homebuilders & home const- ITB -3.4%, Internet- HHH -3.4%, Biotech- XBI -3.2%.

Other Market Moving Factors:
• Headlines indicate EU Finance Ministers meeting for tomorrow is cancelled
• Europe remains point of focus as leaders wrestle details related to restoring financial conditions in the region
• Earnings generally exceed expectations

Companies trading higher in after hours in reaction to earnings: PNRA +10.3%, FFIV +7.6%, MTW +5.2%, MCK +4.0%, LIFE +3.9%, ESRX +3.3%, CNO +3.2%, NBR +2.5%, CHRW +2.0%.

Companies trading lower in after hours in reaction to earnings: AMZN -12.1%, HGSI -12.0%, FTI -4.4%, RSH -4.2%.
Companies trading lower in after hours in reaction to news:
• IBM -0.8% (IBM has elected Virginia M. Rometty president and chief executive officer).


___________________________________________

ECONOMIC COMMENTARY - Tuesday 25 October, 2011

• India raises key interest rates by 25bps to 8.25%

• New Zealand Economic Data

- Q3 CPI +4.6% vs +5.3% in 3Q10 (30.38 )
- Q3 CPI +0.4% vs +1.0% in Q2

• Australia Aug Conference Board Leading Index -0.1% vs -0.1% in Jul

• Japan Oct Small Business Confidence 46.4 vs 47.2 in Sep

• Bank of Canada leaves interest rate unchanged at 1.00%, as expected
• Bank of Canada revises down 2011 GDP to 2.1%, 2012 GDP to 1.9%; revises up 2013 GDP to 2.9%

• U.S. Economic Data

- August Case Shiller 20-city Index -3.8% vs -3.5%; Prior -4.11%
- October Consumer Confidence 39.8 vs 46.0; September 45.4
- August FHFA Housing Price Index -0.1%; Prior +0.8%

Consumer Confidence Falls to its Lowest Level Since March 2009 in October
The Conference Board's Consumer Confidence Index fell sharply in October, falling from an upwardly revised 46.3 (from 45.4) in September to 39.8. The Briefing.com consensus estimate was pegged at 46.0. Consumer confidence has fallen to its lowest level since March 2009, which coincided with the economy contracting 6.7% during that quarter. Like the preliminary reading of the University of Michigan Consumer Sentiment Report for October, the drop in confidence was mostly due to worries about the future. The expectations index fell from 55.1 in September to 48.7 in October, reaching its lowest level since March 2009. The decline in expectations is most likely the result of media reports constantly flashing high probabilities of another recession and not from economic fundamentals. The economic data have improved substantially since the beginning of the summer. The current conditions index also deteriorated, declining from 33.3 in September to 26.3 in October, and is at its lowest level since November 2010. Fortunately, the lack of consumer confidence in the economy will most likely not have an adverse effect on consumption. Consumption tends to follow income, and income growth, while weak, remains positive.

• Asian Markets Close; Nikkei -0.9%, Hang Seng +1.1%, Shanghai +1.6%, Sensex +1.9%
The major Asian indices closed mostly higher on low volume as traders remained optimistically cautious ahead of tomorrow's expected announcement from European leaders on how they plan to combat the region's debt problems. Helping sentiment was a rumor that the People's Bank of China planned to provide liquidity by cutting the reserve requirement ratio for banks. The Bank of Japan announced it will cut its growth forecast for the next two years due to the global economic slowdown, EU debt crisis, and strong yen. Also out overnight was word that the Bank of Japan would establish liquidity provisions with the Bank of Thailand and use JGBs as collateral under an agreement to help stabilize funding of Japanese banks who are offering funds to Japanese firms impacted by the flooding in Thailand. In an expected move, the Reserve Bank of India hiked its benchmark interest rate 25 bps to 8.50% as it continues to battle high inflation. The central bank did however indicate a hike at its December meeting is unlikely. Data in the region showed Singapore's manufacturing production climb 12.8% YoY, Hong Kong's trade deficit widen to -HKD 40.0 bln (-HKD 34.8 bln previous), and Australia's the CB Leading Index tick down to -0.1% MoM (0.0% MoM previous). Looking at the currencies...USDCNY weakened to 6.3615 while USDJPY is flat at 76.12.

In Japan, the Nikkei closed -0.9% as earnings season got started on the wrong foot. Robotics maker Fanuc fell 3.0% after announcing an in-line forecast. Camera maker Canon announced better than expected profits but revised its outlook downward going forward as the strong yen and Thailand floods will weigh on earnings. Embattled camera maker Olympus ended a seven-day slide with a gain of 8.2%.

In Hong Kong, the Hang Seng finished +1.1% as energy stocks paced the advance. Energy giant Cnooc led the way with a 5.4% surge while competitor PetroChina advanced 1.7%.

In China, the Shanghai Composite settled +1.6% financial and real estate stocks performed admirably. ICBC Bank was among the best performing financials with a gain of 1.2% while real estate giant Gemdale soared 5.7%.

In India, the Sensex closed +1.9% as energy and technology shares were the best performers. Heavyweight Reliance Industries gained 3.4% to lead the way while Infosys Technologies added 3.1%. Financials were under pressure after the announcement of the rate hike with State Bank of India falling 3.5%.

• European Markets Closing Prices
UK's FTSE: -0.4%
Germany's DAX: -0.1%
France's CAC: -1.4%
Spain's IBEX: -0.9%
Portugal's PSI: -2.4%
Italy's MIB Index: -1.1%
Irish Ovrl Index: -0.5%
Greece FTSE/ASE 20: + 1.2%

EARNINGS CALL

• Before market open

DuPont (DD) beats by $0.13, beats on revs; raises FY11 EPS guidance
Reports Q3 (Sep) earnings of $0.69 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus Estimate of $0.56; revenues rose 32.0% year/year to $9.24 bln vs the $8.85 bln consensus. with 15 percent higher local prices, 4 percent currency benefit, 1 percent higher volume, and a 12 percent net increase from portfolio changes. Sales in developing markets grew 38 percent. Growth in demand for the co's agricultural products and further expansion into food ingredient and enzyme markets offset destocking in photovoltaics and specialty polymers. Co issues raises guidance for FY11, raises EPS to $3.97-4.05, ex-items, from $3.90-4.05 vs. $3.97 Capital IQ Consensus Estimate.

U.S. Steel (X) beats by $0.17, reports revs in-line
Reports Q3 (Sep) earnings of $0.72 per share, excluding non-recurring items, $0.17 better than the Capital IQ Consensus Estimate of $0.55; revenues fell 0.8% year/year to $5.08 bln vs the $5.05 bln consensus.

Commenting on U. S. Steel's outlook for the fourth quarter, Surma said, "Our Tubular operations are expected to have another strong performance as operating results are expected to be in line with the third quarter. We expect to report lower operating results in the fourth quarter for our North American Flat-rolled and European operations as a result of the slow and uneven economic recovery in those regions." We expect our Flat-rolled results to reflect an operating loss in the fourth quarter. Average realized prices and shipments are expected to decline as a result of cautious purchasing patterns created by the uncertain economic outlook and increasing domestic supply. These market factors are expected to bring our operating results down to around a break-even level prior to the effects of increased maintenance outages and Hamilton Works' labor agreement and facility restart costs. With reduced capacity utilization due to market conditions, we are taking the opportunity to perform maintenance outages, resulting in additional costs of approximately $50 million compared to the third quarter.

We expect the fourth quarter results for our European segment to decrease compared to the third quarter 2011. Shipments and average realized prices are expected to decline as market demand softens in response to the uncertain economic conditions in Europe, particularly Southern Europe. Operating costs are expected to decrease compared to the third quarter, reflecting lower spending and lower raw materials costs. The idled blast furnace at U. S. Steel Serbia is not expected to operate during the fourth quarter. Tubular fourth quarter 2011 results are expected to be in line with the strong performance achieved in the third quarter as the demand for oil country tubular goods (OCTG) remains strong. Average realized prices are expected to be comparable to the third quarter and shipments are expected to be slightly lower as distributors actively control their inventory levels going into year end, particularly for non-OCTG products.

3M (MMM) misses by $0.09, misses on revs; lowers FY11 EPS below consensus, lowers FY11 organic sales growth guidance
Reports Q3 (Sep) earnings of $1.52 per share, $0.09 worse than the Capital IQ Consensus Estimate of $1.61; revenues rose 9.6% year/year to $7.53 bln vs the $7.76 bln consensus. Co issues downside guidance for FY11, lowers EPS to $5.85-5.95 from $6.10-6.25 vs. $6.17 Capital IQ Consensus Estimate, including a $0.22 increase in [ension/postretirement benefit exp. 3M also expects FY organic sales volume growth of 3 to 4% vs. a prior expected range of 6 to 7.5%.

The co now expects that currency effects will add 3 to 3.5 percent to sales for the year and acquisitions will add another 3 to 3.5 percent. Third-quarter worldwide sales growth was 9.6%, of which 3.7% came from acquisitions, 3.1% from foreign exchange impacts, 1.9% from organic volume growth and 0.9% from higher year-on-year selling prices. Organic volume growth was below recent trend levels, reflecting weakness across the electronics market along with generally slowing economic growth in the developed world. 3M also noted that a number of its customers reduced inventories during the quarter in anticipation of slowing demand.

Excluding the positive impact of currency, five of the company's six business segments expanded sales in the quarter, with Industrial and Transportation up 15.1%, Safety, Security and Protection Services up 14.1%, Health Care up 10.9%, Consumer and Office up 4.6% and Electro and Communications up 1.0%. Local-currency sales in Display and Graphics declined 14.1%, largely due to end-market weakness and lower attachment rates in LCD TVs. The company reported year-on-year sales increases in all geographic regions. Sales in local currencies grew 11.2% in Latin America/Canada, 9.2% in the U.S., 5.9% in Europe and 2.1% in Asia Pacific. Excluding optical, Asia Pacific sales increased 11.3% in local currencies.

UPS (UPS) beats by $0.01, reports revs in-line; reaffirms FY11 EPS guidance
Reports Q3 (Sep) earnings of $1.06 per share, $0.01 better than the Capital IQ Consensus Estimate of $1.05; revenues rose 8.0% year/year to $13.17 bln vs the $13.14 bln consensus. Co reaffirms guidance for FY11, sees EPS of $4.15-4.40 vs. $4.23 Capital IQ Consensus Estimate. The results were driven by the U.S. Domestic and Supply Chain & Freight segments. U.S. Domestic operating margin improved to 13.1% compared to last year's adjusted results and Supply Chain and Freight operating profit increased more than 10%. Free cash flow for the first nine months of the year was strong, exceeding $3.7 billion. During the quarter, UPS delivered 965 million packages, an increase of 0.7% over the prior-year period.

• After market close

Amazon.com (AMZN) misses by $0.09, reports revs in-line; guides Q4 revs in-line, operating income below expectations
Reports Q3 (Sep) earnings of $0.14 per share, $0.09 worse than the Capital IQ Consensus Estimate of $0.23; revenues rose 43.9% year/year to $10.88 bln vs the $10.95 bln consensus. Amazon.com reports Q3 operating margin of 0.7% vs 2.0% last qtr and 3.5% Q3 year ago. Co issues in-line rev guidance for Q4, sees Q4 revs of $16.45-18.65 bln vs. $18.21 bln Capital IQ Consensus Estimate. Issues downside operating income guidance, sees Q4 operating income of ($200) to $250 mln vs $491 mln estimate. "September 28th was the biggest order day ever for Kindle, even bigger than previous holiday peak days -- we introduced Kindle Fire for $199, Kindle Touch 3G for $149, Kindle Touch for $99, and our all new Kindle for only $79," said Jeff Bezos, founder and CEO of Amazon.com. "In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we're seeing with Kindle Fire pre-orders, we're increasing capacity and building millions more than we'd already planned."

C.H. Robinson (CHRW) reports EPS in-line, revs in-line
Reports Q3 (Sep) earnings of $0.70 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.70; revenues rose 11.3% year/year to $2.69 bln vs the $2.69 bln consensus.

Manitowoc (MTW) beats by $0.01, reports revs in-line
Reports Q3 (Sep) earnings of $0.18 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.17; revenues rose 15.9% year/year to $935.4 mln vs the $932.2 mln consensus. For 2011 the co expects: Crane revenue - 20-25% year-over-year percentage growth, Crane margins: mid single-digit percentage operating margins, Foodservice revenue: high single-digit percentage growth, Foodservice margins: flat mid-teen percentage operating margins, Capital expenditures: approx $70 mln, Depreciation & amortization: approx $125 mln, Interest expense: approx $150 mln, Amortization of deferred financing fees: approx $15 mln, and debt reduction: target of $150 to $200 mln.


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TECHNICAL UPDATE - Tuesday 25 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,706.62 -207.00 (-1.74%)
Volume: 161,449,080 from 161,870,011 the previous day
Range: 11,682.52 – 11,912.86

http://img850.imageshack.us/img850/7971/dowa.jpg (http://imageshack.us/photo/my-images/850/dowa.jpg/)

NASDAQ rockets up into positive for the year, putting all three benchmarks in the black for the year. NASDAQ also broke through its 200DSMA but closes just shy of 2,700. DOW and SPX, however, look like pausing into a Stall after three consecutive gains. DOW was rejected just shy of its own 200DSMA.

After three sessions to the upside in extraordinary fashion, the Stall was expected. DOW stayed above the 10,700 level and was supported by its 100DSMA while NASDAQ broke below its 200DSMA and SPX fell below its 100DSMA. Support at the current levels (10,700, 2,635 and 1,230) will be crucial if the benchmarks are to maintain this upward momentum on Wednesday and into the close of the month.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,638.42 -61.02 (-2.26%)
Volume: 466,852,158 from 470,091,836 the previous day
Range: 2,633.94 – 2,685.88

S&P 500 INDEX (SPX: CBOE)
1,229.05 -25.14 (-2.00%)
Volume: 774,021 from 700,005 the previous day
Range: 1,226.79 – 1,253.86


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MARKET INTERNALS - Tuesday 25 October, 2011 AMC

NYSE :
Lower than avg volume @ 1010 mln, vs. 1131 mln
Decliners outpaced Advancers (adv/dec): 528/2507
New highs outpaced new lows (hi/lo): 40/8

NASDAQ :
Lower than avg volume @ 1730 mln, vs. 1988 mln
Decliners outpaced Advancers (adv/dec): 474/2052
New lows outpaced new highs (hi/lo): 28/34


Advancers outpaced Decliners by an average 4.56 to 1 on lower average volumes (-11.69%) on Monday (avg +1.51%).

Volumes predictably dipped but maintained a decent overall total. It should be noted that Monday's volumes were exceptional therefore this dip should be taken in perspective. More importantly, New Lows have fallen back quite dramatically and the small caps ($RUT and IWM) are showing signs of strength - they have been amongst the strongest in the past weeks - which is a good indicator of a recovery. The VIX is also showing signs of a return of the serious Bull by falling below 30 points in its second lowest close in 11 weeks, thus breaking its stranglehold support of 31 for the second time in seven sessions.

Decliners outpaced Advancers by an average 4.55 to 1 on lower average volumes (-12.15%) on Tuesday (avg -2.00%).

Just like that, the VIX scoots back up above 31 again. The only thing that the bears were missing to complete the rout was volumes. Leadership to the downside were the usual suspects in Financials, Materials and Industrials. As cautious as I have been, I am not entirely convinced that the bears are returning now.

http://img803.imageshack.us/img803/9206/intp.jpg (http://imageshack.us/photo/my-images/803/intp.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold surges to close above $1700

Precious metals rallied sharply today. Gold prices surged 2.9% to settle at $1700.40 per ounce, while silver prices finished up 4.4% at $33.05 per ounce. Worse-than-expected consumer confidence data, coupled with concerns about what was happening over in the euro zone, helped the precious metals rally throughout the day. Gold put in highs at $1704.70, a ~1 month high, while silver notched highs at $33.34, also a ~1 month high. Dec copper lost 3 cents to close at $3.42.

Crude oil prices added to yesterday's rally, adding 2.1% to finish at $93.17 per barrel. Most of crude's gains came in electronic trade. Futures traded in a relatively small range throughout the session, but once again closed the gap between Brent prices. Shrinking stocks in Cushing, Oklahoma helped crude oil trade higher for its second consecutive session. Today's highs, at $94.65, are crude's best since August 2. Natural gas ended higher by 1.6% at $3.66 per MMBtu. Nov heating oil shed 5 cents to close at $3.04 while Nov RBOB Gasoline finished higher by 2 cents at $2.69.

Corn settled flat at $6.52/bu, wheat fell 6 cents to end at $6.37, soybeans were 3 cents lower at $12.23, ethanol rose 1 cent to close at $2.60, while sugar was flat at $0.27.

Commodities AMC on Tuesday 25 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 93.17 +1.90 (+2.08%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,700.40 +48.10 (+2.91%)

Treasuries finished near their best levels of the session as poor economic data, more uncertainty over the situation in Europe, and a solid 2-yr note auction were all catalysts for today's strong move higher. The long bond led today's advance, adding more than two and a half points as the buying dropped its yield more than 13 bps to 3.144%. Buying was less pronounced in the 10-yr, but still strong as the benchmark yield fell 11 bps to 2.128%. Some aggressive flattening took place along the yield curve today as the 2-10-yr spread tightened 9 bps to 186.5 bps.

Treasury Yields AMC on Tuesday 25 October, 2011:
• 2 Year Note 0.26% -0.04
• 5 Year Note 1.01% -0.09
• 10 Year Note 2.14% -0.11
• 30 Year Bond 3.13% -0.14
2/30 Spread : 287bps ( -10 ) ... 2/10 Spread : 188bps ( -7 )


A slow and gradual steepening. This is good. The whole curve needs to climb its spreads above and away from those par values. The 2/10 spread is now only 5bps from its fair value while the 2/30 spread is closer at only 3bps.

OOFF! That was like a punch right in the belly to take the wind out of you. After working its ass off to climb its yields up over the last 6 sessions, all it takes is one hit to deflate the curve and send yields down to near double-under par again. The 5yr yield is now only 1bps from being twice under par again.


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PREVIEW FOR WEDNESDAY 26 OCTOBER, 2011

Attention now shifts to tomorrow's $35 bln 5-yr note auction. Wednesday's data includes the weekly MBA Mortgage Index (7:00), durable orders, durable orders ex-transportation (8:30), and new home sales (10:00). The Fed will sell $8.00-9.00 bln worth of 2014 maturities through its ‘twist.

Earnings Highlights
BMO: AB, BEAV, BA, COP, GLW, DPS, EXC, FSRV, F, GD, ITRI, LMT, MDP, MYL, NDAQ, S, VSI and WLP.
AMC: AFL, AEM, NSC, SFLY, TER, V, and WCAA.

Economic Events
07:00 am MBA Mortgage Index
08:30 am Durable Orders
08:30 am Durable Orders -ex Transportation
10:00 am New Home Sales
10:30 am Crude Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- Second EU Summit To Discuss EU Debt Problems
- MENA Conference 2011 - Dubai
- New Orleans Investment Conference


___________________________________________

SUMMARY

Looks like a bit of a Pause about to ensue. Nevertheless, this run is impressive. Darryl Guppy could be right on the money again (http://www.conradalvinlim.com/2011/09/michael-kahn-vs-daryl-guppy/).

One corrective day does not a bear run make. It is going to take more than economic data to deter the bulls given the great earnings we've been getting.

Direction for Wednesday 26 October, 2011; ∆ Up

2011 Daily Directional Accuracy: 114/192 (59.37%)

Conrad
10-27-2011, 03:15 AM
U.S. MARKETS - Wednesday 26 October, 2011 AMC

http://img535.imageshack.us/img535/4531/dexsg.jpg (http://imageshack.us/photo/my-images/535/dexsg.jpg/)

One corrective day does not a bear run make. It is going to take more than economic data to deter the bulls given the great earnings we've been getting.

Direction for Wednesday 26 October, 2011; ∆ Up

Wednesday's mid-day turn around is more proof that the bulls have taken the bears by the horns ... erm, ... by the b ... nevermind. The bulls have the lead. As the EU take their time to do I-don't-know-what (because it is obvious what needs to be done already), the US market will take their lead from earnings which continue to impress and surprise.


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MARKET SUMMARY - Wednesday 26 October, 2011


BRIEFING.COM - Wednesday 26 October, 2011 AMC
Daily Sector Wrap: Stocks Reclaim Gains

The major equity averages scored varied gains even though the highly anticipated European Union Summit concluded without providing market participants with a framework for shoring up financial conditions in the continent.

Investors looking for a plan regarding the EU's approach to improving financial conditions will have to wait a few more weeks. Until then, headline risk related to financial conditions in Europe will likely persist, given that little insight was given into the discussions made by members of the EU during a summit today. Despite that, stocks were able to attract buying interest and rebound after rolling over in morning trade.

Even though there is still concern about the exposure of banks to Europe, financials provided leadership this session. In doing so, the sector helped stocks recover from a morning retreat that took the major averages down sharply from their opening levels. Financials collectively scored a 2% gain.

Energy stocks were even stronger today. The sector advanced 2.3%, even though oil prices fell more than 3% to conclude pit trade at $90.20 per barrel. The selling was largely driven by bearish weekly inventory data and a degree of profit taking from the energy component's recent climb to a two-month high.

Consumer discretionary stocks underperformed all session. They settled with a collective loss of 0.4%, making them the only major sector that failed to finish in positive territory. Amazon.com (AMZN 198.40, -28.75) was an especially heavy drag on the sector after its earnings came short of the consensus forecast. Weakness in AMZN also hampered the Nasdaq all session, leaving it to underperform its counterparts.

The Dow maintained a healthy lead over the other averages for the entire session. Boeing (BA 66.56, +2.84) was one of its best performers, thanks to a better-than-expected earnings report.

Data today featured a 0.8% decline in total durable goods orders for September and a 1.7% jump in orders less transportation. The consensus call was for a 1.0% decline in total orders and a 0.4% increase in orders less transportation.

Sector Leaders/Laggards for Wednesday 26 October, 2011 AMC
Leading Sectors: Energy +2.2%, Financials +2.0%, Materials +1.9%, Health Care +1.4%, Telecom +1.1%, Consumer Staples +0.9%, Industrials +0.7%, Utilities +0.7%, Tech +0.4%.
Leading Industries/ETFs : Copper- JJC +3.0%, Energy- XOP +3.0%, Steel- SLX +3.0%, Oil Service OIH -2.6%, Coal- KOL +2.5%, Reg Bank KRE +2.3%, Ag/Chem MOO +2.2%.

Lagging Sectors: Consumer Discretionary -0.4%.
Lagging Industries/ETFs : Internet- HHH -7.2%, Vix- VXX -4.0%, Crude oil 0 OIL -2.3, USO -2.1%, Natural gas- UNG +1.8%, Sugar- SGG +1.8%, Treasuries-1.8, Grains- JJG -1.7%, Energy- UGA -1.6%.Retail- RTH -1.4%.

Other Market Moving Factors:
• EU Summit fails to offer framework or details of financial stability plan; details now expected in November
• Earnings generally exceed expectations

Companies trading higher in after hours in reaction to earnings: AKAM +12.5%, EXXI +4.7%, NSC +4.5%, IDCC +4.1%, SFSF +3.9%, NVLS +2.6%.

Companies trading lower in after hours in reaction to earnings: HGR -15.5%, SFLY -8.9%, BMC -8.1%, ACOM -8.4%, FOE -4.2%, LSI -3.9%, SYMC -2.7%, V -2.1%.
Companies trading lower in after hours in reaction to news:
• AGNC -3.9% (American Capital Agency announces 37 mln share public offering of common stock).


___________________________________________

ECONOMIC COMMENTARY - Wednesday 26 October, 2011

• Germany Sep Import Price Index +0.6% vs +0.6% in Aug

• New Zealand Economic Data

- Oct NBNZ Activity Outlook 26.1 vs 35.4 in Sep
- Oct NBNZ Business Confidence 13.2 vs 30.3 in Sep

• Australia Economic Data

- Q3 CPI +3.5% vs +3.6% in 3Q10
- Q3 CPI RBA Trimmed Mean +0.3% vs +0.8% in Q2

• U.S. Economic Data

- MBA Mortgage Applications of +4.9% vs -14.9% Prior
- September Durable Orders -0.8% vs -1.0%; prior -0.1%
- September Durable Orders ex-trans +1.7% vs +0.4%; Prior revised to -0.4% from 0.0%
- September New Home Sales 313K vs 300K

Decline in Aircraft Orders Lead to a Contraction in Durable Orders, Business Investment Strengthened
As expected, a drop-off in orders for aircraft led to a decline in durable goods orders in September. Durable orders fell 0.8% after falling 0.1% in August. The drop, however, was better than expected. The Briefing.com consensus predicted durable goods orders would decrease 1.0%. Nondefense and defense aircraft orders fell 25.5% and 33.9% respectively in September after both sectors increased approximately 25% in August. Motor vehicles and parts orders fell 2.7% in September. Excluding the transportation sector, new durable goods orders were up 1.7% and easily surpassed the consensus estimate for a 0.4% gain. Every sector outside of the transportation sector saw positive gains except for communications equipment in September. Those orders fell 0.6% after increasing 4.9% in August. Importantly, orders for primary and fabricated metals increased a healthy 2.6% and 1.9% respectively. These goods are necessary inputs for later-stage manufacturing processes and suggest that manufacturers are seeing strong demand up the production line. Demand for business investment was strong. Orders of nondefense capital goods excluding aircraft increased 2.4% in September, up from 0.5% growth in August. Shipments, which directly affect third quarter GDP, were down 0.9% in September. It seems that most of the increase in business investment orders will not be shipped until the fourth quarter. As a result, the GDP gains from increased business investment will occur next quarter.

New Home Sales Continue to Move Sideways in September
New home sales increased from 296,000 in August to 313,000 in September, an increase of 5.7%. The Briefing.com consensus expected new home sales to increase to 300,000. Even though the sales numbers look relatively impressive for September, sales have actually averaged 300,000 since May 2010. The increase in sales in September was not outside the normal volatility range and actually follows two consecutive months of sub-par sales levels. Sales will most likely deteriorate slightly in October and move back to the 300,000 average. The monthly supply of inventory fell to 6.2 months in September from 6.6 months in August. Supply had held between 6.5 and 6.7 months since April as both sales and construction levels both trended sideways. The median sales price dropped 10.3% y/y in September. As buyers look toward distressed properties in the existing home space for good deals, builders are being pressured to drop prices in order to attract demand.

• Oil Inventory Data

Dept of Energy reports that:

Crude oil inventories had a build of 4.7 mln (consensus is a build of 1.5 mln).
Gasoline inventories had a draw of 1.4 mln (consensus is a draw of 1.8 mln).
Distillate inventories had a draw of 4.3 mln (consensus is a draw of 2.0 mln).
Change in refinery utilization was +1.7% (vs consensus for no change).
Summary of Weekly Petroleum Data for the week ending Oct 21

Production: U.S. crude oil refinery inputs averaged about 14.7 million barrels per day during the week ending October 21, 253 thousand barrels per day above the previous week's average. Refineries operated at 84.8 percent of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 million barrels per day. Distillate fuel production increased last week, averaging 4.4 million barrels per day.

Imports: U.S. crude oil imports averaged just under 9.4 million barrels per day last week, up by about 1.5 million barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged about 8.8 million barrels per day, 9 thousand barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 675 thousand barrels per day. Distillate fuel imports averaged 147 thousand barrels per day last week.

Inventory: At 337.6 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 1.4 million barrels last week and are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 4.3 million barrels last week and are in the middle limit of the average range for this time of year. Propane/propylene inventories increased by 0.2 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories increased by 0.7 million barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged about 8.8 million barrels per day, down by 2.7 percent from the same period last year. Distillate fuel product supplied has averaged about 4.2 million barrels per day over the last four weeks, up by 7.5 percent from the same period last year.

Finished Motor Gasoline (Implied Demand): Finished motor gasoline demand for the week ended 10/21 was 8,501K bpd, slightly below last week's 8,598K, and lower than the yr ago period of 9,358K.

• Asian Markets Close; Nikkei -0.2%, Hang Seng +0.5%, Shanghai +0.8%, Sensex +0.3%
The major Asian indices closed mostly higher as traders remained optimistic that the EU Summit will provide a solution for the European debt crisis. A speech made by Chinese Premier Wen Jiabo provided support as he suggested China's macroeconomic policies need ‘fine-tuning' and that small businesses need support. Japanese Finance Minister Jun Azumi once again suggested current levels for the yen are inappropriate and that bold measures would be taken to combat its strength. The yen responded with another postwar high against the greenback as it touched 75.71. Reports out overnight suggested Japan would be interested in buying EFSF bonds. Data in the region was light as Australian CPI fell to 0.6% QoQ (0.6% QoQ expected, 0.9% QoQ previous). Looking at the currencies...USDCNY weakened to 6.3544 while USDJPY is weaker at 75.84.

In Japan, the Nikkei closed -0.2% as traders snapped up shares of companies that have recently sold off on poor earnings. Robotics maker Fanuc added 2.9% while camera marker Canon gained 0.6%. Shares of embattled Olympus tumbled another 7.6%.

In Hong Kong, the Hang Seng finished +0.5% to finish higher for a fourth consecutive session. Financials were among the top performers as Bank of Communications gained 2.4% and Bank of China rallied 1.1%. Exporter Li & Fung, which has heavy exposure to Europe, lost 0.9%.

In China, the Shanghai Composite settled +0.8% as materials stocks were among the best performers. Anhui Conch Cement climbed 2.1% after reporting a 125% gain in Q3 profits and Zijin Mining rallied 6.3% on yesterday's sharp move higher in gold.

In India, the Sensex closed +0.3% as markets celebrated Diwali. Hindalco Industries and State Bank of India were the top performers, gaining 2.2% and 1.4% respectively.

• European Markets Closing Prices
UK's FTSE: + 0.5%
Germany's DAX: -0.5%
France's CAC: -0.2%
Spain's IBEX: -0.5%
Portugal's PSI: -0.2%
Italy's MIB Index: + 0.1%
Irish Ovrl Index: + 0.4%
Greece FTSE/ASE 20: + 2.9%

EARNINGS CALL

• Before market open

BE Aerospace (BEAV) beats by $0.09, beats on revs; raises FY11 EPS, above consensus; guides FY12 EPS below consensus, revs in-line
Reports Q3 (Sep) earnings of $0.64 per share, $0.09 better than the Capital IQ Consensus Estimate of $0.55; revenues rose 28.5% year/year to $636 mln vs the $628.4 mln consensus. Co issues upside guidance for FY11, sees EPS of ~$2.20 vs. $2.16 Capital IQ Consensus Estimate. Co issues guidance for FY12, sees EPS of ~$2.65 vs. $2.67 Capital IQ Consensus Estimate, which is $0.10 above prior guidance; sees FY12 revs of ~$2.8 bln vs. $2.81 bln Capital IQ Consensus Estimate. Bookings during the third quarter of 2011 were ~$660 mln reflecting a book-to-bill ratio of 1.05 to 1. However, total backlog, both booked and awarded but unbooked, expanded to a record $6.95 bln, an increase of approximately 26 percent as compared with September 30, 2010. Booked backlog at the end of the quarter was ~$3.45 bln, an increase of ~21% as compared with the co's September 30, 2010 backlog and supplier furnished equipment backlog increased to ~$3.5 bln.

WellPoint (WLP) beats by $0.09, reports revs in-line; raises FY11 guidance
Reports Q3 (Sep) earnings of $1.77 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus Estimate of $1.68; revenues rose 5.9% year/year to $15.15 bln vs the $15.19 bln consensus. Co issues guidance for FY11, raises EPS to $6.90-7.00, excluding non-recurring items, from $6.75-6.95 vs. $7.05 Capital IQ Consensus Estimate; raises FY11 revs to ~$60.1 bln from ~$59.9 bln vs. $60.19 bln Capital IQ Consensus Estimate. "Earnings quality was high in the quarter, and included operating cash flow of 1.1 times net income, and sequential increases in our medical claims payable balance and the days in claims payable metric. We are increasing full year 2011 guidance for earnings per share and operating cash flow based on the continued strong performance in our Commercial segment and in the capital management areas of the company, which are offsetting higher than expected medical costs in the Senior business. During the quarter, we continued to execute on our share repurchase and dividend programs while also reinvesting in our businesses. We are excited about the pending acquisition of CareMore Health Group, which is on target to close by year-end and is expected to enhance our future growth opportunities."

Sprint Nextel (S) beats by $0.09, reports revs in-line; gives subscriber outlook for 2011
Reports Q3 (Sep) loss of $0.10 per share, $0.09 better than the Capital IQ Consensus Estimate of ($0.19); revenues rose 2.2% year/year to $8.33 bln vs the $8.38 bln consensus. The company achieved its best total company wireless net subscriber additions in more than five years. The company added nearly 1.3 million total net wireless subscribers, primarily driven by 304,000 net postpaid additions for the Sprint brand, net prepaid additions of 485,000 and net wholesale and affiliate additions of 835,000.... Sprint Nextel expects net postpaid subscriber additions for the full year 2011 and to improve total net wireless subscriber additions in 2011, as compared to 2010. The company expects full year capital expenditures in 2011, excluding capitalized interest, to be approximately $3 billion. In addition, the company expects Free Cash Flow* between negative $200 million and positive $100 million for 2011.

Boeing (BA) beats by $0.35, reports revs in-line; guides FY11 EPS above consensus, revs in-line
Reports Q3 (Sep) earnings of $1.46 per share, $0.35 better than the Capital IQ Consensus Estimate of $1.11; revenues rose 4.5% year/year to $17.73 bln vs the $17.69 bln consensus. Co issues guidance for FY11, raises EPS guidance to $4.30-4.40 vs. $4.27 Capital IQ Consensus Estimate; sees FY11 revs of $68-70 bln vs. $68.81 bln Capital IQ Consensus Estimate. "Strong operational performance drove double-digit margins in both of our major businesses and produced an outstanding quarter," said Boeing chairman, president and chief executive officer, Jim McNerney. "We also strengthened our foundation for accelerated growth by completing development and certification of the 787-8 Dreamliner and 747-8 Freighter, launching the new 737 MAX, and continuing our disciplined ramp up in commercial airplane production rates. Our improved outlook for earnings reflects confidence in our market positions, and our team's relentless focus on productivity and disciplined execution."

Lockheed Martin (LMT) beats by $0.29, beats on revs
Reports Q3 (Sep) earnings of $2.10 per share, $0.29 better than the Capital IQ Consensus Estimate of $1.81; revenues rose 6.8% year/year to $12.12 bln vs the $11.74 bln consensus.

The Corporation's preliminary outlook for 2012 is premised on the U.S. Government's timely approval of 2012 defense budget legislation at a level consistent with the President's proposed 2012 defense budget as well as continued support and funding of the Corporation's programs. If this occurs, the Corporation expects 2012 net sales to be flattish as compared to 2011 levels, and that consolidated 2012 segment operating profit margin will remain at approximately 11 percent.

In addition, the continued decline in discount rates used to measure pension liabilities at year-end could impact 2012 earnings. If one were to assume a 4.5 percent discount rate at year-end 2011 and the actual investment return for 2011 was 5.0 percent, the effort to harmonize the timing of recovery of pension expense under government cost accounting standards (CAS) with pension funding requirements is not in effect until after 2012, and the expected long-term rate of return on plan assets is potentially reduced from 8.5 percent to 8.0 percent, the Corporation would expect that its 2012 non-cash FAS/CAS pension expense adjustment could be comparable to the 2011 adjustment of approximately $925 million. This estimate for the 2012 FAS/CAS pension adjustment is significantly higher than the Corporation's previous expectations due to the impact of changes in economic factors from those used at year-end 2010 and a delay in the CAS harmonization beyond 2012. The Corporation will not finalize its postretirement benefit plan assumptions, or determine the actual return on plan assets, until its Dec. 31, 2011 measure.

General Dynamics (GD) beats by $0.03, misses on revs
Reports Q3 (Sep) earnings of $1.80 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $1.77; revenues fell 2.0% year/year to $7.85 bln vs the $8.32 bln consensus. Co-wide operating margins in the quarter grew to 12.7 percent, an increase of 60 bps over third-quarter 2010. The growth in operating margins was driven by improvement in the Information Systems and Technology and Marine Systems groups. Funded backlog grew in three of the company's four business groups, increasing by 3.7% in third-quarter 2011 to $45.9 billion. Total backlog, which includes both funded and unfunded orders, grew by 2.5 percent in the quarter, to $58.5 billion. In addition to the total backlog, the company's estimated potential contract value grew by 28.7% over the end of the second quarter, largely on the strength of a $5.7 billion increase in the Information Systems and Technology group. Estimated potential contract value is management's estimate of the ultimate value of unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options.

• After market close

Visa (V) beats by $0.02, reports revs in-line; reaffirms FY12 guidance; adds $1 bln to share buyback
Reports Q4 (Sep) earnings of $1.27 per share, $0.02 better than the Capital IQ Consensus Estimate of $1.25; revenues rose 12.6% year/year to $2.38 bln vs the $2.39 bln consensus. Co reaffirms its financial outlook for the following metrics through 2012: Annual net revenue growth: high single to low double digit range; and Adjusted annual diluted class A common stock earnings per share growth: mid to high teens range; with client incentives as a percent of gross revenues: 17% to 18% range; annual operating margin: ~60%. Payments volume growth, on a constant dollar basis, for the three months ended June 30, 2011, on which fiscal fourth quarter service revenue is recognized, was a positive 14% over the prior year at $941 billion. Payments volume growth, on a constant dollar basis, for the three months ended Sept 30, 2011, was a positive 13% over the prior year at $970 billion. Cross border volume growth, on a constant dollar basis, was a positive 15% for the three months ended Sept 30, 2011. Total processed transactions, which represent transactions processed by VisaNet, for the three months ended September 30, 2011, were 13 billion, a positive 9% increase over the prior year. During the three months ended September 30, 2011, the co repurchased ~5.2 million class A common shares, at an average price of $80.87 per share, for a total cost of $423 million. Co announces that its Board of Directors has authorized a $1 billion increase to its previously announced $1 billion share repurchase program. The authorization will be in place through July 20, 2012, and is subject to further change at the discretion of the Board.

McDermott (MDR) sees Q3 revs of $870-880 mln vs. $896.6 mln Capital IQ Consensus Estimates; sees EPS of $0.03-0.05 vs. $0.30 consensus
McDermott has not traditionally provided, and does not expect to provide, specific earnings guidance, since its financial results can and do vary substantially quarter-to-quarter and year-to-year. However, in an effort to assist the financial community, the co is sharing its preliminary outlook for 2012. Based upon current contracts in backlog, combined with an evaluation of the bids outstanding, co currently believes that attaining full-year 2012 revenues that are essentially equal to expected full-year 2011 revenues is achievable, but will be dependent upon, among other things, which bids are awarded to the co and the timing of the associated work. While the Co's long-term operating margin target range remains unchanged, co currently expects operating margins for 2012 to be in a range of 7-10%. This results from the Co's expectation for next year of substantially fewer marine barge workdays and a lower level of fabrication manhours in one segment, as compared to 2011. With lower expected asset utilization as compared to 2011, the Co currently expects to incur an increased level of costs in 2012 which will not be allocated to projects, resulting in lower consolidated operating income margins.

IN OTHER NEWS ...

• European Banking Authority: $106 bln euros needed to strengthen EU banks

• Euro summit concludes with little new information; uncertainty of event removed but headline risk likely to remain elevated -Update-

Briefing.com noted in this morning's Floor Talk comment that the bid in the market preceded an EU Summit for which expectations had been substantially reduced. Now that we've gotten the draft statement that emerged from that summit, along with a move to highs in the stock market, it's fair to say that expectations were in fact, very low.

The draft EU statement has confirmed a few things, but left many details until later dates. The factors that were confirmed were widely anticipated as well, including the following:

• The risk insurance and SPV dual leverage model will be put into place.
• The bailout will be leveraged 'several fold'.
• Further enhancements to EFSF are possible with cooperation from IMF.
The things left hanging include:

• Italy's economic plans (to be presented 11/15 now)
• The magnitude of Greek debt haircuts
• Bank recap plans (which can't be finalized until Greek haircuts are agreed to)
• Amount of EFSF leverage (rumored to be around 4x a 250-275 bln euro base)
While nothing substantial came out of today's highly anticipated summit, outside of what was already discussed, the big, uncertain volatility event of the summit has been removed from the horizon, which is a positive for stocks.

With the EU summit "event" now in the past, the next event for U.S. market participants to focus on is tomorrow's initial Q3 GDP reading, which is expected to come in at a 2.3% annualized growth rate.

Finally, with nothing definitive out of Europe, headline risk is likely remain elevated over the near term.

• Northrop Grumman receives $119.7 mln contract - Dept. of Defense
Northrup Grumman Systems, Northrop Grumman Information Systems, Herndon, Va., is being awarded an $119,715,682 cost-plus-incentive-fee, firm-fixed-price contract for the design, development, test, and deployment of Increment 10.2, modernization of the Air and Space Operations Center Weapon System. Increment 10.2 is intended to bring net-centric capabilities to the Geographic Air and Space Operations Center Weapons Systems, thereby allowing data to flow seamlessly across various platforms and process workflows rather than being locked in separate information technology system "silos" to be accessed and retransmitted by humans, as is the process today. Increment 10.2 capabilities will be fielded to the Geographic Air and Space Operations Centers; a help desk at Langley Air Force Base, Va.; and the Formal Training Unit at Hurlburt Field, Fla. In addition, the modernization contractor will be responsible for maintaining interoperability and sustainment of the Air and Space Operations Center Weapon System baseline, to include site-specific tailoring. The primary location of performance is Northrup Grumman Systems Corporation, Herndon, Va. Electronic Systems Center (ESC/HSGK), Hanscom Air Force Base, Mass., is the contracting activity (FA8707-12-C-0002).


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TECHNICAL UPDATE - Wednesday 26 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,869.04 +162.42 (+1.39%)
Volume: 183,733,346 from 161,449,080 the previous day
Range: 11,694.36 – 11,891.21

http://img802.imageshack.us/img802/9719/dowc.jpg (http://imageshack.us/photo/my-images/802/dowc.jpg/)

After three sessions to the upside in extraordinary fashion, the Stall was expected. DOW stayed above the 10,700 level and was supported by its 100DSMA while NASDAQ broke below its 200DSMA and SPX fell below its 100DSMA. Support at the current levels (10,700, 2,635 and 1,230) will be crucial if the benchmarks are to maintain this upward momentum on Wednesday and into the close of the month.

Back up again. NASDAQ wears a Hammer implying upside in the next session while DOW and SPX have counter-attacking patterns which also imply more upside in the coming session. DOW will make a third attempt at 11,900 after two consecutive rejections while NASDAQ and SPX will have their work cut out for them at 2,675 - 2,700 and 1,255 - 1,260 respectively.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,650.67 +12.25 (+0.46%)
Volume: 557,449,364 from 466,852,158 the previous day
Range: 2,598.74 – 2,666.29

S&P 500 INDEX (SPX: CBOE)
1,242.00 +12.95 (+1.05%)
Volume: 892,603 from 774,021 the previous day
Range: 1,221.06 – 1,246.28


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MARKET INTERNALS - Wednesday 26 October, 2011 AMC

NYSE :
Lower than avg volume @ 1110 mln, vs. 1131 mln
Advancers outpaced Decliners (adv/dec): 2427/595
New highs outpaced new lows (hi/lo): 53/17

NASDAQ :
Higher than avg volume @ 2060 mln, vs. 1988 mln
Advancers outpaced Decliners (adv/dec): 1854/691
New highs outpaced new lows (hi/lo): 35/39


Decliners outpaced Advancers by an average 4.55 to 1 on lower average volumes (-12.15%) on Tuesday (avg -2.00%).

Just like that, the VIX scoots back up above 31 again. The only thing that the bears were missing to complete the rout was volumes. Leadership to the downside were the usual suspects in Financials, Materials and Industrials. As cautious as I have been, I am not entirely convinced that the bears are returning now.

Advancers outpaced Decliners by an average 3.33 to 1 on higher average volumes (+1.63%) on Wednesday (avg +0.97%).

A Shooting Star on the VIX implies that fear is due to come down after closing below 30.00 again. The broader market's turn around was very impressive. The bears had ample opportunity to take the market down further but held back and never committed to get into the game. The bulls firmly asserted their dominance thereafter.

http://img339.imageshack.us/img339/3118/intx.jpg (http://imageshack.us/photo/my-images/339/intx.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, silver end higher for fourth consecutive session on flight to safety

The rally in precious metals continued into its fourth consecutive session. Gold futures gained 1.3% to end at $1723.60 per ounce, while silver futures closed higher by 1.9% to end at $33.65 per ounce. The flight to safety is back on for the precious metals (evidenced by today's strength in the dollar) as uncertainty reigns over what is next to come in the euro zone. Both metals traded to fresh ~1 month highs today as well. Dec copper gained 7 cents to close at $3.49.

Bearish inventory data, concerns about the euro zone, and profit taking from its recent rally to back above $90 all pressured crude oil prices, which ended lower by 3.2 % at $90.20 per barrel. Natural gas futures ended lower by 7 cents at $3.59 per MMBtu. Nov heating oil ended lower by 3 cents at $3.02, while Nov RBOB gasoline ended down 5 cents at $2.63.

Corn settled 13 cents lower at $6.38/bu, wheat fell 17 cents to end at $6.20, soybeans were 15 cents lower at $12.11, ethanol fell 1 cent to close at $2.59, while sugar was up .0.26% at $0.26.

Commodities AMC on Wednesday 26 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 90.20 -2.97 (-3.19%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,723.50 ++23.10 (+1.36%)

Treasuries finished at their worst levels of the session as recycled news that China was going to help fund the EFSF dropped maturities to their worst levels of the session. Early selling in the complex told hold following this morning’s better than expected data, but a solid $35 bln 5-yr note auction caused maturities to climb back towards the flat line before the headlines about China brought about more selling. The $35 bln 5-yr note auction drew 1.055% and saw a sound 2.90x bid/cover as the dollar demand of $101.5 bln was the fourth strongest over the past year. Losses were most serve in the long bond as heavy selling dropped the 30-yr more than 1.5% by the end of the cash session. The late day selling in the complex ran the 10-yr yield back up to 2.20% as it now sits at the midpoint of important support of 2.10% and important resistance near 2.30%. Selling swung the yield curve steeper as the 2-10-yr spread widened to 190.5 bps.

Treasury Yields AMC on Wednesday 26 October, 2011:
• 2 Year Note 0.28% +0.02
• 5 Year Note 1.09% +0.08
• 10 Year Note 2.23% +0.09
• 30 Year Bond 3.22% +0.09
2/30 Spread : 294bps ( +7 ) ... 2/10 Spread : 195bps ( +7 )


OOFF! That was like a punch right in the belly to take the wind out of you. After working its ass off to climb its yields up over the last 6 sessions, all it takes is one hit to deflate the curve and send yields down to near double-under par again. The 5yr yield is now only 1bps from being twice under par again.

This thing can drive you nuts, can it? One day down, one day up ... I don't know if its the knee jerking EU news or the good earnings that is driving the bond traders. But one thing is certain, even the usually rock steady bond traders are still nervous. And it looks like Gold and Silver is doing its seasonal thing again and just like last year, Silver is providing the better percentage gain at +10% vs +7% for gold in the last four sessions.


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PREVIEW FOR THURSDAY 27 OCTOBER, 2011

Thursday’s data is the most anticipated of the week as initial and continuing claims will accompany the first look at Q3 GDP (8:30) with that data being followed by pending home sales (10). The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities through its Permanent Open Market Operations. Treasury will auction $29 bln 7-yr notes.

Earnings Highlights
BMO: DDD, MO, AVP, ABX, CELG, CCE, CL, DOW, XOM, BEN, IMAX, IP, LAZ, LM, MJN, MSI, OMX, POT, PCP, PG, RTN, RCL, SIX, TWC, LCC, WM and ZMH.
AMC: AMD, BIDU, CELL, CSTR, DECK, DRIV, ERTS, EXPE, GILD, IMGN, KLAC, NTGR, NUVA, STMP, VAR, VRSN, and VPRT.

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am GDP-Adv.
08:30 am GDP Deflator
10:00 am Pending Home Sales
10:30 am Natural Gas Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- FSX Investor Conference
- TD Ameritrade Institutional 2011 Fall Regional Conference
- Dynavax Analyst and Investor Day


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SUMMARY

What a difference a day makes ... Did I speak too soon? Or is this a case of a typical day in the market during earnings season?

Two of my favorite companies are on the line today; RTN and POT. After yesterday's stellar performance from BA, GD, LMT and BEAV, I am expecting RTN to blow the roof off its earnings. POT then become the first in a series of fertilizer companies to toe the line which should give me a good idea of how they will fair this winter. Then of course, we have that major game changer BMO ... the GDP report. My question is: can it get any worse?

Direction for Thursday 27 October, 2011; ∆ Up

2011 Daily Directional Accuracy: 115/193 (59.58%)

Conrad
10-28-2011, 04:18 AM
U.S. MARKETS - Thursday 27 October, 2011 AMC

http://img838.imageshack.us/img838/5912/dexsk.jpg (http://imageshack.us/photo/my-images/838/dexsk.jpg/)

Two of my favorite companies are on the line today; RTN and POT. After yesterday's stellar performance from BA, GD, LMT and BEAV, I am expecting RTN to blow the roof off its earnings. POT then become the first in a series of fertilizer companies to toe the line which should give me a good idea of how they will fair this winter. Then of course, we have that major game changer BMO ... the GDP report. My question is: can it get any worse?

Direction for Thursday 27 October, 2011; ∆ Up

DOW makes its best ever monthly gain in history! S&P500 made its best monthly gain since 1987. GDP avoided another contraction and econ data was largely encouraging. Earnings continue to impress although guidance was a rare commodity. This was truly an outstanding day and I am so glad I totally reduced my hedges late last week and early this week. This October has turned into one of the worst Bear Killers in history.


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MARKET SUMMARY - Thursday 27 October, 2011


BRIEFING.COM - Thursday 27 October, 2011 AMC
Daily Sector Wrap: Rally On

Stocks staged their best single-session performance in more than two weeks on strong volume this session. That has helped the S&P 500 move closer to its fourth straight weekly gain and best monthly performance in more than 20 years. Amid the action the Volatility Index, frequently labeled the Fear Gauge, dove to its lowest level in more than two months. Since the start of the month it is down more than 40%.

Buying today was primarily driven by news that the European Union plans to improving financial conditions in their continent by increasing the eurozone bailout fund to about $1.4 trillion, recapitalizing banks, and agreeing to cut Greece's debt obligations by 50%. The announcement removes an element of uncertainty related the financial troubles that have troubled the continent for so long.

Bolstered by the plan, the euro ripped higher in one of its best one-day performances of the year. As of the close of trade, it was up 2.3% to $1.419, setting a multi-week high on its way. The yen also gained ground against the greenback, too, even though Japan's central bank recently reduced its forecast for the country's economy and added 5 trillion yen to an asset purchase program that now stands at 55 trillion yen. By session's end the yen was up 0.3% to 75.96 yen per dollar.

The dollar didn't even benefit from an advance reading that showed the U.S. economy expanded by 2.5% during the third quarter, exceeding the 2.3% growth rate that had been broadly expected to follow the 1.3% increase recorded for the prior quarter.

Initial jobless claims for the week ended October 22 totaled 402,000, just as had been expected among economists polled by Briefing.com. The latest weekly tally is hardly changed from the 404,000 initial claims filed during the prior week.

Pending home sales for September made up the only other item on the economic calendar. They proved disappointing because of a 4.6%, which was worse than the 0.9% decline that had been expected to follow the 1.2% downturn endured during the prior month.

Although earnings haven't garnered a great deal of attention amid all of the turmoil and uncertainty that has surrounded the eurozone for so long, but market participants were dealt a big batch of reports. The majority of them exceeded expectations. Visa (V 94.40, +2.38), Akamai Tech (AKAM 27.45, +3.67), Bristol-Meyers Squibb (BMY 32.99, +0.48), and Colgate-Palmolive (CL 91.33, +0.79) all bested predictions for the bottom line. Procter & Gamble (PG 65.26, +0.31) and Exxon Mobil (XOM 81.88, +0.81) both matched the consensus. One of the few issues that failed to benefit from the broad market's bounce, Avon Products (AVP 18.81, -4.20) dropped precipitously in response to an earnings miss and news that it has received a subpoena from the SEC.

Sector Leaders/Laggards for Thursday 27 October, 2011 AMC
Leading Sectors: Financials +6.2%, Materials +5.3%, Industrials +4.4%, Energy +3.9%, Tech +3.1%, Consumer Discretionary +2.7%, Telecom +2.5%, Health Care +2.2%, Utilities +2.1%, Consumer Staples +1.3%
Leading Industries/ETFs : solar, TAN +13.7%, Steel- SLX +9.1%, Financials- KCE +8.4%, Broker- IAI +8.0%, Alternative energy- PBW +8.0%, Coal- KOL +7.0%, oil & gas services- XOP +6.8%, OIH +6.5%, Financials XLF +6.0%, Copper- JJC +5.8%.

Lagging Sectors: None.
Lagging Industries/ETFs : Vix- VXX -13.3%, Tresauries- TLT -3.4%, Dollar index- UUP -1.7%.

Other Market Moving Factors:
• EU announces plan aimed at improving financial conditions in region
• GDP increases more than expected in third quarter
• No surprises to weekly initial jobless claims count
• Earnings continue to generally exceed expectations

Companies trading higher in after hours in reaction to earnings: MIPS +7.3%, BIDU +6.8%, RATE +6.4%, NCR +4.5%, QTM +4.3%, LVS +3.7%, DNB +3.7%, CLD +3.2%, DECK +2.9%, CERN +1.9%, CROX +0.5%.

Companies trading lower in after hours in reaction to earnings: NANO -14.0%, CSTR -10.1%, QLIK -9.6%, AMKR -8.9%, DRIV -8.7%, LEG -5.8%, ERTS -2.9%, KLAC -1.7%.


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ECONOMIC COMMENTARY - Thursday 27 October, 2011

• Bank of Japan leaves target rate unchanged
Increases asset purchasing program by JPY5 trln to JPY55 trln
For details of this release, click here (http://www.boj.or.jp/en/announcements/release_2011/k111027a.pdf)

- BOJ releases Semi-Annual Report; cuts FY11/12 to +0.3% vs +0.6% prior

• EU outlines plans for debt crisis; 50% Greek write down
EFSF to be $1.4 trln; Capital requirements of 9%
Click here (http://www.bloomberg.com/news/2011-10-27/europe-leaders-set-50-greek-writedown-1-4-trillion-in-debt-crisis-fight.html) for Bloomberg.com story

• U.S. Economic Data

- Q3 GDP- Advanced +2.5% vs +2.3%; Prior +1.3%
- Q3 GDP Deflator +2.5% vs +2.5%; Prior +2.5%
- Initial Claims 402K vs 402K; Prior revised to 404K from 403K
- Continuing Claims falls to 3.645 mln from 3.741 mln
- September Pending Home Sales M/M -4.6% vs -0.9%; Prior -1.2%

Q3 GDP Increases By Its Fastest Rate in a Year
According to the advance report, GDP increased 2.5% in the third quarter after increasing 1.3% in Q2 2011. That was the biggest increase since Q3 2010. The Briefing.com consensus expected GDP to increase 2.3%. In all, the GDP report was relatively strong and there were few surprises. The data clearly show that the U.S. is not in a recession and that the likelihood of entering one in the next few months is low. Every sector, with the exception of changes in private inventories, was in the black. After subtracting out the inventory slowdown, final sales of real GDP increased 3.6% in the third quarter. That was two percentage points greater than the final sales increase in Q2 2011 and the largest increase since Q4 2010. Personal consumption expenditures increased 2.4% on healthy growth in durable (+4.1%) and services (+3.0%) demand. Nonresidential investment increased 16.3% as nonresidential structures investment increased 13.3% and equipment and software spending increased 17.4%. Residential construction was up 2.4% and posted its first consecutive increase since the third and fourth quarters in 2005. Exports increased by 4.0% while imports increased by 1.9%. Government spending was flat as a 2.0% increase in federal spending completely offset a 1.3% decline in state and local expenditures.

Initial Claims Continue to Trend Sideways, Stay Within Our "Recovery Zone"
The initial claims level declined slightly from an upwardly revised 404,000 (from 403,000) for the week ending October 15 to 402,000 for the week ending October 22. That was exactly what the Briefing.com consensus expected. There were no special factors influencing the initial claims data. For the past five weeks, the initial claims level has remained below the upper bound (410,000) of our "Recovery Zone." At that level, nonfarm payroll growth in excess of the 100,000 needed to support normal labor force growth is expected. However, claims have not materially improved during that time as the level has trended almost perfectly sideways. The continuing claims level declined from an upwardly revised 3.741 mln (from 3.719 mln) for the week ending October 8 to 3.645 mln for the week ending October 15. That is the lowest number of continuing claims since September 2008. The consensus expected continuing claims to fall to 3.700 mln.

• Natural Gas Inventory Data

Natural gas inventory showed a build of 92 bcf vs expectations for a build of 88 bcf.
Working gas in storage was 3,716 Bcf as of Friday, October 21, 2011, according to EIA estimates. This represents a net increase of 92 Bcf from the previous week. Stocks were 28 Bcf less than last year at this time and 158 Bcf above the 5-year average of 3,558 Bcf. In the East Region, stocks were 25 Bcf above the 5-year average following net injections of 44 Bcf. Stocks in the Producing Region were 114 Bcf above the 5-year average of 1,067 Bcf after a net injection of 41 Bcf. Stocks in the West Region were 19 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,716 Bcf, total working gas is within the 5-year historical range.

• Asian Markets Close; Nikkei +2.0%, Hang Seng +3.3%, Shanghai +0.4%, Sensex CLOSED
It was a sea of green across Asia as investors cheered the results of the EU Summit. The Bank of Japan announced it kept its benchmark interest rate between zero and 0.1% and has expanded its asset purchase program to JPY 55 trl from JPY 50 trl in an 8-1 vote. The actions are being viewed as a disappointment as many were expecting the central bank to launch a bazooka in an effort to combat the strong yen. Japanese retail sales were out overnight and showed a 1.2% YoY decline (0.0% YoY expected). In an expected move, the Reserve Bank of New Zealand held its benchmark interest rate unchanged at 2.50%. South Korean GDP was unchanged at 3.4% while consumer sentiment ticked up to 100 (99 previous). Looking at the currencies...USDCNY strengthened to 6.3600 while USDJPY is weaker at 75.73.

In Japan, the Nikkei closed +2.0% as financials surged on the European deal. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group both rallied more than 5.0%. Meanwhile, a short squeeze in shares of Olympus sent the embattled camera maker soaring by 23%.

In Hong Kong, the Hang Seng finished +3.3% as financials and those with large exposure to Europe were the best performers. ICBC rallied 7.7% to lead financials higher amid speculation Beijing will ease its policy to provide liquidity to the system while rival China Construction Bank added 4.6%. Agricultural Bank of China gained 6.6% after reporting a 40% rise in Q3 profits. Retailer Esprit surged 6.8% because of its heavy exposure to Europe.

In China, the Shanghai Composite settled +0.4% as financials led the way. Agricultural Bank of China rallied 1.1% following its earnings while China Citic Bank gained 0.9% after announcing Q3 profits rose 41%.

In India, the Sensex was closed for Diwali Balipratipada.

• European Markets Closing Prices
UK's FTSE: + 2.9%
Germany's DAX: + 5.4%
France's CAC: + 6.3%
Spain's IBEX: + 5.0%
Portugal's PSI: + 2.6%
Italy's MIB Index: + 5.5%
Irish Ovrl Index: + 3.5%
Greece FTSE/ASE 20: + 5.2%

EARNINGS CALL

• Before market open

Royal Dutch Shell (RDS.A) reports Q3 results
Reports Q3 2011 CCS EPS per ADS of $1.12 and may not compare to $1.13 Cap IQ consensus; revs of $123.4 bln vs $110.1 bln Cap IQ consensus. Liquids and natural gas production for the third quarter 2011 was 3,012 thousand boe/d, 2% lower than in the third quarter 2010. Production for the third quarter 2011 excluding the impact of divestments of some 100 thousand boe/d was 2% higher than in the same quarter last year. New field start-ups and the continuing ramp-up of fields contributed some 270 thousand boe/d to production in the third quarter 2011, which more than offset the impact of field declines. LNG sales volumes of 4.76 mln tonnes in the third quarter 2011 were 12% higher than in the same quarter a year ago. Oil Products sales volumes for the third quarter 2011 were in line with the third quarter 2010. Excluding the impact of divestments and the effects of the formation of the Ra?zen joint venture, of some 110 thousand b/d, sales volumes were 2% higher than in the same period last year. Chemical product sales volumes in the third quarter 2011 decreased by 9% compared with the third quarter 2010. Oil Products refinery availability in the third quarter 2011 was 94%, compared with 93% in the third quarter 2010. Chemicals manufacturing plant availability was 90%, compared with 94% in the same period last year.

Potash (POT) reports EPS in-line, beats on revs; reaffirms FY11 EPS guidance
Reports Q3 (Sep) earnings of $0.94 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.94; revenues rose 47.4% year/year to $2.32 bln vs the $2.17 bln consensus. Co reaffirms guidance for FY11, sees EPS of $3.40-3.80 vs. $3.74 Capital IQ Consensus Estimate. In this environment, we now estimate our full-year 2011 potash segment gross margin will be in the range of $2.8-$3.1 billion. For the fourth quarter, we anticipate a larger allocation of sales to markets for standard product compared to typically higher-netback granular markets. Total shipments for 2011 are expected to approximate 9.5-9.7 million tonnes. Our ability to reach the top end of the previous sales guidance range has been impacted by weather-related downtime requirements at our Patience Lake solution mine as well as limited additional capability from our Cory operation as the ramping-up of our new red product mill continues. We expect per-tonne cost of goods sold for the fourth quarter will be slightly lower than in the third quarter but still higher than normal because of previously indicated maintenance-related downtime at Rocanville (four weeks) and expansion-related downtime at Allan (six weeks). We expect our combined phosphate and nitrogen gross margin for full-year 2011 to be in the range of $1.4-$1.7 billion.

Raytheon (RTN) beats by $0.10, misses on revs; raises the low end of FY11 EPS guidance, lowers revs guidance
Reports Q3 (Sep) earnings of $1.43 per share, $0.10 better than the Capital IQ Consensus Estimate of $1.33; revenues fell 2.2% year/year to $6.13 bln vs the $6.38 bln consensus. Co issues mixed guidance for FY11, the co raises the low end of their EPS guidance to $5.55-5.65 from $5.50-5.65 vs. $5.05 Capital IQ Consensus Estimate; lowers FY11 revs to $25-25.3 bln down from $25.5-25.9 bln vs. $25.76 bln Capital IQ Consensus Estimate.

Procter & Gamble (PG) reports EPS in-line, beats on revs; guides Q2 EPS, revs below consensus; reaffirms FY12 EPS guidance, lowers FY12 revs, in-line
Reports Q1 (Sep) earnings of $1.03 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $1.03; revenues rose 8.9% year/year to $21.92 bln vs the $21.52 bln consensus. Co issues downside guidance for Q2, sees EPS of $1.05-1.11, excluding non-recurring items, vs. $1.16 Capital IQ Consensus Estimate; sees Q2 revs of +3-5% to ~$22.0-22.41 bln vs. $22.53 bln Capital IQ Consensus Estimate. Co issues guidance for FY12, reaffirms EPS of $4.17-4.33, excluding non-recurring items, vs. $4.21 Capital IQ Consensus Estimate; lowers FY12 revs growth to +3-6% to ~$85.0-87.5 bln from +5-9% YoY, vs. $86.76 bln Capital IQ Consensus Estimate.

Bristol-Myers (BMY) beats by $0.03, beats on revs; raises low end of FY11 EPS, in-line
Reports Q3 (Sep) earnings of $0.61 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.58; revenues rose 11.4% year/year to $5.34 bln vs the $5.29 bln consensus. Co issues in-line guidance for FY11, raises EPS to $2.25-2.30, excluding non-recurring items, from $2.20-2.30 vs. $2.28 Capital IQ Consensus Estimate. High-single-digit revenue growth. Gross margin as a percentage of net sales consistent with last year.

Celgene (CELG) beats by $0.07, beats on revs; raises FY11 EPS, revs above consensus
Reports Q3 (Sep) earnings of $1.02 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.95; revenues rose 37.4% year/year to $1.25 bln vs the $1.2 bln consensus. Co issues upside guidance for FY11, raises EPS to $3.78-3.80, excluding non-recurring items, from $3.45-3.55 vs. $3.62 Capital IQ Consensus Estimate; raisess FY11 revs to $4.8-4.85 bln from $4.6-4.7 bln vs. $4.7 bln Capital IQ Consensus Estimate.

Exxon Mobil (XOM) reports EPS in-line
Reports Q3 (Sep) earnings of $2.13 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $2.13. Upstream earnings were $8,394 million, up $2,927 million from the third quarter of 2010. On an oil-equivalent basis, production decreased 4% from the third quarter of 2010. Downstream earnings of $1,579 million were up $419 million from the third quarter of 2010. Refining margins increased earnings by $1 billion. Volume and mix effects increased earnings by $110 million, while all other items, mainly unfavorable foreign exchange impacts and lower gains on asset sales, decreased earnings by $710 million.

• After market close

Las Vegas Sands (LVS) beats by $0.03, beats on revs
Reports Q3 (Sep) earnings of $0.55 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.52; revenues rose 26.2% year/year to $2.41 bln vs the $2.34 bln consensus. "We set quarterly records for both net revenue and adjusted property EBITDA during the quarter. Strong revenue growth and margin expansion at Marina Bay Sands in Singapore and our portfolio of properties in Macau and the United States contributed to excellent financial performance overall. In Singapore, Marina Bay Sands produced a record $413.9 million of adjusted property EBITDA during the quarter and an EBITDA margin of 52.2%."

Advanced Micro (AMD) beats by $0.05, beats on revs; guides Q4 revs above consensus
Reports Q3 (Sep) earnings of $0.15 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.10; revenues rose 4.4% year/year to $1.69 bln vs the $1.65 bln consensus. Co issues upside guidance for Q4, sees Q4 revs +1-3% QoQ to ~$1.707-1.775 bln vs. $1.71 bln Capital IQ Consensus Estimate.

IN OTHER NEWS ...

• ISDA Statement on Greek Haircut
The determination of whether the Eurozone deal with regard to Greece is a credit event under CDS documentation will be made by ISDA's EMEA Determinations Committee when the proposal is formally signed, and if a market participant requests a ruling from the DC. Based on what we know it appears from preliminary news reports that the bond restructuring is voluntary and not binding on all bondholders. As such, it does not appear to be likely that the restructuring will trigger payments under existing CDS contracts. In addition, it is important to note that the restructuring proposal is not yet at the stage at which the ISDA Determinations Committee would be likely to accept a request to determine whether a credit event has occurred.
Click here (http://www2.isda.org/uploaded_files/tinymce/Update%20on%20Greek%20Q%20and%20A%2027%2010%2011.p df) for document.

• France cutting their GDP forecast for 2012 to 1% from 1.75%
See Reuters story here (http://www.reuters.com/article/2011/10/27/france-sarkozy-budget-idUSL5E7LR5JS20111027).


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TECHNICAL UPDATE - Thursday 27 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,208.55 +339.51 (+2.86%)
Volume: 251,641,960 from 183,733,346 the previous day
Range: 11,872.07 – 12,284.31

http://img163.imageshack.us/img163/6742/dowz.jpg (http://imageshack.us/photo/my-images/163/dowz.jpg/)

Back up again. NASDAQ wears a Hammer implying upside in the next session while DOW and SPX have counter-attacking patterns which also imply more upside in the coming session. DOW will make a third attempt at 11,900 after two consecutive rejections while NASDAQ and SPX will have their work cut out for them at 2,675 - 2,700 and 1,255 - 1,260 respectively.

Forget about 11,900 ... DOW sliced right through 12K too in a 400 point session. NASDAQ managed an incredible 100 points while SPX claimed 50. It was only in the last half hour that the benchmarks gave back some of their gains as traders booked profits ahead of some key data on Friday. The increase in volumes were astounding and the market internals were lop-sided for the whole session.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,738.63 +87.96 (+3.32%)
Volume: 714,501,208 from 557,449,364 the previous day
Range: 2,694.27 – 2,753.37

S&P 500 INDEX (SPX: CBOE)
1,284.59 +42.59 (+3.43%)
Volume: 1,060,954 from 892,603 the previous day
Range: 1,243.97 – 1,292.66


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MARKET INTERNALS - Thursday 27 October, 2011 AMC

NYSE :
Higher than avg volume @ 1430 mln, vs. 1140 mln
Advancers outpaced Decliners (adv/dec): 2689/393
New highs outpaced new lows (hi/lo): 177/7

NASDAQ :
Higher than avg volume @ 2729 mln, vs. 1995 mln
Advancers outpaced Decliners (adv/dec): 2202/437
New highs outpaced new lows (hi/lo): 111/25


Advancers outpaced Decliners by an average 3.33 to 1 on higher average volumes (+1.63%) on Wednesday (avg +0.97%).

A Shooting Star on the VIX implies that fear is due to come down after closing below 30.00 again. The broader market's turn around was very impressive. The bears had ample opportunity to take the market down further but held back and never committed to get into the game. The bulls firmly asserted their dominance thereafter.

Advancers outpaced Decliners by an average 5.89 to 1 on higher average volumes (+32.66%) on Thursday (avg +3.20%).

The VIX didn't dip ... it CAPITULATED! and fell more than 5 full points down to 24.70 before bounding back up at bit. You've gotta love the Shooting Star. This is what happens when the Bears stop playing as I noted yesterday - we get one of the most lop-sided sessions in history.

http://img9.imageshack.us/img9/9735/inthi.jpg (http://imageshack.us/photo/my-images/9/inthi.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, silver extend rally to fifth session; crude surges on European debt deal

Weakness in the dollar, coupled with uncertainty about the details of the European debt deal, helped precious metals rally for a fifth consecutive session. Gold ended higher by 1.4% at $1747.70 per ounce, while silver finished up 5.3% at $35.12 per ounce. The last minute deal reached in the euro zone left many questions about how the plan will play out and that helped gold and silver prices trade to fresh ~1 month highs. Dec copper ended up 19 cents at $3.69.

Natural gas ended lower by 0.3% at $3.76 per MMBtu. Futures sold off following this morning's slighty larger-than-expected inventory data. Natural gas did manage to rebound but were unable to hold onto gains to end just below the flat line. Crude oil ended higher by 4.1% to $93.96 per barrel. Futures rallied on weakness in the dollar and strength in equities following the EU debt deal. They ended just shy of session highs at $94.25. Nov heating oil ended higher by 8 cents at $3.10, while Nov RBOB gasoline gained 9 cents to finish at $2.71.

Commodities AMC on Thursday 27 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 93.96 +3.76 (+4.17%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,747.70 +24.20 (+1.40%)

A flight into equities on the developments out of Europe coupled with decent economic data and a poor 7-yr note auction weighed on maturities across the Treasury complex. Today's 7-yr note auction drew 1.791% and saw a 2.59x bid/cover (2.83x bid/cover) as indirect bidders took down just 33.9% (46.6% 12-auction average) of the offering. The dollar demand of $75.1 bln was tepid, coming in at the lowest since July 2009. The long bond saw heavy selling as it ended the day down more than four handles and with a loss of almost 4.0%. The large losses led to a jump of 22 bps in the 30-yr yield as it settled at 3.446%, seeing highest level since August 5. Similarly, today's selling in the 10-yr caused its yield to climb 19 bps to 2.395% as it finished at its highest level since August 8. Severe steepening of the yield curve saw the 2-10-yr spread widen to 208 bps.

Treasury Yields AMC on Thursday 27 October, 2011:
• 2 Year Note 0.31% +0.03
• 5 Year Note 1.20% +0.11
• 10 Year Note 2.42% +0.19
• 30 Year Bond 3.45% +0.23
2/30 Spread : 314bps ( +20 ) ... 2/10 Spread : 211bps ( +16 )


This thing can drive you nuts, can it? One day down, one day up ... I don't know if its the knee jerking EU news or the good earnings that is driving the bond traders. But one thing is certain, even the usually rock steady bond traders are still nervous. And it looks like Gold and Silver is doing its seasonal thing again and just like last year, Silver is providing the better percentage gain at +10% vs +7% for gold in the last four sessions.

Just like that, money flies out of Treasuries into the risk market and yields spike back up ... in a very healthy way! This puts the whole curve back up to just one-under par on yields.


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PREVIEW FOR FRIDAY 28 OCTOBER, 2011

Data wraps up for the week on Friday with personal income, personal spending, PCE Prices - Core, the Employment Cost Index (8:30), and Michigan Sentiment - Final (9:55). The Fed will look to sell $8.00-9.00 bln worth of 2013/2014 maturities as part of its ‘twist.'

Earnings Highlights
BMO: AXL, AGP, AON, ACI, B, BIIB, COL, CVX, D, GT, LEA, LPNT, NEM, MRK, WY, and WHR.

Economic Events
08:30 am Personal Income
08:30 am Personal Spending
08:30 am PCE Prices - Core
08:30 am Employment Cost Index
09:55 am Michigan Sentiment - Final

Conferences and Shareholder/Analyst Meetings of Interest
- Metso Corporation Analyst Presentation
- FBN sponsored 1 on 1's in NYC with VP
- Italian Bond Auction


___________________________________________

SUMMARY

Wednesday's mid-day turn around is more proof that the bulls have taken the bears by the horns ... erm, ... by the b ... nevermind. The bulls have the lead. As the EU take their time to do I-don't-know-what (because it is obvious what needs to be done already), the US market will take their lead from earnings which continue to impress and surprise.

Expect some profit taking at the open on Friday. It promises to be a very volatile session early in the day till the 9:55 Mich Sentiment report. After that, it will surprise me if this market shows us more legs. I won't be expecting much and will be happy with an upside consolidation into the weekend.

The last three days of October are traditionally bullish with Halloween being more bullish than most. If Thursday was the first of those three days, you've gotta wonder if the next two can continue the run because only one word comes to my mind after a run like Thursday - Overcooked.

Direction for Friday 28 October, 2011; ∆ Up

2011 Daily Directional Accuracy: 116/194 (59.79%)

Conrad
10-31-2011, 05:47 AM
U.S. MARKET RECAP - Monday 24 October, 2011 to Friday 28 October, 2011 AMC
http://img684.imageshack.us/img684/1385/dexweek.jpg (http://imageshack.us/photo/my-images/684/dexweek.jpg/)


Looks like we might just get that bullish close for the year ... if the earnings keep coming in on the upside and if the EU get their act together ... Now that the market has made me eat my words, let's see if this rally has legs ... the last three days of October are traditionally bullish.

Third quarter growth is expected to return better than had been predicted at around 2.8% compared to 1.9% in September. Increases in auto sales are also seen as a sign of a rebound in process. This jacked up the consumer spending numbers but begs the question if this spending is sustainable given the high jobless rate and slow income growth. Manufacturing and production numbers have sustained decent levels suggesting that a bottom may have been reached ... Any downside could come from price hikes in commodities and more headline shenanigans out of the EU. But if earnings continue to flow in at this positive rate, I have little doubt that we may have turned the corner for a positive finish to the year ... but there stubbornly remains a little doubt.

Direction for the week Monday 24 October, 2011 to Friday 28 October, 2011; ∆ Up

Finally, a good break. The bulls did everything right this week to put the bears out of action. Friday's session removed more doubt about the bull's commitment to this rally but more significantly, the session confirmed for me that the bears are effectively out of the game now.


__________________________________________________ ________

Dow Jones Industrial Average - Friday 28 October, 2011 AMC
http://img528.imageshack.us/img528/2444/dexs.jpg (http://imageshack.us/photo/my-images/528/dexs.jpg/)


Expect some profit taking at the open on Friday. It promises to be a very volatile session early in the day till the 9:55 Mich Sentiment report. After that, it will surprise me if this market shows us more legs. I won't be expecting much and will be happy with an upside consolidation into the weekend.

Direction for Friday 28 October, 2011; ∆ Up

Bingo! Its nice to be back in sync! Now let's see if this rally really has what ti takes to make America a better place. After all, the market leads the economy, doesn't it? So maybe a good market will lead to a healthier America.


__________________________________________________ ________

MARKET SUMMARY - Friday 28 October, 2011


BRIEFING.COM - Friday 28 October, 2011
Daily Sector Wrap: Flat Finish for Friday

In contrast to the action of the first four sessions of the week, stocks spent Friday trading close to the neutral line for a flat finish.

Trade on Friday lacked excitement. Even with the weekend immediately around the corner, many market participants were compelled to take early rest. Their fatigue came after stocks staged four consecutive swings of 1% or more.

To be fair, though, the final session of the week didn't feature much news flow, or at least enough of the sort that would bring participants back in to the fold. Earnings were generally better than expected, as has been the case all week, but overall broad market participants appeared uninspired by them. That said, Merck (MRK 35.11, +0.80) made a strong move on the back of a better-than-expected report. Fellow blue chip Chevron (CVX 109.64, +0.67) had a quiet session, despite an upside earnings surprise of its own. Whirlpool (WHR 51.80, -8.67) tumbled in response to an earnings miss.

Sector Leaders/Laggards for Friday 28 October, 2011
Leading Sectors: Materials +0.7%, Energy +0.5%, Telecom +0.5%, Health Care +0.3%, Tech +0.3%.
Leading Industries/ETFs : Natural gas- UNG +3.9%, Internet- HHH +2.9%, Gold miners- GDX +2.3%, Alt. energy- PBW +2.1%, TAN +1.3%, Steel- SLX +1.9%, Coal- KOL +1.9%.Treasuries- TLT +1.1%.

Unchanged Sectors: Industrials (unch.).

Lagging Sectors: Financials -0.2%, Consumer Staples -0.2%, Utilities -0.6%, Consumer Discretionary -0.7%.
Lagging Industries/ETFs : Sugar- SGG -2.6%, Housing- XHB -2.4%, ITB -1.9%, RBOB gas futures- UGA -1.7%, Retail XRT -1.5%, Insurance KIE -1.4%, Wind energy- FAN -1.3%.

Other Market Moving Factors:
• Buyers take a break after week of whipsaw trade
• Earnings remain strong overall
• Personal spending increases in line with expectations, but income increases by less than forecasted


BRIEFING.COM - Friday 28 October, 2011
After-Hours Report: Weekly Wrap

Economic data featured a 0.1% increase in personal income during September, slightly less than the Briefing.com consensus forecast of 0.3% growth. Personal spending increased by 0.6%, just as had been expected. These numbers were already incorporated into the advance reading on third quarter GDP, which was released yesterday.

On Thursday, advance GDP data showed that the economy expanded at a 2.5% clip during the third quarter. That exceeded the 2.3% growth rate that had been broadly expected to follow the 1.3% increase in output posted in the prior quarter.

Another weekly initial jobless claims tally just above 400,000 was given little discussion, especially since most traders focused their attention on the European Union's (EU) plan aimed at improving the continent's precarious financial conditions. Although specifics weren't released, participants were pleased that the plan will increase the eurozone bailout fund to about $1.4 trillion, recapitalize banks, and cut Greece's debt obligations by 50%. The stock market spiked more than 3% on Thursday for its best single-session performance in more than two weeks, but financials fared even better by boasting a 6% gain as bank stocks benefited quelled concern about their presence in Europe.

Many investors had thought that they would have to wait a few more weeks for the plan, given that a meeting among members of the EU on Wednesday finished without any word related to the matter. Still, the belief that European leaders were committed to finding a solution helped bolster buying interest, such that the stock market gained more than 1%. That contrasted trade on Tuesday, when angst ahead of the meeting left the broad market to tumble 2% for its only loss of the week.

Trade in the first session of the week was broadly positive, resulting in a gain of more than 1% for the stock market. The advance took the S&P 500 back above the 1250 line for the first time in more than two months. Tech stocks, which collectively make up the largest sector by market weight, were some of the top performers, partly fueled by news that Oracle (ORCL 33.69, +0.03) acquired RightNow Tech (RNOW 43.10, -0.16) for a hefty premium over its prior session closing price.

Market participants return on Monday for one final session in October. The S&P 500 heads into that session riding four straight weekly gains and on pace for monthly gain of more than 13%, which would make for one of the stock market's best monthly performances on record.


http://img412.imageshack.us/img412/7672/dexsumm.jpg (http://imageshack.us/photo/my-images/412/dexsumm.jpg/)

This week's biggest % gainers/losers
The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

• This week's top 20 % gainers
Technology: STP (3.08 +53.37%), UIS (27.28 +46.65%), VIT (12.99 +45.41%), VDSI (8.95 +42.63%), OCZ (7.48 +41.4%), STX (16.39 +35.52%), FIO (33.93 +33.67%), NTCT (17.33 +33.31%)
Industrial Goods: MTW (11.96 +48.81%), TWIN (39.49 +48.09%), HOLI (8.93 +33.68%)
Healthcare: EXEL (7.6 +40.22%), HS (54.18 +37.08%), MOH (21.42 +36.71%)
Financial: EJ (8.94 +37.5%), PVTB (11.35 +34.33%)
Basic Materials: LNG (11.93 +77.03%), PDC (11.03 +36.03%), CWEI (70.21 +35.46%), FTK (7.66 +33.69%)

• This week's top 20 % losers
Technology: TQNT (5.53 -24.25%), PLCM (17.36 -22.68%), SXCI (46.54 -15.79%), ININ (27.91 -13.97%), PWER (4.91 -11.17%), NIHD (24.97 -11.1%), BMC (35.21 -10.18%)
Services: NFLX (84.14 -26.1%), RPXC (16 -18.54%), ATHN (53.43 -13.71%), DV (38.86 -12.28%), AMZN (217.32 -11.48%)
Industrial Goods: MDR (10.86 -20.04%)
Healthcare: HGSI (10.97 -25.04%), HGR (17.82 -13.77%), VRUS (70.16 -12.59%), ZLTQ (14.77 -9.62%)
Consumer Goods: AVP (18.87 -16.81%), FN (12.83 -16.61%)
Basic Materials: BRY (36.82 -12.66%)


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ECONOMIC COMMENTARY - Friday 28 October, 2011

• China MNI Oct Business Condition Survey 58.47 vs 59.84 in Sep

• Japan Economic Data

- Sep Jobless Rate 4.1% vs 4.3% in Aug
- Sep CPI (ex-fresh food) +0.2% vs +0.2% in Sep 2010
- Sep Industrial Production -4.0% vs +0.4% in Sep 2010
- Sep Vehicle Production -4.5% vs +1.8% in Sep 2010

• UK Oct Consumer Confidence Survey -32 vs -30 in Sep

• U.S. Economic Data

- September Personal Income +0.1% vs +0.3%
- September Personal Spending +0.6% vs +0.6%
- September PCE Prices- Core M/M 0.00% vs +0.1%
- September PCE Prices- Core Y/Y 1.6%
- Q3 Employment Index +0.3% vs +0.6%
- October Michigan Sentiment (final revision) 60.9 vs. 58.0 consensus; prior 57.5

Personal Income and Spending Strengthen in September
The data in the September personal income and spending report were already incorporated into the advance third quarter GDP release. If there were no revisions to July or August data, the GDP report already showed that income declined 0.2% and spending increased 1.2% in September. Minor downward revisions to July and August income data offset the decline in income recorded by the GDP report. Personal income actually increased 0.1% in September, slightly less than the Briefing.com consensus forecast of 0.3% growth. Strong upward revisions, especially in July (0.9% from 0.7%) cut into the expected increase in spending from the GDP report. Personal spending increased 0.6% in September, exactly what the consensus expected. There was nothing unusual in the spending data. Durable goods increased 2.2% in September after falling 1.1% in August. The gains were mostly in the auto sector. Nondurable goods consumption increased 1.1%. Services consumption slowed, increasing 0.2% in September after increasing 0.7% in July and 0.3% in August.

Employee Compensation Growth Slows As Benefit Spending Weakens
Employment costs increased 0.3% in Q3 2011 after increasing 0.7% in the second quarter. The Briefing.com consensus expected employment costs to increase 0.6%. Growth in benefits spending weakened substantially in the third quarter, increasing only 0.1% after surging 1.3% in the second quarter. Wages and salaries growth slowed slightly, increasing 0.3% in Q3 2011 after increasing 0.4% in the second quarter. Private industry compensation increased 0.4%. Slowdowns occurred in both wages and salaries (to 0.4% from 0.5%) and benefits (to 0.1% from 1.6%). Compensation growth was flat in the public sector. Wages and salaries contracted, falling 0.2% in the third quarter after increasing 0.4% in the second quarter. Benefit spending slowed from 0.5% in the second quarter to 0.3% in the third quarter.

Consumer Sentiment Moves Higher in October
The final reading of the October University of Michigan Consumer Sentiment Index came in at 60.9, above the 59.4 registered in September and the 57.5 seen in the preliminary reading. The Briefing.com consensus expected the index to be revised to 58.0. The move contrasted with the decline in the Confidence Board's Consumer Confidence level. That index fell from 46.4 in September to 39.8 in October, the lowest reading since March 2009. The gain in sentiment was most likely the result of the combination of strong equity gains in October and modestly lower gasoline prices. The expectations index was revised up from 47.0 in the preliminary October reading to 51.8. That is the strongest showing in expectations since July. The current conditions index was revised up from 73.8 to 75.1.

• Asian Markets Close: Nikkei +1.4%, Hang Seng +1.7%, Shanghai +1.6%, Sensex +3.0%
Asian markets extended their rally as investors cheered the developments out of the EU Summit. All of the region's major indices finished higher with China's Shanghai Composite tacking on another 1.7% to finish at its highest level in five weeks. Japanese data was mixed today with household spending falling 1.9% YoY (-3.4% YoY expected), Tokyo core CPI ticking down to -0.4% YoY (-0.4% YoY expected), and preliminary industrial production tumbling 4.0% MoM (-2.0% MoM expected). Meanwhile, South Korea's current account surplus fell to $2.35 bln ($2.71 bln previous). Looking at the currencies...USDCNY weakened to 6.3580 while USDJPY is weaker at 75.76.

In Japan, the Nikkei closed +1.4% as exporters gained despite the yen ending yesterday's session at a postwar high against the dollar. Honda Motor gained 4.4% and Sony added 3.6% to finish among the top performers in the index. Shares of embattled camera maker Olympus plunged 10% as word spread that it may be delisted due to falsification of records.

In Hong Kong, the Hang Seng finished +1.7% as financial names were among the best performers. Hong Kong Exchanges & Clearing climbed 7.2% while ICBC gained 2.0% after posting slightly better than expected earnings following yesterday's close.

In China, the Shanghai Composite settled +1.6% as real estate shares climbed on word that Beijing may announce a 20% cut on deposits necessary for bidding on residential property. Poly Real Estate Group and Gemdale added 4.4% and 4.9% respectively.

In India, the Sensex closed +3.0% as it played catch up following yesterday's holiday. Banking giant ICICI Bank surged 7.1% to lead the way higher as investors bid up shares ahead of Monday's earnings. Rivals State Bank of India and HDFC Bank both piggybacked the move with rallies of 2.3%.

• European Markets Closing Prices
UK's FTSE: -0.3%
Germany's DAX: + 0.1%
France's CAC: -0.6%
Spain's IBEX: -0.5%
Portugal's PSI: -0.8%
Italy's MIB Index: -1.8%
Irish Ovrl Index: -0.3%
Greece FTSE/ASE 20: + 5.2%

EARNINGS CALL

• Before market open

Chevron (CVX) beats by $0.50, beats on revs
Reports Q3 (Sep) earnings of $3.92 per share, $0.50 better than the Capital IQ Consensus Estimate of $3.42; sales and other operating rev rose 26.2% year/year to $61.26 bln vs the $58.79 bln consensus. Worldwide net oil-equivalent production was 2.60 million barrels per day in the third quarter 2011, down from 2.74 million barrels per day in the 2010 third quarter. Production increases from project ramp-ups in Canada, the United States and Brazil and new volumes stemming from the acquisition of Atlas Energy, Inc. were more than offset by maintenance-related downtime, normal field declines and an approximate 39,000 barrels per day negative effect of higher prices on volumes produced under cost-recovery and variable-royalty contract provisions. .S. downstream operations earned $704 million in the third quarter 2011, compared with $349 million a year earlier. Earnings mainly benefited from improved margins on refined product sales and lower operating expenses. Refinery crude-input of 897,000 barrels per day in the third quarter 2011 increased 17,000 barrels per day from the year-ago period. Refined product sales of 1.25 million barrels per day were down 91,000 barrels per day from the third quarter of 2010, mainly due to lower gas oil, kerosene and gasoline sales. Branded gasoline sales decreased 8 percent to 529,000 barrels per day due to weaker demand and previously completed exits from selected eastern U.S. retail markets.

Rockwell Collins (COL) reports EPS in-line, misses on revs; reaffirms FY12 EPS, revs guidance
Reports Q4 (Sep) earnings of $1.13 per share, in-line with the Capital IQ Consensus Estimate consensus of $1.13; revenues rose 2.0% year/year to $1.3 bln vs the $1.31 bln consensus. Sales related to aircraft original equipment manufacturers increased $37 million, or 16%, to $268 million driven by higher product deliveries for the Bombardier Global platform and increased sales of avionics to air transport OEMs resulting from higher aircraft production rates. Sales in the fourth quarter of 2011 were $779 million, a decrease of $19 million, or 2%, compared to the $798 million reported for the same period last year. Co reaffirms guidance for FY12, sees EPS of $4.40-4.60 vs. $4.51 Capital IQ Consensus Estimate; sees FY12 revs of $4.9-5.0 bln vs. $5.01 bln Capital IQ Consensus Estimate.

Merck (MRK) beats by $0.03, beats on revs; raises FY11 guidance
Reports Q3 (Sep) earnings of $0.94 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.91; revenues rose 8.1% year/year to $12.02 bln vs the $11.59 bln consensus. Co issues in-line guidance for FY11, raises EPS to $3.72-3.76, excluding non-recurring items, from $3.68-3.76 vs. $3.73 Capital IQ Consensus Estimate. Merck raises full year 2011 revenue guidance to grow in the mid-single digit percent range from a base of $46.0 billion in 2010, up from the low- to mid-single digit percent range, vs. the +3.5% consensus.


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TECHNICAL UPDATE - Friday 28 October, 2011 - AMC


Forget about 11,900 ... DOW sliced right through 12K too in a 400 point session. NASDAQ managed an incredible 100 points while SPX claimed 50. It was only in the last half hour that the benchmarks gave back some of their gains as traders booked profits ahead of some key data on Friday. The increase in volumes were astounding and the market internals were lop-sided for the whole session.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img585.imageshack.us/img585/7971/dowa.jpg (http://imageshack.us/photo/my-images/585/dowa.jpg/)
12,231.11 +22.56 (+0.18%)
Volume: 163,617,659 from 251,641,960 the previous day
Range: 12,164.24 – 12,251.92

DOW Stalled above 12,200, a very critical support level. If it can hold above that, it could become a launch-pad for the next leg up. On weekly candles, DOW has closed out five straight candles to the upside since the last week of September. Monthly candles are impressive - October has wiped out two months' losses incurred by September and August. Let's pray that Monday doesn't rally more than 180 points because that would turn DOW's monthly candles into a Three Line Strike which implies that November could resume the downtrend.
Resistance 2 : 12,360
Resistance 1 : 12,888
Support 1 : 12,200
Support 2 : 12,100

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img689.imageshack.us/img689/594/ndxb.jpg (http://imageshack.us/photo/my-images/689/ndxb.jpg/)
2,737.15 -1.48 (-0.05%)
Volume: 480,431,615 from 714,501,208 the previous day
Range: 2,723.03 – 2,742.27

NASDAQ's monthly candles show a Bullish Engulfing pattern which stands November in good stead. On daily candles, NASDAQ wears a Side-by-side White Lines implying upside on Monday.
Resistance 2 : 2,765
Resistance 1 : 2,750
Support 1 : 2,725
Support 2 : 2,700

S&P 500 INDEX (SPX: CBOE)
http://img696.imageshack.us/img696/4145/spxv.jpg (http://imageshack.us/photo/my-images/696/spxv.jpg/)
1,285.09 +0.50 (+0.04%)
Volume: 773,623 from 1,060,954 the previous day
Range: 1,277.01 – 1,287.08

SPX's DragonFly Doji may be suggesting more upside on Monday. On weekly candles, SPX has made four consecutive candles to the upside creating the possibility of a fifth candle reversal in the coming week ... as unlikely as it may seem, let's not write off the possibilities yet.
Resistance 2 : 1,305
Resistance 1 : 1,295
Support 1 : 1,260
Support 2 : 1,255


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MARKET INTERNALS - Friday 28 October, 2011

NYSE :
Lower than avg volume @ 1010 mln, vs. 1128 mln
Decliners outpaced Advancers (adv/dec): 1465/1531
New highs outpaced new lows (hi/lo): 177/7

NASDAQ :
Lower than avg volume @ Nasdaq 1780 mln, vs. 1993 mln
Decliners outpaced Advancers (adv/dec): 1124/1434
New highs outpaced new lows (hi/lo): 111/25


Advancers outpaced Decliners by an average 5.89 to 1 on higher average volumes (+32.66%) on Thursday (avg +3.20%).

The VIX didn't dip ... it CAPITULATED! and fell more than 5 full points down to 24.70 before bounding back up at bit. You've gotta love the Shooting Star. This is what happens when the Bears stop playing as I noted yesterday - we get one of the most lop-sided sessions in history.

Decliners outpaced Advancers by an average 1.14 to 1 on lower volumes (-10.61%) on Friday (avg +0.06%).

Not the most convincing session but given that the bears had ample opportunity to seize the initiative and never did, puts the control firmly in the bull's hands. New Lows finally got beaten down in overwhelming style for a flat day.

http://img836.imageshack.us/img836/3431/vixe.jpg (http://imageshack.us/photo/my-images/836/vixe.jpg/)

The VIX also fell to a new low, closing below 25 points for the first time since 3 August 2011. The VIX now wears a Bearish Engulfing pattern on dailies.

http://img191.imageshack.us/img191/2352/into.png (http://imageshack.us/photo/my-images/191/into.png/)


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COMMODITIES & BONDS - Summary for Friday 28 October, 2011
Gold, silver end near unchanged mark, but post sizeable weekly gains - from Briefing.com

It was a choppy and uneventful final session for the precious metals. Gold futures ended just below the flat line at $1747.20 per ounce while silver posted gains of 0.3% to finish at $35.29 per ounce. Both metals traded sideways right around the unchanged mark for the majority of the day. On the week, gold rallied for approximately $105 or 6.3%, while silver futures surged $3.65 or 11.5%. Dec copper closed up 1.2 cents at $3.70.

The same could be said for trade in crude oil futures, which posted a modest decline of 0.7% to close at $93.32 per barrel. On the week crude oil rallied for % and managed to trade to its best levels in close to three months at $94.65. Natural gas rallied for 4.1% to close at $3.92. Futures were aided by colder weather, coupled with possibility of snow in some places, blanketing major consuming portions of the country. Nov heating oil ended lower by 4 cents at $3.06 while Nov RBOB gasoline shed 6 cents to finish at $2.64.

Corn settled 5 cents lower at $6.56/bu, wheat fell 2 cents to end at $6.46, soybeans were 17 cents lower at $12.27, ethanol rose 1 cent to close at $2.64, while sugar was up 0.38% at $0.26.

Commodities AMC on Friday 28 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 93.32 -0.15 (-0.16%)
Natural Gas (NYMEX) December 11 ($US per mmbtu.) : 3.92 +0.159 (+4.22%)
Unleaded Gas (NYMEX) December 11 ($US per gal.) : 2.65 -0.0611 (-2.26%)

Gold (NYMEX) December 11 ($US per Troy oz.) : 1,747.20 +10.60 (+0.61%)
Silver (NYMEX) December 11 ($US per Troy oz.) : 35.29 +0.176 (+0.50%)
Copper (NYMEX) December 11 ($US per lb.) : 3.71 +0.002 (+0.05%)

Corn (CBT) December 11 (cents per bu.) : 655.00 +4.00 (+0.61%)
Soyabeans (CBT) January 11 (cents per bu.) : 1,226.00 -20.50 (-1.64%)
Wheat (CBT) December 11 (cents per bu.) : 644.50 -1.00 (-0.16%)

Cocoa (NYMEX) December 11 ($ per metric ton) : 2,774.00 +64.00 (+2.36%)
Coffee (NYMEX) December 11 (cents per pound) : 233.00 -93.50 (-28.64%)
Cotton (NYMEX) December 11 (cents per pound) : 103.87 +5.90 (+6.02%)
Sugar #11 (NYMEX) March 11 (cents per pound) : 26.93 -0.07 (-0.26%)

BONDS - Weekly Summary for Monday 24 October, 2011 to Friday 28 October, 2011
Week Ends with Solid Gains: 10-yr: +22/32..2.318%..USD/JPY: 75.76..EUR/USD: 1.4158

Treasuries moved lower this week as the complex was under heavy selling pressure on Thursday following the announcement of the plan to stem the European debt crisis. Thursday’s onslaught saw yields surge by as much as 22 bps at the back of the curve before Friday’s buying cut those losses in half. The selloff on Thursday resulted in longer dated yields climbing to levels not seen since early August. Yields at the back of the curve climbed 7 bps for the week with the 10-yr hitting 2.40% before finishing Friday’s session at 2.30%. The inability of the 10-yr yield to slide back below the 2.30% threshold in a timely manner will likely result in a climb as high as 2.90% as little overhead resistance will come into play until then. Shorter dated yields saw little change on the week with the 2- and 3-yr yields adding 1 bp to their respective 0.289% and 0.487%.

The yield curve swung steeper this week, climbing 9 bps to 201.5 bps. The spread widened to 211.5 bps on Thursday’s heavy selloff, but erased a good portion of that move on the heels of Friday’s rally.

Treasury Yields AMC on Friday 28 October, 2011:
• 2 Year Note 0.28% -0.03
• 5 Year Note 1.13% -0.07
• 10 Year Note 2.34% -0.08
• 30 Year Bond 3.36% -0.09
2/30 Spread : 308bps ( -6 ) ... 2/10 Spread : 206bps ( -5 )


Just like that, money flies out of Treasuries into the risk market and yields spike back up ... in a very healthy way! This puts the whole curve back up to just one-under par on yields.

A little drop but given the state of the risk market, this drop in yields can be considered a healthy correction and not a run into safety. On the month, the market has been good to yields given where we were three weeks ago.

http://img685.imageshack.us/img685/1261/77222663.jpg (http://imageshack.us/photo/my-images/685/77222663.jpg/)


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Looking Back on October: Best Month For The S&P In Nearly 40 Years

Early in the month October lived up to its reputation as the most volatile month of the year, with the VIX peaking above 45 as the market made 52-week lows in early Oct. However, that extreme volatility has subsided as stocks rebounded sharply off those lows to produce the best monthly gain in stocks since 1974, with the S&P gaining over 13% on the month. The 16%+ rebound off the early Oct lows culminated with yesterday's +3.4% gain in the S&P 500 as global markets surged on the EU summit agreement.

Throughout the month the fluctuations in U.S. equities continued to be highly correlated with the European markets, with news out of Europe improving as the month progressed. Additionally, participants found encouragement in better U.S. economic data and China's increase in manufacturing activity reported late in the month.

To recap, October started with the anticipated ECB decision on October 6th, which was the last ECB decision where Jean Claude Trichet was at the helm. ECB left rates unchanged, disappointing many that had anticipated further accommodation in the form of a rate cut. The ECB meets again next week, with uncertainty about whether or not Mario Draghi will cut rates at his first meeting as ECB President.

The U.S. benefited from improved economic data during October, with the first big report being the better-than-expected non-farm payrolls report. Non-farm payrolls for Sep. came in at +103K vs. the +60K Briefing.com consensus.

News out of Europe began to turn positive after it was reported that German Chancellor Merkel and French President Sarkozy agreed to a recapitalization plan for European banks. In the weeks that followed, anticipation turned to the upcoming EU summit that was to be held on Wednesday October 26th, where leaders discussed a possible bailout plan. There were many rumors about this plan that came out in the weeks preceding the meeting, which caused swings in the market. However, in the end the leaders did come up with a plan. The latest plan includes a 50% "voluntary" haircut to Greek bondholders (which has reportedly been deemed not to be a credit event), the EFSF to be levered 4-5X to ~$1.4 trillion, and a 9% core tier one capital ratio for banks. European markets gained over 4% that day as the S&P 500 gained ~3.4%.

Back home, US corporate earnings season kicked off with many big surprises and disappointments. Most notably, Apple (AAPL) missed by $0.22 on EPS and missed on revenues, which caused a sell-off of ~5.5% the following day. Regarding the highly anticipated financial earnings, Citi (C) reported a solid quarter which sent the stock 7% higher the day it reported while Wells Fargo (WFC) missed and fell 8%. Bank of America (BAC) reported a noisy quarter while Goldman Sachs (GS) missed expectations and reported its second ever quarterly loss as a public company. Finally, on Thursday October 27th, the US reported that GDP grew 2.5%, which was in line with expectations. Earnings season is about halfway over now, and about 72% of companies have beaten analyst EPS estimates.

In Summary, the S&P 500 & the Nasdaq both gained ~13% for the month, while the Dow Jones gained 12%. In Europe, the DAX gained 15.3%, the CAC 40 gained 12.3%, and the FTSE gained 11.2%. In Asia, the Hang Sang was the best performing market gaining 14.9%, while the Sensex gained 8.2%. The Shanghai and the Nikkei lagged behind gaining 4.8% and 4.0% respectively. (Note: The Shanghai was closed for the first 10 days in October).


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PREVIEW FOR THE WEEK - MONDAY 31 OCTOBER, 2011 TO FRIDAY 04 NOVEMBER, 2011

Monday’s data is limited to Chicago PMI (9:45). The Fed will release its new POMO schedule.

Tuesday’s data releases include the ISM Index, construction spending (10), and auto/truck sales (15).

Wednesday will see the weekly MBA Mortgage Index (7), Challenger Job Cuts (7:30), ADP Employment Change (8:15), and the FOMC interest rate decision (12:30).

A steady flow of data will occur on Thursday as initial and continuing claims, productivity-preliminary, unit labor costs-preliminary (8:30), factory orders, and ISM services (10) are all released.

Friday has the week’s most anticipated data as nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and average workweek (8:30) are due out.

Earnings Highlights
Monday: CYOU, CTB, L, SOHU, ALL, FST, LEAP, SKH, and WYNN.
Tuesday: AMED, ADM, BHI, BPI, CME, COCO, DNKN, PCS, OSK, PFE, OSG, RDN, TRI, CF, FISV, HTZ, JAZZ, NVTL, OPEN, TRLG, and XL.
Wednesday: AOL, CLX, CTSH, FWLT, GRMN, ICE, MA, OIIM, SNE, TWX, WCG, CAR, CLWR, IPI, KFT, WFR, NTRI, MUR, SGMS, TSLA, VCLK, WBMD, WFM and ZIP.
Thursday: AGU, ANR, APA, MT, CVS, LAMR, MFC, MGM, NYX, SPR, STRA, WNR, WWE, BEBE, CLMS, CNW, FLR, GNW, ITMN, LNKD, MFLX, N, SUN, and SPWRA.
Friday: ACOR, ALU, KKR, RSTI, POM, UPL, VNDA, and WIN..

Economic Events
Monday:
09:45 am Chicago PMI
Tuesday:
10:00 am ISM Index
10:00 am Construction Spending
15:00 pm Auto Sales
15:00 pm Truck Sales
Wednesday:
07:00 am MBA Mortgage Index
07:30 am Challenger Job Cuts
08:15 am ADP Employment Change
10:30 am Crude Inventories
12:30 pm FOMC Rate Decision
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am Productivity-Prel
08:30 am Unit Labor Costs -Prel
10:00 am Factory Orders
10:00 am ISM Services
10:30 am Natural Gas Inventories
Friday:
08:30 am Nonfarm Payrolls
08:30 am Nonfarm Private Payrolls
08:30 am Unemployment Rate
08:30 am Hourly Earnings
08:30 am Average Workweek

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- Gabelli and Company's 35th Annual Automotive Aftermarket Symposium
- National Guard Bureau Joint C41 Conference
- Bank of America Merrill Lynch New China Conference 2011
Tuesday:
- Needham and Company's Communications Conference
- Stifel Nicolaus Bank Conference
- Goldman Sachs Global Industrials Conference
Wednesday:
- RoboBusiness Leadership Summit
- Sprint Open Solutions Conference
- FOMC Monetary Policy Update Followed By Press Conference By Ben Bernanke
Thursday:
- ECB Rate Decision
- G-20 Summit Cannes
- BlogWorld and New Media Expo
Friday:
- Bank of America Merrill Lynch Global Macro Conference
- CanGEA - Geothermal Power Forum
- Electronics For Imaging (EFI) Investor Day


___________________________________________

SUMMARY

DOW makes its best ever monthly gain in history! S&P500 made its best monthly gain since 1987. GDP avoided another contraction and econ data was largely encouraging. Earnings continue to impress although guidance was a rare commodity. This October has turned into one of the worst Bear Killers in history.

Indeed ... with one more day to go, October 2011 is turning into the most effective Bear Killer of all time. With this amazing comeback, Q1 of 2008's pattern comes into play ...

http://img38.imageshack.us/img38/7396/q1of2008.th.jpg (http://imageshack.us/photo/my-images/38/q1of2008.jpg/)

I am such a bear ... hehehe!

October 31, Halloween, is traditionally a very bullish day. Since the market has been keeping tradition and becoming more predictable, I will stay on the safe side for now and take the ride. Bear in mind (pun intended) that the First Day of November usually corrects so if you're thinking of jumping into the rally now, you might wanna wait till Tuesday to make a decision. After all, if we do rally Monday, you'll be buying the high - a good reason not to trade anyway.

Direction for Monday 31 October, 2011; ∆ Up

Direction for the week Monday 31 October, 2011 to Friday 04 November, 2011; ∆ Up

2011 Daily Directional Accuracy: 117/195 (60.00%)

2011 Weekly Directional Accuracy Year-To-Date: 25/42 (59.52%%)

Conrad
11-01-2011, 04:16 AM
U.S. MARKETS - Monday 31 October, 2011 AMC

http://img405.imageshack.us/img405/4041/dexsd.jpg (http://imageshack.us/photo/my-images/405/dexsd.jpg/)

Uploaded with ImageShack.us (http://imageshack.us)

October 31, Halloween, is traditionally a very bullish day. Since the market has been keeping tradition and becoming more predictable, I will stay on the safe side for now and take the ride. Bear in mind (pun intended) that the First Day of November usually corrects so if you're thinking of jumping into the rally now, you might wanna wait till Tuesday to make a decision. After all, if we do rally Monday, you'll be buying the high - a good reason not to trade anyway.

Direction for Monday 31 October, 2011; ∆ Up

Yow ... Never saw that coming. I don't know what to make of this session. From where I sit, the market was very divergent until the last hour when it all came together in a sell-down. There was evidence of bullish resistance but there was too little of it. The bears who had been rested for a long time were certainly rejuvenated right at the open but lacked the strength in depth to really take the market down. For the most part, the session was sideways.


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MARKET SUMMARY - Monday 31 October, 2011


BRIEFING.COM - Monday 31 October, 2011 AMC
Daily Sector Wrap: October Comes to a Close

The S&P 500 suffered its worst single-session percentage loss in four weeks today, but it still made it out of October with its best monthly gain in nearly 20 years.

Market participants were inclined to sell today. They took their cues from overseas markets this morning and never really looked back. That left stocks to slog along with substantial losses and settle at session lows.

Last week Europe's leaders announced plans to shore up the continent's financial conditions, but it appeared that euphoria related to that announcement evaporated over the weekend. That prompted global participants to drop Germany's DAX and France's CAC for losses of more than 3%.

Confidence in the euro was also lost. In turn, it dove more than 2% against the greenback. The yen was an even poorer performing currency, though. It tumbled more than 3% after Japan's officials intervened in the currency in an effort to curb its strength after it had set a post-WWII record high last week.

Natural resource plays suffered the worst losses this session. That left the energy sector to tumble 4.4% and the materials sector to slide 4.2%. Financials weren't far behind; the sector fell 3.9%.

Defensive in nature, utilities made up the only sector that managed to find positive territory at all this session, but broad market weakness ultimately undermined its efforts and left it to log a 0.7% loss. It was the only sector to limit its loss to less than 1%.

Today's sell-off ate into the gains that the stock market had amassed in the course of the past four weeks, which had the stock market on track for one of its best monthly performances on record. Still, the S&P 500 finished October with a monthly gain of almost 11%, which is not only its first monthly gain since April, but it is also its best monthly performance since December 1991.

Sector Leaders/Laggards for Monday 31 October, 2011 AMC
Leading Sectors: None.
Leading Industries/ETFs : Vix- VXX +10.6%, Treasuries- TLT +4.0%, Dollar Index- UUP +1.9%.

Lagging Sectors: Energy -4.4%, Materails -4.2%, Financials -3.9%, Industrials -2.5%, Health Care -1.9%, Tech -1.8%, Telecom -1.7%, Consumer Discretionary -1.5%, Consumer Staples -1.3%, Utilities -0.7%
Lagging Industries/ETFs : Solar- TAN -7.7%, Coal- KOL -6.5%, Steel- SLX -6.1%, Global wind energy- FAN -6.0%, Energy services- XOP -5.3%, Alt. energy- PBW -5.2%, Financials- KCE -4.7%, Energy- XLE -4.6%, OIH -4.4%, Broker- IAI -4.3%, Ag/Chem- MOO -4.1%.

Other Market Moving Factors:
• Sellers move to pare positions after stocks climb sharply in past four weeks
• Dollar rallies as euro retreats amid skepticism over eurozone bailout and yen tumbles after Japan's intervention in currency
• Treasuries rally

Companies trading higher in after hours in reaction to earnings: NBIX +12.1%, WINN +8.8%, ALL +3.5%, SKH +3.2%, UAN +2.6%, APC +0.6%.

Companies trading lower in after hours in reaction to earnings: BGC -13.3%, CAVM -9.0%, ROG -7.3%, AVB -5.0%, HLF -3.0%.
Companies trading lower in after hours in reaction to news:
• EXEL -34% (Exelixis to initiate cabozantinib '306 trial with poain endpoint in Mcrpc).


___________________________________________

ECONOMIC COMMENTARY - Monday 31 October, 2011

• China Sep Leading Index 100.43 vs 101.31 in Aug

• Australia Economic Data

- Oct TD Securities Inflation +0.1% vs +0.1% in Sep
- Oct Private Sector Credit +0.5% vs +0.2% in Sep

• Japan Economic Data

- Oct Nomura/JMMA Manufacturing Purchasing Manager Index 50.6 vs 49.3 in Sep
- Sep Housing Starts -10.8% vs +14.0% in Sep 2010

• U.S. Economic Data

- October Chicago PMI 58.4 vs 58.9; September 60.4

Chicago PMI Toes the Growth Line
The Chicago Purchasing Managers Index from Kingsbury International, Ltd., decreased from 60.4 in September to 58.4 in October. The Briefing.com consensus expected a reading of 58.9. The October survey reflects a manufacturing region that is still comfortably in an expansion mode, even if it does reflect some modest softening from the prior month. The line of demarcation between expansion and contraction is 50.0.

The new orders index dipped to 61.3 from 65.3 while the production index held fairly steady at 63.4. The prices paid index increased to 66.0 from 62.3. Notably, the order backlogs index recovered from a contraction phase, jumping to 51.2 from 45.4. Fittingly, the employment index increased to 62.3 from 60.6 and is at its highest level in six months.

The market may have reacted negatively to the headline miss in the business barometer, but this survey in totality is another marker that goes against recession arguments in general and certainly for the Chicago Fed region in particular.

• Asian Markets Close: Nikkei -0.7%, Hang Seng -0.8%, Shanghai -0.2%
The major Asian indices close mostly lower as Japanese authorities stepped in to weaken the yen. Japan's Ministry of Finance confirmed intervention did in fact take place and while figures have not been announced many participants believe it was somewhere in the neighborhood of JPY 3-5 trln. Chinese Real Estate names were hit hard after Premier Wen Jiabo announced property curbs would remain in place. Taiwan's GDP slowed to 3.37% YoY (4.88% YoY previous). Elsewhere in the region, South Korea's industrial production climbed 6.8% YoY, Singapore's unemployment rate ticked down to 2.0%, and Thailand's trade surplus expanded to $2.4 bln. Looking at the currencies...USDCNY weakened to 6.3557 while USDJPY is stronger at 78.20.

In Japan, the Nikkei closed -0.7% and on its session lows despite the intervention from Japanese authorities. Honda Motor Corp lost 3.7% ahead of its earnings which missed expectations. The co said it will no longer give annual guidance. Exporter Panasonic closed dow 2.1% ahead of its earnings miss and cut its annual outlook.

In Hong Kong, the Hang Seng finished -0.8% as real estate names were the worst performers. China Land Resources fell 5.4% and China Overseas & Land lost 5.7%. Financials were weak with ICBC shedding 1.7%.

In China, the Shanghai Composite settled -0.2% as property stocks weighed. Beijing Vatone Real Estate shed 1.6% to finish as one of the worst performers in the space. Media shares rallied on word that Beijing plans to spend billions of yuan to provide a boost to the industry. Huawen Media Investment gained 8.0%.

In India, the Sensex closed -0.6% as growth worries weighed on the index. Aluminum maker Hindalco Industries tumbled 4.3% and heavyweight Reliance Industries lost 2.8%.

• European Markets Closing Prices
UK's FTSE: -2.4%
Germany's DAX: -2.9%
France's CAC: -2.8%
Spain's IBEX: -2.9%
Portugal's PSI: -1.5%
Italy's MIB Index: -3.8%
Irish Ovrl Index: -1.3%
Greece FTSE/ASE 20: -1.4%

EARNINGS CALL

• Before market open

Shaw Group (SHAW) reports Q4 (Aug) results, misses on revs; guides FY12 below consensus
Reports Q4 (Aug) loss of $0.44 per share, excluding Westinghouse segment, may not be comparable to the Capital IQ Consensus Estimate of $0.57; revenues fell 14.0% year/year to $1.48 bln vs the $1.58 bln consensus. Shaw's backlog of unfilled orders totals $20.0 billion. Co sees FY12 EPS of $2.00-2.10, excluding Westinghouse segment, may not be comparable to $2.30 Capital IQ Consensus Estimate; sees FY12 revs of $5.5-6.0 bln vs. $6.42 bln Capital IQ Consensus Estimate. Co sees FY12 Operating cash flow of ~$100 million and ending fiscal year 2012 backlog of ~$22 billion... Shaw is in the process of evaluating strategic alternatives for its Energy & Chemicals segment. The company has received multiple written indications of interest from potential acquirers and is exploring options related to this business. Shaw's board of directors previously authorized a share repurchase program in the amount of $500 million. During the fourth quarter of fiscal year 2011, Shaw purchased ~$21.8 million under the program. Within the next two weeks, Shaw intends to announce a modified Dutch auction tender offer that will likely range from $100 - $475 mln.

Humana (HUM) beats by $0.52, reports revs in-line; guides FY11 EPS in-line; guides FY12 EPS below consensus
Reports Q3 (Sep) earnings of $2.54 per share, excluding non-recurring items, $0.52 and may not compare to the Capital IQ Consensus Estimate of $2.02; revenues rose 11.4% year/year to $9.3 bln vs the $9.28 bln consensus. Co issues in-line guidance for FY11, sees EPS of $8.35-8.40, excluding non-recurring items, and may not compare to $7.70 Capital IQ Consensus Estimate. Co issues downside guidance for FY12, sees EPS of $7.40-7.60 vs. $7.82 Capital IQ Consensus Estimate.

IN OTHER NEWS ...

• MF Global: NY Fed suspends MF from conducting new business with the New York Fed
"The Federal Reserve Bank of New York has informed MF Global Inc. that it has been suspended from conducting new business with the New York Fed. This suspension will continue until MF Global establishes, to the satisfaction of the New York Fed, that MF Global is fully capable of discharging the responsibilities set out in the New York Fed's policy, "Administration of Relationships with Primary Dealers," or until the New York Fed decides to terminate MF Global's status as a primary dealer."

• Greek govt will hold a referendum on adoption of the new EU aid package
See Reuters story here (http://www.reuters.com/article/2011/10/31/us-greece-referendum-idUSTRE79U5PQ20111031).


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TECHNICAL UPDATE - Monday 31 October, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,955.01 -276.10 (-2.26%)
Volume: 185,793,149 from 163,617,659 the previous day
Range: 11,954.41 – 12,229.29

http://img207.imageshack.us/img207/4615/dowb.jpg (http://imageshack.us/photo/my-images/207/dowb.jpg/)

DOW Stalled above 12,200, a very critical support level. If it can hold above that, it could become a launch-pad for the next leg up. On weekly candles, DOW has closed out five straight candles to the upside since the last week of September. Monthly candles are impressive - October has wiped out two months' losses incurred by September and August. Let's pray that Monday doesn't rally more than 180 points because that would turn DOW's monthly candles into a Three Line Strike which implies that November could resume the downtrend. NASDAQ's monthly candles show a Bullish Engulfing pattern which stands November in good stead. On daily candles, NASDAQ wears a Side-by-side White Lines implying upside on Monday. SPX's DragonFly Doji may be suggesting more upside on Monday. On weekly candles, SPX has made four consecutive candles to the upside creating the possibility of a fifth candle reversal in the coming week ... as unlikely as it may seem, let's not write off the possibilities yet.

Well, on days like these, technicals just don't matter anymore. Monday's correction effectively puts S&P500 back in the red for the year. Now all we can do is wait to see if there is a follow-through on this sell-down on Tuesday before we start taking this correction seriously.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,684.41 -52.74 (-1.93%)
Volume: 503,621,949 from 480,431,615 the previous day
Range: 2,684.13 – 2,716.70

S&P 500 INDEX (SPX: CBOE)
1,253.30 -31.79 (-2.47%)
Volume: 860,463 from 773,623 the previous day
Range: 1,253.16 – 1,284.96


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MARKET INTERNALS - Monday 31 October, 2011 AMC

NYSE :
Higher than avg volume @ 1140 mln, vs. 1120 mln
Decliners outpaced Advancers (adv/dec): 556/2466
New highs outpaced new lows (hi/lo): 38/8

NASDAQ :
Lower than avg volume @ 1730 mln, vs. 1991 mln
Decliners outpaced Advancers (adv/dec): 562/2009
New lows outpaced new highs (hi/lo): 21/31


Decliners outpaced Advancers by an average 1.14 to 1 on lower volumes (-10.61%) on Friday (avg +0.06%).

Not the most convincing session but given that the bears had ample opportunity to seize the initiative and never did, puts the control firmly in the bull's hands. New Lows finally got beaten down in overwhelming style for a flat day. The VIX also fell to a new low, closing below 25 points for the first time since 3 August 2011. The VIX now wears a Bearish Engulfing pattern on dailies.

Decliners outpaced Advancers by an average 4 to 1 on lower average volumes (-7.75%) on Monday (avg -2.22%).

Looking closely at the internals from Monday's session, I see little reason yet to switch back to my bear suit. It was a nasty sell-down, I'll give in to that. But not enough to turn me bear yet. The market was overcooked last week and a correction was due. Thus, Monday's sell-down was a healthy and expected on and in my opinion, not a reason to turn bear again. Not yet anyway.

http://img198.imageshack.us/img198/6184/intlu.jpg (http://imageshack.us/photo/my-images/198/intlu.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Silver futures close lower for first time in seven sessions

It was a relatively quiet start to the week for commodities. Strength in the dollar, stemming from a Japanese intervention on the yen, pressured prices.

Precious metals traded sideways. Gold prices traded in a ~10 point range, while silver futures traded in a ~20 cent range. On the session, gold shed 1.2% to finish at $1725.20 per ounce, while silver ended lower by 2.7% at $34.36 per ounce. With today's losses, silver closed lower for the first time in seven sessions. Dec copper closed down 10 cents at $3.64.

Crude oil ended lower by 0.1% at $93.32 per barrel. Futures managed to rally heading into the close to recoup most of their overnight losses. Natural gas finished higher by a penny at $3.94. Nov heating oil ended lower by 2 cents at $3.05, while Nov RBOB gasoline shed 4 cents to close at $2.60.

Commodities AMC on Monday 31 October, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 93.19 -0.13 (-0.14%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,725.20 -22.00 (-1.26%)

Treasuries ended the day at their best levels as continued uncertainty in Europe and further selling of equities provided a safety net. Today marked the second consecutive session of strong gains as the two-day rally has now erased the losses that occurred last Wednesday and Thursday. The 10-yr yield touched the 2.40% mark during Thursday's sell off, but has since fallen more than 20 bps to today's cash close of 2.175%. The aggressive buying that has developed over the past two sessions now has the 10-yr yield threatening to break important support near 2.10%. Flattening along the yield curve continues to take hold with the 2-10-yr spread tightening to 188 bps. Meanwhile, precious metals closed near U.S. session highs, but still saw heavy losses as gold slipped $24 to $1723 and silver tumbled $0.90 to near $34.40.

Treasury Yields AMC on Monday 31 October, 2011:
• 2 Year Note 0.25% -0.03
• 5 Year Note 0.99% -0.14
• 10 Year Note 2.17% -0.17
• 30 Year Bond 3.16% -0.20
2/30 Spread : 291bps ( -17 ) ... 2/10 Spread : 192bps ( -14 )


A little drop but given the state of the risk market, this drop in yields can be considered a healthy correction and not a run into safety. On the month, the market has been good to yields given where we were three weeks ago.

The curve flattened in dramatic fashion as investors ran their fer into the longer term maturities and fell the 10 and 30 year yields to send the 2/10 and 2/30 spread back under par in a hurry.


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PREVIEW FOR NOVEMBER, 2011

November has 20 full trading days and one half day and is known to be very bullish. November traditionally starts the best six months on the Dow Jones and S&P500 and the best eight months on the NASDAQ.

October Trivia

• The first trading day of November has been up only once out of the last 6
• Sunday 06 November Daylight Saving Time ends
• The first week of November is very bullish
• Monday 07 November, the market opens at 22:30 SG time.
• Tuesday 08 November is Election Day
• Friday 11 November is Veteran's Day
• The second week is typically bullish with the occasional correction
• The Monday before Expiration Friday has been down on the DOW 7 of the last 12
• The week before Thanksgiving has been up 15 of the last 18
• November Expiration Friday has been bullish 7 of the last 9
• 24 November is Thankgiving Day (Markets Closed)
• 25 November is a Shortened Trading Day
• November's last week usually ends well and is the most bullish week of the month
• November's last day normally corrects

Commodities

• Oil remains weak but recovers mid month
• Natural Gas is flat depending on weather patterns
• Long Gold and Silver till end April/early May
• Copper stays bearish
• Corn starts its run, Wheat and Soyabeans end their run by month's end
• Sugar tops out before the last week of November
• Cocoa and Coffee prices usually rally in November


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PREVIEW FOR TUESDAY 01 NOVEMBER, 2011

Tuesday's data releases include the ISM Index, construction spending (10:00), and auto/truck sales (15:00). The Fed will purchase $1.00-1.50 bln worth of 2018-2041 maturities through POMO.

Earnings Highlights
BMO: AMED, ADM, BHI, BPI, CME, COCO, DNKN, PCS, OSK, PFE, OSG, RDN and TRI.
AMC: CF, FISV, HTZ, JAZZ, NVTL, OPEN, TRLG, and XL.

Economic Events
10:00 am ISM Index
10:00 am Construction Spending
15:00 pm Auto Sales
15:00 pm Truck Sales

Conferences and Shareholder/Analyst Meetings of Interest
- Needham and Company's Communications Conference
- Stifel Nicolaus Bank Conference
- Goldman Sachs Global Industrials Conference


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SUMMARY

... with one more day to go, October 2011 is turning into the most effective Bear Killer of all time ... Now let's see if this rally really has what ti takes to make America a better place. After all, the market leads the economy, doesn't it? So maybe a good market will lead to a healthier America.

Now that MF Global's client's funds have been put in limbo, New York-based brokerage house's problems have gone from worse to tragic. Client's are not able to move their monies out of the brokerage and there are rumblings of a lack of regulation and guidance by the exchanges when it comes to the handling of such situations ... echoes of Refco - the largest broker on the CME before its spectacular collapse in October 2005 with $4 billion in 200,00 customer accounts. In comparison by the end of August 2011, MF Global ranked as the eighth largest merchant in terms of client funds on deposit, holding $7.3 billion in U.S. client funds on deposit.

As spectacular as Refco's demise was, it was only a temporary blip on the charts. Considering the circumstances of Refco's scandalous scenario (http://en.wikipedia.org/wiki/Refco), MF Global's issues pale in comparison and in my opinion, Monday's sell-down was overdone in so many ways. If anything, the sell-down was exacerbated by the on-gong fears surrounding Europe.

I'll be expecting the market to bottom on this sell-down on Tuesday. Any further sell-down should come from a new round of bad news but MF as an event should be done and dusted. There's nothing anything or anyone can do for the company now except to bail it out.

Direction for Tuesday 01 November, 2011; ∇ Consolidation

2011 Daily Directional Accuracy: 117/196 (59.69%)

Conrad
11-04-2011, 01:19 PM
I swore I made a posting on this ... The DMA will be back on 14 Nov. I need my rest.

Conrad
11-14-2011, 01:59 AM
U.S. MARKET RECAP - Monday 07 November, 2011 to Friday 11 November, 2011 AMC
http://img18.imageshack.us/img18/1385/dexweek.jpg (http://imageshack.us/photo/my-images/18/dexweek.jpg/)

Although the DOW and S&P made gains on the week, NASDAQ was lagging and mustered an unchanged and slightly negative week. As we head into the last week of earnings season and the start of the Christmas season, I seriously wonder if this market has what it takes to get higher by December.


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Dow Jones Industrial Average - Friday 11 November, 2011 AMC
http://img84.imageshack.us/img84/9362/dexh.jpg (http://imageshack.us/photo/my-images/84/dexh.jpg/)

Friday was one of those irritating gap-up-and-go-nowhere sessions on weaker volumes ... doesn't inspire confidence just when you thought the market had legs enough to get out of this four week funk.


__________________________________________________ ________

MARKET SUMMARY - Friday 11 November, 2011


BRIEFING.COM - Friday 11 November, 2011
Daily Sector Wrap: Strong Finish for Week

Stocks finished the week on a strong note, booking gains of about 2%. The effort marked the fourth advance in five sessions.

A strong, broad bid at the open lifted the major averages to big gains in the early going. The move attracted additional interest, adding to early gains, before stocks set adrift in afternoon trade. From then out support remained steady.

Consumer discretionary plays scored the strongest gains with a 2.5% climb, thanks to leadership from Disney (DIS 36.70, +2.06), which set a multi-month high on the back of a better-than-expected quarterly report. The stock's strength also helped the Dow maintain a modest lead over its counterparts for the duration of trade. All 30 of its components closed in positive territory.

Telecom was the worst performing sector on Friday, but even it scored a 1.0% gain.

Bolstering buying interest was another rally by Europe's bourses -- in broad terms, the EuroStoxx 50 bounced 2%. Underpinning the performance is an increased tolerance for risk as the region moves forward with efforts to stabilize precarious fiscal and financial conditions, especially in Italy, where a new austerity plan is gaining momentum in the legislative process. Yields on Italy's debt were down for the second straight session.

The only dose of data today came from the University of Michigan, which posted its preliminary Consumer Sentiment Survey for November. The Survey improved to 64.2 from 60.9 in the prior month, although it had only been expected to come in at 61.3.

Limited economic releases and corporate announcements likely prevented many market participants from taking positions, effectively keeping a cap on share volume. It probably didn't help that the bond market stayed closed in observance of Veterans Day, keeping many traders away from their desks. Fewer than 800 million shares were traded on the NYSE today.

Such thin share volume may prompt the more cynical market watchers to question the conviction underlying today's climb, especially since each bid carries a greater relative weight on light volume days. Nonetheless, the S&P 500 booked its best single-session percentage gain since the end of October. For the week, stocks advanced almost 1% and are now marginally positive for the year.

Sector Leaders/Laggards for Friday 11 November, 2011
Leading Sectors: Consumer Discretionary +2.5%, Industrials +2.4%, Materials +2.4%, Financials +2.2%, Tech +2.1%, Energy +1.8%, Health Care +1.7%, Utilities +1.4%, Consumer Staples +1.1%, Telecom +1.0%
Leading Industries/ETFs : Gold miners- GDX +3.6%, Steel- SLX +3.4%, Semi Equip- XSD +3.4%, Internet- HHH +3.3%, Copper- JJC +3.2%, Semis- SMH +3.2%, Solar- TAN +3.1%, Oil Service OIH +3.1% , Housing XHB +3.1%, Wind energy- FAN +3.0%.

Lagging Sectors: None.
Lagging Industries/ETFs : Vix- VXX -4.3%, Nat gas- UNG -1.8%, Dollar index- UUP -1.0%, Sugar- SGG -1.0%.

Other Market Moving Factors:
• Financials, Industrials, and Discretionary issues offer leadership
• Europe's bourses bounce and the euro advances against the dollar amid reduction in Italy's debt yields


BRIEFING.COM - Friday 11 November, 2011
After-Hours Report: Weekly Wrap

Market participants had displayed a renewed tolerance for risk on Thursday, reacting to improved market conditions in Europe and news of a successful debt auction by Italy. Although the auction came at a cost, demand for the country's debt was taken by the market as a sign of confidence.

The only loss of the week was suffered on Wednesday, but it was the worst one-day percentage drop for the S&P 500 about three months. Many were spooked by the specter of contagion as Italy's debt yields climbed to record levels and the notion that Italy's economy is far too large to be aided by a bailout.

Concerns about Italy and its ability to establish a unified political front were also at play as the country looked to replace its prime minister, but stocks were still able to overcome those concerns and score strong gains.

Greece was in focus at the start of the week, when it was announced that Prime Minister Papandreou would step down from his post. Later in the week it was announced that Lukas Papademos will succeed him. Papandreou's resignation came after he had unnerved many officials, and markets for that matter, by proposing a referendum for the country's bailout package.

There wasn't a great deal of data earlier this week, but traders took note of the latest weekly initial jobless claims count, which totaled 390,000. That is less than than 400,000 claims that had been exected, on average, among economists polled by Briefing.com and is also 10,000 less than the prior week total.

The trade deficit for September was also posted. It contracted to $43.1 billion from $44.9 billion in the prior month. A $45.9 billion deficit had been generally expected for September.

The Treasury also posted its budget, which had a deficit of $98.5 billion. A $105.0 billion deficit had been broadly expected to follow the $140.0 billion deficit reported for the prior month.

The pace of earnings announcements slowed this week. Among the more widely held names that reported, Cisco (CSCO 19.04, +0.43), Best Buy (BBY 28.09, +0.79), and General Motors (GM 22.51, -0.19) all bested expectations for the bottom line. Shares of GM cast a pall over its report by issuing a disappointing outlook, however.

There were a handful of debt auctions this week, but results were mostly mixed. The yield on the benchmark 10-year Note ended the week a few basis points above 2.0%.


http://img339.imageshack.us/img339/7672/dexsumm.jpg (http://imageshack.us/photo/my-images/339/dexsumm.jpg/)\


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ECONOMIC COMMENTARY - Friday 11 November, 2011

• Spain Q3 GDP +0.8% vs revised +0.8% in 3Q10 (prior +0.7%)

• Japan Sep Tertiary Industry Index -0.7% vs 0.0% in Aug

• UK Economic Data

- Oct PPI Output 0.0% vs +0.3% in Sep
- Oct PPI Input -0.8% vs +1.7% in Sep

• Bank of Korea leaves 7-Day Repo Rate unchanged at 3.25%

• U.S. Economic Data

- November Michigan Sentiment- prelim 64.2 vs 61.3; October 60.9

Sentiment Improves to its Highest Level Since June
The University of Michigan Consumer Sentiment index increased from 60.9 in October to 64.2 in the preliminary reading for November. This is the strongest reading since June. The Briefing.com consensus expected the Sentiment Index to increase to 61.3. Both future expectations and current conditions improved in November. The Expectations Index strengthened from 51.8 in October to 56.2. The Current Conditions Index increased from 75.1 to 76.6. The increase in sentiment in November most likely stems from the strong growth in stock prices over the past few weeks. Other areas that tend to produce notable effects on consumer attitudes -- employment, oil prices, and media reports -- were essentially unchanged over the last month. The November increase in sentiment does not necessarily mean that consumption is headed for stronger growth. Consumption is highly reliant upon income growth and fluctuates with the employment situation, not sentiment.

• Asian Markets Close: Nikkei +02%; Hang Seng +0.9%; Shanghai +0.1%; Sensex -0.9%
The Asian equity markets saw a slight rebound from yesterday's broad based sell-off. The Bank of Korea held interest rates in check as expected, though commentary added some insight. Statements out of the BOK suggested they would move if they see signs of chronic inflation and global markets would have to stabilize before the BOK adjusts policy. Japan's Finance minister would not comment on speculation that the nation secretly intervened the week after the confirmed intervention. It appears that coordinated intervention talk was not well received at the G-20 summit, so perhaps Japan will engage in some sort of stealth intervention going forward. In China, a former CSRC chairman suggested China's policy is too tight and not prudent. Tim Geithner is encouraging Asian economies to stimulate demand to offset EU weakness. Looking at currencies...the yuan closed little changed to 6.3416; the yen is stronger to 77.36.

In Japan, the Nikkei closed +0.2%. Shares of Olympus (-5.0%) fell for a 10th straight day, and announced it will postpone its earnings call that was set for next week.

In Hong Kong, the Hang Seng closed up 0.9%. Shares of Melco Crown fell over 11% after posting weak earnings. The Red Chip Index settled +0.8% while H-shares closed +1.3%.

In China, the Shanghai Composite saw a mixed session but managed to close slightly higher on the day. Bank stocks saw interest today as Ag Bank of China (+3.5%) and ICBC (+2.1%) both gained after recent data suggests new loans are more abundant.

In India, the Sensex (-0.9%) finished down on the day as it played catch-up with being closed for business yesterday. As such, the BSE Bankex (2.9%) and BSE Realty Index (-2.3%) both declined while the BSE Oil&gas Index (+1.0%) and BSE Auto Index (+0.7%) moved higher. Tata Steel closed down 4% as it reported an 89% decline in net profit.

• European Markets Closing Prices
UK's FTSE: + 1.7%
Germany's DAX: + 3.0%
France's CAC: + 2.6%
Spain's IBEX: + 3.0%
Portugal's PSI: -0.9%
Italy's MIB Index: + 3.7%
Irish Ovrl Index: + 1.4%
Greece FTSE/ASE 20: -0.3%

• Economic Week in Review: Nov. 7 - 11, 2011

Consumer Credit Returns to an Upward Path in September

Consumer credit rebounded in September, increasing $7.3 bln and nearly offsetting the entire $9.7 bln decline in August, which was the first decline since September 2010. The Briefing.com consensus expected consumer credit to increase by $5.0 bln.

The consumer credit report suffers from some extremely large revisions, making it difficult to grasp the credit situation until three months after the data are released. Typically, the data have overstated the actual credit situation in the original release. Thus, the September rebound may actually be weaker than the report suggests.

The gain in September, however, was solid. As we suspected last month, it seems the decline in August was a one-time event and not the start of a credit tightening cycle. Revolving credit contracted for the third consecutive month, declining by $0.6 bln in September after falling $2.3 bln in August. Nonrevolving credit increased by $8.0 bln in September and more than offset the $7.4 bln decline in August.

Wholesale Inventories Slip in September, Likely Lead to Lower Q3 GDP Revision

In the advance third quarter GDP report, the BEA estimated that wholesale inventories increased by roughly 0.9% in September. That estimate proved to be too optimistic. Wholesale inventories actually fell 0.1% in September. The Briefing.com consensus expected wholesale inventories to increase 0.5%.

The discrepancy between the actual number and the BEA estimate alone should lead to a substantial negative revision to Q3 GDP in the second estimate. In addition, there will be added downward pressure on the second estimate for Q3 GDP on account of inventories in August being revised from 0.4% to 0.1%.

Wholesale sales levels were up a healthy 0.5% in September after increasing 1.0% in August. Sales were helped by a 7.8% increase in chemical demand and a 3.9% increase in petroleum spending. The inventory-to-sales ratio remained at 1.15 in September.

September Trade Balance

The U.S. trade deficit narrowed from a downwardly revised $44.9 bln (from $45.6 bln) in August to $43.1 bln in September. The Briefing.com consensus expected the deficit to increase to $45.9 bln.

According to the advance estimate of third quarter GDP, the BEA assumed the trade deficit widened to about $46.0 bln in September. Unfortunately, a portion of the contraction in September was due to a net export surplus of $1.2 bln of nonmonetary gold.

The BEA excludes gold in its net export calculation. This means the deficit did not contract by as much as the headline suggests and the effect on the second estimate revisions to GDP will not be as large.

Exports increased from $177.9 bln in August to $180.4 bln in September. The September gains came primarily from industrial supplies and materials ($1.4 bln, of which the entire gain came from nonmonetary gold) and consumer goods ($0.8 bln).

Imports increased from $222.8 bln in August to $223.5 bln in September. The increase in imports was due to higher demand for industrial supplies and materials ($0.9 bln) and motor vehicles and parts ($0.5 bln).

Jobless Claims

The initial claims level declined from an upwardly revised 400,000 (from 397,000) for the week ending October 29 to 390,000 for the week ending November 5. The Briefing.com consensus expected initial claims to remain at 400,000.

For the past several weeks, the initial claims level has remained below the upper bound (410,000) of our "Recovery Zone." In the past, this would signal payroll gains in excess of the 100,000 necessary to support normal labor force growth.

As the October employment report showed, however, businesses have halted their layoffs but have not increased their workforce substantially. The data suggest that, instead of 100,000 new jobs, businesses may only increase payrolls by about 75,000.

This type of slow improvement in the labor sector is consistent with the sub-par/moderate GDP growth we expect over the next several quarters.

The continuing claims level decreased from 3.707 mln for the week ending October 22 to 3.615 mln for the week ending October 29. The consensus expected continuing claims to increase to 3.690 mln.


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TECHNICAL UPDATE - Friday 11 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img411.imageshack.us/img411/3472/dowg.jpg (http://imageshack.us/photo/my-images/411/dowg.jpg/)
12,153.68 +259.89 (+2.19%)
Volume: 134,518,567 from 168,467,787 the previous day
Range: 11,896.28 – 12,179.72

DOW has to break above and hold above 12,240 if it is going to convince anyone that this break out to the upside has any legs at all. It also needs to stay away from the 200DSMA that has been dogging it for the last four weeks.
Resistance 2 : 12,420
Resistance 1 : 12,300
Support 1 : 12,000
Support 2 : 11,900

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img403.imageshack.us/img403/7148/ndxp.jpg (http://imageshack.us/photo/my-images/403/ndxp.jpg/)
2,678.75 +53.60 (+2.04%)
Volume: 401,759,328 from 501,228,249 the previous day
Range: 2,649.85 – 2,684.67

The NASDAQ closed the week off in a Rickshawman Doji (weekly candles), implying a stall or reversal in the coming week. The Bullish Kicker from Thursday into Friday might give the NASDAQ some bullish respite come Monday but I won't be holding my breath for it. The 200DSMA is becoming a pain in the butt for NASDAQ - two breaks in three weeks and NASDAQ still can't get away from it and it is going to be serious resistance in the coming session.
Resistance 2 : 2,730
Resistance 1 : 2,700
Support 1 : 2,650
Support 2 : 2,615

S&P 500 INDEX (SPX: CBOE)
http://img100.imageshack.us/img100/551/spxry.jpg (http://imageshack.us/photo/my-images/100/spxry.jpg/)
1,263.85 +24.16 (+1.95%)
Volume: 576,721 from 694,505 the previous day
Range: 1,240.12 – 1,266.98

I wish I could believe that SPX has more legs. But given the weaker volumes on Friday and the nature those gains were made (gap up and stayed there) only makes me cautious come Monday. Plus that 200DSMA is going to raise the level of difficulty if SPX is to break higher.
Resistance 2 : 1,290
Resistance 1 : 1,275
Support 1 : 1,240
Support 2 : 1,220


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MARKET INTERNALS - Friday 11 November, 2011

NYSE :
Lower than avg volume @ 762 mln, vs. 1092 mln
Advancers outpaced Decliners (adv/dec): 2599/424
New highs outpaced new lows (hi/lo): 55/16

NASDAQ :
Lower than avg volume @ 1550 mln, vs. 1991 mln
Advancers outpaced Decliners (adv/dec): 1983/545
New lows outpaced new highs (hi/lo): 30/44

Advancers outpaced Decliners by an average 4.73 to 1 on Lower volumes (-25.01%) on Friday (avg +2.06%).

So the market finished up ... So did the VIX. It parked at 30.04 in spite of a 260 point gain on the DOW on Friday. Fear is still very high in the risk space.

http://img651.imageshack.us/img651/9209/intj.jpg (http://imageshack.us/photo/my-images/651/intj.jpg/)


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COMMODITIES & BONDS - Summary for Friday 11 November, 2011

Crude ends just shy of $99, rallies for 5% on the week - from Briefing.com

Precious metals finished higher today, aided by weakness in the dollar after the Italian Senate approved austerity measures requested by the EU. Gold posted gains of 1.6% to finish at $1788.10 per ounce, while silver rallied for 1.7% to close at $34.69 per ounce. Copper gained 9 cents to close at $3.46 (all Dec contracts).

Crude oil futures posted gains of 1.2% to settle at $98.99 per barrel. Crude oil put in highs at $99.20 -its best levels since July 27. Futures were aided by better than expected econ data in the US and the passing of the austerity measures in Italy. Natural gas ended lower by 1.8% at $3.58 per MMBtu. Futures put in fresh 3 week lows at $3.57. Heating oil ended higher by 2 cents at $3.17, while RBOB gasoline shed 3 cents to close at $2.60.

Commodities AMC on Friday 11 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 98.99 0.00 (0.00%)
Natural Gas (NYMEX) December 11 ($US per mmbtu.) : 3.58 -0.065 (-1.78%)
Unleaded Gas (NYMEX) December 11 ($US per gal.) : 2.60 -0.033 (-1.25%)

Gold (NYMEX) December 11 ($US per Troy oz.) : 1,788.10 +28.50 (+1.62%)
Silver (NYMEX) December 11 ($US per Troy oz.) : 34.68 +0.576 (+1.69%)
Copper (NYMEX) December 11 ($US per lb.) : 3.36 +0.0895 (+2.65%)

Corn (CBT) December 11 (cents per bu.) : 638.50 -7.00 (-1.08%)
Soyabeans (CBT) January 11 (cents per bu.) : 1,175.50 +8.00 (+0.69%)
Wheat (CBT) December 11 (cents per bu.) : 616.75 -3.25 (-0.52%)

Cocoa (NYMEX) December 11 ($ per metric ton) : 2,489.00 -15.00 (-0.60%)
Coffee (NYMEX) December 11 (cents per pound) : 233.95 +3.95 (+1.72%)
Cotton (NYMEX) December 11 (cents per pound) : 99.24 -0.26 (-0.26%)
Sugar #11 (NYMEX) March 11 (cents per pound) : 25.00 -0.39 (-1.54%)

BONDS - Weekly Summary for Monday 07 November, 2011 to Thursday 10 November, 2011
The Week in Review

Treasuries ended the week little changed despite the violent swings as contagion fears sparked a run on Italian debt. Heavy selling of Italian BTPs sent yields along the Italian curve through the 7.00% threshold and briefly inverted the 2-10-yr spread. The Italian 10-yr yield hit a post-euro inception high of 7.47%. This week saw the likely end of two governments as Greece’s Prime Minister George Papandreou ceded power to Lucas Papademos and Italy’s Prime Minister Silvio Berlusconi announced he would step down following the passage of the Italian austerity bill. Yields along the U.S. curve saw little change but wide ranges as the 10- and 30-yr yields saw 20 bp moves from high to low. The 10-yr yield finished the week at 2.056% as it was unable to hold below the 2.00% threshold during Thursday’s session. Markets should be volatile next week as European debt concerns will remain front and center. The yield curve ended the week little changed despite the volatility as the 2-10-yr spread widened 1 bp to 182 bps.

Treasury Yields AMC on Thursday 10 November, 2011:
• 2 Year Note 0.24%
• 5 Year Note 0.90%
• 10 Year Note 2.04%
• 30 Year Bond 3.12%
2/30 Spread : 288bps ... 2/10 Spread : 180bps

http://img810.imageshack.us/img810/4777/10973703.jpg (http://imageshack.us/photo/my-images/810/10973703.jpg/)

U.S. Treasury Market was closed Friday 11 November 2011 in observance of Veterans Day. The market will resume normal trading hours on Monday, 14 November 2011.


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PREVIEW FOR THE WEEK - MONDAY 14 NOVEMBER, 2011 TO FRIDAY 18 NOVEMBER, 2011

There is no data on Monday. The Fed will purchase $2.25-2.75 bln worth of 2036-2041 maturities through POMO.

A steady flow of data kicks off the week on Tuesday as PPI, core PPI, retail sales, retail sales ex-auto, Empire Manufacturing (8:30), and business inventories are released. The Fed’s Permanent Open Market Operations continue with the buying of $4.25-5.00 bln worth of 2017-2019 maturities. Fed speak is plentiful as STL’s Bullard gives a speech on his economic outlook to the CFA Society of St. Louis (7:30), Chicago’s Evans discusses foreign relations in NYC (8), SF’s Williams gives his outlook in Phoenix (9:30), Richmond’s Lacker talks Fed Policy at the Cato institute in D.C. (11:15), and Dallas’ Fisher talks on ‘too big to fail’ at Columbia Business School in NYC (12:30).

Wednesday’s data is heavy as the weekly MBA Mortgage Index (7), CPI, core CPI (8:30), net long-term TIC flows (9), industrial production and capacity utilization (9:15), and the NAHB Housing Market Index (10) are released. The Fed will sell $8.00-8.75 bln worth of 2013/2014 maturities through POMO. Richmond’s Lacker will speak again at the Cato Institute in D.C. (11:15), and Boston’s Rosengren will speak in front of the Boston Economic Club (12:45).

Thursday’s data menu is full as initial and continuing claims, housing starts and building permits (8:30), and the Philly Fed (10) are all released. The Fed will buy $4.25-5.00 bln worth of 2020/2021 maturities as part of its Permanent Open Market Operations. Fed speak concludes for the week with Cleveland’s Pianalto giving her economic outlook in Lexington, KY (12:30).

Friday’s data is limited to leading indicators (10). The Fed’s POMO concludes for the week with the purchase of $2.25-2.75 bln worth of 2036-2041 maturities.

Earnings Highlights
Monday: CTFO, DYN, JCP, LOW, SCR, SORL, SNSS, VNET, AERL, AGO, ADY, GOK, HSFT, IOC, JEC, MOTR, NOAH, TNGN, TUDO, URBN, VISN, and ZAGG
Tuesday: BZH, CVVT, COV, DKS, HD, NRGY, INXN, LRN, MTOR, NGPC, SKS, SPLS, TJX, TSEM, VIT, VELT, WMT, A, ASYS, ADSK, BOBE, CNQR, DELL, and JADE.
Wednesday: ANF, DANG, ESLT, ENER, SABH, SPB, TGT, TYC, VVTV, AMAT, DL, HOTT, LTD, NTAP, NTES, PETM, QIHU, YOKU, and ZOLL.
Thursday: AMAP, BONT, BKE, CMRG, PLCE, CSUN, DEST, DLTR, DCI, GME, GSOL, HP, SGM, DATE, PERY, ROST, SHLD, SSI, SMRT, WSM, CRMT, ARUN, ATW, BCSI, DLB, FMCN, FL, GPS, INTU, MRVL, MENT, MTSC, NWY, CRM, SCVL, WAIR, and WTSLA.
Friday: ANN, BRC, CPWM, CYBX, HIBB, HNZ, KIRK, SIRO, and TNP.

Economic Events
Monday:
None Scheduled (Like we don't have enough data for the whole week anyway!)
Tuesday:
08:30 am PPI
08:30 am Core PPI
08:30 am Retail Sales
08:30 am Retail Sales ex-auto
08:30 am Empire Manufacturing
10:00 am Business Inventories
Wednesday:
07:00 am MBA Mortgage Index
08:30 am CPI Oct
08:30 am Core CPI Oct
09:00 am Net Long-Term TIC Flows
09:15 am Industrial Production
09:15 am Capacity Utilization
10:00 am NAHB Housing Market Index
10:30 am Crude Inventories
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am Housing Starts
08:30 am Building Permits
10:00 am Philadelphia Fed Nov
10:30 am Natural Gas Inventories
Friday:
10:00 am Leading Indicators

Conferences and Shareholder/Analyst Meetings of Interest
Monday
- Bank of America Merrill Lynch Russia and CIS 1-1 Conference
- Brean Murray, Carret and Co. (BMC) 2011 Life Sciences Summit
- Barclays 2011 Global Automotive Conference
Tuesday
- UBS Global Technology and Services Conference
- Morgan Stanley's Asia Pacific Summit
- Fed's Bullard
Wednesday
- Southwest IDEAS Conference
- Morgan Stanley Technology, Media and Telecoms Conference
- Citi 8th Annual Small/Mid Cap Conference
Thursday
- Morgan Stanley Global Chemicals Conference
- The Hanover Insurance Group Investor Day
- Liberty Media Corporation Investor Meeting
Friday
- Gabelli and Company Third Annual Specialty Chemical Conference
- J.P. Morgan's Asia Pacific TMT Conference
- Elster Investor Day


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SUMMARY

The Monday before Expiration Friday has been down on the DOW 7 of the last 12 and the week before Thanksgiving (24 November) has been up 15 of the last 18 while November Expiration Friday has been bullish 7 of the last 9.

Well, the second week was supposed to be typically bullish with the occasional correction and boy did we get a correction! ...


http://img849.imageshack.us/img849/8762/dexswed9nov.jpg (http://imageshack.us/photo/my-images/849/dexswed9nov.jpg/)
Wednesday 09 November 2011, AMC

Yields in Italy hit a record ridiculous high (http://www.marketwatch.com/story/margin-boost-pushes-italy-yields-to-brink-2011-11-09) while yields, sending 10-year yields to a euro-era high of 7.4%. Typically, borrowing rates above 7% are considered to be unsustainable over the long term. in China, yields inverted (http://www.bloomberg.com/news/2011-01-06/yields-invert-as-bond-shortage-outweighs-inflation-china-credit.html) ... its bad news all around!!

One bright spot has to be earnings. Revenues suck, yes, and some even go as far as to accuse "creative accounting" for the great earnings we've been having so far at the expense of revenues. Regardless, I am only interested in how the market is going to trend after HD and WMT bring the curtain down on Q4's earnings season on Tuesday.

I reckon it (earnings) are not going to be enough to rally this market. Not yet anyway. The economic data is supporting the opinion that the economy has bottomed out and might start showing signs of growth and expansion soon. But if the market leads the economy, then it is looking more likely to be another 1973/1974 scenario all over again because the markets aren't going anywhere.

Bear rally? Real Bull run? I think neither. More likely, this is all part of a larger picture consolidation. We'll break down again. Maybe not tomorrow, maybe not next week but we will break down to again soon. Mind the Double Top.

Direction for Monday 14 November, 2011; ∆ Up

Direction for the week Monday 14 November, 2011 to Friday 18 November, 2011; ∆ Up

2011 Daily Directional Accuracy: 118/197 (59.90%)

2011 Weekly Directional Accuracy Year-To-Date: 26/43 (60.46%)

Conrad
11-15-2011, 04:48 AM
U.S. MARKETS - Monday 14 November, 2011 AMC

http://img36.imageshack.us/img36/4531/dexsg.jpg (http://imageshack.us/photo/my-images/36/dexsg.jpg/)

The Monday before Expiration Friday has been down on the DOW 7 of the last 12 ... Bear rally? Real Bull run? I think neither. More likely, this is all part of a larger picture consolidation. We'll break down again. Maybe not tomorrow, maybe not next week but we will break down to again soon. Mind the Double Top.

Direction for Monday 14 November, 2011; ∆ Up

Are we there already? The Double Top isn't quite there yet but then again, Monday's sell-down wasn't quite a sell-down either because one statistic stands out - volumes were pathetic following Friday's already weak volumes. Monday 14 November was amongst the year's lowest volumes. I don't know if Friday and Monday can be taken seriously.


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MARKET SUMMARY - Monday 14 November, 2011


BRIEFING.COM - Monday 14 November, 2011 AMC
Daily Sector Wrap: Stocks Slide on Low Volume

Sellers returned to the fold on Monday to hand stocks sizable losses. Financials led the slide.

Financials fell to a 2.0% loss and were weak since the open of trade, which was relatively rocky. Pressure against the sector was largely rooted in an effort by market participants to pare their positions in bank stocks, given the group's sensitivity to the threats of Europe. Sentiment in Europe seemed to sour during the weekend, resulting in losses for the region's major bourses and a sharply lower day for the euro. Pressure came even though embattled Italy approved new austerity measures and held another successful debt offering.

Tech stocks fought to keep sellers at bay for the first couple of hours, but ultimately succumbed to broad market selling pressure to settle with a 0.6% loss. Even IBM (IBM 187.35, -0.03) surrendered a gain after it had been bid higher on the back of word from billionaire investor Warren Buffett that he has been acquiring shares in the company for the past month.

The economic calendar was entirely empty today and earnings were limited to only a handful of names. Lowe's (LOW 23.50, +0.39) posted an upside earnings surprise and issued mixed guidance, but in-line earnings from J.C. Penney (JCP 32.98, -0.94) were overshadowed by a disappointing forecast.

With so few catalysts for trade today, share volume on the NYSE totaled at paltry 700 million. Over the past 50 days share volume has been closer to 1 billion, on average.

Sector Leaders/Laggards for Monday 14 November, 2011 AMC
Leading Sectors: None.

Lagging Sectors: Tech -0.6%, Consumer Staples -0.7%, Consumer Discretionary -0.7%, Health Care -0.7%, Industrials -0.7%, Materials -0.9%, Telecom -1.1%, Utilities -1.2%, Energy -1.2%, Financials -2.0%

Other Market Moving Factors:
• Financials feel pressure
• Europe's bourses move lower; euro shows weakness
• No economic items on tap

Companies trading higher in after hours in reaction to earnings: VNET +12.2%.
Companies trading higher in after hours in reaction to news:
• CIM +8.2% (Chimera Investment Corp updates status of 10-Q filing; announces no material changes to historical financial statements; no impact on taxable EPS and dividends; Sept 30, 2011 GAAP book value of $3.27).

Companies trading lower in after hours in reaction to earnings: MITK -13.5%, IOC -6.6%, TWER -6.3%, MOTR -6.2%, ZAGG -4.8%.
Companies trading lower in after hours in reaction to news:
• GERN -15.0% (Geron announced earlier it will focus on its first-in-class oncology programs; Co is cutting 66 jobs)
• LDK -9.4% (LDK Solar lowers Q3 and FY11 rev, shipment and gross margin guidance)
• KOG -3.0% (announces proposed public offering of common stock of 37.5 mln common shares; agrees to acquire an additional 50K net leasehold acres and 3,500 BOE/d of current net production in heart of Bakken Trend; announces 2012 preliminary capital Budget; provides 2012 production guidance; updates estimated reserves quantities; announces $550 mln offering of senior notes).


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ECONOMIC COMMENTARY - Monday 14 November, 2011


• Japan Economic Data

- Q3 prelim GDP +6.0% vs -2.1% in 3Q10
- Sep Indus. Prod -3.3% vs -4.0% in Aug
- Sep Capacity Utilization -3.6% vs +2.4% in Aug

• New Zealand Q3 Retail Sales ex-inflation +2.2% vs +1.0% in Q2

• France Sep Current Account (in EUR) -4.0 bln vs -2.4 bln in Aug

• Eurozone Sep Indus Prod -2.0% vs +1.4% in Aug

• Asian Markets Close; Nikkei +1.1%, Hang Seng +1.9%, Shanghai +1.9%, Sensex -0.4%
The major Asian indices closed mostly higher with only India's Sensex (-0.4%) posting a loss. Investors snapped up shares following the developments out of Europe as both Greece and Italy names new prime ministers. Japan posted its first expansion in four quarters with GDP climbing 1.5% QoQ as the nation rebuilds following the twin natural disasters. Data in the region was light India's inflation accelerated to 9.73% in October, and remained above 9.0% for an eleventh consecutive month. Looking at the currencies...USDCNY strengthened to 6.3546 while USDJPY is weaker at 77.00.

In Japan, the Nikkei closed +1.1% as financial stocks rallied ahead of earnings. Nomura led the complex higher with a gain of 5.8% while Mitsui Financial Group and Mizuho Financial Group both added at least 2.0%. Embattled camera maker Olympus closed limit up on no volume as it was bid at the limit.

In Hong Kong, the Hang Seng finished +1.9% as real estate stocks led the way following recent underperformance. Sino Land was the top performer in the space, taking on 7.6%. Casino operators were under pressure with Wynn Macau falling 4.2%.

In China, the Shanghai Composite settled +1.9% as mining stocks led the charge. Coal-based energy co China Shenhua Energy rallied 4.1% and gold miner Zhongjin Gold Corp. closed up 4.0%. Copper Miner Jiangxi Copper also saw strengthening, finishing up 2.8%.

In India, the Sensex closed -0.4% as poor earnings weighed. Automaker Mahindra & Mahindra closed down 6.0% after posting disappointing Q2 earnings. Meanwhile, sugar stocks saw heavy selling pressure after Balrampur Chini Millls missed estimates. The stock tumbled 11.0% on the miss.

• European Markets Closing Prices
UK's FTSE: -0.5%
Germany's DAX: -1.2%
France's CAC: -1.3%
Spain's IBEX: -2.2%
Portugal's PSI: -0.6%
Italy's MIB Index: -2.0%
Irish Ovrl Index: + 0.2%
Greece FTSE/ASE 20: + 0.7%

EARNINGS CALL

• Before market open

Lowe's (LOW) beats by $0.02, beats on revs; guides Q4 EPS in-line, revs above consensus
Reports Q3 (Oct) earnings of $0.35 per share, excluding $0.17 for charges for store closings and discontinued projects, $0.02 better than the Capital IQ Consensus Estimate of $0.33; revenues rose 2.3% year/year to $11.85 bln vs the $11.7 bln consensus. Co issues mixed guidance for Q4, sees EPS of 0.20-0.23 vs. $0.23 Capital IQ Consensus Estimate; sees Q4 revs of +8% YoY, calculating to ~$11.32 bln vs. $11.24 bln Capital IQ Consensus Estimate. Co expects comparable store sales of flat to 1%.

• After market close

Urban Outfitters (URBN) reports EPS in-line, revs in-line with preannouncement
Reports Q3 (Oct) earnings of $0.33 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.33; revenues rose 6.3% year/year to $610 mln, in-line with co's preannouncement. For the three months ended October 31, 2011, gross profit margin percentage declined by 571 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns to clear slow moving women's apparel inventory at both Anthropologie and Urban Outfitters, as well as occupancy deleverage caused by negative comparable store sales. As of October 31, 2011, total inventories grew by $78 million or 27%, on a year-over-year basis. Total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 18% at cost while total comparable store inventory increased by 13% at cost. The balance of the increase was driven by the acquisition of inventory to stock new retail stores. "We anticipate additional improvements through continued product focus, aggressive inventory management and the organization changes we announced last week."

IN OTHER NEWS ...

• Boeing receives single largest order from Emirates for 50 777-300ERs; valued at $18 bln
Co and and Dubai-based Emirates Airline announce an order for 50 Boeing 777-300ERs (Extended Range) plus options for an additional 20 of the twin-aisle commercial jetliner. The order, with a value of $18 bln, makes this the single largest commercial airplane order in co's history by dollar value. It also makes 2011 the best-selling year for the 777 program, surpassing the previous record of 154 orders set in 2005. With the Emirates order, the 2011 net order book for the 777 currently stands at 182. The options for 20 additional airplanes is valued at $8 bln. Emirates has also signed a 12-year OnPoint solution agreement for the maintenance, repair and overhaul of these newly ordered GE90-115B engines, (from GE Aviation). The engine order list price and service agreement is valued at approximately $6 blnover the life of the contract. Additionally, Boeing and Oman Air, Sultanate of Oman's flagship carrier, announced an order for six 787-8s.

• IMF Calls for Further Reforms in China’s Financial System
China's financial system is robust overall, but faces a steady build-up in vulnerabilities. While significant progress has been made towards developing a more commercially-oriented financial sector, and supervision and regulation are being strengthened, risks stem from the growing complexity of the system and the uncertainties surrounding the global economy. Further reforms are needed to support financial stability and encourage strong and balanced growth, the International Monetary Fund (IMF) says in its first formal evaluation of China's financial sector published today.

According to the FSAP report, China's financial sector is confronting several near-term risks: deterioration in loan quality due to rapid credit expansion; growing disintermediation by shadow banks and off-balance sheet exposures; a downturn in real estate prices; and the uncertainties of the global economic scenario.

Stress tests conducted jointly by the Fund and Chinese authorities of the country's largest 17 commercial banks indicate that most of them appear to be resilient to isolated shocks.

The main areas of reform should include:

-- Steps to broaden financial markets and services, and developing diversified modalities of financial intermediation that would foster healthy competition among banks.

-- A reorientation of the role of government away from using the banking system to carry out broad government policy goals and to allow lending decisions to be based on commercial goals.

-- Expansion of the use of market-based monetary policy instruments, using interest rates as the main instrument to govern credit expansion, rather than administrative measures.

-- An upgrading of the financial infrastructure and legal frameworks, including strengthening the payments and settlement systems, as well as consumer protection and expansion of financial literacy.

• Personal Observation
IPOs have picked up over the last couple of weeks and 200 more companies are filed to go public over the next few months. IPO fees have hit their highest levels since 2007. Tech is the hottest sector with no less than 38 IPOs this year.

It has been said that any recovery has to be preceded with the emergence of new companies and an uptick in IPOs. This could be another long-term sign that America is finally on the mend.


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TECHNICAL UPDATE - Monday 14 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,078.98 -74.70 (-0.61%)
Volume: 119,533,572 from 134,518,567 the previous day
Range: 12,027.03 – 12,170.56

http://img545.imageshack.us/img545/4615/dowb.jpg (http://imageshack.us/photo/my-images/545/dowb.jpg/)

DOW has to break above and hold above 12,240 if it is going to convince anyone that this break out to the upside has any legs at all. It also needs to stay away from the 200DSMA that has been dogging it for the last four weeks ... The NASDAQ closed the week off in a Rickshawman Doji (weekly candles), implying a stall or reversal in the coming week. The Bullish Kicker from Thursday into Friday might give the NASDAQ some bullish respite come Monday but I won't be holding my breath for it. The 200DSMA is becoming a pain in the butt for NASDAQ - two breaks in three weeks and NASDAQ still can't get away from it and it is going to be serious resistance in the coming session ... I wish I could believe that SPX has more legs. But given the weaker volumes on Friday and the nature those gains were made (gap up and stayed there) only makes me cautious come Monday. Plus that 200DSMA is going to raise the level of difficulty if SPX is to break higher.

The DOW and SPX wear high Bearish Haramis that are almost always followed by lower successive sessions. NASDAQ sports a straightforward Bearish Harami implying a consolidation with bearish tendencies.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,657.220 -21.53 (-0.80%)
Volume: 355,997,171 from 401,759,328 the previous day
Range: 2,647.48 – 2,682.13

S&P 500 INDEX (SPX: CBOE)
1,251.79 -12.06 (-0.95%)
Volume: 400,306 from 576,721 the previous day
Range: 1,246.68 – 1,263.85


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MARKET INTERNALS - Monday 14 November, 2011 AMC

NYSE :
Lower than avg volume @ 704 mln vs 927 mln
Decliners outpaced Advancers (adv/dec): 720/2301
New highs outpaced new lows (hi/lo): 42/17

NASDAQ :
Lower than avg volume @ 1390 mln vs 1770 mln
Decliners outpaced Advancers (adv/dec): 638/1921
New lows outpaced new highs (hi/lo): 31/58


Advancers outpaced Decliners by an average 4.73 to 1 on Lower volumes (-25.01%) on Friday (avg +2.06%).

So the market finished up ... So did the VIX. It parked at 30.04 in spite of a 260 point gain on the DOW on Friday. Fear is still very high in the risk space.

Decliners outpaced Advancers by an average 1.78 to 1 on lower average volumes (-22.36%) on Monday (avg -0.79%).

If not for the massive gains on BA, the DOW will look a lot worse. The broader market sold off more than the indices would show. The VIX rose yet again to closed at 31.13 +1.09 (+3.63%). And all the while, volumes were at their worst levels for the year. Volumes on Friday had already dipped 25% off the average and Monday dipped a further 22%.

http://img443.imageshack.us/img443/369/intou.jpg (http://imageshack.us/photo/my-images/443/intou.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Natural gas ends near lows
Precious metals were pressured today by the persistent strength in the dollar. Gold futures ended lower by 0.5% at $1778.40 per ounce, while silver futures shed 1.9% at $34.02 per ounce. Throughout the session gold managed to remain above its overnight lows at $1774.20. Silver, on the other hand, traded to session lows at $33.95 heading into the close of pit trade. Dec copper gained 3 cents to close at $3.49.

Natural gas futures settled lower by 3.5% at $3.46 per MMBtu. Relatively mild weather across the country is stoking concerns about growing supplies, and that caused futures to close lower for the eighth time in ten sessions. Crude oil settled lower by 0.9% at $98.14 per barrel. Strength in the dollar pressured crude futures. Heating oil shed a penny to close at $3.16, while RBOB gasoline fell 6 cents to close at $2.54 (all Dec contracts).

Corn settled 5 cents lower at $6.34/bu, wheat fell 2 cents to end at $6.15, soybeans rose 2 cents at $11.78, ethanol was unchanged at $2.65, while sugar fell 0.2% at $0.25.

Commodities AMC on Monday 14 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 98.14 -0.85 (-0.86%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,778.40 -9.70 (-0.54%)

Treasuries ended the day with small gains as European worries buoyed the complex. A disappointing Italian 5-yr auction led to a surge in yields for both Italian and Spanish paper as investors dumped riskier government debt. Late morning buying dropped yields in the U.S. to their session lows with the 10-yr falling to 2.025% before sellers emerged. Treasury bears continue to defend the 2.00% threshold for the 10-yr yield as action remains focused on that mark. Outperformance by the long bond caused a 5 bp decline in the 30-yr yield yield to 3.088%. Flattening of the yield curve caused the 2-10-yr spread to tighten to 181 bps.

Treasury Yields AMC on Monday 14 November, 2011:
• 2 Year Note 0.24% unch
• 5 Year Note 0.91% +0.01
• 10 Year Note 2.04% unch
• 30 Year Bond 3.09% -0.03
2/30 Spread : 285bps ( -3 ) ... 2/10 Spread : 180bps ( unch )


U.S. Treasury Market was closed Friday 11 November 2011 in observance of Veterans Day. The market will resume normal trading hours on Monday, 14 November 2011.

And the curve flattens some more. Any more flattening is going to send the 10 and 30 year yields to under-par lows again and right now, we're not far away from those levels.


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PREVIEW FOR TUESDAY 15 NOVEMBER, 2011

A steady flow of data kicks off the week on Tuesday as PPI, core PPI, retail sales, retail sales ex-auto, Empire Manufacturing (8:30), and business inventories are released. The Fed's Permanent Open Market Operations continue with the buying of $4.25-5.00 bln worth of 2017-2019 maturities. Fed speak is plentiful as STL's Bullard gives a speech on his economic outlook to the CFA Society of St. Louis (7:30), Chicago's Evans discusses foreign relations in NYC (8), SF's Williams gives his outlook in Phoenix (9:30), Richmond's Lacker talks Fed Policy at the Cato institute in D.C. (11:15), and Dallas' Fisher talks on ‘too big to fail' at Columbia Business School in NYC (12:30).

Earnings Highlights
BMO: BZH, CVVT, COV, DKS, HD, NRGY, INXN, LRN, MTOR, NGPC, SKS, SPLS, TJX, TSEM, VIT, VELT, WMT,
AMC: A, ASYS, ADSK, BOBE, CNQR, DELL, and JADE.

Economic Events
08:30 am PPI
08:30 am Core PPI
08:30 am Retail Sales
08:30 am Retail Sales ex-auto
08:30 am Empire Manufacturing
10:00 am Business Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- UBS Global Technology and Services Conference
- Morgan Stanley's Asia Pacific Summit
- Fed's Bullard


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SUMMARY

Although the DOW and S&P made gains on the week, NASDAQ was lagging and mustered an unchanged and slightly negative week. As we head into the last week of earnings season and the start of the Christmas season, I seriously wonder if this market has what it takes to get higher by December ... Friday was one of those irritating gap-up-and-go-nowhere sessions on weaker volumes ... doesn't inspire confidence just when you thought the market had legs enough to get out of this four week funk.

The end of earnings season arrives with the numbers from HD and WMT BMO. That, and a slew of data for the rest of the week should bring volumes back but punters are not dovish about the numbers. Oil and Gas inventories are expected to show substantial builds while today's PPI and tomorrow's CPI are expected to reveal higher levels of inflation while manufacturing and production numbers are expected to dip significantly too. The ongoing European saga continues as a rise overnight in Spanish and Italian yields stoke concerns that Europe’s crisis is deepening.

Retail sales, retail earnings and a lot of Fed Speak may give the US market some respite but I won't be holding my breath as this Double Top on the indices could well turn into a self-fulfilling prophecy.

Direction for Tuesday 15 November, 2011; ∇ Down

2011 Daily Directional Accuracy: 118/198 (59.60%)

Conrad
11-16-2011, 04:47 AM
U.S. MARKETS - Tuesday 15 November, 2011 AMC

http://img194.imageshack.us/img194/9226/dexsx.jpg (http://imageshack.us/photo/my-images/194/dexsx.jpg/)

The end of earnings season arrives with the numbers from HD and WMT BMO. That, and a slew of data for the rest of the week should bring volumes back but punters are not dovish about the numbers. Oil and Gas inventories are expected to show substantial builds while today's PPI and tomorrow's CPI are expected to reveal higher levels of inflation while manufacturing and production numbers are expected to dip significantly too. The ongoing European saga continues as a rise overnight in Spanish and Italian yields stoke concerns that Europe’s crisis is deepening ... Retail sales, retail earnings and a lot of Fed Speak may give the US market some respite but I won't be holding my breath as this Double Top on the indices could well turn into a self-fulfilling prophecy.

Direction for Tuesday 15 November, 2011; ∇ Down

Man, it tough getting back in sync with the market after a long absence. I saw no reason to be bearish after the data came out and true enough, European fears faded as common sense took over in the afternoon session.


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MARKET SUMMARY - Tuesday 15 November, 2011


BRIEFING.COM - Tuesday 15 November, 2011 AMC
Daily Sector Wrap: Varied Gains Follow Lackluster Start

Stocks slipped after a choppy start to the session, but buyers eventually stepped back in to provide a broad lift. Their efforts picked up right around the time that trade in Europe wrapped up.

Sentiment this morning was initially imbued by renewed worries about financial conditions in Europe, where the region's major bourses traded with weakness once again. Once trade there was closed, the mood among market participants quickly improved. At about the same time the euro started to move off of its intraday low, although it was still down about 0.7% against the greenback at session's end.

The Nasdaq was able to outperform its counterparts with help from tech stocks. As a group, tech issues advanced 1.3%. Intel (INTC 25.34, +0.71) was a steady leader, but Dell (DELL 15.63, +0.31) also advanced nicely ahead of its quarterly announcement.

Wal-Mart (WMT 57.46, -1.43) weighed on the Dow for virtually the entire session. The stock's weakness came after the retail behemoth failed to produce the earnings expected by Wall Street.

An upside earnings surprise helped Home Depot (HD 38.07, -0.18) shares bounce at the open, but the stock failed to hold that move and never really recovered, not even amid the broad market's afternoon bounce.

Word of an oil leak at a rig run by Chevron (CVX 103.27, -2.90) and Transocean (RIG 47.86, -1.85) dragged down the pair's shares, as well as those of other oil and gas services players. Collectively, energy stocks logged a 0.2% loss, making them the only major sector that failed to score a gain.

Share volume was anemic for the second straight session. Yesterday it barely broke 700 million on the NYSE and today it failed to crack 800 million. Over the past 50 days share volume on the Big Board has averaged about 1 billion shares per session.

A substantial dose of data didn't even attract participants to the action. Overall, the reports were generally proved pleasing.

Retail sales climbed by 0.5% during October. A 0.4% increase had been generally expected. Excluding autos, sales actually increased by 0.6%, which is well above the 0.2% pickup that had been widely anticipated.

Producer prices for October fell by 0.3%, exceeding the 0.2% decline that had been commonly forecasted. Core prices were flat for the month, not too different than the 0.1% increase expected among economists surveyed by Briefing.com.

The Empire State Manufacturing Survey for November improved to 0.6 from -8.5 in the prior month. Many thought it would remain in negative territory by an incremental margin.

Business inventories for September were flat, contrasting with the Briefing.com consensus call for a 0.2% increase.

Sector Leaders/Laggards for Tuesday 15 November, 2011 AMC
Leading Sectors: Tech +1.3%, Industrials +0.6%, Telecom +0.5%, Financials +0.4%, Consumer Discretionary +0.4%, Consumer Staples +0.4%, Utilities +0.2%, Tech +0.2%, Materials +0.1%
Leading Industries/ETFs : U.S. Gasoline- UGA +2.2%, Grains; JJG +1.7%, Oil- OIL +1.5%, USO +1.5%, Semis- XSD +1.4%, SMH +1.4%, Oil & Gas Expl- XOP +1.3%.

Lagging Sectors: Energy -0.2%
Lagging Industries/ETFs : Solar- TAN -2.2%, Natural gas- UNG -1.1%, Vix- VXX -1.1%, Wind energy -1.1%.

Other Market Moving Factors:
• Tech emerges as a source of leadership
• Euro retreats against greenback again
• Monthly retail sales prove solid
• Producer prices move little

Companies trading higher in after hours in reaction to earnings: ADSK +1.9%.
Companies trading higher in after hours in reaction to news:
• VELT +4.0% (Velti acquires Mobile Interactive Group; co will pay a minimum consideration of $25 mln, including $20 mln of cash at closing)
• AMRN +3.6% (Amarin Phase 3 MARINE study results presented at American Heart Association's Scientific sessions 2011).

Companies trading lower in after hours in reaction to earnings: ZOOM -12.7%, ASYS -11.6%, A -3.0%, BOBE -2.1%, DELL -1.2%.
Companies trading lower in after hours in reaction to news:
• OZM -8.7% (Och-Ziff Capital announces public offering of $250 mln of class A shares).


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ECONOMIC COMMENTARY - Tuesday 15 November, 2011

• Germany Economic Data

- Q3 prelim GDP +0.5% vs +0.1% in Q2
- Nov Zew Economic Sentiment -55.2 vs -48.3 in Oct
- Nov Current Situation 34.2 vs 38.4 in Oct

• France Q3 prelim GDP +0.4% vs 0.0% in Q2

• UK Oct CPI +0.1% vs +0.6% in Sep

• Eurozone Economic Data

- Q3 GDP +0.2% vs +0.2% in Q2
- Sep Trade Balance sa (in EUR) +2.1 bln vs -1.0 bln in Aug

• Reserve Bank of Australia Minutes released
For details of this release, click here (http://www.rba.gov.au/monetary-policy/rba-board-minutes/2011/01112011.html)

• U.S. Economic Data

- October PPI -0.3% vs -0.2%
- October Core PPI +0.0% vs +0.1%
- October Retail Sales +0.5% vs +0.4%; Prior +1.1%
- October Retail Sales ex-auto +0.6% vs +0.2%; Prior revised to +0.5% from +0.6%
- November Empire Manufacturing +0.60 vs -0.8; October -8.48
- September Business Inventories 0.0% vs +0.2%

Retail Sales Beat Expectations in October on Strong Demand for Electronics and Appliances
Retail sales increased 0.5% in October, down from 1.1% in September. The Briefing.com consensus expected retail sales to increase 0.4%. Motor vehicles and parts dealers, which were expected to provide much of the October growth, increased only 0.4% after increasing 4.2% in September. Excluding motor vehicle sales, retail sales increased 0.6% in October, up from 0.5% in September. The consensus expected these sales to increase by only 0.2%. More importantly, core sales - which exclude the highly volatile motor vehicle dealers, building material and supply stores, and gasoline stations - increased 0.6% in October. That was the strongest increase since March. Sales were strong across the board. Only furniture (-0.7%) stores, gasoline stations (-0.4%), and clothing stores (-0.7%) saw declines in October. A big part of the October gain, however, came from a 3.7% increase in electronics and appliances store sales, which was the largest increase since November 2009. This type of growth is not sustainable and sales in this area most likely will tumble over the next month or two.

Lower Energy Costs Lead to a Decline in the October PPI
Producer prices fell 0.3% in October after increasing 0.8% in September. That is the first decline since June, when prices fell by the same amount. The Briefing.com consensus expected the PPI to decline 0.2%. As expected, the energy sector was the reason for the decline. The energy sector suffered from timing issues in September rather than real price movements. Instead of taking an average price level for the month, the BLS surveys consumers and producers during only one week. Temporary price spikes then can have a profound impact on inflation levels. Even though average oil prices in September were lower than in August, it just so happened that the week of the survey came during a mini-surge in prices. Oil prices reverted to lower levels within a few days. This caused a 1.4% decline in energy prices in October after increasing 2.3% in September. Food prices were up a modest 0.1%, the smallest increase since May.

Total Business Inventoriers Were Flat in September
Total business inventories were flat in September after increasing 0.4% in August. The Briefing.com consensus expected inventories to increase 0.2%. Inventory growth for both manufacturers (0.1%) and merchant wholesalers (-0.1%) was known prior to the release. The only piece of new information was that retailer inventories fell 0.1% in September after increasing 0.7% in August. The decline in retailer inventories was in-line with BEA expectations from the third quarter advance GDP report. This comes after the BEA overestimated inventory growth for both manufacturers and merchant wholesalers, which will lead to negative revisions to GDP. Business sales increased 0.6% in September, up from 0.4% in August. The inventory/sales ratio remained at 1.27 in September.

• Asian Markets Close; Nikkei -0.7%, Hang Seng -0.8%, Shanghai UNCH
The major Asian indices closed mostly lower following yesterday's losses on Wall Street. Asian investors remain skeptical as to whether or not the new governments in Greece and Italy will be able to solve their nations' debt problems. The Reserve Bank of Australia's monetary policy minutes suggested a ‘more neutral' setting going forward. There was no data. Looking at the currencies USDCNY weakened to 6.3475 while USDJPY is weaker at 77.00.

In Japan, the Nikkei closed -0.7% as technology shares were the worst performers. Kyocera shed 1.0% and TDK fell 1.8% to finish as laggards in the space. Embattled camera maker Olympus closed limit up with no volume for a second straight session as delisting fears continue to abate.

In Hong Kong, the Hang Seng finished -0.8% as names with large amounts of business in Europe were hit the hardest. Retailer Esprit lost 2.9% while HSBC closed down 1.9%. China Construction Bank gained 1.1% on news that Bank of America would look to sell most of its stake in the co.

In China, the Shanghai Composite settled unchanged as financials and real estate shares saw modest losses. ICBC and Bank of China both lost 0.7% while Poly Real Estate shed 0.8%.

In India, the Sensex closed -1.4% as heavyweights Reliance Industries and Infosys Technologies lost 1.4% and 0.6% respectively.

• European Markets Closing Prices
UK's FTSE: + 0.2%
Germany's DAX: -0.9%
France's CAC: -1.9%
Spain's IBEX: -1.4%
Portugal's PSI: -0.8%
Italy's MIB Index: -1.1%
Irish Ovrl Index: -1.0%
Greece FTSE/ASE 20: -4.7%

EARNINGS CALL

• Before market open

Home Depot (HD) beats by $0.02, beats on revs; guides FY12 EPS above consensus, reaffirms FY12 revs guidance; increases quarterly dividend by $0.16 per share
Reports Q3 (Oct) earnings of $0.60 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.58; revenues rose 4.4% year/year to $17.33 bln vs the $17.12 bln consensus. Co issues raises EPS guidance for FY12, sees EPS of $2.38 vs. $2.35 Capital IQ Consensus Estimate and above prior guidance of $2.34; reaffirms FY rev guidance; sees FY12 revs of +2.5% YoY calculating to ~$69.7 bln vs. $69.68 bln Capital IQ Consensus Estimate. Comparable store sales for the third quarter of fiscal 2011 were positive 4.2%, and comp sales for U.S. stores were positive 3.8%. The co also declares a 16% increase in its quarterly dividend to $0.29 per share.

Wal-Mart (WMT) misses by $0.01, beats on revs; guides Q4 EPS in-line
Reports Q3 (Oct) earnings of $0.97 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.98; revenues rose 8.2% year/year to $109.52 bln vs the $107.8 bln consensus. Co issues in-line guidance for Q4, sees EPS of $1.42-1.48, excluding non-recurring items, vs. $1.45 Capital IQ Consensus Estimate, with U.S. Q4 comparable store sales of flat to +2% and Sam's Club comparable store sales of +4-6%. Wal-Mart reports U.S. Q3 comparable store sales of +1.3%; co guided for range of -1% to +1%; Sam's Club Q3 comparable store sales of +5.7%; co guided for +3-5% (ex-fuel). During the 13-week period, Walmart U.S. comp sales were driven by an increase in average ticket, partially offset by a decline in traffic versus last year. However, comp traffic improved 160 basis points over 2Q12. Grocery, health and wellness and hardlines, which represent ~75 percent of Walmart U.S. annual revenues, all had positive comps. Walmart International increased net sales ~20% to $32.4 bln for the quarter, including the benefit from acquisitions and currency exchange translation. In Q3, the co repurchased $1.4 bln worth of shares, representing ~27 mln shares. In addition, the co paid $1.3 bln in dividends.

• After market close

Dell (DELL) beats by $0.07, misses on revs; lowers FY12 revs guidance, reaffirms FY12 operating income guidance
Reports Q3 (Oct) earnings of $0.54 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.47; revenues fell 1.9% year/year to $15.37 mln vs the $15.66 bln consensus. Dell reaffirms FY12 operating income guidance of +17-23%. Dell sees FY12 revenue at lower end of the range of its revenue outlook of 1-5% full fiscal-year growth; consensus calls for 1.6% growth. "Given the uncertain macroeconomic environment and complexity in working through the industry-wide hard drive issue, the company is trending to the lower end of the range of its revenue outlook of 1 to 5-percent full fiscal-year growth"


___________________________________________

TECHNICAL UPDATE - Tuesday 15 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,096.16 +17.18 (+0.14%)
Volume: 145,106,885 from 119,533,572 the previous day
Range: 12,001.26 – 12,165.11

http://img839.imageshack.us/img839/8166/dowo.jpg (http://imageshack.us/photo/my-images/839/dowo.jpg/)


The DOW and SPX wear high Bearish Haramis that are almost always followed by lower successive sessions. NASDAQ sports a straightforward Bearish Harami implying a consolidation with bearish tendencies.

Technically, the benchmarks are divergent. NASDAQ wears a Bullish Engulfing patter while SPX is stalled on a Spinning Top and DOW is stuck with a short Rickshawman. Although volumes were better across the benchmarks, the broader market volumes continued to dip.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,686.20 +28.98 (+1.09%)
Volume: 432,176,803 from 355,997,171 the previous day
Range: 2,644.00 – 2,695.87

S&P 500 INDEX (SPX: CBOE)
1,257.81 +6.03 (+0.48%)
Volume: 624,302 from 400,306 the previous day
Range: 1,244.34 – 1,264.25


___________________________________________

MARKET INTERNALS - Tuesday 15 November, 2011 AMC

NYSE :
Lower than avg volume @ 781 mln, vs. 1076 mln
Advancers outpaced Decliners (adv/dec): 1895/1113
New highs outpaced new lows (hi/lo): 51/27

NASDAQ :
Lower than avg volume @ 1640 mln, vs. 1981
Advancers outpaced Decliners (adv/dec): 1712/830
New lows outpaced new highs (hi/lo): 46/83


Decliners outpaced Advancers by an average 1.78 to 1 on lower average volumes (-22.36%) on Monday (avg -0.79%).

If not for the massive gains on BA, the DOW will look a lot worse. The broader market sold off more than the indices would show. The VIX rose yet again to closed at 31.13 +1.09 (+3.63%). And all the while, volumes were at their worst levels for the year. Volumes on Friday had already dipped 25% off the average and Monday dipped a further 22%.

Advancers outpaced Decliners by an average 1.86 to 1 on lower average volumes (-20.80%) on Tuesday (avg +0.57%).

Volumes continue to be an enigma for a third straight session. What are they waiting for? In the meantime, the VIX, like me, remain unconvinced about any bullishness by staying high and closing at 31.22.

http://img408.imageshack.us/img408/6647/intz.jpg (http://imageshack.us/photo/my-images/408/intz.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude oil ends just shy of $100; natural gas extends sell-off

Crude oil rallied for 1.3% to close at $99.37 per barrel, its highest settling price in 16 weeks. Futures, aided by strength in equities and better-than-expected econ data, rallied throughout the afternoon to close just shy of session highs at $99.84. The sell-off in natural gas continued today, as continued above-avg temps across the country weighed on demand. Futures traded to their lowest levels in a year, at $3.39, and finished just above those lows at $3.40 per MMBtu, down 1.7% on the session. Heating oil ended up a penny at $3.17, while RBOB gasoline rallied for 5 cents to close at $2.59 (all Dec contracts).

It was a quiet session for gold futures, which ended higher by 0.1% at $1782.20 per ounce. Futures recouped morning losses heading into afternoon trade and spent the remainder of the session chopping around the unchanged mark. Silver finished up 1.2% at $34.46 per ounce. Silver gave up its gains in mid-morning trade after falling from session highs back to the unchanged mark. It was, however, able to recoup some of its earlier gains in afternoon trade. Dec copper gained 1 cent to close at $3.51.

Corn settled 11 cents higher at $6.45/bu, wheat rose 16 cents to end at $6.32, soybeans rose 22 cents at $12.00, ethanol ended 3 cents higher at $2.68, while sugar fell 0.4% at $0.25.

Commodities AMC on Tuesday 15 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 99.37 +1.23 (+1.25%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,782.20 +3.80 (+0.21%)

Treasuries ended the day little changed, but on their worst levels of the session as a late morning/early afternoon selloff erased this morning's gains. Better than expected data dropped the complex off its best levels early this morning, but Treasuries rallied back to their highs following the business inventories miss. The complex then succumbed to heavy selling as money rotated out of Treasuries and into equities on news that new Italian Prime Minister Mario Monti would soon announce his cabinet. The 10-yr yield once again failed to cleanly pierce the 2.00% threshold as the afternoon selloff ran it back up to 2.06% at the cash close. Slight outperformance came from the long bond as it saw fractional gains drop its yield 1 bp to 3.097%. Little changed occurred along the yield curve as the 2-10-yr spread widened slightly to 182 bps.

Treasury Yields AMC on Tuesday 15 November, 2011:
• 2 Year Note 0.26% +0.02
• 5 Year Note 0.93% +0.02
• 10 Year Note 2.06% +0.02
• 30 Year Bond 3.10% +0.01
2/30 Spread : 284bps ( -1 ) ... 2/10 Spread : 180bps ( unch )


And the curve flattens some more. Any more flattening is going to send the 10 and 30 year yields to under-par lows again and right now, we're not far away from those levels.

While US bond yields stagnate, Spanish and Italian yields go through the roof. What's next, Portuguese yields?


___________________________________________

PREVIEW FOR WEDNESDAY 16 NOVEMBER, 2011

Wednesday's data is heavy as the weekly MBA Mortgage Index (7), CPI, core CPI (8:30), net long-term TIC flows (9), industrial production and capacity utilization (9:15), and the NAHB Housing Market Index (10) are released. The Fed will sell $8.00-8.75 bln worth of 2013/2014 maturities through POMO. Richmond's Lacker will speak again at the Cato Institute in D.C. (11:15), and Boston's Rosengren will speak in front of the Boston Economic Club (12:45).

Earnings Highlights
BMO: ANF, BNHNA, DANG, ESLT, SBH, SPB, GASS, TGT, TYC, and VVTV
AMC: ENER, AMAT, DL, HOTT, LTD, NTAP, NTES, PETM, QIHU, YOKU, and ZOLL.

Economic Events
07:00 am MBA Mortgage Index
08:30 am CPI Oct
08:30 am Core CPI Oct
09:00 am Net Long-Term TIC Flows
09:15 am Industrial Production
09:15 am Capacity Utilization
10:00 am NAHB Housing Market Index
10:30 am Crude Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- Southwest IDEAS Conference
- Morgan Stanley Technology, Media and Telecoms Conference
- Citi 8th Annual Small/Mid Cap Conference


___________________________________________

SUMMARY

Are we there already? The Double Top isn't quite there yet but then again, Monday's sell-down wasn't quite a sell-down either because one statistic stands out - volumes were pathetic following Friday's already weak volumes. Monday 14 November was amongst the year's lowest volumes. I don't know if Friday and Monday can be taken seriously.

I am going with the flow of positive data and earnings seeing how this market is not as headline sensitive to Europe as it was in the last few weeks. With Black Friday weekend round the corner, I am expecting a good holiday season ahead if volumes can pick up and maintain a healthier level than in the last few sessions.

Direction for Wednesday 16 November, 2011; ∆ Up

2011 Daily Directional Accuracy: 118/199 (59.30%)

Conrad
11-17-2011, 04:29 AM
U.S. MARKETS - Wednesday 16 November, 2011 AMC

http://img88.imageshack.us/img88/1931/dexse.jpg (http://imageshack.us/photo/my-images/88/dexse.jpg/)

I am going with the flow of positive data and earnings seeing how this market is not as headline sensitive to Europe as it was in the last few weeks. With Black Friday weekend round the corner, I am expecting a good holiday season ahead if volumes can pick up and maintain a healthier level than in the last few sessions.

Direction for Wednesday 16 November, 2011; ∆ Up

Utilities and Staples take the lead while Financials were the major drag. I just seem to get my calls right ... 3 for 3 off the mark.


___________________________________________

MARKET SUMMARY - Wednesday 16 November, 2011


BRIEFING.COM - Wednesday 16 November, 2011 AMC
Daily Sector Wrap: Sellers Return

Stocks rolled over in the final hour of trade to logg sizable losses. The move lower coincided with a retreat by the euro.

The major equity averages opened trade today with marked losses, but stocks gradually worked their way up to the neutral line. The lack of leadership left stocks to lose momentum and drift back into negative territory.

Selling accelerated in the final hour, right around the time that the euro began its pullback from positive territory. The euro, generally a barometer of confidence in the eurozone, had been down against the greenback in morning trade, but eventually mustered a modest gain. That move proved unsustainable, though, as it forfeited its gain to trade with a 0.3% loss against the dollar by session's end.

Although it wasn't a revelation, analysts at Fitch reminded market participants about the risk of contagion by suggesting that domestic banks could be hurt if the fiscal and financial problems of Europe worsen. For now, though, the analysts have a stable outlook on the U.S. banking industry. In contrast, analysts at Moody's downgraded credit ratings on 10 banks in Germany, which is Europe's strongest, most diversified economy.

Financials had been relatively weak all session and, perhaps appropriately, suffered some of the steepest losses. The sector's 2.5% drop was driven by shares of large-cap diversified financial services players like Bank of America (BAC 5.90, -0.23), which set a new monthly low.

Even energy stocks were imbued by broad market weakness, despite a rally by oil prices to a multi-month high above $100 per barrel. The energy component closed pit trade more than 3% higher at almost $102.60 per barrel, but energy stocks, as a group, logged a 1.5% loss.

Tech stocks tried to offer support on a few occassions, but efforts were repeatedly checked by sellers, culminating in a 1.5% loss for the largest sector by market weight. Dell (DELL 15.25, -0.38) was a steady drag after its tepid guidance cast a pall over an upside earnings surprise.

For the second straight session data did little for traders. The economic calendar featured an October Consumer Price Index that slipped by 0.1%, which is not too different than the consensus call for no change. Core prices made a 0.1% increase, just as had been generally expected. Separately, industrial production increased in October by 0.7%. That exceeded the 0.4% increase that had been broadly expected.

Sector Leaders/Laggards for Wednesday 16 November, 2011 AMC
Leading Sectors: None.
Leading Industries/ETFs : Vix- VXX +4.9%, Oil- OIL +2.6%, USO +2.4%, Treasuries- TLT 0.9%.

Lagging Sectors: Consumer Staples -0.8%, Utilities -1.3%, Tech -1.5%, Energy -1.5%, Industrials -1.5%, Telecom -1.6%, Health Care -1.8%, Consumer Discretionary -1.9%, Materials -2.4%, Financials -2.5%
Lagging Industries/ETFs :
IAI -3.8%, Airlines- FAA -3.3%, Financials- KCE -2.8%, XLF -2.5%, Semi Equip XSD -2.7%, Steel- SLX -2.6%, Silver- SLV -2.5%, Retail XRT +2.3%, Coal- KOL -2.3%, Nat gas- UNG -2.2%.

Other Market Moving Factors:
• Selling broadens and accelerates into the close
• Euro makes modest rebound against greenback, but then backs down
• No real surprise to latest CPI
• Oil prices push past $100 to multi-month high
• Earnings announcements slow, limiting bellwethers

Companies trading higher in after hours in reaction to earnings: ZOLL +9.4%, NTAP +6.9%, HOTT +6.4%, QIHU +4.7%, NTES +2.8%.

Companies trading lower in after hours in reaction to earnings: YOKU -14.6%, LTD -0.7%.


___________________________________________

ECONOMIC COMMENTARY - Wednesday 16 November, 2011

• Bank of Japan leaves monetary policy unchanged; lowers economic assessment
For deatails of this release; click here (http://www.boj.or.jp/en/announcements/release_2011/k111116a.pdf)

• Australia Economic Data

- Sep Westpac Leading Index -0.3% vs +0.7% in Aug
- Oct DEWR Internet Skilled Vacancies -1.9% vs -2.1% in Sep
- Q3 Wage Cost Index +0.7% vs +0.9% in Q2

• China Oct Actual FDI +8.8% vs +7.9%

• UK Economic Data

- Oct Jobless claims +5.3K vs revised +13.4K in Sep (prior +17.5K)
- Sep ILO Unemployment Rate 8.3% vs +8.1% in Aug

• Eurozone Oct Core CPI +1.6% vs +1.6% in Sep

• BOE Inflation Report released;

- Economic conditions worsened; reduced growth and inflation forecasts; market sentiment took a turn for the worse in Aug; stock futures beginning to slide after news
For details of this release, click here (http://www.bankofengland.co.uk/publications/inflationreport/ir11nov.pdf)

• U.S. Economic Data

- MBA Mortgage Applications of -10.0% vs +10.3% Prior
- October Headline CPI Y/Y +3.5%
- October Headline Core CPI Y/Y +2.1%
- October CPI M/M -0.1% vs 0.0%
- October Core CPI M/M +0.1% vs +0.1%
- September Net long-term TIC Flows $68.6 bln, Prior $57.9 bln
- October Capacity Utilization 77.8% vs 77.7%; Prior revised to 77.3% from 77.4%
- October Industrial Production +0.7% vs +0.4%; Prior revised to -0.1% from +0.2%
- November NAHB Housing Market Index 20 vs 18; October 17

CPI Declines for the First Time Since June
A decline in energy prices caused headline CPI to decline 0.1% in October. That was the first decline since June. The Briefing.com consensus expected CPI to remain flat. Just like the October PPI, the drop in energy costs in October was due to timing issues. The BLS monitors consumer inflation during one week of the month. It just so happened that the survey period in September was during a mini-surge in crude and gasoline prices. That led to elevated energy costs for the month. As the prices quickly retreated, the October survey period was compared to the relatively high September levels. That caused energy prices to fall 2.0% for the month, completely removing the September gain. Food prices increased 0.1% in October. Excluding food and energy, core CPI increased 0.1% in October, exactly what the consensus expected. Higher shelter costs were partially offset by a decline in new and used motor vehicle prices.

Industrial Production Surges on Strong Manufacturing and Utilities Production
Following a downwardly revised 0.1% decline in September (from +0.2%), industrial production spiked 0.7% in October. The Briefing.com consensus expected production to increase 0.4%. Manufacturing production increased a healthy 0.5% in October after increasing 0.3% in September. The strong growth in the manufacturing sector was slightly at odds with the national ISM data, which showed industrial production slowing down and nearing a potential contraction. Gains in manufacturing were seen across the board as every major market group with the exception of energy saw substantial gains. Motor vehicle manufacturing increased 3.1% in October. That was the largest gain since a 4.5% increase in July. Auto and light truck assemblies increased from 8.49 mln SAAR in September to 9.05 mln SAAR in October. That was the first time since July 2008 that motor vehicle manufacturers produced more than 9.0 mln vehicles. There is still room for growth as assemblies averaged over 11.0 mln SAAR prior to the recession. Mining production rebounded 2.3% after falling 0.5% in September. Utilities production fell 0.1% in October, which was the third consecutive monthly decline.

• Oil Inventory Data

Dept of Energy reports that:

- Crude oil inventories had a draw of 1.1 mln (consensus is a draw of 1.2 mln).
- Gasoline inventories had a build of 992K (consensus is a draw of 1.0 mln).
- Distillate inventories had a draw of 2.1 mln (consensus is a draw of 2.4 mln).
- Change in refinery utilization was +2.2% (vs consensus of +0.5%).
Summary of Weekly Petroleum Data for the week ending Nov 11

Production: U.S. crude oil refinery inputs averaged about 14.7 mln bpd during the week ending November 11, 344 thousand bpd above the previous week's average. Refineries operated at 84.8 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.1 mln bpd. Distillate fuel production increased last week, averaging about 4.8 mln bpd.

Imports: U.S. crude oil imports averaged just under 8.6 mln bpd last week, down by 53 thousand bpd from the previous week. Over the last four weeks, crude oil imports have averaged about 8.9 mln bpd, 379 thousand bpd above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 762 thousand bpd. Distillate fuel imports averaged 82 thousand bpd last week.

Inventory: At 337.0 mln barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.0 mln barrels last week and are in the middle of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 2.1 mln barrels last week and are in the lower limit of the average range for this time of year. Propane/propylene inventories decreased by 0.6 mln barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 8.7 mln barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged about 8.6 mln bpd, down by 5.7 percent from the same period last year. Distillate fuel product supplied has averaged nearly 4.3 mln bpd over the last four weeks, up by 5.1 percent from the same period last year.

Finished Motor Gasoline (Implied Demand): Finished motor gasoline demand for the week ended 11/11 was 8,625K bpd, down from last week's 8,671K, and lower than the yr ago period of 8,952K.

• Asian Markets Close; Nikkei -0.9%, Hang Seng -2.0%, Shanghai -2.5%, Sensex -0.6%
The major Asian indices closed mostly lower with yesterday's gains on Wall Street being unable to provide optimism across the Pacific as European debt worries continue to weigh. The Bank of Japan held its benchmark interest rate below 0.10% but gave a weak economic outlook, saying the European debt crisis, flooding in Thailand, and strong yen will likely weigh on growth. Data in the region was limited to Australia as the MI Leading Index fell 0.3% MoM and the Wage Price Index rose a less than expected 0.7% QoQ (0.9% QoQ expected). Looking at the currencies...USDCNY weakened to 6.3446 while USDJPY is weaker at 796.94.

In Japan, the Nikkei closed -0.9% as financials were among the worst performers. Nomura Holdings tumbled 4.4% while Daiwa Securities fell 4.6%. DRAM maker Elpida surged 8.8% after the co announced it considering cutting production in an effort to support prices. Meanwhile, camera maker Olympus closed limit up for a third consecutive session as investors continue to snap up shares on hopes the stock will not be delisted.

In Hong Kong, the Hang Seng finished -2.0% as insurance stocks were hit hard after China Life announced October premiums fell 16% YoY. The stock fell 5.1% on the news while peer Ping An dropped 5.8%. European retailer Esprit dropped 4.3% on word that it will be removed from the MSCI Hong Kong Index.

In China, the Shanghai Composite settled -2.5% with real estate stocks seeing selling pressure on reports that cos may cut prices further in an effort to deal with large loan repayments. China Vanke and Poly Real Estate Group both fell at least 3.5%. Airline stocks were hit after the sector was downgraded to ‘neutral' from ‘positive' at Daiwa Capital Markets. China Southern Airlines slid 2.8%.

In India, the Sensex closed -0.1% and finished at its worst level in a month. Automakers gained as fuel prices were cut. Mahindra & Mahindra added 2.1% while Tata Motors rose 0.6%. Petroleum stocks were under pressure on the price cut as Hindustan Petroleum shed 5.1%.

• European Markets Closing Prices
UK's FTSE: -0.1%
Germany's DAX: -0.3%
France's CAC: + 0.5%
Spain's IBEX: + 0.8%
Portugal's PSI: -0.4%
Italy's MIB Index: + 0.8%
Irish Ovrl Index: + 0.4%
Greece ATHEX Composite: -2.4%

EARNINGS CALL

• Before market open

Wal-Mart (WMT) misses by $0.01, beats on revs; guides Q4 EPS in-line
Reports Q3 (Oct) earnings of $0.97 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.98; revenues rose 8.2% year/year to $109.52 bln vs the $107.8 bln consensus. Co issues in-line guidance for Q4, sees EPS of $1.42-1.48, excluding non-recurring items, vs. $1.45 Capital IQ Consensus Estimate, with U.S. Q4 comparable store sales of flat to +2% and Sam's Club comparable store sales of +4-6%. Wal-Mart reports U.S. Q3 comparable store sales of +1.3%; co guided for range of -1% to +1%; Sam's Club Q3 comparable store sales of +5.7%; co guided for +3-5% (ex-fuel). During the 13-week period, Walmart U.S. comp sales were driven by an increase in average ticket, partially offset by a decline in traffic versus last year. However, comp traffic improved 160 basis points over 2Q12. Grocery, health and wellness and hardlines, which represent ~75 percent of Walmart U.S. annual revenues, all had positive comps. Walmart International increased net sales ~20% to $32.4 bln for the quarter, including the benefit from acquisitions and currency exchange translation. In Q3, the co repurchased $1.4 bln worth of shares, representing ~27 mln shares. In addition, the co paid $1.3 bln in dividends.

Home Depot (HD 3Q11 EPS beats consensus by $0.02, raises guidance and dividend
Telsey Advisory Group notes HD reported Q3 EPS of $0.60 vs their $0.59 forecast. The firm says the co is up against a difficult 3.9% comparison in 4Q11, however, so far in November the comp has been positive, and the company expects to comp positively for the quarter. Firm says the stock might come under some pressure in the near term given the more challenging sales comparison. However, they remain favorable on the stock longer-term given their expectation for above average EPS growth of ~15% over the next three years.

IN OTHER NEWS ...

• Citigroup plans to eliminate at least 900 positions, according to reports
Click Here (http://www.ft.com/intl/cms/s/0/0fac6cd6-0ffa-11e1-a468-00144feabdc0.html#axzz1dreT8Vfx) for the FT Story

• Moody's Lowers 10 German Banks on expectations of reduce government support
Click here for report (http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_137301)


___________________________________________

TECHNICAL UPDATE - Wednesday 16 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,905.59 -190.57 (-1.58%)
Volume: 166,222,617 from 145,106,885 the previous day
Range: 11,890.57 – 12,109.03

http://img337.imageshack.us/img337/7971/dowa.jpg (http://imageshack.us/photo/my-images/337/dowa.jpg/)

Technically, the benchmarks are divergent. NASDAQ wears a Bullish Engulfing patter while SPX is stalled on a Spinning Top and DOW is stuck with a short Rickshawman. Although volumes were better across the benchmarks, the broader market volumes continued to dip.

That High Harami on Monday followed by Tuesday's low Rickshawman has really turned the DOW and S&P down. But if they don't make a lower low, then it looks very much like a Bullish Pennant in the making, and looking likely to break out soon.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,639.61 -46.59 (-1.73%)
Volume: 508,628,547 from 432,176,803 the previous day
Range: 2,637.91 – 2,688.86

S&P 500 INDEX (SPX: CBOE)
1,236.91 -20.90 (-1.66%)
Volume: 753,541 from 624,302 the previous day
Range: 1,235.67 – 1,259.61


___________________________________________

MARKET INTERNALS - Wednesday 16 November, 2011 AMC

NYSE :
Lower than avg volume @ 919 mln, vs. 1074 mln
Decliners outpaced Advancers (adv/dec): 706/2325
New highs outpaced new lows (hi/lo): 40/31

NASDAQ :
Lower than avg volume @ 1900 mln, vs. 1981 mln
Decliners outpaced Advancers (adv/dec): 680/1883
New lows outpaced new highs (hi/lo): 36/76


Advancers outpaced Decliners by an average 1.86 to 1 on lower average volumes (-20.80%) on Tuesday (avg +0.57%).

Volumes continue to be an enigma for a third straight session. What are they waiting for? In the meantime, the VIX, like me, remain unconvinced about any bullishness by staying high and closing at 31.22.

Decliners outpaced Advancers by an average 3.04 to 1 on lower average volumes (-7.72%) on Wednesday (avg -1.66%).

All that waiting around on lower volumes, all that divergence, doubt and confusion led to a 190 point sell off on the DOW in the last hour. Volumes on the broader market improved but are still lower than average. But one stat stands out for me - the New Lows are picking up the pace again.

http://img202.imageshack.us/img202/6033/intb.jpg (http://imageshack.us/photo/my-images/202/intb.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude oil surges on pipeline news; natural gas extends sell-off to sixth consecutive session

Trade in crude oil was focused around news that Enbridge and Enterprise plan to change the direction of crude oil flows on the Seaway pipeline, pending regulatory approval, to enable it to transport oil from Cushing, Oklahoma to the U.S. Gulf Coast. While the reversal may not happen until the back half of 2012, the Dec contract rallied sharply today. Futures, which closed the WTI-Brent spread, put in highs at $102.46, their best levels since June 10. This morning's inventory data was more-or-less a non-event as futures saw a very modest pullback before resuming their rally.

Crude posted gains of 3.2% to close at $102.59 per barrel. Natural gas futures extended their recent sell-off after shedding 1.7% to close at $3.34 per MMBtu. Futures put in fresh +1 year lows at $3.33 and closed just above those lows. Heating oil finished lower by 3 cents at $3.14, while RBOB gasoline ended higher by 4 cents at $2.63 (all Dec contracts).

Precious metals quietly bounced off of their respective lows, at $1753.90 and $33.57, in mid-morning trade. Gold, which posted losses of 0.4% at $1774.30, closed at levels seen in overnight trade. Silver, which settled lower by 1.8% to close at $33.82, gave back most of its bounce heading into afternoon trade. Dec copper fell 2 cents to close at $3.49.

Corn settled 2 cents lower at $6.45/bu, wheat lost 15 cents to end at $6.17, soybeans fell 12 cents at $11.88, ethanol ended 1 cent higher at $2.69, while sugar was unchanged at $0.25.

Commodities AMC on Wednesday 16 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 102.59 +3.22 (+3.24%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,774.30 -7.90 (-0.44%)

Treasuries ended the day just off their best levels of the session as a late day rally erased an early afternoon selloff. The complex traded in a tight range near its highs for much of the session, but fell back to the flat line as equity markets rallied following the European close. The 10-yr yield spent most of the day near 2.02% before climbing to 2.05% on the heels of the afternoon selloff, and then sliding back to 2.02% by the cash market close. The long bond was once again the top performer as a gain of 24/32 ran it up to 101 16/32. Flattening of the yield curve saw the 2-10-yr spread narrow to 176 bps.

Treasury Yields AMC on Wednesday 16 November, 2011:
• 2 Year Note 0.26% unch
• 5 Year Note 0.90% -0.03
• 10 Year Note 2.01% -0.05
• 30 Year Bond 3.05% -0.05
2/30 Spread : 279bps ( -5 ) ... 2/10 Spread : 175bps ( -5 )


While US bond yields stagnate, Spanish and Italian yields go through the roof. What's next, Portuguese yields?

The curve flattens ... again. The 10 and 30 year yields are now just 1 and 5 bps away from par values respectively. This is getting so painful to endure.


___________________________________________

PREVIEW FOR THURSDAY 17 NOVEMBER, 2011

Thursday's data menu is full as initial and continuing claims, housing starts and building permits (8:30), and the Philly Fed (10) are all released. The Fed will buy $4.25-5.00 bln worth of 2020/2021 maturities as part of its Permanent Open Market Operations. Fed speak concludes for the week with Cleveland's Pianalto giving her economic outlook in Lexington, KY (12:30).

Earnings Highlights
BMO: AMAP, BONT, BKE, CMRG, PLCE, CSUN, DEST, DLTR, DCI, GME, GSOL, HP, SGM, DATE, NM, PERY, ROST, SHLD, SSI, SMRT, TDG, and WSM.
AMC: CRMT, ARUN, ATW, BCSI, DLB, FMCN, FL, GPS, INTU, MRVL, MENT, MTSC, NWY, CRM, SCVL, WAIR, and WTSLA.

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am Housing Starts
08:30 am Building Permits
10:00 am Philadelphia Fed Nov
10:30 am Natural Gas Inventories

Conferences and Shareholder/Analyst Meetings of Interest
- Morgan Stanley Global Chemicals Conference
- The Hanover Insurance Group Investor Day
- Liberty Media Corporation Investor Meeting


___________________________________________

SUMMARY

Man, it tough getting back in sync with the market after a long absence. I saw no reason to be bearish after the data came out and true enough, European fears faded as common sense took over in the afternoon session.

I am going to stick with data and earnings and stay cautiously optimistic. I suspect the market will bounce and regain its losses and if it does, I also suspect it might overcook it,

Direction for Thursday 17 November, 2011; ∆ Up

2011 Daily Directional Accuracy: 118/200 (59.00%)

Conrad
11-18-2011, 01:57 AM
U.S. MARKETS - Thursday 17 November, 2011 AMC

http://img268.imageshack.us/img268/4499/dexsz.jpg (http://imageshack.us/photo/my-images/268/dexsz.jpg/)

I am going to stick with data and earnings and stay cautiously optimistic. I suspect the market will bounce and regain its losses and if it does, I also suspect it might overcook it,

Direction for Thursday 17 November, 2011; ∆ Up

Boom! In my face!! This is getting painfully humiliating. Data has been great, earnings are dovish and Christmas sales are round the corner ... so why does it feel like I am trading in Europe instead of the United States? This was purely a technical breakdown and such breakdowns are not entirely rational and makes the market hard to read for real sentiment. Leadership was clearly in the defensive counters and volumes increased - is this confirmation of the end of the bear rally and the return of the bear?


___________________________________________

MARKET SUMMARY - Thursday 17 November, 2011


BRIEFING.COM - Thursday 17 November, 2011 AMC
Daily Sector Wrap: Breakdown Brings About Barrage of Selling

Continued lack of leadership caused stocks to struggle in the face of resistance, which ultimately gave way to a technical breakdown that resulted in steep losses for the major averages.

Sellers hit stocks at the open. The major averages fought back some, but their efforts lacked leadership. That hampered the broad market and kept it from poking into positive territory. Most notably, though, a barrage of selling was brought about by the inability of the S&P 500 to push back above a rising trendline that formed the bottom of a triangle pattern and a simultaneous pullback by the euro.

The slide stabilized once the S&P 500 found the 1210 zone, setting a near one-month low, but stocks never really rebounded from there. The euro also drifted into the close, resulting in only a fractional gain for the day. It is on pace for a 2% weekly loss.

Participation picked up in response to the market's volatility. In recent session's share volume has been anemic, but today it approached 1 billion on the Big Board.

Market movement distracted participants from a dose of generally pleasing data, which featured the latest weekly initial jobless claims count. Initial jobless claims for the week ended November 12 totaled 388,000. Not only is that less than the 398,000 initial claims that had been broadly expected, it marked the lowest initial claims level since April.

Housing starts in October hit an annualized rate of 628,000, which is little changed from the downwardly revised rate of 630,000 units in the prior month, but greater than the pace of 604,000 that had been generally expected. Building permits set an annualized pace of 653,000 to exceed the rate of 603,000 that had been anticipated. Building permits in the prior month had trended at an annualized pace of 589,000.

The Philadelphia Fed Survey for November slipped to 3.6 from 8.7 in the prior month. Many had expected to ease to just 7.5.

Sector Leaders/Laggards for Thursday 17 November, 2011 AMC
Leading Sectors: None.
Leading Industries/ETFs : Volatility-VXX +4.6%, Natural Gas-UNG +2.7%.

Lagging Sectors: Telecom -0.5%, Consumer Staples -0.5%, Utilities -0.6%, Health Care -1.2%, Consumer Discretionary -1.7%, Industrials -1.8%, Financials -2.1%, Energy -2.1%, Tech -2.2%, Materials -2.9%
Lagging Industries/ETFs : Silver-SLV -6.6%, Palladium-PALL -6.4%, Software-SWH -5.0%, Jr. Gold Miners-GDXJ -5.0%, Silver Miners-SIL -4.4%, Coal-KOL -4.0%, Oil Services-OIH -3.8%, Cotton-BAL -3.6%, Semis-SMH -3.5%, Corn-CORN -3.5%, Copper-JJC -3.4%, Gas-UGA -3.3%, Grains-JJG -3.1%, India-INP -3.1%.

Other Market Moving Factors:
• Tech stocks trade with weakness
• Weekly initial jobless claims decline more than expected to lowest level since April
• Pace of monthly housing starts and building permits exceed expectations
• Europe's bourses experience more selling, but euro advances against greenback
• Phila. Fed Survey due at 10:00 AM ET

Companies trading higher in after hours in reaction to earnings: BCSI +19.5%, FMCN +12.6%, MRVL +2.5%.

Companies trading lower in after hours in reaction to earnings: CRM -6.4%.


___________________________________________

ECONOMIC COMMENTARY - Thursday 17 November, 2011

• Australia Economic Data

- Aug Avg Weekly Earnings +1.2% vs 1.2% in Jul
- Oct Foreign Exchange Transaction (in AUD) 401 mln vs 641 mln

• UK Oct Retail Sales +0.6% vs revised +0.6% in Sep (prior +0.5%)

• U.S. Economic Data

- Initial Jobless Claims 388K vs 398K; Prior revised to 393K from 390K
- Continuing Claims falls to 3.608 mln from 3.665 mln
- October Building Permits 653K vs 603K; Prior revised to 589K from 594K
- October Housing Starts 628K vs 604K; Prior revised to 630K from 658K
- November Philadelphia Fed 3.6 vs 7.5; October 8.7
- FHFA reports Q3 Mortgage Delinquencies +7.99%, Q2 +8.44%; Foreclosures +4.43%, prior +4.43%

Housing Starts Remain Strong on Elevated Multifamily Construction
New housing starts declined from a downwardl revised 630,000 (from 658,000) in September to 628,000 in October. The Briefing.com consensus expected starts to fall to 604,000. Multifamily starts, which represented the bulk of the gain in September, only declined by 8.3% in October to 198,000 units. This is still well above their average levels and suggests a further decline in November is likely. Single-family starts increased 3.9% in October to 430,000 homes. The gain offset a downward revision for September from 425,000 to 414,000. Homes under construction increased for the second consecutive month, the first time that has happened since the housing bubble peaked in 2006. While it is still too early to call a bottom in residential construction, the two-month gain is an encouraging sign.

Initial Claims Fall to their Lowest Level Since April
The initial claims level declined from 393,000 for the week ending Nov. 5 to 388,000 for the week ending Nov. 12. The Briefing.com consensus expected the initial claims level to increase to 398,000. This is the lowest level of initial claims since April. Normally, a claims level below 410,000 would suggest that nonfarm payroll growth should exceed the 100,000 necessary to support normal labor force growth. Even though businesses have slowed the number of layoffs, they have been reluctant to hire new workers. Instead of expecting 100,000 new jobs, we now expect gains of only 75,000. The continuing claims level declined from 3.665 mln for the week ending Oct. 29 to 3.608 mln for the week ending Nov. 5. The consensus expected the continuing claims level to fall to 3.648 mln.

A Dip, but Not a Dive, in Philadelphia Fed Index
The Philadelphia Fed's Business Outlook Index fell from 8.7 in October to 3.6 in November. The Briefing.com consensus expected the index to fall to 7.5. Both unfilled orders and new orders weakened. The new orders index barely remained in an expansion cycle as the index fell from 7.8 in October to 1.3 in November. Unfilled orders contracted in November as the index declined from 3.4 in October to -1.5. The lack of growth in orders put downward pressure on shipments as the index dropped from 13.6 to 7.3. Conversely, the number of employees index increased from 1.4 in October to 12.0 in November, suggesting perhaps that manufacturers do not expect the drop in demand to last long. If businesses were worried about the long-term outlook, employment would not have strengthened nearly as much and most likely would have contracted.

• Natural Gas Inventory Data
Natural gas inventory showed a build of 19 bcf vs expectations for a build of 26 bcf.

Natural Gas Inventory Data Follow-Up; total working gas is above the 5-year historical range

Working gas in storage was 3,850 Bcf as of Friday, November 11, 2011, according to EIA estimates. This represents a net increase of 19 Bcf from the previous week. Stocks were 14 Bcf higher than last year at this time and 224 Bcf above the 5-year average of 3,626 Bcf. In the East Region, stocks were 58 Bcf above the 5-year average following net injections of 9 Bcf. Stocks in the Producing Region were 148 Bcf above the 5-year average of 1,098 Bcf after a net injection of 11 Bcf. Stocks in the West Region were 18 Bcf above the 5-year average after a net drawdown of 1 Bcf. At 3,850 Bcf, total working gas is above the 5-year historical range.

• Asian Markets Close; Nikkei +0.2%, Hang Seng -0.8%, Shanghai -0.2%
The major Asian indices closed mixed as worries over the situation in Europe remain. Technology shares led the Kospi (+1.1%) to the strongest gain in the region while Hong Kong (-0.8%) saw some of the biggest declines because of its exposure to Europe. The Bank of Japan's Monthly Report indicated exports and output are likely to stay flat as the European debt crisis, Thailand Flooding, and strong yen weigh. Data in the region was light as Singapore's non-oil domestic exports tumbled 16.2% YoY. Looking at the currencies...USDCNY settled weaker at 6.3419 while USDJPY is weaker at 76.95.

In Japan, the Nikkei closed +0.2% as technology shares performed well. TDK surged 8.8% on reports that Western Digital agreed to use subsidiary SAE Magnetics for components of its hard disk drives. Camera maker Olympus opened up the limit (+18%), but closed with just a 1.0% gain. The stock had ended limit up the prior three sessions.

In Hong Kong, the Hang Seng finished -0.8% as cos with strong ties to Europe were under pressure. Retailer Esprit shed 6.1% while exporter Li & Fung dropped 1.5%.

In China, the Shanghai Composite settled -0.2% as financials and real estate developers were under pressure. China Pacific Insurance lost 2.0% while Poly Real Estate Group fell 0.4%.

In India, the Sensex closed -1.9% as weakness in heavyweight Reliance Industries (-4.5%) weighed on the index. Financials were also weak as ICICI Bank and HDFC Bank both lost 1.5%.

• European Markets Closing Prices
UK's FTSE: -1.5%
Germany's DAX: -1.2%
France's CAC: -1.9%
Spain's IBEX: -0.4%
Portugal's PSI: -0.8%
Italy's MIB Index: -1.2%
Irish Ovrl Index: -1.5%
Greece ATHEX Composite: + 1.0%

EARNINGS CALL

• Before market open

Sears Hldg (SHLD) misses by $0.33, reports revs in-line; Sears Domestic comps -0.7%; Kmart comps -0.9%
Reports Q3 (Oct) loss of $2.57 per share, excluding non-recurring items, $0.33 worse than the Capital IQ Consensus Estimate of ($2.24); revenues fell 1.2% year/year to $9.56 bln vs the $9.53 bln consensus. Sears Domestic comparable store sales declined 0.7%, Kmart's comparable store sales declined 0.9% and Sears Canada comparable store sale declined 7.8%."While we are not satisfied with our performance, we saw improvement in some core areas. Sears Full-line Stores saw improvement, as Sears apparel achieved both comparable store sales and margin rate increases in the quarter. We also saw nearly 20% growth in our domestic online business, and while appliance sales declined in the quarter, we improved our market leadership positions in overall appliances and Kenmore. Despite improvement in these areas, our overall results were down, led by declines in Sears Canada, consumer electronics and Kmart apparel." Kmart's gross margin rate declined 60 basis points mainly due to increased markdowns in apparel and home, as well as declines in other categories. Sears Domestic's gross margin rate declined 50 basis points primarily due to reduced margins in the home appliance and consumer electronics categories, partially offset by improvements in the apparel and home categories, and declines in home services. Sears Canada's gross margin rate declined 290 basis points as a result of clearing inventory, due to an enhanced focus on improving inventory productivity.

Helmerich & Payne (HP) beats by $0.06, beats on revs
Reports Q4 (Sep) earnings of $1.11 per share, $0.06 better than the Capital IQ Consensus Estimate of $1.05; revenues rose 25.4% year/year to $700.8 mln vs the $673.13 mln consensus.

Williams-Sonoma (WSM) beats by $0.03, beats on revs; reaffirms Q4 EPS guidance, revs guidance
Reports Q3 (Oct) earnings of $0.41 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.38; revenues rose 6.3% year/year to $867 mln vs the $858.06 mln consensus. Co reaffirms guidance for Q4, sees EPS of $1.15-1.20 vs. $1.19 Capital IQ Consensus Estimate; sees Q4 revs of $1.24-1.27 bln vs. $1.25 bln Capital IQ Consensus Estimate. During Q3 11, we repurchased and retired 963,700 shares of our common stock at an average cost of $32.68 per share and a total cost of ~$31 mln. There remains an aggregate of ~$31 mln available for repurchases under the $125 mln stock repurchase program authorized by our Board in January 2011.

• After market close

Gap (GAP) beats by $0.02, misses on revs; reaffirms FY12 EPS guidance
Reports Q3 (Oct) earnings of $0.38 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.36; revenues fell 99.9% year/year to $3.59 mln vs the $3.61 bln consensus. Co expects inventory dollars per store at the end of the fourth quarter to be up in the mid-to-high single digits compared with the fourth quarter of last year. The company's third quarter comparable sales, which include the associated comparable online sales, were down 5 percent compared with a 1 percent increase in the third quarter last year. For the third quarter of fiscal year 2011, online sales positively impacted comparable sales for Gap Inc. by 2 percentage points... Co reaffirms guidance for FY12, sees EPS of $1.40-1.50 vs. $1.49 Capital IQ Consensus Estimate. Co continues to expect fiscal year 2011 capital spending of about $575 million. Co continues to expect full year net square footage to decrease about 2 percent for fiscal year 2011.

IN OTHER NEWS ...

• General Dynamics (GD) awarded a $395 mln contract for work under the Egyptian tank co-production program

• Headlines that S&P raising rating on Brazil; notes country remains strong despite recent global slump


___________________________________________

TECHNICAL UPDATE - Thursday 17 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,770.73 -134.86 (-1.13%)
Volume: 169,829,458 from 166,222,617 the previous day
Range: 11,676.35 – 11,948.43

http://img577.imageshack.us/img577/7479/dowlh.jpg (http://imageshack.us/photo/my-images/577/dowlh.jpg/)

That High Harami on Monday followed by Tuesday's low Rickshawman has really turned the DOW and S&P down. But if they don't make a lower low, then it looks very much like a Bullish Pennant in the making, and looking likely to break out soon.

So the benchmarks made lower lows. And ironically, volumes were better for the first time in a week. I reckon the bear rally is over and we might just be back in a bear run again. But for now, DOW's supports at 11,650 and 11,770 look solid as do 1,210 on S&P.

DOW is not two consecutive sessions below its 200DSMA while the SPX has fallen below its 100DSMA and remains below its 200DSMA for the seventh session. NASDAQ is the scariest - it is below its 200, 100 and 20 DSMAs and sits just 2 points below its 50DSMA.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,587.99 -51.62 (-1.96%)
Volume: 556,156,022 from 508,628,547 the previous day
Range: 2,576.22 – 2,637.48

S&P 500 INDEX (SPX: CBOE)
1,216.13 -20.78 (-1.68%)
Volume: 822,872 from 753,541 the previous day
Range: 1,209.43 – 1,237.73


___________________________________________

MARKET INTERNALS - Thursday 17 November, 2011 AMC

NYSE :
Higher than avg volume @
Lower than avg volume @ 1022 mln, vs. 1080 mln
Decliners outpaced Advancers (adv/dec): 573/2452
New lows outpaced new highs (hi/lo): 19/56

NASDAQ :
Higher than avg volume @ 2149 mln, vs. 1988 mln
Decliners outpaced Advancers (adv/dec): 706/1789
New lows outpaced new highs (hi/lo): 16/86


Decliners outpaced Advancers by an average 3.04 to 1 on lower average volumes (-7.72%) on Wednesday (avg -1.66%).

All that waiting around on lower volumes, all that divergence, doubt and confusion led to a 190 point sell off on the DOW in the last hour. Volumes on the broader market improved but are still lower than average. But one stat stands out for me - the New Lows are picking up the pace again.

Decliners outpaced Advancers by an average 3.32 to 1 on higher average volumes (+3.36%) on Thursday (avg -1.59%).

Volumes finally showed some improvement but it was hardly anything to be impressed by. The market is still lacking any sort of commitment in any direction although leadership seems to be taking on a very defensive front. New Lows across the board have overtaken the New Highs and the Decliners continue to increase DonD through the week. If this carries into the weekend, we could be in for a major sell-off next week ... or just maybe, with a small chance, this could be a major launch-pad for a huge rally on Black Friday weekend.

http://img171.imageshack.us/img171/9103/intpf.jpg (http://imageshack.us/photo/my-images/171/intpf.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Gold, silver finish sharply lower; natural gas ends up following inventory data

Gold and silver futures sold off sharply today. Gold ended lower by 3% at $1720.20 per ounce, while silver shed 7% to finish at $31.50 per ounce. Both metals cratered as market participants covered positions in the precious metals to cover losses in other asset classes. Gold futures put in lows at $1711, their lowest levels since Nov 1. Silver traded as low as $31.04, its lowest levels since Oct 21. Dec copper settled off 11 cents at $3.37.

The weakness in equities pressured crude oil futures, which shed % to settle at $ per barrel. Futures gave back all of yesterday's gains and finished back below the $99 level. Natural gas surged on the heels of this morning's inventory data, which posted a smaller-than-expected build. Futures traded as high as $3.48 before pulling back to the flat line in late-morning trade. Natural gas did manage to bounce off the unchanged line to recoup some gains, but ended well below session highs. On the day natural gas gained 1.9% to finish at $3.41. Dec heating oil ended lower by 4 cents at $3.09, while Dec RBOB gasoline fell 11 cents to close at $2.52.

Corn settled 27 cents lower at $6.43/bu, wheat lost 24.25 cents to end at $5.925, soybeans fell 18 cents at $11.6975, ethanol ended 6 cents lower at $2.63, while sugar was down 1 cent at $0.24.

Commodities AMC on Thursday 17 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 98.82 -3.77 (-3.67%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,720.20 -54.10 (-3.05%)

Treasuries ended the day with solid gains as an afternoon selloff in equities sparked a flight to safety in the complex. The long bond was the top performer as a gain of more than one point dropped the 30-yr yield below 3.00%, and produced a close below that level for the first time since October 6. Buying in the 10-yr space knocked its yield below the 2.00% threshold that has provided support since the beginning of November. Should the 1.95% level give way traders will turn their attention to the October lows near 1.75%. Tightening of the yield curve continues as the 2-10-yr spread flattened to 169 bps.

Treasury Yields AMC on Thursday 17 November, 2011:
• 2 Year Note 0.27% +0.01
• 5 Year Note 0.88% -0.02
• 10 Year Note 1.96% -0.05
• 30 Year Bond 2.98% -0.07
2/30 Spread : 279bps ( -5 ) ... 2/10 Spread : 175bps ( -5 )


The curve flattens ... again. The 10 and 30 year yields are now just 1 and 5 bps away from par values respectively. This is getting so painful to endure.

The curve drops and flattens in a hurry and in so doing, the 10 and 30 year yields drop to twice under-par. To add to the scar factor, the was also a slight hike in the 2yr to help the flattening. But you have to wonder how much of this flattening is due to POMO activities as the Fed sells off its 2yr and buys more 30yrs.


___________________________________________

PREVIEW FOR FRIDAY 18 NOVEMBER, 2011

Friday's data is limited to leading indicators (10). The Fed's POMO concludes for the week with the purchase of $2.25-2.75 bln worth of 2036-2041 maturities.

Earnings Highlights
BMO: ANN, BRC, CPWM, CYBX, HIBB, HNZ, KIRK, SIRO, and TNP.

Economic Events
10:00 am Leading Indicators

Conferences and Shareholder/Analyst Meetings of Interest
- Gabelli and Company Third Annual Specialty Chemical Conference
- J.P. Morgan's Asia Pacific TMT Conference
- Elster Investor Day


___________________________________________

SUMMARY

I just seem to get my calls right ... 3 for 3 off the mark.

Make that 4 for 4. Now do I change my sentiment for following the market or do I stick to my guns? Do I stick with earnings, macros and technicals because this week, retailers haven't disappointed (save Target) and earnings continue to impress, data has been largely great, contract commissions continue to pour in, more M&A deals are being negotiated, more IPOs are being pushed forward and for now, technical levels are supporting the benchmarks. Also, November Expiration Friday has been bullish 7 of the last 9. Rational or irrational,

I am sticking to my guns until the earnings, macros and technical say otherwise.

Direction for Friday 18 November, 2011; ∆ Up

2011 Daily Directional Accuracy: 118/201 (58.71%)

Conrad
11-21-2011, 11:29 AM
Sorry the report is so late. I just got back from K.L. by car (hired driver and car) and the damn car overheated and broke down along the highway. What drama!


U.S. MARKET RECAP - Monday 14 November, 2011 to Friday 18 November, 2011 AMC
http://img64.imageshack.us/img64/1385/dexweek.jpg (http://imageshack.us/photo/my-images/64/dexweek.jpg/)


Although the DOW and S&P made gains on the week, NASDAQ was lagging and mustered an unchanged and slightly negative week. As we head into the last week of earnings season and the start of the Christmas season, I seriously wonder if this market has what it takes to get higher by December ... The Monday before Expiration Friday has been down on the DOW 7 of the last 12 and the week before Thanksgiving (24 November) has been up 15 of the last 18 while November Expiration Friday has been bullish 7 of the last 9.

Direction for the week Monday 14 November, 2011 to Friday 18 November, 2011; ∆ Up

Looks like the bulls have run out of steam and the bears are back in control again. Its just like Q1 and Q2 of 2008 all over again!


__________________________________________________ ________

Dow Jones Industrial Average - Friday 18 November, 2011 AMC
http://img853.imageshack.us/img853/5097/dexsp.jpg (http://imageshack.us/photo/my-images/853/dexsp.jpg/)


Data has been great, earnings are dovish and Christmas sales are round the corner ... so why does it feel like I am trading in Europe instead of the United States? This (Thursday) was purely a technical breakdown and such breakdowns are not entirely rational and makes the market hard to read for real sentiment. Leadership was clearly in the defensive counters and volumes increased - is this confirmation of the end of the bear rally and the return of the bear? ... Now do I change my sentiment for following the market or do I stick to my guns? Do I stick with earnings, macros and technicals because this week, retailers haven't disappointed (save Target) and earnings continue to impress, data has been largely great, contract commissions continue to pour in, more M&A deals are being negotiated, more IPOs are being pushed forward and for now, technical levels are supporting the benchmarks. Also, November Expiration Friday has been bullish 7 of the last 9. Rational or irrational,

I am sticking to my guns until the earnings, macros and technical say otherwise.

Direction for Friday 18 November, 2011; ∆ Up

With a packed week of economic events happening this week, I am not taking any chances. The US is announcing their GDP on Tuesday and the Congressional Super Committee are doing their $1.2 trillion thing (http://www.cnbc.com/id/45356640/) before the vote on Wednesday. And the fact that is is an extremely short trading week, anything can happen and if it does, it will be quick and violent.


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MARKET SUMMARY - Friday 18 November, 2011


BRIEFING.COM - Friday 18 November, 2011
Daily Sector Wrap: Flat Finish to Worst Week Since September

Stocks slogged along for almost the entire session. They ultimately finished flat. The lack of action made for an unexciting finish to the stock market's worst week in more than a month.

Premarket posture was positive. Participants responded to the stabilization of yields on the debt of such trouble spots as Spain and Italy, renewed strength in the euro, and a climb by Europe's bourses from their session lows. Buying in Europe eventually lost momentum, leaving the region's major averages to settle with varied losses.

An absence of follow through buying in Europe undermined this morning's improved tone. In turn, stocks slipped at the open of U.S. trade and never really established a direction of trade. Movement in the S&P 500 was partly limited because of resistance near 1225 and support at the weekly low just beneath 1210.

Consistent with trade earlier this week, stocks lacked a legitimate form of leadership. That said, financials managed to put together their best performance of the week by advancing 0.5% as a group. They still shed more than 5% for the week, though.

Tech stocks, which make up the largest sector by market weight, lagged once again. With a 0.7% slide the sector logged its third straight loss. Tech stocks collectively fell about 4% this week.

The expiration of monthly options likely added to the market's chop. Option-related trade helped inflate share volume on the NYSE in the absence of market-moving corporate news and economic data. Share volume on the Big Board still didn't break 1 billion, though.

Action on Friday made for a rather boring follow-up to the sharp losses suffered in the prior two sessions. Those back-to-back declines combined for a drop of more than 3%, which made up the bulk of the near 4% weekly slide suffered by stocks.


http://img3.imageshack.us/img3/594/dexweeksumm.jpg (http://imageshack.us/photo/my-images/3/dexweeksumm.jpg/)

Sector Leaders/Laggards for Friday 18 November, 2011
Leading Sectors: Utilities +0.6%, Financials +0.5%, Consumer Staples +0.4%, Industrials +0.4%, Materials +0.4%,
Leading Industries/ETFs : Silver-SLV +2.5%, Base Metals-DBB +1.9%, Israel-ESR +1.6%, Spain-EWP +1.6%, Coffee-JO +1.5%, Copper-JJC +1.4%, Italy-EWI +1.3%.

Lagging Sectors: Consumer Discretionary -0.1%, Health Care -0.2%, Telecom -0.2%, Energy -0.5%, Tech -0.7%
Lagging Industries/ETFs : Cotton-BAL -3.3%, Natural Gas-UNG -2.4%, Peru-EPU -1.9%, Cocoa-NIB -1.8%, Software-IGV -1.6%, Oil Services-OIH -1.4%, Internet-FDN -1.4%, Crude Oil-USO -1.1%, Small cap Gold Miners-GDXJ -1.0%.

Other Market Moving Factors:
• Stocks lack leadership
• Technical levels bound movement
• Debt yields of Spain and Italy stabilize
• Monthly options expire


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ECONOMIC COMMENTARY - Friday 18 November, 2011

• Germany Oct Producer Prices +5.3% vs +5.5% in Oct 2010

• Japan Oct Nationwide Department Store Sales -0.5% vs -2.4% in Oct 2010

• China Nov MNI Flash Business Sentiment Survey 55.5 vs 58.5 in Oct

• U.S. Economic Data

- October Leading Indicators +0.9% vs +0.6%

Leading Indicators Grow at Its Fastest Rate Since February
The Conference Board's Leading Economic Indicators Index increased 0.9% in October after increasing 0.1% in August. That is the biggest increase since February. The Briefing.com consensus expected the index to increase 0.6%. Since seven of the 10 components are known prior to the release, the difference between the consensus and the actual data normally comes from the three estimated components: manufacturing orders of consumer goods, manufacturing orders of business capital, and M2 money supply. In this case, however, the actual data on building permits were released after economists made their leading indicators prediction. The timing problem caused economists to rely on their building permits forecast when calculating the leading indicators prediction. Building permits growth was much stronger than the consensus expected (+10.8% vs. +1.5%) and contributed 0.27 percentage points to the leading indicators. That was exactly the difference between the consensus leading indicators forecast and the actual release.

• Asian Markets Close: Nikkei -1.2%, Hang Seng -1.7%, Shanghai -1.9%, Sensex -0.6%
As one would expect, all Asian equity markets had a rough day, tumbling on the back of weak markets across the board yesterday. China saw a drop in housing prices for the first time this year which indicates the nation's attempt to curb prices is apparently taking effect. An advisor to the PBOC suggested that China's trade surplus could fall to flat to negative with in 2 years commenting that he worries about depreciation in exchange rate. They yen is noticeably stronger today perhaps, in part, gaining strength following a FT report that the Bund should no longer be considered a safe haven, as the yen has been considered as such in recent trade. Looking at currencies...the yuan closed little changed to 6.3565; the yen is stronger vs the dollar to 76.67.

In Japan, the Nikkei closed -1.2% as the index closed just above its ytd low. Shares of Olympus ended its 4 day gain, getting slammed 16% as prosecuters are reportedly to investigating 3 execs on $4.9 bln in potential fraudulent investment activity.

In Hong Kong, the Hang Seng closed down 1.7% as Financials underperformed the index. ICBC (-3.1%) and China Construction Bank (-2.5%) both underperformed the index. The Red Chip Index settled -2.4% while H-shares closed -2.7%.

In China, the Shanghai Composite saw a decline of 1.9%. As mentioned above, a decline in housing stocks took its toll on property stocks. Both Vanke and Poly RE closed down ~3%.

In India, the Sensex finished down 0.6% and had its largest weekly decline in over 3 months. Cos whose shares hit all-time lows today included state-run telecom major MTNL (-4.5%), as well as Punj Lloyd (-6%).

• European Markets Closing Prices
UK's FTSE: -0.8%
Germany's DAX: -0.9%
France's CAC: -0.3%
Spain's IBEX: + 0.5%
Portugal's PSI: + 0.3%
Italy's MIB Index: + 0.2%
Irish Ovrl Index: -0.6%
Greece ATHEX Composite: -1.7%

IN OTHER NEWS ...

• Boeing (BA) receives historic commitment for up to 380 737s; when finalized, order will be the largest ever for co
Co and Lion Air today announced a commitment for the airline to order 201 737 MAXs and 29 Next-Generation 737-900 ERs. The agreement also includes purchase rights for an additional 150 airplanes. With 230 airplanes at a list price of $21.7 bln, this deal when finalized will be the largest commercial airplane order ever in Boeing's history by both dollar volume and total number of airplanes. Co and Lion Air are working to finalize details of the agreement, at which time it will be a firm order posted on the Boeing Orders and Deliveries website. Lion Air will also acquire purchase rights for an additional 150 airplanes valued at more than $14 bln if exercised at list prices.


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TECHNICAL UPDATE - Friday 18 November, 2011 - AMC


So the benchmarks made lower lows. And ironically, volumes were better for the first time in a week. I reckon the bear rally is over and we might just be back in a bear run again. But for now, DOW's supports at 11,650 and 11,770 look solid as do 1,210 on S&P.

DOW is not two consecutive sessions below its 200DSMA while the SPX has fallen below its 100DSMA and remains below its 200DSMA for the seventh session. NASDAQ is the scariest - it is below its 200, 100 and 20 DSMAs and sits just 2 points below its 50DSMA.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img402.imageshack.us/img402/6397/dowzc.jpg (http://imageshack.us/photo/my-images/402/dowzc.jpg/)
11,796.16 +25.43 (+0.22%)
Volume: 181,241,570 from 169,829,458 the previous day
Range: 11,755.82 – 11,854.81

On daily candles, the DOW and SPX seems to have lost some of the downward momentum. However, if Monday closes down, NASDAQ will be wearing a DFDM. NASDAQ was rejected at the 200DSMA on Tuesday and Wednesday and the SPX and the DOW fell below its 200DSMA on Wednesday. Whether this has a significant impact of the broader market remains to be seen as volumes have waned a lot since last week. Such low volumes make for easy volatility and technicals can't be relied on when volumes are this weak.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img844.imageshack.us/img844/6800/ndxl.jpg (http://imageshack.us/photo/my-images/844/ndxl.jpg/)
2,572.50 -15.49 (-0.60%)
Volume: 473,606,054 from 556,156,022 the previous day
Range: 2,567.15 – 2,595.84

S&P 500 INDEX (SPX: CBOE)
http://img856.imageshack.us/img856/2638/spx.jpg (http://imageshack.us/photo/my-images/856/spx.jpg/)
1,215.65 -0.480 (-0.04%)
Volume: 788,180 from 822,872 the previous day
Range: 1,211.36 – 1,223.51


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MARKET INTERNALS - Friday 18 November, 2011

NYSE :
Lower than avg volume @ 955 mln, vs. 1074 mln
Advancers outpaced Decliners (adv/dec): 1732/1292
New lows outpaced new highs (hi/lo): 29/42

NASDAQ :
Lower than avg volume @ 1702 mln, vs. 1982 mln
Decliners outpaced Advancers (adv/dec): 1239/1261
New lows outpaced new highs (hi/lo): 17/88


Decliners outpaced Advancers by an average 3.32 to 1 on higher average volumes (+3.36%) on Thursday (avg -1.59%).

Volumes finally showed some improvement but it was hardly anything to be impressed by. The market is still lacking any sort of commitment in any direction although leadership seems to be taking on a very defensive front. New Lows across the board have overtaken the New Highs and the Decliners continue to increase DonD through the week. If this carries into the weekend, we could be in for a major sell-off next week ... or just maybe, with a small chance, this could be a major launch-pad for a huge rally on Black Friday weekend.

Decliners outpaced Advancers by an average 1.16 to 1 on lower volumes (-13.06%) on Friday (avg -0.14%).

The divergence between the benchmarks is also apparent in the broader market internals. The bulls and bears can't seem to agree and on lighter volumes, this usually leads to heightened volatility. I will be extremely cautious this coming week.

http://img440.imageshack.us/img440/4742/vixf.jpg (http://imageshack.us/photo/my-images/440/vixf.jpg/)

On Friday, the VIX closed square on 32.00 having retreated for most of the session. However, such elevated levels of fear suggest that the broader market is still very skeptical about being bullish going into the shortened week.

http://img638.imageshack.us/img638/3118/intx.jpg (http://imageshack.us/photo/my-images/638/intx.jpg/)


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COMMODITIES - Summary for Friday 18 November, 2011
Energy Prices Roll Over - from Briefing.com

The CRB Commodity Index was up solidly this morning, but rolled over with energy prices to end the day with a 0.7% loss.

Oil prices had been up about 1% in early pit trade, but the energy component tumbled shortly thereafter. It traded as low as $96.70 per barrel before trimming its loss. It settled the session at $97.41 per barrel with a 1.4% loss. Natural gas prices closed pit trade at $3.31 per MMBtu for a 2.6% gain after they had been bid slightly higher in the early going. Dec heating oil ended lower by 4.08 cents at $3.0424, while Dec RBOB gasoline fell 2.77 cents to close at $2.479.

As for precious metals, gold prices spent the session holding on to a modest gain. It finished at $1724.50 per ounce for a 0.2% gain. Silver was much more impressive in its performance. Prices advanced 2.9% to $32.47 per ounce. Dec copper gained a penny to close at $3.41.

Corn settled 29 cents lower at $6.14/bu, wheat lost 0.5 cents to end at $5.92, soybeans fell 1.75 cents at $11.68, ethanol ended flat at $2.63, while sugar was flat at $0.24.

BONDS - Summary for Friday 18 November, 2011

Treasuries ended the day on decidedly down tone, but still managed to hold onto solid gains for the week as renewed turmoil in Europe sparked a flight to safety. The big winner for the week was the 30-year Bond as it saw its yield drop about 20 bps from its peak level on Monday.

A surge in French, Italian, and Spanish yields ignited a new wave of the crisis as countries at the core of the Eurozone are now seeing a significant rise in their cost of borrowing. The Italian 10-yr yield climbed above the 7.00% threshold before European Central Bank buying dropped it back below that mark. Things eased up further on Friday and the Italian 10-year yield finished the week at 6.62%. The Spanish 10-yr yield ran above 6.80% following Thursday's poor auction, but it has also pulled back since then and finished the week at 6.31%. In addition to concerns about Italy and Spain, ‘AAA' rated France now finds itself in the crosshairs of bond vigilantes as selling of French OATs ran its 10-yr yield as high as 3.80% before the ECB acted, and swiftly bought French government debt in an effort to bring down its yields. The French 10-year yield closed the week out at 3.45%.

Here in the U.S., the 10-yr yield was finally able to crack the 2.00% support level that has been in place for all of November. However, it bounced back above that level on Friday to finish the week at 2.01%. A flight into the long bond dropped its yield below 3.00% and it managed to close out the week at 2.99%.

The yield curve flattened over the course of the week with the 2-10-yr spread tightening by about 17 bps.

Treasury Yields AMC on Friday 18 November, 2011:
• 2 Year Note 0.29% +0.02
• 5 Year Note 0.94% +0.06
• 10 Year Note 2.01% +0.05
• 30 Year Bond 2.99% +0.01
2/30 Spread : 270bps ( -1 ) ... 2/10 Spread : 172bps ( +3 )


The curve drops and flattens in a hurry and in so doing, the 10 and 30 year yields drop to twice under-par. To add to the scar factor, the was also a slight hike in the 2yr to help the flattening. But you have to wonder how much of this flattening is due to POMO activities as the Fed sells off its 2yr and buys more 30yrs.

Not much respite for yields on Friday as the 5 and 30 remain under-par while the 10 just made it above 2% ahead of an important economic week. Like the VIX, bond yield movements in the past week seem to be warning of a tough week ahead.


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PREVIEW FOR THE WEEK - MONDAY 21 NOVEMBER, 2011 TO FRIDAY 25 NOVEMBER, 2011

Economic data is fairly light and volume could be impacted by the shortened holiday week.

Earnings Highlights
Monday: TECD, TSN, ADI, BRCD, BWS, CCIH, CEDU, PSS, DY, GMLP, HPQ, JACK, JKS, PWRD, TSL, and ZLC.
Tuesday: AMWD, CPB, CSIQ, CHS, CRIC, XNY, CTRN, CBRL, DAKT, DCIX, DSW, EJ, EV, FRED, GCO, HRL, JASO,LDK, GAGA, LTXC, MDT, PDCO, SIG, STP, VAL, STV, NUAN, P, and TIVO.
Wednesday: DE, DSX, NJR, SOL, and YGE.
Thursday: Markets are Closed
Friday: Markets are open for a half day

Economic Events
Monday:
10:00 am Existing Home Sales
Tuesday:
08:30 am GDP - Second Estimate
08:30 am GDP Deflator - Second Estimate
14:00 am FOMC Minutes
Wednesday:
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am MBA Mortgage Index
08:30 am Personal Income
08:30 am Personal Spending
08:30 am PCE Prices - Core
08:30 am Durable Orders
08:30 am Durable Orders -ex Transportation
09:55 am Michigan Sentiment - Final
10:30 am Natural Gas Inventories
10:30 am Crude Inventories
Thursday:
Markets are Closed for Thanksgiving Day
Friday:
None scheduled - Markets Close early at 13:00 EST

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- Bank of America Merrill Lynch Business Services 1-1 Conference
-2 Year Treasury Note Auction
-Atlanta Fed President Dennis Lockhart to speak at 14:30
Tuesday
-Bank of America Merrill Lynch Cyber Security Investor Day
-Bank of America Merrill Lynch Emerging Stars Conference 2011
-Standard Chartered Asia Pacific Emerging Corporates Conference
Wednesday
-Deadline for Joint Subcommittee
-7 Year Treasury Note Auction
Thursday
-Thanksgiving Day - Markets Closed
Friday
-Markets Close early at 13:00 EST


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SUMMARY

I reckon it (earnings) are not going to be enough to rally this market. Not yet anyway. The economic data is supporting the opinion that the economy has bottomed out and might start showing signs of growth and expansion soon. But if the market leads the economy, then it is looking more likely to be another 1973/1974 scenario all over again because the markets aren't going anywhere ... Bear rally? Real Bull run? I think neither. More likely, this is all part of a larger picture consolidation. We'll break down again. Maybe not tomorrow, maybe not next week but we will break down to again soon. Mind the Double Top.

I am preparing to open more spreads this coming week if the fear prevails. The usual seasonal cycles are not working this year-end and that tells me that this market is not going to be a normal one going into the close for the year. The DOW remains positive for the year but the NASDAQ and SPX have fallen into negative territory for the year again.

One would think that with Black Friday weekend coming, the market ought to be more optimistic than this. But with the massive economic events due this week, no one is taking chances. And neither am I.

Direction for Monday 21 November, 2011; ∇ Down

Direction for the week Monday 21 November, 2011 to Friday 25 November, 2011; ∇ Down

2011 Daily Directional Accuracy: 119/202 (58.91%)

2011 Weekly Directional Accuracy Year-To-Date: 26/44 (59.09%)

Conrad
11-22-2011, 04:36 AM
U.S. MARKETS - Monday 21 November, 2011 AMC

http://img197.imageshack.us/img197/4041/dexsd.jpg (http://imageshack.us/photo/my-images/197/dexsd.jpg/)

I am preparing to open more spreads this coming week if the fear prevails. The usual seasonal cycles are not working this year-end and that tells me that this market is not going to be a normal one going into the close for the year. The DOW remains positive for the year but the NASDAQ and SPX have fallen into negative territory for the year again.

One would think that with Black Friday weekend coming, the market ought to be more optimistic than this. But with the massive economic events due this week, no one is taking chances. And neither am I.

Direction for Monday 21 November, 2011; ∇ Down

The DOW falls into negative for the year ... again! I have said it countless times before and I will continue to repeat it - America has no more money ... they only have debt and they cannot reduce it anymore. They have to honor it. I don't even know why they bothered with this Super Committee at all. The people occupying Wall Street could have told you that America is in debt. What is odd is that the market reacted like as if it was surprised at this revelation. "What? We can't cut 1.2trillion?? OMG!! .... Duh!"


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MARKET SUMMARY - Monday 21 November, 2011


BRIEFING.COM - Monday 21 November, 2011 AMC
Daily Sector Wrap: Debt Fears Drive Sell-Off

Aggressive selling dropped the Dow more than 300 points before it began to fight back in afternoon action. Efforts to sell were largely debt driven.

Many market participants were put into a negative mindset with the technical breakdown last week. Their move to dump stocks came as Europe's bourses rolled over to resume their descent. Europe continues to wrestle with precarious financial conditions in both its periphery and its core -- Moody's even issued cautious comments about the outlook on France's debt rating. Traders were also agitated over the lack of progress made by U.S. officials in a recent attempt to arrange plans for shoring up fiscal conditions. The major equity averages were all down well in excess of 2% before stocks got any relief.

The market squeezed higher an afternoon trade right around the time that headlines indicated officials are moving forward on a plan to handle the U.S. deficit. Around the same time, Atlanta Fed President Lockhart was quoted for saying that he does not see risk of an outright recession, and that the risk of a recession stands at about 30%. Market participants may get more insight into the thinking of Fed members with the release of minutes from the most recent FOMC meeting tomorrow afternoon.

Although stocks were able to work their way up from session lows, the market never generated a great deal of momentum. That left stocks to still log sizable losses -- all 10 major sectors ended the day down 1% or more -- and give the S&P 500 its lowest close in more than a month.

Concerns about conditions in Europe and an aversion to risk prompted some to rotate into the dollar. As a result, the greenback gained ground against a basket of major foreign currencies. This morning the Dollar Index set a one-month high, but by session's end it was up a tame 0.3%.

Treasuries saw only limited interest amid the carnage, even after the latest auction of 2-year Notes saw very strong demand. The auction drew a bid-to-cover of 4.07, dollar demand of $142.5 billion, and an indirect bidder participation rate of 42.2%. Dollar demand was actually its strongest in more than 20 months.

Sector Leaders/Laggards for Monday 21 November, 2011 AMC
Leading Sectors: None.
Leading Industries/ETFs : Biotech-XBI +2.6%, Natural Gas-UNG +2.1%, Volatility-VXX +1.4%

Lagging Sectors: Telecom -1.1%, Utilities -1.2%, Consumer Staples -1.5%, Consumer Discretionary -1.5%, Materials -1.6%, Energy -1.7%, Health Care -1.9%, Tech -1.9%, Industrials -2.3%, Financials -2.5%
Lagging Industries/ETFs : Rare/Strategic Metals-REMX -5.4%, Russia-RSX -5.1%, Gold Miners-GDXJ -4.9%, Copper Miners-COPX -4.7%, India-INP -4.5%, Coal-KOL -4.4%, Silver Miners-SIL -4.0%, Steel-SLX -3.8%, Indonesia-IDX -3.5%, Taiwan-EWT -3.4%, South Korea-EWY -3.2%, Metals and Mining-XME -2.8%, Oil Services-OIH -2.5%, Solar-TAN -2.4%, Silver-SLV -2.0%

Other Market Moving Factors:
• Debt concerns continue to dominate trade
• Greenback gains against competing currencies
• No earnings or corporate announcements of broad market consequence

Companies trading higher in after hours in reaction to earnings: BRCD +5.3%, JACK +1.4%.

Companies trading lower in after hours in reaction to earnings: HPQ -2.0%.
Companies trading lower in after hours in reaction to news:
• NFLX -2.0% (filed offering to sell stock).


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ECONOMIC COMMENTARY - Monday 21 November, 2011

• Japan Economic Data

- Oct Merchandise Trade Balance Total (in JPY) -273.8 bln vs 296.2 bln in Oct 2010
- Oct Merchandise Trade Exports -3.7% vs +2.3% in Oct 2010
- Oct Merchandise Trade Imports +17.9% vs +12.1% in Oct 2010
- Sep All Industry Activity Index -0.9% vs -0.3% in Aug
- Sep Coincident Index 89.0 vs 88.9 in Aug
- Sep Leading Index 91.5 vs 91.6 in Aug

• UK Nov Rightmove House Prices -3.1% vs+2.8% in Oct

• U.S. Economic Data

- October Existing Home Sales 4.97 mln vs 4.85 mln; Prior revised to 4.90 mln from 4.91 mln

Existing Home Sales Show Modest Improvement in October
Existing home sales improved to 4.97 mln units in October, up from 4.90 mln in September. The Briefing.com consensus expected existing home sales to fall to 4.85 mln. The modest boost in sales was in-line with recent mortgage applications activity. The Mortgage Bankers Associations' Mortgage Purchasing Index increased 0.2% in October. A further expansion in sales in November, however, does not look likely. Not only have the underlying details that normally support the housing market, unemployment and income growth remained soft, but the ability to complete a sale has weakened dramatically in the last month. That has put substantial pressure on the already tepid pace of demand for existing homes. Contract failures were reported by 33% of realtors in October. That was up from 18% in September and 8% from October 2010. Falling home prices will add to the number of failures over the next several months. Inventory levels dipped from 8.3 months of supply in September to 8.0 months in October. That was the lowest inventory level since January. Median existing home prices declined 4.7% y/y in October from $170,600 to $162,500.

• Asian Markets Close; Nikkei -0.3%, Hang Seng -1.4%, Shanghai UNCH
It was a sea of red across Asia with the inability for the U.S. ‘SuperCommittee' to agree on budget cuts roiling markets as the European debt worries persist. Many of the major averages in the region lost between 1.0 and 2.0% while Shanghai closed just fractionally in the red. China's Vice Premier indicated he believes the global economy will enter a long-term recession and that China needs reform to combat slower growth. The Bank of Japan's Monetary Policy Minutes indicated the central bank will increase its asset purchase program by JPY 5 trln for the purpose of buying JGBs. Growth in the region showed improvement as Singapore's GDP rose 6.1% YoY (5.9% YoY previous) and Thailand's economy expanded at 3.5% YoY (2.7% YoY previous). Japan's trade balance was out overnight and fell short of estimates (-JPY0.46 trln actual v. -JPY0.2 trln expected). Looking at the currencies...USDCNY strengthened to 6.3615 while USDJPY is little changed at 76.85.

In Japan, the Nikkei closed -0.3% as automakers were under pressure amid the continued strength of the yen. Toyota Motor dropped 2.6% while Honda Motor and Nissan Motor lost at least 2.2%. Embattled camera maker Olympus closed limit up despite a deepening probe into the company's books.

In Hong Kong, the Hang Seng finished -1.4% as financials and real estate developers saw heavy losses. Agricultural Bank of China plunged 5.0% and China Land Resources fell 4.5%.

In China, the Shanghai Composite settled unchanged as steel stocks gained while financial shares lost. Wuhan Iron & Steel rallied 0.9% while Industrial & Commercial Bank of China lost 1.2%.

In India, the Sensex closed -2.6% and ended at its lowest level in six weeks as automakers were the worst performers. Tata Motors saw the heaviest selling, tumbling more than 5.0%. ICICI Bank was also hit hard, losing more than 4.0%.

• European Markets Closing Prices
UK's FTSE: -2.6%
Germany's DAX: -2.3%
France's CAC: -2.3%
Spain's IBEX: -2.2%
Portugal's PSI: -1.2%
Italy's MIB Index: -2.8%
Irish Ovrl Index: -1.5%
Greece ATHEX Composite: -2.9%

EARNINGS CALL

• Before market open

Tyson Foods (TSN) misses by $0.05, beats on revs
Reports Q4 (Sep) earnings of $0.26 per share, $0.05 worse than the Capital IQ Consensus Estimate of $0.31; revenues rose 12.9% year/year to $8.4 bln vs the $8.19 bln consensus. Despite reduced production in the 4th quarter, sales volumes increased due to a reduction of volumes in ending inventory in 2011 as compared to 2010. For the 12 months, a 2.1% increase in slaughter pounds that mostly occurred in the first three quarters of fiscal 2011 and a reduction of volumes in ending inventory in fiscal 2011 as compared to fiscal 2010, primarily drove the 4.6% increase in sales volume for fiscal 2011. USDA data indicates overall domestic protein (chicken, beef, pork and turkey) production is expected to decrease in fiscal 2012. Because exports are likely to remain strong, we forecast total domestic availability of protein to be down 2-3% compared to fiscal 2011, which should continue to support improved pricing.

• After market close

Hewlett-Packard (HPQ) beats by $0.04, reports revs in-line; guides Q1, FY12 EPS below consensus
Reports Q4 (Oct) earnings of $1.17 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $1.13; revenues fell 3.5% year/year to $32.12 bln vs the $32.12 bln consensus. Co issues downside guidance for Q1, sees EPS of $0.83-0.86, excluding non-recurring items, vs. $1.12 Capital IQ Consensus Estimate. Co issues downside guidance for FY12, sees EPS of at least $4.00, excluding non-recurring items, vs. $4.69 Capital IQ Consensus Estimate. In the Americas, fourth quarter GAAP net revenue was $14.5 bln, down 4% YoY and down 5% when adjusted for the effects of currency. Non-GAAP net revenue in the Americas was $14.6 bln, down 3% year over year and down 4% when adjusted for the effects of currency. Europe, the Middle East and Africa GAAP revenue of $11.7 bln was down 6% year over year and down 10% when adjusted for the effects of currency. GAAP revenue in Asia Pacific was $6.0 bln, representing a 3% increase YoY, and down 4% when adjusted for the effects of currency. GAAP revenue from outside of the United States in the fourth quarter accounted for 65% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.8 bln, up 9% over the year-ago period, for 12% of total HP revenue. Revenue in HP's commercial businesses declined 2% year over year. Revenue in HP's consumer businesses, within PSG and IPG, was collectively down 9% year over year.

Highlights from the HPQ earnings call
CEO Whitman says the co is in the software business, but not transforming HPQ into a software co.... Co is getting out of big M&A... She summarizes her opening statements by saying the co is looking to get back to business fundamentals in 2012 with smart investments, fix execution challenges, and strong financial discipline. HPQ admits many of the FY11 headwinds are still with them and is expecting declines in both rev and profit in FY12. Yet, co plans to be positioned for consistent profitable growth in 2013 and beyond... In Q&A, when asked about competition, Whitman says HPQ will be able to maintain or gain share in key segments. Whitman does not believe printing segment is under going a secular decline, but rather there was too much inventory created in the 1H11... On Thailand, co says it made strategic buys of hard drives in October, so it feels it is well-positioned, but Whitman sees shortages in early 2012... Co is not too concerned about firms building their own servers. Whitman has high expectations for new power-saving server.

IN OTHER NEWS ...

• Pharmasset to be acquired by GILD for $137 in cash
Gilead Sciences and co announced that they have signed a definitive agreement under which Gilead will acquire Pharmasset for $137/share in cash. The transaction, which values Pharmasset at ~$11 bln, was unanimously approved by Pharmasset's Board of Directors. Gilead plans to finance the transaction with cash on hand, bank debt and senior unsecured notes. The co expects the transaction, when completed, to be dilutive to Gilead's earnings through 2014 and accretive in 2015 and beyond. Further guidance will be provided when the transaction closes, which is expected to be in the first quarter of 2012.

• Moody's changes Armenia's sovereign outlook to negative

• Deficit reduction panel confirms that it has failed to reach a budget deal according to multiple reports
President Obama, at White House briefing, says there is no imminent threat of US debt default; will veto legislation to block automatic spending cuts; plans to cut budget one way or another

• French bond yield rise risks AAA outlook: Moody's
(MarketWatch) - Rising French government borrowing costs and an uncertain economic outlook continue to pose a threat to the outlook for France's AAA credit rating, Moody's Investors Service said Monday. "Elevated borrowing costs persisting for an extended period would amplify the fiscal challenge the French government faces amid a deteriorating growth outlook, with negative credit implications," wrote Alexander Kockerbeck, senior credit officer, in the ratings firm's Weekly Credit Outlook. The yield on 10-year French government bonds FR:10YR_FRA +0.15% rose 6 basis points to 3.51%, according to FactSet Research. A basis point is one-hundredth of a percentage point.


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TECHNICAL UPDATE - Monday 21 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,547.31 -248.85 (-2.11%)
Volume: 170,963,473 from 181,241,570 the previous day
Range: 11,454.07 – 11,795.70

http://img690.imageshack.us/img690/4035/dowy.jpg (http://imageshack.us/photo/my-images/690/dowy.jpg/)

On daily candles, the DOW and SPX seems to have lost some of the downward momentum. However, if Monday closes down, NASDAQ will be wearing a DFDM. NASDAQ was rejected at the 200DSMA on Tuesday and Wednesday and the SPX and the DOW fell below its 200DSMA on Wednesday. Whether this has a significant impact of the broader market remains to be seen as volumes have waned a lot since last week. Such low volumes make for easy volatility and technicals can't be relied on when volumes are this weak.

All three benchmarks are now below all their major averages except for DOW who is still supported by its 50DSMA for now. All three benchmarks are also negative for the year and NASDAQ and SPX have clocked up another DFDM. SPX now has 2DFDMs out of the last 4 weeks or 3 in 8 or 4 in 12. The frequency is increasing again.

The SPX is now three straight sessions below its critical 1,224 level - this has been a critical level for SPX over the last 12 years as major trends have been launched or rejected at this level no less than 15 times.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,523.14 -49.36 (-1.92%)
Volume: 513,746,156 from 473,606,054 the previous day
Range: 2,500.89 – 2,539.87

S&P 500 INDEX (SPX: CBOE)
1,192.98 -22.67 (-1.86%)
Volume: 735,399 from 788,180 the previous day
Range: 1,183.16 – 1,215.62


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MARKET INTERNALS - Monday 21 November, 2011 AMC

NYSE :
Lower than avg volume @ 927 mln, vs. 1072 mln
Decliners outpaced Advancers (adv/dec): 468/2611
New lows outpaced new highs (hi/lo): 33/113

NASDAQ :
Higher than avg volume @ 2009 mln, vs. 1981 mln
Decliners outpaced Advancers (adv/dec): 433/2128
New lows outpaced new highs (hi/lo): 13/162


Decliners outpaced Advancers by an average 1.16 to 1 on lower volumes (-13.06%) on Friday (avg -0.14%).

The divergence between the benchmarks is also apparent in the broader market internals. The bulls and bears can't seem to agree and on lighter volumes, this usually leads to heightened volatility. I will be extremely cautious this coming week ... On Friday, the VIX closed square on 32.00 having retreated for most of the session. However, such elevated levels of fear suggest that the broader market is still very skeptical about being bullish going into the shortened week.

Decliners outpaced Advancers by an average 5.26 to 1 on lower average volumes (-3.83%) on Monday (avg -1.96%).

The New Lows' overwhelming dominance on Monday was confirmation of my analysis of heightened volatility on lower volumes. The VIX hit a high of 35.27 before settling the session at 32.91, still on the high side of fear.

http://img853.imageshack.us/img853/3820/intip.jpg (http://imageshack.us/photo/my-images/853/intip.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Commodities start week in negative territory
Concerns about debt problems in Europe and the US pressured crude oil prices today. Futures settled lower by 0.8% at $96.92 per barrel. Crude put in lows at $95.24 in late morning trade but managed to bounce off those lows throughout the remainder of trade to recoup some losses. Natural gas closed higher by 2.7% at $3.41 per MMBtu. Futures rallied sharply into positive territory, notching highs at $3.44, in late morning trade. They did pull back from those highs in the afternoon session. Dec heating oil ended lower by 4 cents at $2.99, while Dec RBOB gasoline gained a penny to close at $2.49.

Margin selling, caused by the sharp pullback in equities, pressured gold and silver today. Gold price shed 2.7% to settle at $1678.60 per ounce, while silver prices dropped 4.1% to end at $31.07 per ounce. Today's lows, at $1670.50 and $30.65, are the metals worst in around 1 month. Dec copper closed down 10 cents at $3.80.

Dec wheat shed 6.25 cents to close at $5.92, Dec corn fell 11.25 cents to finish at $5.99, Dec soybeans dropped 22.25 cents to end at $11.46, ethanol closed lower by 6 cents to $2.54, and sugar finished higher by 0.12 cents at $0.2409.

Commodities AMC on Monday 21 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 97.14 +0.22 (+0.23%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,678.60 -46.50 (-2.70%)

Treasuries ended the day higher, but near their worst levels of U.S. trade as the failure of the ‘Supercommittee’ to agree on budgets and the ongoing European debt worries sparked buying along the complex. A solid $35 bln 2-yr note auction drew 0.280% and saw a 4.07x bid/cover (record high) as indirect bidders took down 42.2% of the offering. The auction’s dollar demand of $142 bln was the strongest since February 2010. Traders bought Treasuries in response to the strong auction, but bulls were unable to push the complex to session highs as bears defended important support levels. The 10-yr yield finished the day at 1.962% and with a move to 1925% will see its lowest level since October 6. Tightening of the yield curve saw the 2-10-yr spread narrow to 168 bps.

Treasury Yields AMC on Monday 21 November, 2011:
• 2 Year Note 0.27% -0.02
• 5 Year Note 0.92% -0.02
• 10 Year Note 1.97% -0.04
• 30 Year Bond 2.96% -0.03
2/30 Spread : 269bps ( -1 ) ... 2/10 Spread : 170bps ( -2 )


Not much respite for yields on Friday as the 5 and 30 remain under-par while the 10 just made it above 2% ahead of an important economic week. Like the VIX, bond yield movements in the past week seem to be warning of a tough week ahead.

The flattening now get more obvious. With no POMO program to manipulate bond activities, this was a true reflection of how the bond traders feel about the current market. Now the 5, 10 and 30 year are now twice under-par again.


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PREVIEW FOR TUESDAY 22 NOVEMBER, 2011

Tuesday will see GDP – Second Estimate, GDP Deflator – Second Estimate (8:30), and the FOMC Minutes (14). Treasury will hold a $35 bln 5-yr note auction. The Fed will purchase $4.25-5.00 bln worth of 2017-2019 maturities and $2.25-2.75 bln worth of 2036-2041 maturities through POMO.

Earnings Highlights
BMO: AMWD, CPB, CSIQ, CHS, CRIC, XNY, CTRN, CBLR, DAKT, DCIX, DSW, EJ, EV, FRED, FRO, GCO, HRL, JASO, LDK, GAGA, LTXC, MDT, PDCO, SIG, STP, and VAL.
AMC: STV, NUAN, P, and TIVO.

Economic Events
08:30 am GDP - Second Estimate
08:30 am GDP Deflator - Second Estimate
14:00 am FOMC Minutes

Conferences and Shareholder/Analyst Meetings of Interest
-Bank of America Merrill Lynch Cyber Security Investor Day
-Bank of America Merrill Lynch Emerging Stars Conference 2011
-Standard Chartered Asia Pacific Emerging Corporates Conference


___________________________________________

SUMMARY

Looks like the bulls have run out of steam and the bears are back in control again. Its just like Q1 and Q2 of 2008 all over again!

With the failure of the not-so-Super Committee and the looming threat of France's debt downgrade, I am staying cautious and hedged. Expect a bounce at the open if GDP numbers don't disappoint but thereafter, the market should be flat for the most part will the FOMC minutes are released at 14:00 EST. After that, its anybody's guess. I am staying defensive and cautious and won't be expecting any upside surprises at all.

Direction for Tuesday 22 November, 2011; ∇ Down

2011 Daily Directional Accuracy: 120/203 (59.11%)

Conrad
11-23-2011, 05:55 AM
U.S. MARKETS - Tuesday 22 November, 2011 AMC

http://img24.imageshack.us/img24/3206/dexsm.jpg (http://imageshack.us/photo/my-images/24/dexsm.jpg/)

The DOW falls into negative for the year ... again! ... With the failure of the not-so-Super Committee and the looming threat of France's debt downgrade, I am staying cautious and hedged. Expect a bounce at the open if GDP numbers don't disappoint but thereafter, the market should be flat for the most part will the FOMC minutes are released at 14:00 EST. After that, its anybody's guess. I am staying defensive and cautious and won't be expecting any upside surprises at all.

Direction for Tuesday 22 November, 2011; ∇ Down

Bingo! I am finally getting my groove back. Now to get my portfolio in sync with the market too. There is little as far as I can see to be bullish about at all now. If Black Friday and Cyber Monday further dampen the mood with unsatisfactory numbers, I am shorting this market for Christmas. Its feels good to get my market mojo back!


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MARKET SUMMARY - Tuesday 22 November, 2011


BRIEFING.COM - Tuesday 22 November, 2011 AMC
Daily Sector Wrap: Market Logs Another Loss

Debt and macro concerns continue to underpin pessimism among market participants, prompting many to pare risk. As such, the broad market logged its fourth straight loss.

Sentiment among early traders turned sour with the release of the second estimate of third quarter GDP, which expanded at a clip of just 2.0%. In general, economists had thought that the headline number would go unrevised at a 2.5% growth rate. The downward revision made it less surprising to learn from the latest FOMC minutes that some Committee members believe that the outlook should be eased further.

Uncertainty about the progress of eurozone bailout plans also continues to hang over financial markets. However, headlines that the IMF has established a new liquidity line helped stocks extend a rebound that began when stocks successfully held their ground at the prior session's low, which also marked a monthly low.

Even though the rebound effort took the major equity averages into positive territory, their stay there was brief. The eventual evaporation of buying interest left stocks to drift lower into the close, culminating in another down day for the major averages. Including an incremental loss late last week, the S&P 500 has finished lower in four straight sessions for a cumulative loss of more than 5%.

Sector Leaders/Laggards for Tuesday 22 November, 2011 AMC
Leading Sectors: Health Care +0.2%, Consumer Staples +0.1%

Lagging Sectors: Consumer Discretionary -0.1%, Tech -0.2%, Telecom -0.4%, Industrials -0.8%, Materials -0.8%, Financials -0.9%, Energy -1.0%, Utilities -1.3%

Other Market Moving Factors:
• Third quarter GDP revised downward
• Stocks lack leadership
• U.S. officials fail to compromise on deficit attack plan

Companies trading higher in after hours in reaction to earnings: TIVO +5.4%

Companies trading lower in after hours in reaction to earnings: P -3.2%


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ECONOMIC COMMENTARY - Tuesday 22 November, 2011

• New Zealand Q4 Reserve Bank of New Zealand 2-Year Inflation Expectation +2.8% vs +2.9% in Q3

• Switzerland Economic Data

- Oct Trade Balance (in CHF) 2.15 bln vs 1.91 bln in Sep
- Oct Exports +1.3% vs +4.3% in Sep
- Oct Imports +1.4% vs +0.7% in Sep

• U.S. Economic Data

- Q3 GDP- Second Estimate +2.0% vs +2.5%; Prelim +2.5%
- Q3 GDP Deflator- Second Estimate +2.5% vs +2.5%; Prelim +2.5%

Weaker Inventories Drive Second Estimate for Q3 GDP Lower
GDP in the third quarter was revised down from 2.5% in the advance release to 2.0% in the second estimate. That is still up from 1.3% in the second quarter. The Briefing.com consensus expected GDP to remain at 2.5%. Real final sales, which exclude inventories, remained at 3.6%. That means that the entire negative revision to GDP was due to discrepancies in inventory flows. As we noted in our preview, the BEA overestimated inventories in September by substantial amounts. This included an estimated 0.9% increase in merchant wholesaler inventories in September when they actually declined 0.1%. Using the latest inventory data, inventories actually declined by $8.5 bln. That was a marked departure from the $5.4 bln gain in the advance estimate. The revisions subtracted an additional 0.48 percentage points from the advance estimate. Personal consumption and fixed investment were also revised down, but the revisions were modest. Consumption increased 2.3% in the third quarter, down from 2.4%. Fixed investment increased 12.3%, down from 13.7%. The declines in consumption and fixed investment, however, were completely offset by stronger net export levels. The net export deficit was revised down, from -$409.4 bln to -$400.7 bln. This added an additional 0.27 percentage points to GDP. Government spending was essentially unchanged in the second estimate.

• Asian Markets Close; Nikkei -0.4%, Hang Seng +0.1%, Shanghai -0.1%
The major Asian indices saw a mixed close as a late day rally ran many of the indices into positive territory. Hong Kong's Hang Seng (+0.1%) and South Korea's Kospi (+0.3%) were among the beneficiaries of the afternoon rally. Hong Kong's CPI held steady at 5.8% YoY while Thailand's exports rose just 0.3% YoY due to the impact of the flooding. Meanwhile, Taiwan saw some mixed data as its current account surplus widened to $10.21 bln ($8.36 bln previous) while its unemployment rate ticked up to 4.3% (4.27% previous). Looking at the currencies...USDCNY strengthened to 6.3630 while USDJPY is stronger at 77.03.

In Japan, the Nikkei closed -0.4%, paring its gains after touching its lowest level in eight months. Shares of embattled camera maker Olympus surged 19.9% (the daily limit) after the co announced a third party has found no connection to organized crime.

In Hong Kong, the Hang Seng finished +0.1% as casino names were among the top performers. Sands China led the space with an advance of 5.3% on the news of strong retail sales in the territory. Wynn Macau also saw a nice gain, closing higher by 3.5%. Fosun International tumbled 6.5% because of its holdings of Focus Media. Fosun is the top holder of Focus Media stock which was hit hard following yesterday's Muddy Waters report that led to Focus plunging 39%.

In China, the Shanghai Composite settled -0.1% as metals stocks were under pressure on reports that property investments are expected to decline over the next two quarters. Jiangxi Copper fell 1.1% and Aluminum Corp. of China lost 0.9%.

In India, the S&P/ASX closed +0.7% and ended with a gain for the first time in nine days. Automakers saw strong gains as Tata Motors and Maruti Suzuki climbed 6.8% and 1.8% respectively. Financials were strong as HDFC led the way with an advance of 2.3%.

• European Markets Closing Prices
UK's FTSE: -0.1%
Germany's DAX: -1.2%
France's CAC: -0.8%
Spain's IBEX: -1.5%
Portugal's PSI: -1.2%
Italy's MIB Index: -1.5%
Irish Ovrl Index: -0.2%
Greece ATHEX Composite: -0.3%

EARNINGS CALL

• Before market open

Campbell Soup (CPB) beats by $0.03, misses on revs; reaffirms FY12 EPS, revs guidance
Reports Q1 (Oct) earnings of $0.82 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.79; revenues fell 0.5% year/year to $2.16 bln vs the $2.21 bln consensus. Co reaffirms guidance for FY12, sees EPS of $2.35-2.42, excluding non-recurring items, vs. $2.37 Capital IQ Consensus Estimate; sees FY12 revs of flat to +2% to ~$7.72-7.87 bln vs. $7.82 bln Capital IQ Consensus Estimate. Q1 rev: Volume and mix subtracted 5 percent; Price and sales allowances added 4 percent; Increased promotional spending subtracted 1 percent; Currency added 1 percent.

IN OTHER NEWS ...

• Color on failure of Supercommittee to reach a deficit deal
As mentioned after the close last night, the Supercommittee failed to reach an agreement on cutting the deficit. Disagreements over tax rates for the wealthiest americans was the sticking point, according to most reports (Click Here for an FT Story on the Super Committee for more color). Failure to reach an agreement gives way to automatic spending cuts that don't go into effect until 2013. After this was announced, President Obama said that he would veto any attempt to eliminate these automatic cuts, which were passed as a part of the original debt ceiling agreement.

As expected, the credit ratings agencies discussed news of the Supercommittee failure. Standard & Poors said that the USA's credit rating will not be affected by this impasse, reaffirming its AA+ ratings, while Moody's said the action of the super committee would not be decisive to its analysis of its rating, and maintained its AAA rating. Finally, Fitch said it was reviewing its rating, but previously said that failure of the Supercommittee would likely result in a negative outlook to the US's rating.

Overall, confidence in the Super Committee was already quite low, so failure to reach a deal isn't a major surprise. On top of that, the lack of an immediate negative ratings action by the agencies could be taken as a positive for now. Even though it seems likely that Fitch could come out with a negative outlook at some point in the near future, this has already been well telegraphed and will not likely be a big surprise for the market if/when it does happen.

• Further details on the enhanced IMF Liquidity and Emergency Lending Windows
As mentioned earlier, the U.S. equity averages extended their bounce off the lows as headlines crossed the wires about an enhanced IMF liquidity line. Further details on that line are as follows: "The Executive Board of the International Monetary Fund (IMF) approved on November 21 a set of reforms designed to bolster the flexibility and scope of the Fund's lending toolkit to provide liquidity and emergency assistance more effectively to the Fund's global membership. These reforms, which have been under preparation for some time, will enable the Fund to respond better to the diverse liquidity needs of members with sound policies and fundamentals, including those affected during periods of heightened economic or market stress—the crisis-bystanders—and to address urgent financing needs arising in a broader range of circumstances than natural disasters and post-conflict situations previously covered... The reform replaces the Precautionary Credit Line (PCL) with the more flexible Precautionary and Liquidity Line (PLL), which can be used under broader circumstances, including as insurance against future shocks and as a short-term liquidity window to address the needs of crisis bystanders during times of heightened regional or global stress and break the chains of contagion"... See full IMF release here (http://www.imf.org/external/np/sec/pr/2011/pr11424.htm).

• Retailers are discounting early and often this holiday season as the mix shift towards e-commerce continues
The holiday shopping season kicks off this week and as more and more shoppers make purchases over the internet, retailers are rolling out deals earlier and earlier to drive traffic and gain market share.

Consumers continue to do more of their holiday shopping online. Last year, U.S. online holiday sales on Thanksgiving Day were up 28% to $407 mln, while they were up 9% at $648 mln on Black Friday and up 13% at $30.8 bln from Nov 1 through December 26.

Traditional retailers continue to battle e-commerce giant Amazon (AMZN), whose top line growth (Q4 estimate: +40%) dwarfs that of any traditional retailer. The retailer, who has consistently been ahead of the curve with respect to retail trends, started running Holiday deals on November 1.

About half of online retailers will offer promotions on Thanksgiving day, that number rises to over 75% on Cyber Monday. Wal-Mart (WMT) has been offering online deals all week (including free shipping on all electronics over $45) and will commence in store door busters at 10PM on Thanksgiving. Per usual, WMT is being aggressive on pricing, presenting a challenge for other retailers to also be aggressive in order to drive traffic their way. WMT even reinstated layaway on select electronics and toys in mid-October. Fellow big box retailer Target (TGT) started its four day sale on Sunday, ahead of the Holiday, and will be opening their doors at midnight on Black Friday. Best Buy (BBY), Macy's (M) and Kohl's (KSS) will also be opening at midnight.

The battle for tablet market share may cause some pain for retailers and consumer electronics companies alike. While Apple's (AAPL) iPad 2 is the obvious market leader at the high end, AMZN's Kindle Fire tablet has the ability to squeeze the middle market with its $199 price tag. Samsung, Motorola (MMI), HTC, RIM (RIMM), Sony (SNE) and other electronic manufacturers remain in a vulnerable position with respect to tablet market share. In addition, the TV and PC market remains rather weak. At the same time, retailers BBY, WMT, TGT, etc. will miss out on many of the tablet sales as Apple and Amazon sell through their own channels. Last year, BBY's Black Friday results disappointed The Street as competitors were more aggressive with pricing on lower tier consumer electronics -- mostly TVs but also computers. BBY will report Q3 (ending Nov 26) results on December 13.

The retail sector will obviously be in focus on Cyber Monday as reports about retail/consumer activity pour out over the weekend. comScore will release results for the Holiday period sometime around 7:00 ET on Monday morning.

• FOMC minutes now public on Fed website
See full release here (http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20111102.pdf).

• Federal Reserve issues final rule requiring top-tier U.S. bank holding companies with total consolidated assets of $50 billion or more to submit annual capital plans for review
The Federal Reserve Board on Tuesday issued a final rule requiring top-tier U.S. bank holding companies with total consolidated assets of $50 billion or more to submit annual capital plans for review. Also, the Federal Reserve launched the 2012 review, issuing instructions to the firms, including the macroeconomic and financial market scenarios the Federal Reserve is requiring institutions to use to support the stress testing used in their capital plans. As a part of the review, known as the Comprehensive Capital Analysis and Review (CCAR), the Federal Reserve in 2012 will carry out a supervisory stress test based on the same stress scenario provided to the firms to support its analysis of the adequacy of the firms' capital... There are two sets of instructions: one for the 19 firms that participated in the CCAR in 2011, the other for 12 additional firms with at least $50 billion in assets that have not previously participated in a supervisory stress test exercise... After evaluating the institutions' submissions, the Federal Reserve will publish the results of the supervisory stress tests for each of the 19 institutions including the results of the market shock for the six institutions with large trading operations. Institutions will be required to submit their capital plans by January 9, 2012.


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TECHNICAL UPDATE - Tuesday 22 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,493.72 -53.59 (-0.46%)
Volume: 148,545,707 from 170,963,473 the previous day
Range: 11,433.97 – 11,571.75

http://img52.imageshack.us/img52/6697/dowfr.jpg (http://imageshack.us/photo/my-images/52/dowfr.jpg/)

All three benchmarks are now below all their major averages except for DOW who is still supported by its 50DSMA for now. All three benchmarks are also negative for the year and NASDAQ and SPX have clocked up another DFDM. SPX now has 2DFDMs out of the last 4 weeks or 3 in 8 or 4 in 12. The frequency is increasing again ... The SPX is now three straight sessions below its critical 1,224 level - this has been a critical level for SPX over the last 12 years as major trends have been launched or rejected at this level no less than 15 times.

The DOW now joins the other two benchmarks in being below all its major averages and negative for the year. Momentum to the downside seems to have waned a bit but volumes have waned even more. Going into the Thanksgiving weekend, this weakness in volumes could send the market in either direction in a big way. Technical levels for now are holding up with the DOW at the 11,500 confluence, the NASDAQ at 2,500 and SPX at 1,180.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,521.28 -1.86 (-0.07%)
Volume: 441,533,980 from 513,746,156 the previous day
Range: 2,499.19 – 2,534.40

S&P 500 INDEX (SPX: CBOE)
1,188.04 -4.94 (-0.41%)
Volume: 661,442 from 735,399 the previous day
Range: 1,181.65 – 1,196.81


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MARKET INTERNALS - Tuesday 22 November, 2011 AMC

NYSE :
Lower than avg volume @ 876 mln vs 999 mln
Decliners outpaced Advancers (adv/dec): 1160/1862
New lows outpaced new highs (hi/lo): 40/86

NASDAQ :
Lower than avg volume @ 1790 mln vs 1995 mln
Decliners outpaced Advancers (adv/dec): 896/1595
New lows outpaced new highs (hi/lo): 10/116


Decliners outpaced Advancers by an average 5.26 to 1 on lower average volumes (-3.83%) on Monday (avg -1.96%).

The New Lows' overwhelming dominance on Monday was confirmation of my analysis of heightened volatility on lower volumes. The VIX hit a high of 35.27 before settling the session at 32.91, still on the high side of fear.

Decliners outpaced Advancers by an average 1.86 to 1 on lower average volumes (-10.95%) on Tuesday (avg -0.31%).

Another down day on lower volumes. The VIX stay up at 31.97 while the TRIN stay elevated above 1.50 for the most part. With volumes so weak, I really wonder how much of this information is valid.

http://img39.imageshack.us/img39/5894/intr.jpg (http://imageshack.us/photo/my-images/39/intr.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Precious Metals Outperform

Aside from a modest pullback in late morning trade, precious metals remained strong throughout the session. Gold ended higher by 1.4% at $1702.40 per ounce, while silver posted gains of 5.1% to close at $32.81. Both metals traded to their best levels, at $1706.40 and $33.04, respectively, into the close of pit trade. Dec copper finished higher by 4 cents at $3.34.

Crude oil prices pulled back to the flat line in mid-morning trade, pressured by weakness in equities. Their about-face followed headlines about enhanced IMF Liquidity and Emergency Lending Windows. They did attempt to rebound, but the move stalled around the $98.50 mark, leaving prices to drift lower and close at $98.01 per barrel. Still, that made for a 1.1% gain. Natural gas prices settled higher by 0.5% at $3.42 per MMBtu. Dec heating oil ended higher by 4 cent at $3.03, while Dec RBOB gasoline finished up 7 cents at $2.56.

Dec wheat gained 2.5 cents to close at $5.94, Dec corn closed up 0.75 cents at $5.985, Dec soybeans finished up 3.5 cents to end at $11.51, ethanol closed higher by 1 cent to $2.55, and sugar finished down by 0.65 cents at $0.2344.

Commodities AMC on Tuesday 22 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 98.01 +1.09 (+1.12%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,702.40 +23.80 (+1.42%)

Treasuries finished the day at their highs after a strong $35 bln 5-yr note auction provided an afternoon bid. The auction drew a record low 0.937% and saw a stronger than average 3.15x bid/cover as indirect bidders gobbled up 45.3% of the offering. Dollar demand was healthy at $110 bln. Today's advance caused the 10-yr yield to settle at 1.939%, its lowest close since October 5. The 30-yr yield also saw its lowest close since October 5, settling at 2.910% and is now just 40 bps above its record low that occurred in December 2008. Slight flattening occurred along the yield curve as the 2-10-yr spread narrowed to 167 bps.

Treasury Yields AMC on Tuesday 22 November, 2011:
• 2 Year Note 0.26% -0.01
• 5 Year Note 0.91% -0.01
• 10 Year Note 1.94% -0.03
• 30 Year Bond 2.91% -0.05
2/30 Spread : 265bps ( -4 ) ... 2/10 Spread : 168bps ( -2 )


The flattening now get more obvious. With no POMO program to manipulate bond activities, this was a true reflection of how the bond traders feel about the current market. Now the 5, 10 and 30 year are now twice under-par again.

This flattening is getting down to the year's lows now ...

http://img411.imageshack.us/img411/1153/81238036.jpg (http://imageshack.us/photo/my-images/411/81238036.jpg/)

With this much fear in the market and after an economic hose-down like Tuesday, I wouldn't dare tempt this market by being bullish. Not yet anyway.


___________________________________________

PREVIEW FOR WEDNESDAY 23 NOVEMBER, 2011

Wednesday is the most anticipated day of the week for data as the weekly MBA Mortgage Index (7), initial and continuing claims, personal income, personal spending, PCE Prices - Core, durable orders, durable orders ex-transportation (8:30), and Michigan Sentiment - Final (9:55) are all released. Treasury will auction $29 bln 7-yr notes.

Earnings Highlights
BMO: DE, DSX, NJR, SOL, SFL, and YGE.

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
08:30 am MBA Mortgage Index
08:30 am Personal Income
08:30 am Personal Spending
08:30 am PCE Prices - Core
08:30 am Durable Orders
08:30 am Durable Orders -ex Transportation
09:55 am Michigan Sentiment - Final
10:30 am Natural Gas Inventories
10:30 am Crude Inventories

Conferences and Shareholder/Analyst Meetings of Interest
-Deadline for Joint Subcommittee
-7 Year Treasury Note Auction


___________________________________________

SUMMARY

I have said it countless times before and I will continue to repeat it - America has no more money ... they only have debt and they cannot reduce it anymore. They have to honor it. I don't even know why they bothered with this Super Committee at all. The people occupying Wall Street could have told you that America is in debt. What is odd is that the market reacted (on Monday) like as if it was surprised at this revelation. "What? We can't cut 1.2trillion?? OMG!! .... Duh!"

Its the day before a major public holiday and such days tend to rally the market. This time even more so as it is the eve of the Black Friday weekend. If the market doesn't rally today, even in spite of all the negativity in the world, even if volumes are pathetic, even if the dollar is being ridiculous ... if we don't rally, then I'll know for sure that this market is in deep shit for the rest of the year.

Direction for Wednesday 23 November, 2011; ∆ Up

NOTE:
Thursday 24 November - Markets are Closed in observance of Thanksgiving Day
Friday 25 November - Markets are opened for half a day and will close early at 13:00 EST

2011 Daily Directional Accuracy: 120/203 (59.11%)

Conrad
11-24-2011, 03:42 AM
U.S. MARKETS - Wednesday 23 November, 2011 AMC

http://img52.imageshack.us/img52/7534/dexsq.jpg (http://imageshack.us/photo/my-images/52/dexsq.jpg/)

Its the day before a major public holiday and such days tend to rally the market. This time even more so as it is the eve of the Black Friday weekend. If the market doesn't rally today, even in spite of all the negativity in the world, even if volumes are pathetic, even if the dollar is being ridiculous ... if we don't rally, then I'll know for sure that this market is in deep shit for the rest of the year.

Direction for Wednesday 23 November, 2011; ∆ Up

This is it. In 2007 I said it was going to happen soon. Again in early 2008 I reiterated it and I even mentioned a date - late 2011 to mid 2012. Then in 2009 and 2010 I reminded everyone about it. And now that we're at the end of 2011, I'll say it one more time - we're due for a major Depression and that time has come.

My only surprise is that in 2007 and 2008, I never imagined that the Depressionary threat would come from Europe. Thus, the depth of this Depression could be unprecedented and there is no way to know how deep and long it will run. It doesn't help that the EU is insolvent and that nobody wants to buy their debts. It doesn't help that Belgium just joined the list of sovereign debt threats like the contagion we expected it to be. Most of all, it doesn't help that Germany's bonds are also unwanted now. The core and backbone of the EU is about to get into trouble themselves as they shoulder the burden of the entire Union.

It doesn't help that commodity prices stay elevated and that inflation is still relatively high in most countries. It doesn't help to fight those inflationary pressures when most countries are lowering their monetary policies to level the playing field against the American dollar. It further doesn't help that weather cycles have been insane lately with rain and floods threatening and even wiping out most East Asian crops and staples. And it surely won't help if China continues to sit on their hands and do nothing about anything whether it be their own domestics threats or the global threat to their continued economic conquests.


___________________________________________

MARKET SUMMARY - Wednesday 23 November, 2011


BRIEFING.COM - Wednesday 23 November, 2011 AMC
Daily Sector Wrap: Downtrend Continues

Set against an already bearish backdrop, market participants reacted negatively to the Fed's decision to increase capital controls for banks and underwhelming data from both home and abroad. That left stocks to record their sixth straight loss and settle at new monthly lows.

The stock market's slide was extended to a sixth straight session, including an incremental loss late last week. In that time the S&P 500 has fallen more than 7%. In the face of the swoon, Deere & Co. (DE 74.72, +2.80) displayed strength, thanks to an upside earnings surprise and an optimistic outlook.

Broad market participants saw little reason to alter their bearish mindset when it was learned last evening that the Fed ruled that top-tier domestic banks with total consolidated assets of at least $50 billion must submit annual capital plans for review, bringing the number of banks under surveillance to 31. The decision comes at the same time that many investors have shown aversion to bank stocks and other financial issues for fear of their exposure to the precarious conditions in Europe.

The perception of Europe was hardly helped by news that Germany, the continent's strongest and most diverse economy, held a debt auction that drew disappointing demand. Germany also reported that its PMI Manufacturing reading for November fell to 47.9 from 49.1 in the prior month. The November Manufacturing PMI for the broader eurozone eased to 46.4 from 46.5 in October.

China also issued disappointing data. The country's Flash PMI Manufacturing reading for November fell to 48.0 from 51.0 in the prior month. Asia's major averages all moved lower in overnight action.

As for domestic data, initial jobless claims for the week ended November 19 totaled 393,000, which is barely changed from what was posted in the prior week. It is also on par with what had been expected by many economists.

Personal spending during October increased by 0.1%, which is less than the 0.3% increase that had been broadly expected, but personal income increased by 0.4% to exceed the 0.3% increase that had been anticipated.

Durable goods orders for October fell 0.7%, but that is still less than the 0.9% decline that many had expected. Excluding transportation related items, durable goods orders actually jumped by 0.7% in the face of the consensus call for no change.

Although still short of 1 billion shares, trading volume on the NYSE proved greater than what many had suspected ahead of a holiday. U.S. markets will be closed tomorrow in observance of Thanksgiving. They will re-open Friday for a half day of trade.

Sector Leaders/Laggards for Wednesday 23 November, 2011 AMC
Leading Sectors: None.
Leading Industries/ETFs : Volatility-VXX ++2.8%, Natural Gas-UNG +1.8%, USD-UUP +1.0%, Egypt-EGPT +0.8%, Vietnam-VNM +0.3%, TIPS-TIP +0.2%, Livestock-COW +0.2%, Long Treasuries-TLT +0.2%

Lagging Sectors: Consumer Staples -1.4%, Utilities -1.5%, Health Care -1.5%, Consumer Discretionary -2.1%, Telecom -2.1%, Industrials -2.3%, Tech -2.4%, Materials -2.8%, Energy -2.9%, Financials -2.9%
Lagging Industries/ETFs : Poland-PLND -4.5%, Steel-SLX -4.2%, Italy-EWI -4.0%, Copper Miners-COPX -3.9%, Metals and Mining-XME -3.8%, South Korea-EWY -3.8%, Sweden-EWD -3.7%, Taiwan-EWT -3.7%, Oil/Gas E&P-XOP -3.6%, Silver Miners-SIL -3.3%, Home Construction-ITB -3.2%, Coal-KOL -3.2%, Oil Services-OIH -3.2%, Jr. Gold Miners-GDXJ -3.2%, Shipper-SEA -3.1%, Wind Energy-FAN -3.1%, Rare/Strategic Metals-REMX -3.0%, Regional Banks-KRE -2.8%, Silver-SLV -2.8%

Other Market Moving Factors:
• Fed announces further capital controls on domestic banks
• Weekly initial jobless claims change little from prior week, as expected
• Durable goods orders and orders less transportation vary
• Manufacturing data from China disappoints
• Germany reports lackluster bond auction results and manufacturing data


___________________________________________

ECONOMIC COMMENTARY - Wednesday 23 November, 2011

• China Nov Flash Manuf PMI 48.0 vs 51.0 in Oct

• Australia Sep Conference Board Leading Index +0.1% vs -0.2% in Aug

• France Nov Manuf PMI 47.6 vs 48.5 in Oct

• Eurozone Nov Manuf PMI 46.4 vs 46.5 in Oct

• Germany Nov Manuf PMI 47.9 vs 49.1 in Oct

• U.S. Economic Data

- MBA Mortgage Applications of -1.2% vs -10.0% Prior
- Initial Jobless Claims 393K vs. 391K; prior revised to 391K from 388K
- Continuing Claims rises to 3.691 mln from 3.623 mln
- October PCE Prices- Core M/M +0.1% vs +0.1%
- PCE Headline Y/Y +2.7%; Core Y/Y +1.7%
- Oct. Personal Income +0.4% vs. +0.3%; prior +0.1%
- October Personal Spending +0.1% vs +0.3%
- October Durable Orders -0.7% vs -0.9%; Prior revised to -1.5% from -0.6%
- October Durable Orders ex-trans +0.7% vs 0.0%; Prior revised to +0.6% from +1.8%
- November Michigan Sentiment- Final 64.1 vs 64.2; Prelim 64.2

Weak Aircraft Orders Lower Durable Goods Demand for a Second Consecutive Month
Durable goods orders fell 0.7% in October after declining from a downward revised 1.5% (from -0.6%) in September. The Briefing.com consensus expected durable goods orders to decline 0.9%. As expected, the bulk of the decline was due to weaker aircraft orders. Nondefense aircraft orders declined 16.4% in October after falling 26.8% in September. Excluding transportation, durable goods orders increased 0.7% in October, up from 0.6% in September. The Briefing.com consensus expected no growth from these orders. The gains in orders excluding transportation do not reflect the manufacturing sector as a whole. Only primary metals, machinery, and other durable goods sectors saw orders growth. All other sectors contracted. Business investment demand also weakened in October. After increasing 0.9% in September, new orders of nondefense capital goods excluding aircraft tumbled 1.8%. To make matters worse, shipments - which factor directly into GDP - were down 1.1%. This will most likely lead us to cut our fourth quarter growth rate.

Personal Income and Spending Edge Higher
Personal spending increased 0.1% in October, down from 0.7% growth in September. The Briefing.com consensus expected spending to increase 0.3%. Goods spending increased 0.1%, down from 1.6% growth in October. Services spending increased 0.1%. Real spending also increased 0.1% in October. Personal income increased 0.4% in October. The consensus expected income to increase 0.3%. The growth in income was in-line with the aggregate wage gain revealed in the October Employment Situation Report. T he personal savings rate increased from 3.3% in September to 3.5% in October. That was the first increase in savings since June.

Initial Claims Remain Below 400,000
The initial claims level increased from 391,000 for the week ending November 12 to 393,000 for the week ending November 19. The Briefing.com consensus expected the initial claims level to remain at 391,000. For the past several weeks, the initial claims level has remained below 410,000, a level that would normally suggest that nonfarm payroll growth should exceed the 100,000 necessary to support normal labor force growth. Even though businesses have slowed the number of layoffs, however, they have been reluctant to hire new workers. Instead of expecting 100,000 new jobs, we now expect the improvement in the labor sector to be more modest. The continuing claims level increased from 3.623 mln for the week ending November 5 to 3.691 mln for the week ending November 12. The consensus expected the continuing claims level to fall to 3.620 mln.

Consumer Sentiment Poised to Decline in December
The University of Michigan Consumer Sentiment Index was revised down in the final November reading from 64.2 in the preliminary reading to 64.1. The Briefing.com consensus expected sentiment to remain at 64.2. That was the strongest reading since June. Unfortunately, the underlying data suggest the recent growth in sentiment may not continue next month. Typically, sentiment follows trends in employment, stock prices, oil prices, and media reports. With the exception of employment, which has held steady, all of the areas of contention have deteriorated over the past few weeks. This should put a dent in sentiment in December. Fortunately, changes in sentiment do not reflect consumption growth. Consumption is highly reliant upon income growth and fluctuates with the employment situation, not sentiment.

• Oil Inventory Data

Dept of Energy reports that:

- Crude oil inventories had a draw of 6.219 mln (consensus is a build of 1.4 mln).
- Gasoline inventories had a build of 4.475 mln (consensus is a build of 1.0 mln).
- Distillate inventories had a draw of 770K (consensus is a draw of 1.0 mln).
Summary of Weekly Petroleum Data for the week ending November 18

Production: U.S. crude oil refinery inputs averaged nearly 14.8 million barrels per day during the week ending November 18, 117 thousand barrels per day above the previous week's average. Refineries operated at 85.5 percent of their operable capacity last week. Gasoline production increased last week, averaging about 9.5 million barrels per day. Distillate fuel production increased slightly last week, averaging just under 4.8 million barrels per day.

Imports: U.S. crude oil imports averaged 8.3 million barrels per day last week, down by 246 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 225 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 956 thousand barrels per day. Distillate fuel imports averaged 135 thousand barrels per day last week.

Inventories: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.2 million barrels from the previous week. At 330.8 million barrels, U.S. crude oil inventories are closer to the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 4.5 million barrels last week and are in the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 0.8 million barrels last week and are in the lower limit of the average range for this time of year. Propane/propylene inventories decreased by 0.2 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 3.9 million barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged 8.6 million barrels per day, down by 4.0 percent from the same period last year. Distillate fuel product supplied has averaged 4.2 million barrels per day over the last four weeks, up by 5.7 percent from the same period last year.

• Natural Gas Inventory Data

Natural gas inventory showed a build of 9 bcf vs expectations for a build of 20 bcf.
Working gas in storage was 3,852 Bcf as of Friday, November 18, 2011, according to EIA estimates. This represents a net increase of 9 Bcf from the previous week. Stocks were 23 Bcf higher than last year at this time and 233 Bcf above the 5-year average of 3,619 Bcf. In the East Region, stocks were 65 Bcf above the 5-year average following no net change in storage levels. Stocks in the Producing Region were 146 Bcf above the 5-year average of 1,101 Bcf after a net injection of 5 Bcf. Stocks in the West Region were 22 Bcf above the 5-year average after a net addition of 4 Bcf. At 3,852 Bcf, total working gas is above the 5-year historical range.

• Asian Markets Close; Nikkei CLOSED, Hang Seng -2.1%, Shanghai -0.7%, Sensex -2.3%
It was a sea of red across Asia as a Chinese HSBC Flash Manufacturing reading (48.0 actual v. 51.0 previous) indicated the Chinese manufacturing sector is contracting. Australia, Hong Kong, India, South Korea, and Taiwan all saw their major bourses shed at least 2.0% on worries that the global economy is slowing. Indian stocks continue to see outflows as the rupee trades at record lows against the dollar. Prices in the region held pretty steady as Singapore's CPI ticked down to 5.4% YoY (5.5% YoY previous) and Malaysia's CPI held at 3.4% YoY. Elsewhere, Taiwan's industrial output rose 1.4% YoY. Looking at the currencies...USDCNY weakened to 6.3485 while USDJPY is stronger at 77.20.

In Japan, the Nikkei was closed for Labor Thanksgiving Day.

In Hong Kong, the Hang Seng finished -2.1% as cos with heavy exposure to global economy were under pressure. Exporter Li & Fung dropped 2.9% while Jiangxi Copper retreated 3.8%. European retailer Esprit outperformed with a gain of 6.3% after the co's CFO announced he had purchased shares.

In China, the Shanghai Composite settled -0.7% as financials and real estate developers weighed. Shanghai Pudong Development Bank shed 0.7% and Poly Real Estate Group lost 1.8%.

In India, the Sensex closed -2.3% and finished at their lowest level in two years. Financials were the worst performers as HDFC Bank slid 3.9% and ICICI Bank lost 2.5%. Heavyweight Infosys Technologies fell 2.7% on concerns of a slowdown in its European business.

• European Markets Closing Prices
UK's FTSE: -1.0%
Germany's DAX: -1.2%
France's CAC: -1.4%
Spain's IBEX: -1.8%
Portugal's PSI: -0.6%
Italy's MIB Index: -2.3%
Irish Ovrl Index: -1.2%
Greece ATHEX Composite: -1.2%

EARNINGS CALL

• Before market open

Deere (DE) beats by $0.19, reports slight miss on rev; guides Q1 and FY12 revs above consensus; FY12 net income above
Reports Q4 (Oct) earnings of $1.62 per share, $0.19 better than the Capital IQ Consensus Estimate of $1.43; revenues rose 20.4% year/year to $7.9 bln vs the $7.98 bln consensus. Sales included a favorable currency-translation effect of 2 % for the quarter and 3 % for the year and price increases of 3 % for both periods. Equipment net sales in the United States and Canada rose 14 % for the quarter and 17 % for the year. Outside the U.S. and Canada, net sales were up 31 % and 38 % for the respective periods, with favorable currency-translation effects of 4 % and 7 %. Co issues upside guidance for Q1, sees Q1 revs of +16-18% YoY to ~$6.40-6.51 bln vs. $6.17 bln Capital IQ Consensus Estimate. Co issues upside guidance for FY12, sees FY12 revs of +15% to ~$33.89 bln vs. $32.16 bln Capital IQ Consensus Estimate, with net income of ~$3.2 bln vs. ests of ~$3.07 bln.

Diana Shipping (DSX) beats by $0.02, beats on revs; extends buyback one year
Reports Q3 (Sep) earnings of $0.33 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.31; revenues fell 10.3% year/year to $64.2 mln vs the $62.3 mln consensus. mainly due to reduced average time charter rates and the deconsolidation of Diana Containerships Inc. The decrease in time charter revenues was partly offset by revenues derived from the increase in ownership days resulting from the addition to the co's fleet of the vessels Alcmene and Arethusa in November 2010 and July 2011, respectively. The co has further announced that the Board of Directors has authorized a new share repurchase program for up to U.S. $100 million of the co's common shares, which may be repurchased from time to time until Dec 31, 2012. The new authorization replaces the co's previous share repurchase program, which was scheduled to expire on December 31, 2011. The co noted that it did not repurchase any shares under the prior buyback authorization.

IN OTHER NEWS ...

• European Yields: -09/32..1.951%..USD/JPY: 77.23..EUR/USD: 1.3406
Yields are sharply higher across most of Europe after the disastrous 10-yr Bund auction. Germany sold just EUR3.64 bln of the EUR6 bln offered as 35% of the auction failed to receive bids. The auction drew 1.98% (2.09% previous) and has fixed income investors in the region on edge. German yields are up as much as 13 bps as a result of the auction with the 10-yr yield now at 2.01%.

Bond vigilantes have attacked Italian BTPs and have caused an inversion of the 2-10-yr spread which now trades -17 bps as the 2-yr yield is up 51 bps on the session. Selling of Spanish paper has yields up as much as 21 bps with the 10-yr now elevated at 6.64%. The Spanish 10-yr yield eased off its session highs of more than 6.70% on presumed ECB buying.

A recent spike in French yields has them back near their session highs as sellers have run the French 10-yr yield up another 15 bps to 3.66%. Belgian yields are sharply higher today on fears that the bailout of Dexia is on the verge of collapse. The troubled lender has already been bailed out once and the second bailout is now in question. Yields in Belgium are up as much as 40 bps with the 10-yr now at 5.33%. U.K. Gilts are the lone safe-haven today, and even they trade mixed as yields hover on both sides of the flat line. The 10-yr Gilt yield is lower by just 1 bp at 2.03%.


___________________________________________

TECHNICAL UPDATE - Wednesday 23 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,257.55 -236.17 (-2.05%)
Volume: 152,215,629 from 148,545,707 the previous day
Range: 11,257.55 – 11,492.82

http://img443.imageshack.us/img443/3416/dowm.jpg (http://imageshack.us/photo/my-images/443/dowm.jpg/)

The DOW now joins the other two benchmarks in being below all its major averages and negative for the year. Momentum to the downside seems to have waned a bit but volumes have waned even more. Going into the Thanksgiving weekend, this weakness in volumes could send the market in either direction in a big way. Technical levels for now are holding up with the DOW at the 11,500 confluence, the NASDAQ at 2,500 and SPX at 1,180.

This looks exactly like Q1 and Q2 of 2008 all over again. If this persists, we're going to punch our way down to 10,500 before Christmas. If it comes to that, it wouldn't be far fetched to see DOW get down to 9,500 by year's end.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,460.08 -61.20 (-2.43%)
Volume: 440,401,188 from 441,533,980 the previous day
Range: 2,460.08 – 2,503.38

S&P 500 INDEX (SPX: CBOE)
1,161.79 -26.25 (-2.21%)
Volume: 689,777 from 661,442 the previous day
Range: 1,161.79 – 1,187.48


___________________________________________

MARKET INTERNALS - Wednesday 23 November, 2011 AMC

NYSE :
Lower than avg volume @ 876 mln vs 937 mln
Decliners outpaced Advancers (adv/dec): 358/2692
New lows outpaced new highs (hi/lo): 28/162

NASDAQ :
Lower than avg volume @ 1710 mln vs 1892 mln
Decliners outpaced Advancers (adv/dec): 382/2165
New lows outpaced new highs (hi/lo): 4/174


Decliners outpaced Advancers by an average 1.86 to 1 on lower average volumes (-10.95%) on Tuesday (avg -0.31%).

Another down day on lower volumes. The VIX stay up at 31.97 while the TRIN stay elevated above 1.50 for the most part. With volumes so weak, I really wonder how much of this information is valid.

Decliners outpaced Advancers by an average 6.56 to 1 on lower average volumes (-8.59%) on Wednesday (avg -2.23%).

Wipe out. The VIX spiked 2.01 points to close just shy of 34 at 38.98. The TRIN stayed above 1.80 for most of the session and closed at the sessin high of 3.37, the second highest close in 7 weeks.

http://img707.imageshack.us/img707/6826/intda.jpg (http://imageshack.us/photo/my-images/707/intda.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Clipped

Efforts to pare risk prompted market participants to extend their efforts into the commodity complex. Selling pressure dropped the CRB Commodity Index for a 1.4% loss.

News of a surprise inventory draw failed to improve sentiment surrounding oil trade today. That left the energy crude oil prices to fall 1.9% to $96.15 per barrel. Natural gas prices also succumbed to selling pressure. The energy component closed at $3.61 per MMbtu, which was comfortably above its session low, but it still made for a 1.4% loss. Inventory numbers for natural gas also proved surprisingly positive. Dec heating oil ended lower by 7 cent at $2.97, while Dec RBOB gasoline finished down 5 cents at $2.52.

Precious metals were able to trim losses after falling sharply in morning trade. Gold prices settled at $1696.80 per ounce for a 0.3% loss. Silver settled with a 2.8% loss at $32.02 per ounce. Dec copper finished down $0.05 at $3.28.

Wheat (continuous) fell 9 cents to close at $5.94, Dec corn closed down 10 cents at $5.89, Dec soybeans finished down 30 cents to end at $11.225, ethanol closed lower by 7 cents to $2.49, and sugar finished flat at ~$0.2315.

Commodities AMC on Wednesday 23 November, 2011:
Light Crude (NYMEX) December 11 ($US per bbl.) : 96.17 -1.84 (-1.88%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,695.90 -6.50 (-0.38%)

Treasuries finished at their best levels of the session as a late day swoon in equities provided a bid. The afternoon rally got started following the strong 7-yr note auction that drew a record low 1.415%. Today’s dollar demand of $93 bln was the strongest since May as direct bidders took down 18.9% of the offering. The long bond led today’s advance, tacking on just more than one point as its yield fell 6 bps to 2.823% and closed at its lowest level since October 4. A 5 bp decline pushed the 10-yr yield down to 1.879% where it is just 17 bps above its October low. Aggressive flattening of the yield curve saw the 2-10-yr spread tighten to 161.5 bps.

Treasury Yields AMC on Wednesday 23 November, 2011:
• 2 Year Note 0.26% unch
• 5 Year Note 0.88% -0.03
• 10 Year Note 1.89% -0.05
• 30 Year Bond 2.82% -0.09
2/30 Spread : 256bps ( -9 ) ... 2/10 Spread : 163bps ( -5 )

http://img827.imageshack.us/img827/8778/68053221.jpg (http://imageshack.us/photo/my-images/827/68053221.jpg/)


This flattening is getting down to the year's lows now ... With this much fear in the market and after an economic hose-down like Tuesday, I wouldn't dare tempt this market by being bullish. Not yet anyway.

The flattening accelerates. We're almost down to the lowest yields for the year. The good news is that American bonds are still in demand. But what if the Fed stopped buying?


___________________________________________

PREVIEW FOR FRIDAY 25 NOVEMBER, 2011

Earnings Highlights
None scheduled - Markets Close early at 13:00 EST

Economic Events
None scheduled - Markets Close early at 13:00 EST

Conferences and Shareholder/Analyst Meetings of Interest
-Markets Close early at 13:00 EST


___________________________________________

SUMMARY

I am finally getting my groove back. Now to get my portfolio in sync with the market too. There is little as far as I can see to be bullish about at all now. If Black Friday and Cyber Monday further dampen the mood with unsatisfactory numbers, I am shorting this market for Christmas. Its feels good to get my market mojo back!

If October of 2011 was the best month on the S&P since 1974, then November 2011 is already on track to become the worst November since 1987's Housing Bubble (-8.99%). The current loss on the DOW for this month (-5.8%) has already surpassed the November 2008 drop (-5.07%) and the November 2000 dip (-5.33%). And we still have three and a half days of trading remaining.

Markets are closed on 24 November, 2011 in observance of Thanksgiving Day.

2011 Daily Directional Accuracy: 120/204 (58.82%)

The DMA will return on Monday 28 November 2011.

Conrad
11-28-2011, 03:47 AM
U.S. MARKET RECAP - Monday 21 November, 2011 to Friday 25 November, 2011 AMC
http://img846.imageshack.us/img846/1385/dexweek.jpg (http://imageshack.us/photo/my-images/846/dexweek.jpg/)


I am preparing to open more spreads this coming week if the fear prevails. The usual seasonal cycles are not working this year-end and that tells me that this market is not going to be a normal one going into the close for the year. The DOW remains positive for the year but the NASDAQ and SPX have fallen into negative territory for the year again ... One would think that with Black Friday weekend coming, the market ought to be more optimistic than this. But with the massive economic events due this week, no one is taking chances. And neither am I.

Direction for the week Monday 21 November, 2011 to Friday 25 November, 2011; ∇ Down

By the looks of it, we could get a technical bounce this week. Having said that, I wouldn't buy into the rally too heavily as this is still a bear market. A slew of data is expected to shake up this market including the all important Non Farm Payrolls at the end of the week. Its going to be hard to read into the market sentiment even if data favors a recovering US economy as Europe still weights heavy on the minds of investors everywhere.


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Dow Jones Industrial Average - Friday 25 November, 2011 AMC
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If October of 2011 was the best month on the S&P since 1974, then November 2011 is already on track to become the worst November since 1987's Housing Bubble (-8.99%). The current loss on the DOW for this month (-5.8%) has already surpassed the November 2008 drop (-5.07%) and the November 2000 dip (-5.33%). And we still have three and a half days of trading remaining.

With three sessions remaining, its going to take a major rally of 346 points for the DOW to get back up to break even for the year. Even if that happens, November is set to close in the red as it will take a massive 720 point rally (or 240 points a day for three straight days) to break even for the month. It looks like the bear run that started in May is set to continue after that quick reprieve in October.


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MARKET SUMMARY - Friday 25 November, 2011


BRIEFING.COM - Friday 25 November, 2011
Weekly Sector Wrap: Stocks Unable To Hold Gains, Close on Lows

The major market averages ended lower as the Nasdaq paced the decline with a loss of 0.8%. Today marked the seventh consecutive close in the red for the S&P 500, during which the index has fallen 7.8%. Today's slide caps off the worst Thanksgiving week ever for stocks as the S&P 500 tumbled 4.7%.

Financials were the top performers today as the S&P 500 Financial Index gained 0.4% collectively. Citigroup (C $23.63, +$0.12) and Bank of America (BAC $5.17, +$0.03), two of the more heavily beaten down names in the space, saw solid gains.

Shares of AT&T (T $27.41, -$0.14) fell 0.5% after the company announced it was withdrawing its T-Mobile merger plan from further consideration by the Federal Communications Commission. The company announced it will first focus on receiving approval from the U.S. Justice Department which filed a lawsuit to block the merger. AT&T is setting aside $4 billion which it would need to pay T-Mobile's parent company Deutsche Telekom should the deal collapse.

Retailers underperformed despite today's excitement over Black Friday, the busiest shopping day of the year. The SPDR S&P Retail Index (XRT $48.50, -$0.48) lost 1.0% after running to a gain of 0.7% early in the session. Online retailer Amazon (AMZN $182.40, -$6.59) was one of the worst performers in the space, ending down 3.5%. Home improvement stores Home Depot (HD $36.47, -$0.05) and Lowe's (LOW $22.68, +$0.20) outperformed while electronics retailer Best Buy (BBY $25.63, -$0.08) slid into the red.

Commodities were mixed as precious metals sold off while energy traded flat to higher. After a brief run into positive territory gold ended the day down more than $10 near $1685. Silver, the more speculative of the precious metals, fell more than 2.5% to finish the day just above the $31 level. Crude oil ran to session highs near $97.50 before paring its gains and ending near $96 per barrel. Natural gas outperformed all session long, gaining 1.5% to $3.51.

Sector Leaders/Laggards for Friday 25 November, 2011
Leading Sectors: Utilities +0.5%, Financials +0.4, Consumer Staples +0.2%.
Leading Industries/ETFs : Airlines-FAA +1.9%, Volatility-VXX +1.4%, South Africa-EZA +1.1%, Malaysia-EWM +1.0%, India-INP +0.9%, Financials-IYG +0.9%, REITs-IYR +0.7%, Regional banks-RKH +0.6%, USD-UUP +0.6%, Utilities-XLU +0.6%, Consumer Staples-XLP +0.6%, Insurance-KIE +0.5%

Lagging Sectors: Energy -0.8%, Tech -0.7%, Health Care -0.5%, Materials -0.4%, Consumer Discretionary -0.4%, Telecom -0.3%, Industrials -0.2%.
Lagging Industries/ETFs : Solar-TAN -3.5%, Mexico-EWW -2.4%, Poland-PLND -2.3%, Palladium-PALL -2.2%, Silver-SLV -2.2%, Gas-UGA -2.0%, Clean Energy-PBW -1.8%, Heating Oil-UHN -1.4%, Long Treasuries-TLT -1.3%

Other Market Moving Factors:
• Italy holds disappointing six-month bill auction


BRIEFING.COM - Friday 25 November, 2011
After-Hours Report: Weekly Wrap

Market participants were put into a negative mindset at the start of the week by renewed concerns about financial conditions in Europe's periphery and core after Moody's issued cautious comments about France's debt rating outlook. Bias was also imbued by the inability of U.S. officials to look past partisan politics in an effort to address domestic fiscal conditions. Such discouraging themes came as many participants continued to reflect on a significant technical breakdown that took place late in the previous week.

On Tuesday stocks overcame disappointment related to downward revision to third quarter GDP, but a loss of momentum left the major averages to roll over. Stocks managed to rebound because of a combination of technical support and a headline that the IMF has established a new liquidity line, but the effort still failed to give stocks a positive finish.

Widespread weakness on Wednesday resulted in a broad-based sell-off that sent stocks to their lowest level in more than a month. The descent came as market participants, already feeling bearish, reacted to the Fed's decision to increase capital controls for banks. Participants remained pessimistic following underwhelming data from abroad and an in-line initial jobless claims report, mixed durable goods orders data, and a mixed reading on personal income and spending.

Markets were closed on Thursday in observance of Thanksgiving.

On Friday, buyers initially stepped up on this light volume, post-Thanksgiving session, pushing the S&P and Dow Jones indices above their respective Wednesday's afternoon highs during the first hour. However, that upward momentum faded as a lagging Nasdaq index and continued strength in the US Dollar took their toll on stocks. Sellers aggressively began to regain control into midday and erased earlier gains into the close, leaving the markets down for a 7th consecutive lower close. Lagging sectors today included Internet, Gold, Coals, Computer Hardware, Semis, HMO's and Energy. Displaying relative strength were Aerospace/Defense, Tobacco, Utilities, Financials, and Staples.


http://img835.imageshack.us/img835/7672/dexsumm.jpg (http://imageshack.us/photo/my-images/835/dexsumm.jpg/)


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ECONOMIC COMMENTARY - Friday 25 November, 2011

• Great Britian Q3 GDP YoY 0.5% vs 0.5% prior (reported Thursday)

• Germany 3Q GDP YoY 2.6% vs 2.6% prior (reported Thursday)

• September Italian Retail Sales -0.4% MoM vs -0.1% in August

• France November Consumer Confidence 79 vs 82 in Oct

• European Markets Closing Prices
UK's FTSE: + 0.9%
Germany's DAX: + 1.1%
France's CAC: + 1.2%
Spain's IBEX: + 0.4%
Portugal's PSI: + 0.4%
Italy's MIB Index: + 0.2%
Irish Ovrl Index: + 0.2%
Greece ATHEX Composite: -1.4%


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TECHNICAL UPDATE - Friday 25 November, 2011 - AMC


This looks exactly like Q1 and Q2 of 2008 all over again. If this persists, we're going to punch our way down to 10,500 before Christmas. If it comes to that, it wouldn't be far fetched to see DOW get down to 9,500 by year's end.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
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11,231.78 -25.77 (-0.23%)
Volume: 87,478,602 from 152,215,629 on Wednesday
Range: 11,231.56 – 11,361.47

DOW looks ready for the Fifth Candle Reversal after an Inverted Hammer on the 11,230 support. A break below that and we're tanking to 11,000 in a hurry.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img411.imageshack.us/img411/1974/ndxo.jpg (http://imageshack.us/photo/my-images/411/ndxo.jpg/)
2,441.51 -18.57 (-0.75%)
Volume: 200,913,335 from 440,401,188 on Wednesday
Range: 2,441.48 – 2,477.03

Support is supposed to be reliable at 2,450. If it holds, NASDAQ could get a Third Candle Reversal after an Inverted Hammer. The next support going down is at 2,420.

S&P 500 INDEX (SPX: CBOE)
http://img194.imageshack.us/img194/4145/spxv.jpg (http://imageshack.us/photo/my-images/194/spxv.jpg/)
1,158.67 -3.12 (-0.27%)
Volume: 335,956 from 689,777 on Wednesday
Range: 1,158.66 – 1,172.66

Depending on how you count it, SPX is either set for a Fifth or Eighth Candle Reversal on Monday. Support should hold above 1,160. Drop below that and we're down to 1,120 and a possible second consecutive DFDM.


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MARKET INTERNALS - Friday 25 November, 2011

NYSE :
Decliners outpaced Advancers (adv/dec): 1398/1486
New lows outpaced new highs (hi/lo): 28/163

NASDAQ :
Decliners outpaced Advancers (adv/dec): 811/1549
New lows outpaced new highs (hi/lo): 5/185


Decliners outpaced Advancers by an average 6.56 to 1 on lower average volumes (-8.59%) on Wednesday (avg -2.23%).

Wipe out. The VIX spiked 2.01 points to close just shy of 34 at 38.98. The TRIN stayed above 1.80 for most of the session and closed at the sessin high of 3.37, the second highest close in 7 weeks.

Decliners outpaced Advancers by an average 1.37 to 1 on Friday (avg -0.42%).

There's nothing to read into Friday's internals given that it was a half day with half the usual volumes.

http://img526.imageshack.us/img526/5668/intd.jpg (http://imageshack.us/photo/my-images/526/intd.jpg/)


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COMMODITIES & BONDS - Summary for Friday 25 November, 2011

Wheat (continuous) was ~flat at $5.94, Dec corn closed up 7 cents at $5.96, Dec soybeans finished up 0.5 cents to end at $11.23, ethanol closed higher by 1 cent to $2.50, and sugar finished ~flat at $0.23.

Commodities AMC on Friday 25 November, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 96.77 +0.60 (+0.62%)
Natural Gas (NYMEX) December 11 ($US per mmbtu.) : 3.54 +0.082 (+2.37%)
Unleaded Gas (NYMEX) January 11 ($US per gal.) : 2.45 -0.0663 (-2.63%)

Gold (NYMEX) December 11 ($US per Troy oz.) : 1,685.70 -12.20 (-0.72%)
Silver (NYMEX) December 11 ($US per Troy oz.) : 31.01 +0.32 (+1.02%)
Copper (NYMEX) December 11 ($US per lb.) : 3.27 +0.006 (+0.18%)

Corn (CBT) March 11 (cents per bu.) : 590.00 -7.50 (-1.26%)
Soyabeans (CBT) January 11 (cents per bu.) : 1,106.50 -16.00 (-1.43%)
Wheat (CBT) March 11 (cents per bu.) : 589.00 -1.50 (-0.25%)

Cocoa (NYMEX) March 11 ($ per metric ton) : 2,381.00 -44.50 (-1.78%)
Coffee (NYMEX) March 11 (cents per pound) : 232.55 -5.00 (-2.13%)
Cotton (NYMEX) March 11 (cents per pound) : 90.80 +0.69 (+0.77%)
Sugar #11 (NYMEX) March 11 (cents per pound) : 22.85 -0.71 (-3.01%)

BONDS - Weekly Summary for Monday 21 November, 2011 to Friday 25 November, 2011

Treasuries ended the week mixed as more uncertainty in Europe sparked buying at the back end of the curve. Poor auctions and more uncertainty over European debt caused Italian yields to surge above above the 7.00% threshold this week as the Italian 2-yr yield spiked to 7.52%. A sharp selloff in Italian paper on Friday has resulted in the Italian 2-10-yr spread trading at -28 bps. Here in the U.S., Treasuries saw a mixed week as longer dated maturities gained fractionally. The long bond was the best performer on the week as buying dropped its yield 5 bps to 2.920%. Buying over the course of the week dropped the 10-yr yield a couple of basis points to 1.965%. The yield curve flattened a couple of bps on the week to 168 bps.

Treasury Yields AMC on Friday 25 November, 2011:
• 2 Year Note 0.28% +0.02
• 5 Year Note 0.93% +0.05
• 10 Year Note 1.97% +0.08
• 30 Year Bond 2.92% +0.10
2/30 Spread : 264bps ( +8 ) ... 2/10 Spread : 169bps ( +6 )


The flattening accelerates. We're almost down to the lowest yields for the year. The good news is that American bonds are still in demand. But what if the Fed stopped buying?

That's better. A little steepening to give us 'hope'. When yields all over the world are going through the roof, its nice to see the U.S maintaining some level of interest in their own debts. The whole curve remains largely under-par with the 5, 10 and 30 year yields still twice under-par.


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PREVIEW FOR THE WEEK - MONDAY 28 NOVEMBER, 2011 TO FRIDAY 02 DECEMBER, 2011

Monday is limited to new home sales (10). The Fed will purchase $4.25-5.00 bln worth of 2020/2021 maturities through POMO.

Tuesday will see the Case-Schiller 20-city Index (9), consumer confidence, and the FHFA Housing Price Index (10). The Fed will buy $2.25-2.75 bln worth of 2036-2041 maturities through its Permanent Open Market Operations.

Wednesday’s data slate is full as the weekly MBA Mortgage Index (7), Challenger Job Cuts (7:30), ADP Employment Change (8:15), productivity, unit labor costs (8:30), Chicago PMI (9:45), pending home sales (10), and the Fed’s Beige Book (14) are all released. The Fed will sell $8.00-8.75 bln worth of 2013 maturities as part of its Permanent Open Market Operations.

Thursday’s data includes initial and continuing claims (8:30), the ISM Index, construction spending (10), and auto/truck sales (15).

Friday’s data is the most anticipated of the week as nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and the average workweek (8:30) are due out.

Earnings Highlights
Monday: CPRT, HI, and TAOM.
Tuesday: BECN, TIF, KONG, OVTI, RAH, and UTI.
Wednesday: AEO, CIS, SDRL, TFM, UNFI, ARO, CWST, CWTR, EXPR, FNSR, GMAN, GES, KKD, LAZB, RUE, SMTC, SIGM, and SNPS.
Thursday: BKS, CHRS, GIL, ISLE, KR, LULU, MOV, SCMR, TLB, TD, UTIW, ASNA, AVGO, HRB, LAVA, MITL, PVH, ULTA, and ZUMZ.
Friday: BIG and BNS

Economic Events
Monday:
10:00 am New Home Sales
Tuesday:
09:00 am Case-Shiller 20-city Index
10:00 am Consumer Confidence
10:00 am FHFA Housing Price Index
Wednesday:
07:00 am MBA Mortgage Index
07:30 am Challenger Job Cuts
08:15 am ADP Employment Change
08:30 am Productivity-Rev. Q3
08:30 am Unit Labor Costs Q3
09:45 am Chicago PMI
10:00 am Pending Home Sales
10:30 am Crude Inventories
14:00 pm Fed's Beige Book
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
10:00 am ISM Index
10:00 am Construction Spending
10:30 am Natural Gas Inventories
15:00 pm Auto Sales
15:00 pm Truck Sales
Friday:
08:30 am Nonfarm Payrolls
08:30 am Nonfarm Private Payrolls
08:30 am Unemployment Rate
08:30 am Hourly Earnings
08:30 am Average Workweek

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- Credit Suisse Annual Technology Conference
- TSMC Technology Symposium
- U.S./EU Summit in Washington, D.C.
Tuesday
- R W Baird Clean Technology Conference
- Piper Jaffray Healthcare Conference
- Goldman Sachs Global Steel Conference
Wednesday
- JP Morgan SMid Cap Conference
- McCloskey Asia Pacific Coal Outlook Conference 2011
- ECB President Mario Draghi to speak at 3:00
Thursday
- Societe Generale Premium Review Conference
- Nexen Investor Day
- NYSSA Water Utilities Industry Investor Conference
Friday
- Popular, Inc Investor Day
- Fed's Plosser to speak at 10:00
- US Unemployment report to be released at 8:30


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SUMMARY

This is it. In 2007 I said it was going to happen soon. Again in early 2008 I reiterated it and I even mentioned a date - late 2011 to mid 2012. Then in 2009 and 2010 I reminded everyone about it. And now that we're at the end of 2011, I'll say it one more time - we're due for a major Depression and that time has come ... My only surprise is that in 2007 and 2008, I never imagined that the Depressionary threat would come from Europe. Thus, the depth of this Depression could be unprecedented and there is no way to know how deep and long it will run. It doesn't help that the EU is insolvent and that nobody wants to buy their debts. It doesn't help that Belgium just joined the list of sovereign debt threats like the contagion we expected it to be. Most of all, it doesn't help that Germany's bonds are also unwanted now. The core and backbone of the EU is about to get into trouble themselves as they shoulder the burden of the entire Union ... It doesn't help that commodity prices stay elevated and that inflation is still relatively high in most countries. It doesn't help to fight those inflationary pressures when most countries are lowering their monetary policies to level the playing field against the American dollar. It further doesn't help that weather cycles have been insane lately with rain and floods threatening and even wiping out most East Asian crops and staples. And it surely won't help if China continues to sit on their hands and do nothing about anything whether it be their own domestics threats or the global threat to their continued economic conquests.

November’s last week usually ends well and is the most bullish week of the month. November’s last day normally corrects. But whether tradition holds true this week is a huge question mark. This has not been a traditional market since September this year. Last week was supposed to be one of the most bullish weeks of the Quarter but instead, last week's nearly 5% loss in the S&P 500 was the worst Thanksgiving-week loss since 1932.

I'm throwing tradition out the window for now and sticking to plain ol' fundamentals - the American economy should reveal more signs of a turn-around after bottoming out in the last couple of months. With Black Friday's sales blowing away any doubts about consumer sentiment, I suspect we're in for a nice little bounce this week starting on Monday.

Direction for Monday 28 November, 2011; ∆ Up

Direction for the week Monday 28 November, 2011 to Friday 02 December, 2011; ∆ Up

2011 Daily Directional Accuracy: 120/204 (58.82%)

2011 Weekly Directional Accuracy Year-To-Date: 27/45 (60.00%)

Conrad
11-29-2011, 04:38 AM
U.S. MARKETS - Monday 28 November, 2011 AMC

http://img231.imageshack.us/img231/8388/dexsn.jpg (http://imageshack.us/photo/my-images/231/dexsn.jpg/)

I'm throwing tradition out the window for now and sticking to plain ol' fundamentals - the American economy should reveal more signs of a turn-around after bottoming out in the last couple of months. With Black Friday's sales blowing away any doubts about consumer sentiment, I suspect we're in for a nice little bounce this week starting on Monday.

Direction for Monday 28 November, 2011; ∆ Up

It was one of those sickening 'gap up and go nowhere' sessions that got overcooked right at the start. They are so frustrating to trade. They also never have the kind of follow through that would give the bulls encouragement to continue the rally. I suspected that we'd bounce ... I didn't expect it to be a one off in one day though.


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MARKET SUMMARY - Monday 28 November, 2011


BRIEFING.COM - Monday 28 November, 2011 AMC
Daily Sector Wrap: Buyers Return

A big bounce by Europe's bourses brought about a barrage of buying interest this morning. For the most part, the major averages held the ensuing gains -- some bailed out of their positions in the final hour, but a last minute squeeze lifted stocks at the close.

Market participants in Europe were encouraged by a new eurozone fiscal pact that could make budget discipline legally binding and enforceable, along with word that the IMF is devising a lending plan for Italy, though the latter story was refuted. France's CAC climbed more than 5%, while Germany's DAX advanced well in excess of 4%. Strength throughout the region gave the EuroStoxx 50 a gain greater than 3%.

The display of such positive sentiment in the otherwise precarious continent was welcomed by domestic markets, which have been stuck in a downtrend for more than a week. In fact, seven straight losses for the S&P 500 resulted in a cumulative loss of almost 8%.

The troubles of Europe have long overshadowed corporate news reports and even economic data, but the improvement in the market's mood made it easier to give attention to positive nature of early holiday shopping reports. Record spending levels this past weekend suggest that consumer headwinds might not be as stiff as many had feared. The SPDR S&P Retail ETF (XRT 50.17, +1.67) settled more than 3% higher.

Data was limited to the latest new home sales numbers, which showed that sales during October hit an annualized rate of 307,000. That is slightly less than what had been expected, but up slightly from the downwardly revised pace that was posted in the prior month. The report failed to influence broad market trade, but shares of homebuilders set session highs not long after its release. Homebuilders scored a gain of nearly 4% on the session, as measured by the SPDR S&P Homebuilders ETF (XHB 15.51, +0.55).

Buying interest was certainly broad, but natural resource plays sported the strongest gains. They held their heady gains even after several key commodities pulled back in afternoon trade, causing the CRB Commodity Index to settle well off of its session high with a 0.8% gain.

Commodities gains were partly challenged by the greenback's effort to gain ground against competing currencies -- the dollar cut its loss to 0.5%, about half of what it was at session's open, by day's end partly because interest in the euro had waned.

Sector Leaders/Laggards for Monday 28 November, 2011 AMC
Leading Sectors: Materials +3.6%, Energy +3.6%, Tech +3.5%, Industrials +3.3%, Consumer Discretionary +3.0%, Financials +3.0%, Health Care +2.7%, Telecom +2.1%, Consumer Staples +1.5%, Utilities +1.3%
Leading Industries/ETFs : Russia- RSX +6.6%, Oil and Gas- XOP +6.4%, France- EWQ +6.4%, Metals and Mining- XME +6.3%, Italy- EWI +6.2%, South Africa- EZA +6.0%, Austria- EWO +5.8%, Spain- EWP +5.8%, Germany- EWG +5.7%, Sweden- EWD +5.4%, Rare Earth- REMX +5.3%, Biotech- XBI +5.2%, Copper Miners- COPX +5.2%, Coal- KOL +5.0%, South Korea- EWY +5.0%, Steel- SLX +4.9%, Silver Miners- SIL +4.8%

Lagging Sectors: None.
Lagging Industries/ETFs : Volatility- VXX -4.8%, Natural Gas- UNG -2.5%

Other Market Moving Factors:
• Europe's leaders continue efforts to restore financial conditions -- continent's bourses bounce sharply
• Dollar drops against competing currencies

Companies trading higher in after hours in reaction to earnings: STX +6.3% (guided Q2 & Q3 above consensus); HI +4.1%.


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ECONOMIC COMMENTARY - Monday 28 November, 2011

• China Oct Industrial Profits YTD +25.3% vs 27.0% in Oct 2010

• Japan Nov Small Business Confidence 45.8 vs 46.4 in Oct

• New Zealand Nov NBNZ Activity Outlook 28.8 vs 26.1

• UK Economic Data

- Nov Hometrack Housing Survey -0.2% vs -0.2% in Oct
- Nov Lloyds Business Barometer -20 vs -15 in Oct

• U.S. Economic Data

- October New Home Sales 307K vs 312K; Prior revised to 303K from 313K

New Home Sales Grow in October
New home sales improved slightly in October. Sales increased from a downwardly revised 303,000 (from 313,000) in September to 307,000 in October. The Briefing.com consensus expected sales to increase to 312,000. The October sales level is not indicative of the growth in sales expectations seen in the NAHB Housing Market Index. The component in the NAHB Index gauging current sales increased from 14 in September to 18 in October. That would suggest sales closer to 320,000. Builders continue to manage their inventories in the face of overall weak demand. Months of supply edged lower, from 6.4 months in September to 6.3 months in October. Median home prices increased 4.0%.

• Asian Markets Close; Nikkei +1.6%, Hang Seng +2.0%, Shanghai +0.3%, Sensex +3.0%
The major Asian indices closed mostly higher with markets rallying on reports that France and Germany were looking for new ways to combat the region's debt problems and indications that ‘Black Friday' sales were robust in the U.S. Data in the region was light as the Philippines' GDP rose 3.2% YoY for the third quarter. Elsewhere, Thailand's manufacturing production tumbled 35.8% YoY as the fallout from the flooding continues to wreak havoc. Looking at the currencies...USDCNY strengthened to 6.3774 while USDJPY is fractionally stronger at 77.74.

In Japan, the Nikkei closed +1.6% as exporters gained following Friday's weakening of the yen. Toshiba rallied 4.6% and Sony gained 2.3%. Embattled camera maker Olympus sank 10.6% on heavy volume.

In Hong Kong, the Hang Seng finished +2.0% as cos with heavy exposure abroad saw strong gains. Li & Fung surged 10% after the U.S. holiday shopping season reportedly got off to a strong start. Energy stocks saw gains with Cnooc gaining 2.7% to erase a nine-day losing streak.

In China, the Shanghai Composite settled +0.3% as dam builders saw strong gains on reports that the Chinese government will support water irrigation projects over the next four years. Three Gorges Water Conservatory led the space with an advance of 6.8%. Port operators were weak with Shanghai International Port losing 0.3%

In India, the Sensex closed +3.1% as financials and automakers were the top performing sectors. State Bank of India and Tata Motors saw sound gains as both advanced more than 5.0%. Hindalco Industries saw the strongest gains, adding 9.0%.

• European Markets Closing Prices
UK's FTSE: + 2.9%
Germany's DAX: + 4.5%
France's CAC: + 5.3%
Spain's IBEX: + 4.4%
Portugal's PSI: + 2.9%
Italy's MIB Index: + 4.2%
Irish Ovrl Index: + 3.2%
Greece ATHEX Composite: + 0.4%

IN OTHER NEWS ...

• Retailers in focus following reports of record Black Friday weekend
According to the National Retail Federation, traffic and spending were up both online and in stores, reaching historic highs. According to their survey, a record 226 million shoppers visited stores and websites over Black Friday weekend, up from 212 million last year. The average holiday shopper spent $398.62 this weekend, up from $365.34 last year. Total spending reached an estimated $52.4 billion. Additionally, shoppers also checked out retailers' deals online, spending an average of $150.53 on the web -- 37.8 percent of their total weekend spending... See NRF report here (http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1260).

• Barclays says, following their store checks, Black Friday seemed to be relatively in line with their expectations, and they believe the holiday season got off to a strong start, although shoppers appeared very disciplined and focused on specific items from their lists. They believe traffic was impacted by a shift in timing and higher penetration of e-commerce and m-commerce. They continue to expect a 2.5%-3.0% increase in the Barclays Capital Broadlines/Dept. Stores Same Store-Sales Holiday Index versus 1.4% last year.

• Fitch revises U.S. outlook to Negative; affirms AAA rating


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TECHNICAL UPDATE - Monday 28 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,523.01 +291.23 (+2.59%)
Volume: 204,950,431
Range: 11,232.16 – 11,562.10

http://img197.imageshack.us/img197/6500/dowsi.jpg (http://imageshack.us/photo/my-images/197/dowsi.jpg/)

DOW looks ready for the Fifth Candle Reversal after an Inverted Hammer on the 11,230 support. A break below that and we’re tanking to 11,000 in a hurry … NASDAQ’s support is supposed to be reliable at 2,450. If it holds, NASDAQ could get a Third Candle Reversal after an Inverted Hammer. The next support going down is at 2,420 … Depending on how you count it, SPX is either set for a Fifth or Eighth Candle Reversal on Monday. Support should hold above 1,160. Drop below that and we’re down to 1,120 and a possible second consecutive DFDM.

After getting its Fifth candle reversal, DOW just couldn't break above the 50DSMA. NASDAQ and SPX also got their reversals but didn't seem to want to go anywhere immediately after the opening bell. DOW and SPX now wear Morning Stars while NASDAQ seems to be doing its own thing again.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,527.34 +85.83 (+3.52%)
Volume: 455,494,913
Range: 2,507.72 – 2,531.32

S&P 500 INDEX (SPX: CBOE)
1,192.55 +33.88 (+2.92%)
Volume: 739,215
Range: 1,158.67 – 1,197.35


___________________________________________

MARKET INTERNALS - Monday 28 November, 2011 AMC

NYSE :
Lower than avg volume @ 959 mln, vs. 1036 mln
Advancers outpaced Decliners (adv/dec): 2609/513
New highs outpaced new lows (hi/lo): 82/52

NASDAQ :
Lower than avg volume @ 1564 mln, vs. 1936 mln
Advancers outpaced Decliners (adv/dec): 2129/447
New lows outpaced new highs (hi/lo): 17/103


Decliners outpaced Advancers by an average 1.37 to 1 on Friday (avg -0.42%).

There's nothing to read into Friday's internals given that it was a half day with half the usual volumes.

Advancers outpaced Decliners by an average 4.93 to 1 on lower average volumes (-15.11%) on Monday (avg +3.01%).

The VIX had dropped to a low of 29.49 before regaining the high to close out at 32.13 to remind the market that fear still runs high inspite of the 2.5% gain in the equity space. Volumes, as expected for a Monday, were considerably lower.

http://img835.imageshack.us/img835/337/intn.jpg (http://imageshack.us/photo/my-images/835/intn.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Natural gas ends sharply lower

It was a quiet afternoon for the precious metals, as both gold and silver traded in modest ranges. Neither metal reacted to the bounce seen in the dollar. Gold futures gained 1.6% to settle at $1710.80 per ounce, while silver futures rallied for 3.9% to end at $32.20 per ounce. Dec copper ended up 9 cents at $3.36.

The pullback in the dollar did, however, weigh on crude oil futures. Futures extended a late-morning sell-off all the way into afternoon, where they put in lows at $97.13. They did managed to retrace some of that sell-off, but closed well below overnight highs at $100.74 per barrel. On the day, crude oil gained 1.5% to close at $98.12 per barrel. Natural gas shed 3.9% to finish at $3.52 per MMBtu. Futures were pressured by forecasts for warmer-than-average temps across the country. Dec heating oil ended up 5 cents at $2.99, while Dec RBOB gasoline gained 8 cents to finish at $2.53.

Dec wheat closed up 0.25 cents at $5.7475, Jan soy rallied for 17 cents at $11.235, Dec corn finished higher by 8.5 cents at $5.91, ethanol ended up 4 cents at $2.47, while Mar sugar gained 0.22 cents to settle at $0.2312.

Commodities AMC on Monday 28 November, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 98.21 +1.44 (+1.49%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,710.80 +25.10 (+1.49%)

Treasuries ended the day little changed after seeing heavy losses earlier this morning. The long bond erased a loss of more than two full points to finish the day slightly in the green at 104 07/32. Today’s buying of the 30-yr dropped its yield to 2.911% after the early morning selling ran it as high as 3.081%. Healthy buying just after the noon hour dropped the 10-yr yield back below the 2.00% threshold as it finished the day down 1 bp at 1.958%. After widening to 178 bps during this morning’s slide, the 2-10-yr spread finished slightly steeper at 172 bps.

Treasury Yields AMC on Monday 28 November, 2011:
• 2 Year Note 0.26% -0.02
• 5 Year Note 0.91% -0.02
• 10 Year Note 1.97% unch
• 30 Year Bond 2.93% +0.01
2/30 Spread : 267bps ( +3 ) ... 2/10 Spread : 171bps ( +2 )


A little steepening to give us 'hope'. When yields all over the world are going through the roof, its nice to see the U.S maintaining some level of interest in their own debts. The whole curve remains largely under-par with the 5, 10 and 30 year yields still twice under-par.

That's an awful way to steepen - the shorter yields went down and the longer yields went up suggesting that risk is back in the equity space. Still, there remains a lot of interest in the fixed income space ... especially when you consider that a lot of that interest is coming from the Fed.


___________________________________________

PREVIEW FOR TUESDAY 29 NOVEMBER, 2011

Tuesday will see the Case-Schiller 20-city Index (9), consumer confidence, and the FHFA Housing Price Index (10). The Fed will buy $2.25-2.75 bln worth of 2036-2041 maturities through its Permanent Open Market Operations.

Earnings Highlights
BMO: BECN and TIF
AMC: KONG, OVTI, RAH, and UTI.

Economic Events
09:00 am Case-Shiller 20-city Index
10:00 am Consumer Confidence
10:00 am FHFA Housing Price Index

Conferences and Shareholder/Analyst Meetings of Interest
- R W Baird Clean Technology Conference
- Piper Jaffray Healthcare Conference
- Goldman Sachs Global Steel Conference


___________________________________________

SUMMARY

With three sessions remaining, its going to take a major rally of 346 points for the DOW to get back up to break even for the year. Even if that happens, November is set to close in the red as it will take a massive 720 point rally (or 240 points a day for three straight days) to break even for the month. It looks like the bear run that started in May is set to continue after that quick reprieve in October.

Just when you think something is impossible, it turns around and make you eat your words. That is the beauty of the business we're in - never write off the impossible. DOW is now sitting just 54 points off the year's opening price attempting to break above it for the fourth time this year. We still have 23 trading sessions to get the year into positive again and this looks like it might just get down to the wire.

Direction for Tuesday 29 November, 2011; ∆ Up

2011 Daily Directional Accuracy: 121/205 (59.02%)

Conrad
11-30-2011, 07:14 AM
U.S. MARKETS - Tuesday 29 November, 2011 AMC

http://img526.imageshack.us/img526/8468/dowp.jpg (http://imageshack.us/photo/my-images/526/dowp.jpg/)

Just when you think something is impossible, it turns around and make you eat your words. That is the beauty of the business we're in - never write off the impossible. DOW is now sitting just 54 points off the year's opening price attempting to break above it for the fourth time this year. We still have 23 trading sessions to get the year into positive again and this looks like it might just get down to the wire.

Direction for Tuesday 29 November, 2011; ∆ Up

Chalk another one up for the Conman! Yup, I am back in sync. Now that the market has kinda paused to the upside, its going to be a tough call Wednesday especially with the slew of data being release before and after the open.


___________________________________________

MARKET SUMMARY - Tuesday 29 November, 2011


BRIEFING.COM - Tuesday 29 November, 2011 AMC
Daily Sector Wrap: Mixed Finish for Major Averages

Stocks settled in relatively mixed fashion after failing to extend an early advance through initial resistance levels.

The stock market climbed from the flat line to a gain of almost 1% in the early going. The effort came as buyers pushed in after their efforts had waned ahead of the open. The move gained momentum with the release of the Consumer Confidence Index for November, which spiked to 56.0 from 39.8 in the prior month. It had been expected to improve to just 42.5.

Although things had been looking up for stocks, buyers' conviction was tested once the S&P 500 ran into resistance just beneath its 50-day moving average around the 1205 region. The inability to build on gains left stocks to oscillate for the rest of the session.

The Nasdaq never really regained its strength. It was weighed down by weakness among large-cap tech plays, which have dragged down the overall tech sector to a 0.7% loss. Amazon.com (AMZN 188.39, -5.76) and eBay (EBAY 28.75, -0.91) were also sources of weakness.

Tiffany & Co. (TIF 67.22, -6.40) was one of the weaker performers after the company issued a disappointing forecast that overshadowed an upside earnings surprise. The stock set a one-month low in the early going.

AMR Corp (AMR 0.26, -1.36) dove more than 80% after the company announced that it has filed for Chapter 11 reorganization rights. Other air carriers ascended in response to the belief that they will benefit from reduced competition.

Energy plays showed strength in the face of lackluster broad market action. The sector climbed 1.5% with help from crude oil, which closed pit trade 1.6% higher at $99.79 per barrel.

Sector Leaders/Laggards for Tuesday 29 November, 2011 AMC
Leading Sectors: Energy +1.5%, Utilities +1.1%, Consumer Staples +1.0%, Telecom +0.7%, Health Care +0.4%, Consumer Discretionary +0.2%, Materials +0.2%.
Leading Industries/ETFs : Egypt-EGPT +6.4%, Copper Miners-COPX +2.2%, Mexico-EWW +2.0%, Crude Oil-USO +1.9%, Indonesia-IDX +1.9%, Home Construction-ITB +1.9%, South Korea-EWY +1.9%, Grains-JJG +1.8%, Commodities-GSG +1.7%,
Oil/Gas E&P-XOP +1.6%, Corn-CORN +1.4%, Energy-XLE +1.4%

Lagging Sectors: Industrials -0.1%, Financials -0.6%, Tech -0.7%.
Lagging Industries/ETFs : Volatility-VXX -2.0%, South Africa-EZA -1.6%, India-INP -1.5%, Clean Energy-PBW -1.3%, Turkey-TUR -1.3%, Israel-EIS -1.2%, Solar-TAN -1.0%

Other Market Moving Factors:
• Stocks drift lower after S&P 500 encounters resistance
• Dollar drifts back into red after attempting to turn positive
• Commodities catch bid

Companies trading higher in after hours in reaction to news:
• STJ +0.6% (announced it has received FDA approval of its Unify Quadra and Quartet).

Companies trading lower in after hours in reaction to earnings: OVTI -12.0%
Companies trading lower in after hours in reaction to news:
• NNN -3.1% (announces 6 mln share stock offering)


___________________________________________

ECONOMIC COMMENTARY - Tuesday 29 November, 2011

• Japan Economic Data

- Oct Jobless Rate 4.5% vs 4.1% in Sep
- Oct Household Spending -0.4% vs -1.9% in Oct 2010
- Oct Large Retailers Sales -1.4% vs -3.6% in Sep
- Oct Retail Trade +1.9% vs -1.1% in Oct 2010

• UK Nov Nationwide House Prices n.s.a +1.6% vs +0.8% in Nov 2010

• U.S. Economic Data

- Sep. Case-Shiller 20-city Index -3.6% vs. -3.0%
- September FHFA Housing Price Index +0.9%, Prior -0.1%
- November Consumer Confidence 56.0 vs 42.5, Prior 39.8

Consumer Confidence Spikes in November
The Conference Board's Consumer Confidence spiked to 56.0 in November from 40.9 in October. That was well ahead of the Briefing.com consensus estimate, which called for a more modest jump to 42.5, and the October reading of 40.9. The November level is close to the level seen in July 2011 or before the debt ceiling debacle really cranked up in Congress. There was a notable pickup in both the Present Situation Index (to 38.3 from 27.1) and the Expectations Index (to 67.8 from 50.0). The uptick in the Present Situation Index follows six months of steady declines. The cutoff date for this preliminary reading was November 15. That may help explain the spike in confidence as the time between the October reading and then was accented by an improvement in equity prices and a moderation in gas prices and initial jobless claims. The equity market has since been more volatile, which calls into question the sustainability of the November reading. Nonetheless, this report follows on the heels of encouraging reports about sales activity following the Thanksgiving holiday (i.e. after the cutoff date for this report) and is being rightfully treated by the market as a hopeful indication as it relates to the U.S. economy.

• Asian Markets Close; Nikkei +2.3%, Hang Seng +1.2%, Shanghai +1.3%, Sensex -1.0%
The major Asian indices saw another day of gains on hopes that European leaders will reach some sort of agreement as to how the region should combat its ongoing debt crisis. India's Sensex (-1.0%) was a laggard as politicians debate whether or not to open the country's retail sector to foreign investment. Australia announced it cut its 2011/2012 GDP forecast to +3.25% from +4.00%. Data in the region was sound as Japanese household spending (-0.4% YoY actual v. -1.4% YoY expected) and retail sales (1.9% actual v. 0.7% expected) both topped estimates. Elsewhere, South Korea's current account surplus widened slightly to $2.1 bln ($2.08 bln previous). Looking at the currencies...USDCNY strengthened to 6.3614 while USDJPY is is weaker at 77.78.

In Japan, the Nikkei closed +2.3% as steelmakers and financials were among the best performers. Daido Steel surged 8.3% on reports that it would join forces with Mitsubishi and Molycorp to make magnets for electric cars. Nomura Securities climbed 2.5% following reports that it cut its Italian exposure by more than 80%.

In Hong Kong, the Hang Seng finished +1.2% as shares with heavy exposure to Europe were among the top performers. Greek port operator Cosco Pacific jumped 7.8% and European clothing retailer Esprit gained 4.6% to lead the advance. European financial firms HSBC and Standard Charter added 2.7% and 3.7% respectively.

In China, the Shanghai Composite settled +1.3% as miners led the way after Beijing announced measures to make the industry more competitive on a global scale. Zijin Mining rallied 2.3% while Zhongjin Gold gained 1.9%.

In India, the Sensex closed -1.0% as heavyweights Reliance Industries and Infosys Technologies shed 2.3% and 1.4% respectively.

• European Markets Closing Prices
UK's FTSE: + 0.2%
Germany's DAX: + 0.9%
France's CAC: + 0.4%
Spain's IBEX: -0.1%
Portugal's PSI: + 0.0%
Italy's MIB Index: + 0.2%
Irish Ovrl Index: + 0.4%
Greece ATHEX Composite: -0.8%

EARNINGS CALL

• Before market open

Tiffany & Co (TIF) beats by $0.10, beats on revs; guides Q4 EPS, rev below consensus
Reports Q3 (Oct) earnings of $0.70 per share, $0.10 better than the Capital IQ Consensus Estimate of $0.60; revenues rose 20.6% year/year to $821.8 mln vs the $804.69 mln consensus. Co issues downside guidance for Q4, sees EPS of $1.48-1.58 vs. $1.64 Capital IQ Consensus Estimate, with low-teens percentage rev increase in Q4 vs. the +14.0% consensus; co actually raised FY12 EPS guidance to $3.70-3.80 from $3.65-3.75. For FY12 co reaffirms worldwide net sales (in USD) increasing by a high-teens percentage, Sales by region (in U.S. dollars): Americas sales increasing by a high-teens percentage (reaffirm), Asia-Pacific sales increasing at least 35% (up from at least 30%), Japan sales increasing at least 10% (up from HSD) and Europe sales increasing at least 20% (reaffirm). Other sales are expected to decline modestly; reaffirm 100+ bps op margin improvement.

• After market close

OmniVision (OVTI) beats by $0.16, beats on revs; guides Q3 EPS below consensus, revs below consensus
Reports Q2 (Oct) earnings of $0.48 per share, $0.16 better than the Capital IQ Consensus Estimate of $0.32; revenues fell 9.0% year/year to $217.9 mln vs the $214.56 mln consensus. Co issues downside guidance for Q3, sees EPS of $0.05-0.17 vs. $0.26 Capital IQ Consensus Estimate; sees Q3 revs of $160-180 mln vs. $201.43 mln Capital IQ Consensus Estimate.

IN OTHER NEWS ...

• Fitch Upgraded Australia's Foreign-Currency IDR to 'AAA'

• Fed's Yellen Speech: Says scope for further policy accommodations through enhanced guidance on path of funds rate or addition purchases of long-term financial assets. Notes there are clear signs emerging economies are slowing. Says tighter fiscal policy would threaten recovery. Notes Europe woes impacting global economy. Urges further measures to address U.S. housing issues.

• Fed's Lockhart says he is skeptical more bond buying will help economy; does not believe it is a potent policy.


___________________________________________

TECHNICAL UPDATE - Tuesday 29 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
11,555.63 +32.62 (+0.28%)
Volume: 156,947,054 from 204,950,431 the previous day
Range: 11,517.04 – 11,624.01

http://img834.imageshack.us/img834/4799/dowj.jpg (http://imageshack.us/photo/my-images/834/dowj.jpg/)

After getting its Fifth candle reversal, DOW just couldn't break above the 50DSMA. NASDAQ and SPX also got their reversals but didn't seem to want to go anywhere immediately after the opening bell. DOW and SPX now wear Morning Stars while NASDAQ seems to be doing its own thing again.

A pause to the upside. This is quite normal after a massive day like we had on Monday. The threat now comes if this turns into a Stalled Pattern on Wednesday which could signal a turn to the downside to resume the bear trend by the end of the week. Follow through from the bulls will be critical if this reversal is going to have legs. For now, I don't smell any dead cats ... yet.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,515.51 -11.83 (-0.47%)
Volume: 421,291,693 from 455,494,913 the previous day
Range: 2,508.27 – 2,542.46

S&P 500 INDEX (SPX: CBOE)
1,195.19 +2.64 (+0.22%)
Volume: 647,616 from 739,215 the previous day
Range: 1,191.80 – 1,203.67


___________________________________________

MARKET INTERNALS - Tuesday 29 November, 2011 AMC

NYSE :
Lower than avg volume @ 918 mln, vs. 1036 mln
Decliners outpaced Advancers (adv/dec): 1485/1554
New lows outpaced new highs (hi/lo): 42/60

NASDAQ :
Lower than avg volume @ 1562 mln, vs. 1930 mln
Decliners outpaced Advancers (adv/dec): 964/1564
New lows outpaced new highs (hi/lo): 23/105


Advancers outpaced Decliners by an average 4.93 to 1 on lower average volumes (-15.11%) on Monday (avg +3.01%).

The VIX had dropped to a low of 29.49 before regaining the high to close out at 32.13 to remind the market that fear still runs high inspite of the 2.5% gain in the equity space. Volumes, as expected for a Monday, were considerably lower.

Decliners outpaced Advancers by an average 1.27 to 1 on lower average volumes (-16.39%) on Tuesday (avg +0.01%).

Tuesday's volumes weakened even more than Monday's. The VIX lost some ground and closed below 31.00. Noteworthy though, are the New Lows that outpaced the New Highs rather convincingly for a bullish session.

http://img812.imageshack.us/img812/9206/intp.jpg (http://imageshack.us/photo/my-images/812/intp.jpg/)
(Don't ask ... I think someone at Briefing slacked off.)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude oil trades back above $100

Energy: Crude oil closed higher by 1.6% at $99.79 per barrel. Heightened tensions between Iran and the West helped futures trade back above the $100 level. Futures notched highs at $100.15 in early afternoon trade but pulled back from those highs heading into the close. Natural gas gained 3.2% to finish at $3.63 per MMBtu. Futures rebounded following yesterday's sizeable selloff. Dec heating oil ended 5 cents at $3.03, while Dec RBOB gasoline ended up 2 cents at $2.54.

Metals: It was a relatively uneventful session for the precious metals. Gold futures posted gains of 0.2% at $1713.50 per ounce, after they traded in a small range throughout the session. Silver futures shed 0.8% to finish at $31.91 per ounce. In morning trade, silver attempted to recoup overnight losses. After failing to break above the flat line, they pulled back to overnight levels and traded in a modest range all the way into the close. Dec copper closed up 2 cents at $3.38.

Commodities AMC on Tuesday 29 November, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 99.79 +1.58 (+1.61)%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,713.40 +2.60 (+0.15)%)

Treasuries ended the day little changed despite Fitch placing the U.S. ‘AAA' rating on negative outlook following yesterday's close and some better than expected economic data during today's session. The 10-yr yield climbed as high as 2.05% before buyers stepped in and dropped the yield to 1.964%. Late day selling provided the yield with a slightly higher close at 1.996%. The long bond erased a loss of one and a half points before finishing down half a point at 103 8/32. Today marked the second consecutive session that the complex reversed sharply off its lows to close little changed. The yield curve swung steeper on the selling as the 2-10-yr spread finished wider at 173 bps.

Traders will remain focused on the German-U.S. 10-yr yield spread which now trades at 32 bps after being at -20 bps just three weeks ago.

Treasury Yields AMC on Tuesday 29 November, 2011:
• 2 Year Note 0.27% +0.01
• 5 Year Note 0.93% +0.02
• 10 Year Note 2.00% +0.03
• 30 Year Bond 2.96% +0.03
2/30 Spread : 269bps ( +2 ) ... 2/10 Spread : 173bps ( +2 )


That's an awful way to steepen - the shorter yields went down and the longer yields went up suggesting that risk is back in the equity space. Still, there remains a lot of interest in the fixed income space ... especially when you consider that a lot of that interest is coming from the Fed.

Now that is a proper bullish steepening that spells a proper sell-off in the treasuries and a run into riskier assets. More of this and we'll confirm a bull market by year's end.


___________________________________________

PREVIEW FOR WEDNESDAY 30 NOVEMBER, 2011

Wednesday’s data slate is full as the weekly MBA Mortgage Index (7), Challenger Job Cuts (7:30), ADP Employment Change (8:15), productivity, unit labor costs (8:30), Chicago PMI (9:45), pending home sales (10), and the Fed’s Beige Book (14) are all released. The Fed will sell $8.00-8.75 bln worth of 2013 maturities as part of its Permanent Open Market Operations.

Earnings Highlights
BMO: AEO, CIS, JOSB, SDRL, TFM, and UNFI.
AMC: ARO, CWST, CWTR, EXPR, FNSR, GMAN, GES, KKD, LAZB, RUE, SMTC, SIGM, and SNPS.

Economic Events
07:00 am MBA Mortgage Index
07:30 am Challenger Job Cuts
08:15 am ADP Employment Change
08:30 am Productivity-Rev. Q3
08:30 am Unit Labor Costs Q3
09:45 am Chicago PMI
10:00 am Pending Home Sales
10:30 am Crude Inventories
14:00 pm Fed's Beige Book

Conferences and Shareholder/Analyst Meetings of Interest
- JP Morgan SMid Cap Conference
- McCloskey Asia Pacific Coal Outlook Conference 2011
- ECB President Mario Draghi to speak at 3:00


___________________________________________

SUMMARY

It was one of those sickening 'gap up and go nowhere' sessions that got overcooked right at the start. They are so frustrating to trade. They also never have the kind of follow through that would give the bulls encouragement to continue the rally. I suspected that we'd bounce ... I didn't expect it to be a one off in one day though.

We're not expecting any negative on the employment front so the ADP won't be much of a market mover. But the Chicago PMI and Housing data are possible party spoilers. The housing sector has been on an uptick in recent months so a continuation of this trend is expected. By and large, it is going to take more than just a slight miss on data to tank this market now. The belief that America is on the mend is just to strong to tempt the bears to take any sort of initiative for now. I reckon the market will continue to price-in more upside ahead of Friday's NFP.

But for today, a stall after the pause will be a healthy bet. I'm expecting some sort of bearish consolidation before we get more upside. After all, the last day of November corrects very reliably.

Direction for Wednesday 30 November, 2011; ∇ Down

2011 Daily Directional Accuracy: 122/206 (59.22%)

Conrad
12-01-2011, 05:21 AM
U.S. MARKETS - Wednesday 30 November, 2011 AMC

http://img705.imageshack.us/img705/4041/dexsd.jpg (http://imageshack.us/photo/my-images/705/dexsd.jpg/)

... But for today, a stall after the pause will be a healthy bet. I'm expecting some sort of bearish consolidation before we get more upside. After all, the last day of November corrects very reliably.

Direction for Wednesday 30 November, 2011; ∇ Down

The market looked like November was going to be a killer month. On Monday 28 November before the market opened, I said;


With three sessions remaining, its going to take a major rally of 346 points for the DOW to get back up to break even for the year. Even if that happens, November is set to close in the red as it will take a massive 720 point rally (or 240 points a day for three straight days) to break even for the month. It looks like the bear run that started in May is set to continue after that quick reprieve in October.
With three sessions remaining, its going to take a major rally of 346 points for the DOW to get back up to break even for the year. Even if that happens, November is set to close in the red as it will take a massive 720 point rally (or 240 points a day for three straight days) to break even for the month. It looks like the bear run that started in May is set to continue after that quick reprieve in October.

And whenever you least expect it, the impossible becomes possible. The last three days of November produced an amazing 813 points on the DOW to close out the month in positive territory. With that, of course, the DOW is back up in positive territory for the year too. And for the record, Wednesday 30 November 2011 was the DOW's largest gain of 2011 and the best percentage gain since March 2009.


___________________________________________

MARKET SUMMARY - Wednesday 30 November, 2011


BRIEFING.COM - Wednesday 30 November, 2011 AMC
Daily Sector Wrap: Rally On

A bevy of upbeat headlines drove the Dow back above 12,000 as stocks scored their best single-session advance in three months. Stocks are now on pace for their best weekly performance since the first quarter of 2009.

Building on the bounce that began at the beginning of this week, buyers pushed back into stocks after officials in China announced overnight lower reserve requirement ratios for the country's banks. Their efforts were ratcheted up when it was learned that several major central banks, including the Fed, will coordinate efforts to ease pressure in global money markets.

Buying interest was further bolstered by news that the ADP Employment Change for November showed an increase in private payrolls of 205,000, which is far greater than the increase of 125,000 that had been expected, on average, among economists polled by Briefing.com. Data for the prior month was revised upward to reflect an increase of 130,000 private payrolls. However, the Fed's Beige Book for October would later indicate that hiring during that month was generally subdued.

The Chicago PMI improved to its best level since April by spiking from 58.4 in October to 62.6 in November. Many had actually expected the number to slip to 57.5. Pending home sales for October also proved impressive, despite expectations for an underwhelming number. Specifically, an incremental increase of 0.1% had been anticipated, but instead a spike of 10.4% was posted.

The decidedly upbeat nature of today's headlines induced a buying effort that was both strong and broad from start to finish. Moreover, the move came on above-average share volume.

Stocks have now scored three straight gains, but what is most impressive is in that time the broad market has climbed more than 7% to almost fully offset the losses suffered in the seven preceding sessions.

With participants so willing to pile on risk, Treasuries traded lower. In turn, the yield on the benchmark 10-year Note moved back above 2.00%, setting a new 10-day high along the way.

The dollar also dropped today. At session's close it was down nearly 1% against a collection of competing currencies. The euro gained the most ground against the greenback.

The Volatility Index, often euphemistically referred to as the Fear Gauge, returned to its monthly low amid the market's rally. By day's end it was down more than 9%. Just last week it had traded near its monthly high.

Sector Leaders/Laggards for Wednesday 30 November, 2011 AMC
Leading Sectors: Financials +6.6%, Materials +5.9%, Energy +5.5%, Industrials +5.1%, Tech +4.0%, Health Care +3.7%, Telecom +3.3%, Consumer Discretionary +3.2%, Utilities +2.8%, Consumer Staples +2.4%
Leading Industries/ETFs : Coal-KOL +10.0%, Metals and Mining-XME +9.4%, South Africa-EZA +8.9%, Steel-SLX +8.7%, Sweden-EWD +8.2%, Solar-TAN +7.7%, Turkey-TUR +7.6%, Jr. Gold Miners-GDXJ +7.1%, Rare/Strategic Metals-REMX +7.0%, Poland-EPOL +7.0%, Copper Miners-COPX +6.9%, Germany-EWG +6.7%, Materials-IYM +6.7%, Thailand-THD +6.3%

Lagging Sectors: None.
Lagging Industries/ETFs : Volatility-VXX -8.9%, Long Treasuries-TLT -1.6%, Natural Gas-UNG -1.6%, Cocoa-NIB -1.3%

Other Market Moving Factors:
• Central banks announce coordinated efforts to address pressures in global money markets
• China reduces reserve requirement ratio for country's banks
• ADP Employment Change proves far better than expected
• Chicago PMI and pending home sales prove suprisingly strong
• Dollar trades with weakness

Companies trading higher in after hours in reaction to news:
• LAVA +25.7% (SNPS to acquire co for $7.35/share in cash)
• YHOO +3.8% (report that Alibaba-led group prepping for bid of all of co)

Companies trading lower in after hours in reaction to earnings: SMTC -4.5%, FNSR -2.2%, RUE -2.2%
Companies trading lower in after hours in reaction to news:
• NYMT -2.8% (announces 3 mln share stock offering)


___________________________________________

ECONOMIC COMMENTARY - Wednesday 30 November, 2011

• Japan Economic Data

- Nov Nomura/JMMA Manufacturing Purchasing Manager Index 49.1 vs 50.6 in Oct
- Oct Industrial Prod +0.4% vs -3.3% in Oct 2010
- Oct Housing Starts -5.8% vs -10.8% in Oct 2010
- Oct Construction Orders +24.3% vs -9.3% in Oct 2010

• Australia Economic Data

- Oct HIA New Home Sales +5.5% vs -3.5% in Sep
- Q3 Private Capital Expenditure +12.3% vs +6.2% in Q2
- Oct Private Sector Credit +3.5% vs +3.4% in Oct 2010

• Germany Economic Data

- Oct Retail Sales -0.4% vs +0.6% in Oct 2010
- Nov Unemployment Change -20K vs +10K in Oct
- Unemployment rate of 6.9% vs 7.0% in Oct

• France Oct PPI +0.5% vs revised +0.3% in Sep (prior +0.2%)

• Eurozone Economic Data

- Oct Unemp Rate 10.3% vs 10.2% in Sep
- Nov CPI +3.0% vs +3.0% in Oct

• China cuts Reserve Requirement Ratio by 50 bps to 21.00%, effective Dec 5

• U.S. Economic Data

- MBA Mortgage Applications of -11.7% vs -1.2% Prior
- Q3 Productivity- revised +2.3% vs +2.6%; Prelim +3.1%
- Q3 Unit Labor Costs -2.5% vs -2.1%; Prelim -2.4%
- November Chicago PMI 62.6 vs 57.5; October 58.4
- September Pending Home Sales +10.4% vs +0.1%

Challenger report shows employers announced 42,474 job cuts in Nov;
Nov layoffs fell 0.7% from Oct; Nov job cuts were down 13% from a yr ago

November ADP Employment Change 206K vs 125K
Estimated gain in employment from September to October was revised up to 130,000 from the initially reported 110,000

U .S. Nonfarm Private Employment Highlights -- November 2011 Report:
-- Total employment: +206,000
-- Small businesses: +110,000
-- Medium businesses: +84,000
-- Large businesses:+12,000
-- Goods-producing sector: + 28,000
-- Service-providing sector: +178,000
Addendum: -- Manufacturing industry: +7,000
"This month's jobs figures show positive growth in all major sectors of the economy and are in line with the recent drop in the national unemployment rate and weekly jobless claims," said Carlos Rodriguez, President and CEO of ADP. "Despite fiscal uncertainties here and abroad, owners of small- and medium-sized businesses found ways to grow and hire in November. As in previous months, service providers led the way in job creation." According to Joel Prakken, Chairman of Macroeconomic Advisers, LLC, "November's advance was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply. Today's report, notably above the consensus forecast, suggests that employment, which decelerated during the spring, accelerated in November. A firming of employment was evident in the major sectors of the economy tracked in The ADP National Employment Report, and across payrolls of most sizes."

Nonfarm Productivity Revised Lower
Nonfarm productivity in the third quarter was revised down from 3.1% in the preliminary reading to 2.3%. The Briefing.com consensus expected nonfarm productivity to be revised to 2.6%. The second estimate for third quarter GDP was revised down by 0.5 percentage points, and a similar move was expected to the output index in the productivity data. Output, however, was actually revised down 0.6 percentage points, from 3.8% to 3.2%. The larger than expected decline in output combined with a slight increase in the number of hours worked (0.8% from 0.6%) was the reason for the modest, negative surprise in productivity. Unit labor costs were revised down from -2.4% in the preliminary reading to -2.5%. The consensus expected unit labor costs to be revised up to -2.1%. Hourly compensation was revised to -0.2% from 0.6% in the preliminary estimate. That was more than enough to offset the decline in output and push unit labor costs lower.

Manufacturing in the Chicago Region Outperforms Expectations
The Chicago Purchasing Managers Index from Kingsbury International, Ltd., increased from 58.4 in October to 62.6 in November. That was the strongest reading since April. The Briefing.com consensus expected the Chicago PMI to decrease to 57.5. Whereas other regional manufacturing surveys have repeatedly shown stagnant or even downward-trending manufacturing growth for the past few months, the Chicago area has remained strong. This may be due to a heavy bias toward auto manufacturers, which have expanded production substantially since the supply shortages following the Japanese earthquake and tsunami. The production index increased from 63.4 in October to 67.3 in November. That is the highest level since April. Both new and unfilled orders strengthened in November. New orders reached their highest point in six months, jumping from 61.3 in October to 70.2 in November. Unfilled orders rose from 51.2 in October to 55.1 in November. The employment index dipped from 62.3 in October to 56.9 in November. With September and October levels above 60, the drop in November is not a concern.

• Oil Inventory Data

Dept of Energy reports that:

Crude oil inventories had a build of 3.93 mln (consensus is a build of 0.1 mln).
Gasoline inventories had a build of 0.2 mln (consensus is a build of 1.4 mln).
Distillate inventories had a build of 5.5 mln (consensus is a draw of 1.5 mln).
Summary of Weekly Petroleum Data for the week ending Nov 25

Production: U.S. crude oil refinery inputs averaged about 14.6 million barrels per day during the week ending November 25, 231 thousand barrels per day below the previous week's average. Refineries operated at 84.6 percent of their operable capacity last week. Gasoline production decreased last week, averaging about 9.2 million barrels per day. Distillate fuel production increased last week, averaging 4.8 million barrels per day.

Imports: U.S. crude oil imports averaged about 9.1 million barrels per day last week, up by 742 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 285 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 619 thousand barrels per day. Distillate fuel imports averaged 150 thousand barrels per day last week.

Inventory: At 334.7 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.2 million barrels last week and are in the middle of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 5.5 million barrels last week and are in the lower limit of the average range for this time of year. Propane/propylene inventories increased by 0.4 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories increased by 7.7 million barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged about 8.7 million barrels per day, down by 2.9 percent from the same period last year. Distillate fuel product supplied has averaged about 4.0 million barrels per day over the last four weeks, up by 1.4 percent from the same period last year.

Finished Motor Gasoline (Implied Demand): Finished motor gasoline demand for the week ended 11/25 was 8,769K bpd, up from last week's 8,592K, but lower than the yr ago period of 8,867K.

• Asian Markets Close; Nikkei -0.5%, Hang Seng -1.5%, Shanghai -3.2%, Sensex +0.7%
The major Asian indices closed mixed as sentiment remained downbeat ahead of the second day of Eurozone finance ministers meetings. China's Shanghai Composite tumbled 3.2% ahead of tonight's Manufacturing PMI and HSBC Final Manufacturing PMI numbers. The People's Bank of China cut its reserve requirement ratio 50 bps to 21.00% in an effort to provide liquidity to the slowing global economy. Bank of Thailand cut its benchmark interest rate 25 bps to 3.25% in an expected move as the nation continues to deal with devastating floods. Data in the region was plentiful as Japanese preliminary industrial production (2.4% MoM actual v. 1.1% MoM expected) and average cash earnings (0.1% YoY actual v. 0.0% YoY expected) both topped estimates. Down under, HIA New Home Sales rose 5.5% while Private Capital Expenditure surged 12.3% QoQ (8.2% QoQ expected) and private sector credit rose 0.2% MoM (0.4% MoM expected). Elsewhere, India's GDP expanded at 6.9% YoY for Q3, Thailand's current account balance rose $0.04 bln , and South Korea's industrial production climbed 6.2% YoY. Looking at the currencies...USDCNY weakened to 6.3444 while USDJPY is weaker at 77.46.

In Japan, the Nikkei closed -0.5% with financials seeing weakness on the S&P downgrade of major U.S. and European banks. Japanese banks Mizuho Financial Group and Sumitomo Mitsui Financial Group both had their outlooks cut to ‘negative' from ‘stable' by S&P and fell 1.0%.

In Hong Kong, the Hang Seng finished -1.5% as financial firms were hit hard. Ping An Insurance tumbled 5.3% after receiving a warning from regulators regarding the Hunan Shengjiangshanhe Bio Technology IPO. Chinese banks Bank of China and China Construction Bank ended lower by 1.6% and 0.8% respectively despite being upgraded by S&P.

In China, the Shanghai Composite settled -3.2% as coal stocks were hit hard. Yanzhou Coal sank 5.1% and coal-based energy co China Shenhua Energy tumbled 2.9%.

In India, the Sensex closed +0.7% as telecom stocks led the way. Bharti Airtel gained close to 4.0% on heavy volume after announcing it had reached the 50 mln customer mark in Africa.

• European Markets Closing Prices
UK's FTSE: + 2.9%
Germany's DAX: + 4.9%
France's CAC: + 3.9%
Spain's IBEX: + 3.5%
Portugal's PSI: + 2.4%
Italy's MIB Index: + 3.8%
Irish Ovrl Index: + 3.9%
Greece ATHEX Composite: + 3.1%

EARNINGS CALL

• Before market open

American Eagle (AEO) reports EPS in-line, beats on revs; guides Q4 EPS above consensus
Reports Q3 (Oct) earnings of $0.27 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.27; revenues rose 10.7% year/year to $831.8 mln vs the $792.61 mln consensus. Co issues upside guidance for Q4, sees EPS of $0.40-0.44 vs. $0.39 Capital IQ Consensus Estimate. The guidance assumes that sales momentum continues, particularly during peak holiday shopping periods. Additionally, the co expects margin pressure related to higher cotton costs and its planned promotional strategy. For the year, SG&A dollars are expected to increase in the low single-digits. Strong sales over Thanksgiving weekend were driven by increased traffic and conversion. Powerful unit sales growth reflected a positive customer response to the holiday assortment and planned promotions.

• After market close

Guess? (GES) misses by $0.02, misses on revs; guides Q4 EPS below consensus, revs below consensus
Reports Q3 (Oct) earnings of $0.71 per share, $0.02 worse than the Capital IQ Consensus Estimate of $0.73; revenues rose 4.7% year/year to $643 mln vs the $657 mln consensus. Comparable store sales decreased 4.1% in local currency and 3.5% in US dollars for the third quarter of fiscal 2012, compared to the same period a year ago. Co issues downside guidance for Q4, sees EPS of 1.03-1.09 vs. $1.22 Capital IQ Consensus Estimate; sees Q4 revs of $780-795 mln vs. $818.57 mln Capital IQ Consensus Estimate.

IN OTHER NEWS ...

• Fed announces coordinated central bank action to address pressures in global money markets
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity. These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice. As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant. At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise. These swap lines are authorized through February 1, 2013.

Federal Reserve Actions: The Federal Open Market Committee has authorized an extension of the existing temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank through February 1, 2013. The rate on these swap arrangements has been reduced from the U.S. dollar OIS rate plus 100 basis points to the OIS rate plus 50 basis points. In addition, as a contingency measure, the Federal Open Market Committee has agreed to establish similar temporary swap arrangements with these five central banks to provide liquidity in any of their currencies if necessary. Further details on the revised arrangements will be available shortly. U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

• Fed releases Beige Book; reports 'slow to moderate' recovery in 11 of 12; St. Louis one region in decline

Beige Book Summary
Overall economic activity increased at a slow to moderate pace since the previous report across all Federal Reserve Districts except St. Louis, which reported a decline in economic activity. District reports indicated that consumer spending rose modestly during the reporting period. Motor vehicle sales increased in a number of Districts, and tourism showed signs of strength. Business service activity was flat to higher since the previous report. Manufacturing activity expanded at a steady pace across most of the country. Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace. Changes in credit standards and credit quality varied across Districts. Residential real estate activity generally remained sluggish, and commercial real estate activity remained lackluster across most of the nation. Single family home construction was weak and commercial construction was slow. Districts mostly reported favorable agricultural conditions. Activity in the energy and mining sectors increased since the previous report. Hiring was generally subdued, although some firms with open positions reported difficulty finding qualified applicants. Wages and salaries remained stable across Districts. Overall price increases remained subdued, and some cost pressures were reported to have eased. Hiring was generally subdued, although some firms with open positions reported difficulty finding qualified applicants. Wages and salaries remained stable across Districts. Overall price increases remained subdued, and some cost pressures were reported to have eased.
Beige Book
Click here for full report. (http://www.federalreserve.gov/fomc/beigebook/2011/20111130/default.htm)


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TECHNICAL UPDATE - Wednesday 30 November, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,045.68 +490.05 (+4.24%)
Volume: 286,788,700 from 156,947,054 the previous day
Range: 11,559.27 – 12,045.68

http://img155.imageshack.us/img155/5900/dowh.jpg (http://imageshack.us/photo/my-images/155/dowh.jpg/)

A pause to the upside. This is quite normal after a massive day like we had on Monday. The threat now comes if this turns into a Stalled Pattern on Wednesday which could signal a turn to the downside to resume the bear trend by the end of the week. Follow through from the bulls will be critical if this reversal is going to have legs. For now, I don't smell any dead cats ... yet.

Forget Dead Cats. This was the real deal as volumes practically DOUBLED in a single session on that amazing news from the Central Banks. Just like that, DOW is now above all its major DSMAs while NASDAQ and SPX, having overcome their 20, 50 and 100 DSMAs, are still below their 200. Despite today's run-up, the Nasdaq and S&P 500 are down for the year. SPX is now staring up at the 1,254 resistance, NASDAQ faces its year-old nemesis at 2,625 and DOW should get above 12,200.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,620.34 +104.83 (+4.17%)
Volume: 819,829,384 from 421,291,693 the previous day
Range: 2,582.49 – 2,620.34

S&P 500 INDEX (SPX: CBOE)
1,246.96 +51.77 (+4.33%)
Volume: 1,172,115 from 647,616 the previous day
Range: 1,196.72 – 1,247.11


___________________________________________

MARKET INTERNALS - Wednesday 30 November, 2011 AMC

NYSE :
Higher than avg volume @ 1665 mln, vs. 1051 mln
Advancers outpaced Decliners (adv/dec): 2716/404
New highs outpaced new lows (hi/lo): 105/24

NASDAQ :
Higher than avg volume @ 2367 mln, vs. 1940 mln
Advancers outpaced Decliners (adv/dec): 2146/461
New lows outpaced new highs (hi/lo): 61/62


Decliners outpaced Advancers by an average 1.27 to 1 on lower average volumes (-16.39%) on Tuesday (avg +0.01%).

Tuesday's volumes weakened even more than Monday's. The VIX lost some ground and closed below 31.00. Noteworthy though, are the New Lows that outpaced the New Highs rather convincingly for a bullish session.

Advancers outpaced Decliners by an average 5.64 to 1 on higher average volumes (+34.80%) on Wednesday (avg +4.25%).

The VIX fell to its lowest intraday level for the month at 27.03 and closed at 27.80 -2.84 (-9.27%) for the month and the TRIN traded down to its thrid best level for the year at 0.28.

http://img62.imageshack.us/img62/1976/intqc.jpg (http://imageshack.us/photo/my-images/62/intqc.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Commodities rally on back of coordinated actions by six central banks

Commodities, including gold, silver, copper and crude oil all surged on this morning's announcement that six central banks will implement coordinated actions to enhance their capacity to provide liquidity support to the global financial system. This news applied substantial pressure to the dollar.

Gold and silver futures rallied sharply on the back of this news. Both metals did, however, eventually level off. Gold spent the majority of pit trade chopping around the $1750 mark, while silver eventually found resistance at the $33 mark. Gold ended higher by 1.8% at $1750.30 per ounce, while silver settled up 2.9% at $32.89 per ounce. March copper finished higher by 18 cents at $3.56.

Crude futures were pressured in mid-morning trade the bigger-than-expected build in inventories, as well as the modest rebound in the dollar. Despite the pullback, futures managed to close above the $100; up 0.6% at $100.36 per barrel. Natural gas ended lower by 2.2% at $3.56 per MMBtu. Futures attempted to recoup morning losses, but fell shy of breaking above the unchanged mark. That failed breakthrough led to a late-session sell off. Dec heating oil ended lower by 0.5 cents at $3.03, while RBOB gasoline finished up 2 cents at $2.56

March corn finished higher by a penny at $6.065, Jan soy gained 9 cents to settle at $11.34, March wheat fell 2.5 cents to end at $6.135, ethanol closed lower by 2 cents at $2.25, and March sugar gained 0.2 cents to close at $0.2369.

Commodities AMC on Wednesday 30 November, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 100.36 +0.57 (+0.57%)
Gold (NYMEX) December 11 ($US per Troy oz.) : 1,745.50 +32.10 (+1.87%)

Treasuries ended the day sharply lower, but off their worst levels of the session as the coordinated effort by central banks and a batch of strong data produced selling across the complex. Trade quieted as the session progressed with longer yields finishing up as much as 11 bps. A drop of more than two full points in the 30-yr bond caused a rise of 11 bps in its yield as it finished the session at 3.062% and saw its highest close since November 15. A jump of 7 bps caused the 10-yr yield to settle above 2.00% for the first time since November 18. Yields at the front of the curve were little changed as the 2-yr closed near 26 bps. Today's selloff swung the yield curve steeper as the 2-10-yr spread widened dramatically to 182.5 bps.

Treasury Yields AMC on Wednesday 30 November, 2011:
• 2 Year Note 0.25% -0.02
• 5 Year Note 0.96% +0.03
• 10 Year Note 2.08% +0.08
• 30 Year Bond 3.06% +0.10
2/30 Spread : 281bps ( +12 ) ... 2/10 Spread : 183bps ( +10 )


Now that is a proper bullish steepening that spells a proper sell-off in the treasuries and a run into riskier assets. More of this and we'll confirm a bull market by year's end.

With that sell off on Bonds, the 30 and 10 year yields confirmed their promotion to being only once under-par value. The 5yr yield is still twice under-par but is only 5bps from being one under. The steepening was a healthy one as investor only bought up the 2yr (mostly as hedges) while dumping the longer term (safe haven) securities. The run into risk trades is back on.


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PREVIEW FOR THE MONTH OF DECEMBER, 2011

Its the final month of a very volatile and exciting year. Will we have a Santa Claus rally? Will we finish the year up as the many prophecies have suggested - January Barometer, December Low, Valentine's Day Indicator, Pre Olympic Year, President's Third Year, etc ... it will be a race to the finish and it is going to be a thrilling one! So bring it on!!

Trivia For December
December has 21 full trading days, one public holiday and two holiday eves and is known to be very bullish. December is the second of three months (November, December and January) that represent the best three consecutive months of the trading year.

December Trivia

• The first trading day of December has been up 18 of the last 24
• The first week of December tends to be bullish
• 5th December tends to be bullish
• The first week of November ends slightly bearish
• Tuesday 11 December, FOMC meeting concludes at 14:00 EST
• Small Caps pick up strength from the middle of December
• The Monday before Expiration Friday has been up on the DOW 8 of the last 11
• The week before Expiration Friday has been up 22 of the last 27 on S&P
• December Expiration Friday has been bullish on S&P 21 of the last 29
• The last trading day before Christmas has been up for the last 4 years
• Sunday 25 December is Christmas Day (Markets are closed on Monday 26 December)
• The week after Christmas is usually bullish on lower volumes
• December’s last day normally corrects with the NASDAQ down 10 of the last 11
• January’s first trading day is bearish with the Russells down 14 of the last 22

Commodities

• Oil starts showing some strength from mid December
• Natural Gas gets a correction if inventories remain elevated
• Gold and Silver may correct slightly early in the month but stay long till end April/early May
• Copper reverses mid December and stays long till end February
• Corn and Soyabeans stay strong, Wheat weakens
• Sugar corrects in December
• Cocoa and Coffee prices continue their strength from November


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PREVIEW FOR THURSDAY 01 DECEMBER, 2011

Thursday’s data includes initial and continuing claims (8:30), the ISM Index, construction spending (10), and auto/truck sales (15).

Earnings Highlights
BMO: BKS, CHRS, GIL, ISLE, KR, LULU, MOV, SCMR, TLB, TD and UTIW.
AMC: ASNA, AVGO, HRB, LAVA, MITL, PVH, ULTA, and ZUMZ.

Economic Events
08:30 am Initial Claims
08:30 am Continuing Claims
10:00 am ISM Index
10:00 am Construction Spending
10:30 am Natural Gas Inventories
15:00 pm Auto Sales
15:00 pm Truck Sales

Conferences and Shareholder/Analyst Meetings of Interest
- Societe Generale Premium Review Conference
- Nexen Investor Day
- NYSSA Water Utilities Industry Investor Conference


___________________________________________

SUMMARY

Now that the market has kinda paused to the upside, its going to be a tough call Wednesday especially with the slew of data being release before and after the open ... We're not expecting any negative on the employment front so the ADP won't be much of a market mover. But the Chicago PMI and Housing data are possible party spoilers. The housing sector has been on an uptick in recent months so a continuation of this trend is expected. By and large, it is going to take more than just a slight miss on data to tank this market now. The belief that America is on the mend is just to strong to tempt the bears to take any sort of initiative for now. I reckon the market will continue to price-in more upside ahead of Friday's NFP.

Friday's Non-Farm Payrolls. That will be a reason the market pauses today after such a record breaking session on Wednesday. Its not that NFP is expected to disappoint but after such a euphoric week, expectations are high and the smart investors and traders won't risk overcooking the market on Thursday ahead of such a key data. Booking some profits will be a smart thing to do so expect some profit-taking at the open and unless we get another burst of amazing news out of Europe, the market should consolidate today.

Direction for Thursday 01 December, 2011; ∆ Up

2011 Daily Directional Accuracy: 122/207 (58.94%)

Conrad
12-02-2011, 03:18 AM
U.S. MARKETS - Thursday 01 December, 2011 AMC

http://img13.imageshack.us/img13/2444/dexs.jpg (http://imageshack.us/photo/my-images/13/dexs.jpg/)

The first trading day of December has been up 18 of the last 24 ... Friday's Non-Farm Payrolls. That will be a reason the market pauses today after such a record breaking session on Wednesday. Its not that NFP is expected to disappoint but after such a euphoric week, expectations are high and the smart investors and traders won't risk overcooking the market on Thursday ahead of such a key data. Booking some profits will be a smart thing to do so expect some profit-taking at the open and unless we get another burst of amazing news out of Europe, the market should consolidate today.

Direction for Thursday 01 December, 2011; ∆ Up

The market did exactly what I expected it to do. And in a very miserly range too - DOW only put out an 88 point range. Did you book profits? I certainly did.


___________________________________________

MARKET SUMMARY - Thursday 01 December, 2011


BRIEFING.COM - Thursday 01 December, 2011 AMC
Daily Sector Wrap: Stocks Rest

The major equity averages finished mixed as market participants opted to take a break from the action after stocks had rallied more than 7% during the course of the three previous sessions. Today's headlines weren't enough to motivate a follow-up effort.

The ISM Manufacturing Index improved in November to 52.7 from 50.8 in the prior month. Moreover, it exceeded the expected reading of 51.0. In contrast, China's PMI Manufacturing figure decreased to 49.0 in November from 50.4 in October. The eurozone's reading for November stayed at 46.4.

Domestic construction spending increased by 0.8% in October, besting the 0.3% increase that had been broadly expected.

Weekly initial jobless claims increased from an upwardly revised 396,000 to 402,000 in the face of calls for a total of 390,000 initial claims.

Retailers and auto makers came into closer focus today. Retailers offered up their latest same-store sales results, which proved relatively uninspiring. However, Aeropostale (ARO 16.19, +0.68) fought off a weak start that was owed to the apparel retailer's disappointing forecast. Even Guess? (GES 29.61, +1.49) scored a strong gain after traders dismissed its downside forecast.

Auto makers had a mixed session amid monthly U.S. sales numbers. General Motors (GM 20.96, -0.33) posted a 7% year-over-year increase in U.S. sales for November, while Ford (F 10.59, -0.01) offered up a 13% increase from the prior year. Toyota Motor (TM 65.72, -0.19) had an increase of little more than 2%.

Sector Leaders/Laggards for Thursday 01 December, 2011 AMC
Leading Sectors: Tech +0.6%, Health Care +0.1%.
Leading Industries/ETFs : Palladium-PALL +2.8%, Natural Gas-UNG +1.9%, Airlines-FAA +1.6%, China-FXI +1.1%, Taiwan-EWT +1.1%

Unchanged Sectors: Consumer Discretionary unch.

Lagging Sectors: Utilities -0.2%, Industrials -0.2%, Consumer Staples -0.3%, Telecom -0.4%, Materials -0.6%, Energy -0.7%, Financials -1.0%
Lagging Industries/ETFs : Turkey-TUR -2.9%, Austria-EWO -2.2%, New Zealand-ENZL -2.1%, Lithium-LIT -2.1%, Heating Oil-UHN -1.8%, Vietnam-VNM -1.4%, South Africa-EZA -1.4%, Russia-RSX -1.3%, Coal-KOL -1.3%, Regional Banks-RKH -1.2%, REITs-IYR -1.0%, Copper-JJC -1.1%

Other Market Moving Factors:
• Buyers take breather
• Weekly initial jobless claims prove uninspiring
• ISM Manufacturing data proves better than expected

Companies trading higher in after hours in reaction to earnings: ZUMZ +14.2%, PVH +2.2%

Companies trading lower in after hours in reaction to earnings: HRB -2.7%, ULTA -1.4%


___________________________________________

ECONOMIC COMMENTARY - Thursday 01 December, 2011

• China Economic Data

- Nov Manufacturing PMI 49.0 vs 50.4 in Oct
- Nov HSBC Manufacturing PMI 47.7 vs 51.0 in Oct

• Australia Economic Data

- Oct Retail Sales +0.2% vs +0.4% in Sep
- Oct Building Approvals -10.7% vs -14.2% in Sep
- Nov RBA Commodity Price Index 107.5 vs 107.6 in Occt

• New Zealand Economic Data

- Q3 Terms of Trade Index -0.7% vs +2.4% in Q2
- Nov ANZ Commodity Price -0.1% vs -3.5% in Oct

• Japan Nov Vehicle Sales +24.1% vs +28.3% in Oct

• Germany Nov final Manuf PMI 47.9 vs 47.9 prelim

• Eurozone Final Manuf PMI 46.4 vs 46.4 prelim

• UK Nov Manuf PMI 47.6 vs 47.4 in Oct

• France Economic Data

- Nov Final Manuf PMI 47.3 vs 47.6 prelim
- Q3 ILO Mainland Unemp Rate 9.3% vs 9.1% in Q2

• U.S. Economic Data

- Initial Claims 402K vs 390K Briefing.com consensus; Prior revised to 396K from 393K
- Continuing Claims rises to 3.740 mln from 3.705 mln
- November ISM Index 52.7 vs 51.0; October 50.8
- October Construction Spending +0.8% vs +0.3%

Initial Claims Rise Above 400,000 for the first time since October
After four consecutive weeks below 400,000, the initial claims level increased from 396,000 for the week ending November 19 to 402,000 for the week ending November 26. The Briefing.com consensus expected the initial claims level to fall to 390,000. According to the DOL, there was nothing unusual in the data that caused the increase in claims. The DOL cautions, however, that it is difficult to estimate the seasonal effects during a holiday ( in this case Thanksgiving) week. Therefore, a reversal in claims next week may be the result of seasonal adjustments returning to normal and not necessarily a change in the employment situation. Even after the increase, the initial claims level remained below the 410,000 upper bound of our "Recovery Zone" and does not change our outlook of moderate monthly payroll gains. The continuing claims level increased from 3.705 mln for the week ending November 12 to 3.740 mln for the week ending November 19. That is the highest level of continuing claims since the week ending September 17. The consensus expected continuing claims to fall to 3.650 mln.

Home Improvement Projects Spur Stronger-than-Expected Construction Growth
After increasing 0.2% in September, total construction spending increased 0.8% in October. The Briefing.com consensus expected construction spending to increase 0.3%. As expected, the growth in construction spending came from the private sector, up 2.3% in October after increasing only 0.2% in September. Total public construction spending was down 1.8% in October. Private residential construction increased 3.4%. A great majority of the October gain came from a 6.6% increase in home improvement projects. Home improvement spending has been extremely volatile and tends to follow a sawtooth pattern. There is a strong possibility that residential gains in October will be offset with a home improvement contraction in November. New structures spending increased only 0.4%. Private nonresidential construction rose 1.3% in October after no growth in September. Strong increases in the power (5.8%) and office (3.0%) sectors were the main drivers of the October gain.

Growth in the Manufacturing Sector Accelerates More than Expected
The November ISM Manufacturing Index increased from 50.8 in October to 52.7. The Briefing.com consensus expected the ISM Index to increase to 51.0. While most of the regional manufacturing surveys showed little-to-no growth in November, the ISM Manufacturing Index mirrored the gains seen in the Chicago PMI report. Production increased a healthy 6.5 points from 50.1 in October to 56.6. The new orders index increased from 52.4 in October to 56.7. The gains in the November ISM Index, however, do not put the manufacturing sector out of the danger zone. Unfilled orders have contracted for the sixth consecutive month and the rate of contraction accelerated (to 45.0 from 47.5) in November. Without a large supply of order backlogs, production will remain reliant upon growth in new orders.

• Natural Gas Inventory Data
- Natural gas inventory showed a draw of 1 bcf vs expectations for a build of 10 bcf.

• Asian Markets Close; Nikkei +1.9%, Hang Seng +5.6%, Shanghai +2.4%, Sensex +2.1%
It was a sea of green across Asia as markets closed sharply higher following yesterday's coordinated central bank action and the People's Bank of China announcing a 50 bp cut to its reserve requirement ratio after yesterday's close. Hong Kong's Hang Seng paced the advance with a gain of 5.6% while Taiwan's Taiex and South Korea's Kospi were notable outperformers with respective gains of 4.0% and 3.7%. Data in the region was heavy as Chinese Manufacturing PMI showed contraction with a reading of 49.0 (49.8 expected, 50.4 previous) and HSBC Final Manufacturing contracted further to 47.7 (48.0 previous). Australian data was disappointing as building approvals fell 10.7% MoM (3.6% MoM expected) while retail sales rose just 0.2% MoM (0.4% MoM expected) and commodity prices climbed 18.1% YoY. Elsewhere in the region, The Central Bank of the Philippines held its overnight borrowing rate at 4.50% while South Korea's CPI climbed to 4.2% YoY (3.9% YoY previous) and Thailand's held steady at 4.2% YoY. Finally, India's trade deficit widened to $19.6 bln ($9.8 bln previous) while Indonesia's surplus shrank to $1.2 bln ($2.7 bln previous). Looking at the currencies...USDCNY weakened to 6.3410 while USDJPY is stronger at 77.70.

In Japan, the Nikkei closed +1.9% as stocks with heavy exposure to China were among the top performers. Machinery maker Komatsu surged 7.2% while rival Hitachi Construction rallied 7.3%. Financials gained with Mitsubishi UFJ Financial adding 3.1%.

In Hong Kong, the Hang Seng finished +5.6% and saw its second largest gain since April 2009. Financials and real estate stocks saw large gains as Industrial and Commercial Bank of China climbed 11.0% and China Overseas Land & Investment jumped 13.0%. Ping An Insurance was also among the top performers, surging 13.0%.

In China, the Shanghai Composite settled +2.4% as financials and real estate stocks led the charge. China Merchants Bank gained 3.9% and Poly Real Estate added 5.7% to lead their respective sectors.

In India, the Sensex closed +2.1% as metal and financial stocks saw the biggest gains. Sterlite Industries and Hindalco Industries both gained at least 6.5% while ICICI Bank closed higher by 5.5%.

• European Markets Closing Prices
UK's FTSE: -0.2%
Germany's DAX: -0.9%
France's CAC: -0.8%
Spain's IBEX: -0.3%
Portugal's PSI: -0.7%
Italy's MIB Index: -0.2%
Irish Ovrl Index: -1.4%
Greece ATHEX Composite: -1.6%

IN OTHER NEWS ...
• November Same Store Sales Review - in-line results but mixed Black Friday comments add to holiday uncertainty

Retailers reported November Same Store Sales before the open today.

Undoubtedly, the most critical season for every retailer is underway. As expected, retailers saw continued growth for the month boosted by early promotional launches. Black Friday commentary was mixed (adding to the uncertainty of holiday sales final outcome) but unfavorable weather was repeatedly mentioned as having notable impact on the month. Overall results were in-line with expectations with nearly half of the retailers reporting comps within 100 basis points of consensus estimates. Eleven companies beat November comps estimates—and seven missed. Although several retailers provided holiday related commentary, few updated EPS/sales guidance. To get better idea of current EPS expectations, we created table summarizing EPS estimates and last issued guidance (click image to enlarge). Actual reported results and EPS guidance are typically within a few cents of each other—see our table detailing last quarter's results vs guidance/estimates.

Holiday sales expectations have risen since Black Friday (both National Retail Foundation (NRF) and ShopperTrak reported better-than-anticipated results). The recent Black Friday hype lifted early sentiment, but the holiday season has far to go. To help determine the extent that specific retailers rely on November, December and Q4 sales, we compiled estimates for this year and historic data from prior results. Based on results from last year, nearly half of the retailers generate more than qtr of their full year sales during Nov/Dec.

November Same Store Sales results are boosting the retail sector today. The SPDR Retail index (XRT) is currently +0.3% on the day, the S&P Retail (RLX) +0.4%, the Retail Holders Trust (RTH) +0.4% vs S&P500 index (SPX) -0.4%.

Outperforming following results/commentary: BONT +18.3%, SSI +3.4%, JWN +3.3%, ROST +2.6%, ARO +2.6%, CATO +2.0%, COST +1.7%, BKE +1.7%, WTSLA +1.6%, TJX +1.2%, FRED +0.8%, JCP +0.8%.

Underperforming following results/commentary: KSS -7.4%, DUCK -4.3%, SMRT -3.0%, RAD -1.2%, DDS -1.1%.

Nearly unchanged: TGT, GPS, SEO, SKS, LTD, M.


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TECHNICAL UPDATE - Thursday 01 December, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,020.03 -25.65 (-0.21%)
Volume: 143,702,302 from 286,788,700 the previous day
Range: 11,974.62 – 12,062.64

http://img846.imageshack.us/img846/5444/dowk.jpg (http://imageshack.us/photo/my-images/846/dowk.jpg/)

Forget Dead Cats. This was the real deal as volumes practically DOUBLED in a single session on that amazing news from the Central Banks. Just like that, DOW is now above all its major DSMAs while NASDAQ and SPX, having overcome their 20, 50 and 100 DSMAs, are still below their 200. Despite today's run-up, the Nasdaq and S&P 500 are down for the year. SPX is now staring up at the 1,254 resistance, NASDAQ faces its year-old nemesis at 2,625 and DOW should get above 12,200.

Hardly any changes to the technicals but those retracement levels of 2,625 on NASDAQ and 1,254 on SPX really played up the indices on Thursday. DOW didn't make any headway but at least managed a close above the psychological 12K.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,626.20 +5.86 (+0.22%)
Volume: 445,438,868 from 819,829,384 the previous day
Range: 2,611.48 – 2,636.08

S&P 500 INDEX (SPX: CBOE)
1,244.58 -2.38 (-0.19%)
Volume: 616,267 from 1,172,115 the previous day
Range: 1,239.73 – 1,251.09


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MARKET INTERNALS - Thursday 01 December, 2011 AMC

NYSE :
Lower than avg volume @ 851 mln, vs. 1044 mln
Decliners outpaced Advancers (adv/dec): 1200/1845
New highs outpaced new lows (hi/lo): 105/18

NASDAQ :
Lower than avg volume @ 1778 mln, vs. 1933 mln
Decliners outpaced Advancers (adv/dec): 927/1597
New lows outpaced new highs (hi/lo): 44/57


Advancers outpaced Decliners by an average 5.64 to 1 on higher average volumes (+34.80%) on Wednesday (avg +4.25%).

The VIX fell to its lowest intraday level for the month at 27.03 and closed at 27.80 -2.84 (-9.27%) for the month and the TRIN traded down to its thrid best level for the year at 0.28.

Decliners outpaced Advancers by an average 1.62 to 1 on lower average volumes (-11.69%) on Thursday (avg -0.06%).

The VIX got its lowest close since October 28 at 27.41 in spite of the bearish overtones in an otherwise flat session.

http://img69.imageshack.us/img69/3441/intdq.jpg (http://imageshack.us/photo/my-images/69/intdq.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Mixed Finish

Precious metals encountered pressure in afternoon trade, causing both gold and silver prices to settle lower for the session. More specifically, gold surrendered a mid-morning gain to settle with a 0.6% loss at $1739 per ounce. As for silver, it fell to $32.66 per ounce for a 0.5% loss after it had been up more than 1% this morning. March copper finished higher by 1 cent at $3.54.

In the energy complex, oil prices settled with a 0.1% gain at $100.23 per barrel after oscillating for most of the session. Natural gas scored a 2.5% gain by settling pit trade at $3.64 per MMBtu. The move was helped along by bullish inventory data. Dec heating oil ended lower by 4.7 cents at $2.97, while RBOB gasoline finished unch at $2.56.

Commodities AMC on Thursday 01 December, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 100.20 -0.16 (-0.16%)
Gold (NYMEX) February 11 ($US per Troy oz.) : 1,739.80 -10.50 (-0.60%)

Treasuries ended the day modestly lower as early selling after the strong French, and to a lesser extent Spanish auctions, set the tone. A post-data rally dropped yields back to the flat line, but they were unable to cross into negative territory and ultimately ended up climbing back towards their highs in afternoon trade. The long bond saw a loss as large as two points before late buying halved the damage. The 30-yr yield did however close at its highest level since October 31 as it settled at 3.135%. Modest selling in the 10-yr space ran the benchmark yield up to 2.117% as the cash market closed. Further steepening of the yield curve saw the 2-10-yr spread widen to 185 bps.

Treasury Yields AMC on Thursday 01 December, 2011:
• 2 Year Note 0.27% +0.02
• 5 Year Note 0.97% +0.01
• 10 Year Note 2.11% +0.03
• 30 Year Bond 3.12% +0.06
2/30 Spread : 285bps ( +4 ) ... 2/10 Spread : 184bps ( +1 )


With that sell off on Bonds, the 30 and 10 year yields confirmed their promotion to being only once under-par value. The 5yr yield is still twice under-par but is only 5bps from being one under. The steepening was a healthy one as investor only bought up the 2yr (mostly as hedges) while dumping the longer term (safe haven) securities. The run into risk trades is back on.

A nice gentle rise on the curve as it steepens more ... this has left the 5 year yield just 3 bps from being one-under par.


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REVIEW OF NOVEMBER, 2011 from Briefing.com

Markets remain headline driven in November

November was another volatile month for the market. Although there were some sharp swings in the market, the S&P finished November just 0.5% below where it started the month. Despite the nauseating market action, the VIX has pulled back to November lows amid the latest bounce in the market. Correlations remain high as moves in the market continue to be macro in nature.

To recap, the month started with news that Greek PM Papandreou called for a referendum on the latest bailout measures. That news cast additional doubt on the adoption of the latest EU measures, and was weighing heavily on the S&P that day as it fell 35 points. Just a day later came the much anticipated FOMC meeting. Much of the Fed's statement was unchanged from its previous meeting, however, the committee did say that "Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year..." The dollar rose on the heels of the latest FOMC directive, which didn't contain any additional accommodative measures. Focus on the world's central banks continued on Nov 3rd as the ECB announced a 25 bps rate cut to 1.25%. In the press conference following the decision, Mario Draghi said supply of credit has not been affected by heightened financial tensions. On November 4th, the US announced that it added 80,000 jobs in October, slightly below expectations of 85K, however, September had strong upward revisions. On November 9th, concern went back to Europe as Italian yields surged following an increase in margin requirements on Italian bonds at the London Clearing House has led to a surge in Italian borrowing costs.

The week of Thanksgiving showed the worst performance since 1942 for that period of time as investors continued to be concerned about rising Spanish and Italian bond yields and the ECB's unwieldiness to provide more help. The S&P fell 57 points during that week. Also, during Thanksgiving, it was announced that the US supercomittee failed to reach a deal on cutting the nation's debt. Disagreement over tax rates for the wealthiest Americans was the sticking point, according to most reports. Failure to reach an agreement gives way to automatic spending cuts that don't go into effect until 2013. After this was announced, President Obama said that he would veto any attempt to eliminate these automatic cuts, which were passed as a part of the original debt ceiling agreement. As expected, the credit ratings agencies discussed news of the Supercommittee failure. Standard & Poors said that the USA's credit rating will not be affected by this impasse, reaffirming its AA+ ratings, while Moody's said the action of the super committee would not be decisive to its analysis of its rating, and maintained its AAA rating.

However, as the month neared a close, Fitch downgraded its U.S. outlook to 'negative' from 'stable' on November 29th. In addition, S&P downgraded several US banks that day including Bank of America (BAC), Citigroup (C), and Goldman Sachs (GS). The month ended yesterday with the biggest news and stock market rally of the month. The S&P 500 surged 4.3% after the Fed announced coordinated central bank action to address pressures in global money markets. These major central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points to ease strains in financial markets and mitigate the effects of such strains on the supply of credit. To put icing on the cake, the retailers had their best Black Friday ever in terms of sales.

In US Corporate news, Groupon (GRPN) priced its IPO at $20.00/share on November 4th, the stock traded as high as $31.00 before retreating below its offer price. Finally, American Airlines (AMR) filed for chapter 11 bankruptcy.


http://img171.imageshack.us/img171/5482/summ01.jpg (http://imageshack.us/photo/my-images/171/summ01.jpg/) http://img215.imageshack.us/img215/4861/summ02.jpg (http://imageshack.us/photo/my-images/215/summ02.jpg/)
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PREVIEW FOR FRIDAY 02 DECEMBER, 2011

Friday’s data is the most anticipated of the week as nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and the average workweek (8:30) are due out.

Earnings Highlights
BMO: BIG and BNS

Economic Events
08:30 am Nonfarm Payrolls
08:30 am Nonfarm Private Payrolls
08:30 am Unemployment Rate
08:30 am Hourly Earnings
08:30 am Average Workweek

Conferences and Shareholder/Analyst Meetings of Interest
- Popular, Inc (BPOP) Investor Day
- Fed's Fisher to speak at 9:00
- Fed's Plosser to speak at 10:00


___________________________________________

SUMMARY

... whenever you least expect it, the impossible becomes possible. The last three days of November produced an amazing 813 points on the DOW to close out the month in positive territory. With that, of course, the DOW is back up in positive territory for the year too. And for the record, Wednesday 30 November 2011 was the DOW's largest gain of 2011 and the best percentage gain since March 2009.

I am not expecting any surprises from the employment data today. Yesterday's rise in Claims, I am sure, was an annual cycle as claims always rise a bit in December as more people look to dole during the holiday season.

Direction for Friday 02 December, 2011; ∆ Up

I am off to K.L. now for the very last WAT batch of the year, WATMY17.

Have a great weekend ahead and don't forget to;
... listen, not hear ... laugh with, not at ... look at, not stare ... speak to, not talk ... feel, not touch ... smile towards, not sneer at ... be sincere, not pretentious ... understand, not assume ... be concerned, not just care ... walk alongside, not lead ... teach, not brag ... remind, not nag ... and love, not like.

2011 Daily Directional Accuracy: 123/208 (59.14%)

Conrad
12-05-2011, 06:45 AM
U.S. MARKET RECAP - Monday 28 November, 2011 to Friday 02 December, 2011 AMC
http://img526.imageshack.us/img526/1385/dexweek.jpg (http://imageshack.us/photo/my-images/526/dexweek.jpg/)


By the looks of it, we could get a technical bounce this week. Having said that, I wouldn't buy into the rally too heavily as this is still a bear market. A slew of data is expected to shake up this market including the all important Non Farm Payrolls at the end of the week. Its going to be hard to read into the market sentiment even if data favors a recovering US economy as Europe still weights heavy on the minds of investors everywhere.

Direction for the week Monday 28 November, 2011 to Friday 02 December, 2011; ∆ Up

As expected, we bounced ... big time on wednesday too, thanks to news out of Europe. How how long this will last is dependent on what happens in the coming week with some key meetings in Europe.


__________________________________________________ ________

Dow Jones Industrial Average - Friday 02 December, 2011 AMC
http://img845.imageshack.us/img845/3721/dexsb.jpg (http://imageshack.us/photo/my-images/845/dexsb.jpg/)


I am not expecting any surprises from the employment data today. Yesterday's rise in Claims, I am sure, was an annual cycle as claims always rise a bit in December as more people look to dole during the holiday season.

Direction for Friday 02 December, 2011; ∆ Up

So was the call on or off? According to the market internals, it was on. But personally, I won't be buying into it.


__________________________________________________ ________

MARKET SUMMARY - Friday 02 December, 2011


BRIEFING.COM - Friday 02 December, 2011
Daily Sector Wrap: End of Day/Week Summary: Stocks Pare Early Gains, Finish Flat

This was an incredibly strong week for the equity markets, with the S&P 500 jumping nearly 8%. This week's rally follows a 5% decline last week.

The week started with a strong relief rally on Monday, helped by news that European authorities were discussing the possibility for a new eurozone fiscal pact that could make budget discipline legally binding and enforceable by European authorities. The market held onto gains and finished with a 2.9% gain.

After a relatively uneventful Tuesday, stocks surged on Wednesday after major central banks announced coordinated liquidity actions. The S&P 500 jumped 4.4% after the Fed and five other central banks agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points to ease strains in financial markets and mitigate the effects of such strains on the supply of credit. Although these actions do not address the underlying solvency problems in Europe, they help to liquify the markets to help deal with the stresses that result from those solvency problems...Prior to this coordinated action, equity futures had moved up after China eased policy by lowering its Reserve Requirement Ratio by 50 bps to 21.00%.

Thursday was uneventful, with mixed retailer Same Store Sales reports, but markets found an early bid on Friday ahead of the November Employment Report. That report turned out to be an encouraging read on the employment sector, with Nonfarm Payrolls coming in at +120K vs. the +123K Briefing.com consensus, and the Unemployment Rate falling to 8.6% vs. the 9.0% Briefing.com consensus and prior month's level. After moving higher off the open, equities reversed course and pared their early gains. The turnaround wasn't drastic, but did correlate with a decline in euro.

Outside of the macro news, there were some large individual movers as well this week on company news. Among the many stocks that had large gains this week, Zumiez (ZUMZ 28.99, +5.62) was an outperformer with a 39% gain on the week, helped by strong earnings/guidance on Friday. MBIA (MBI 10.62, +0.41) gained 40% on the week, helped by positive broker comments and S&P affirming its rating. Magma Design Automation (LAVA 7.16, +0.03) gained 37% on the week, after it was acquired by Synopsys (SNPS 27.44 -0.06) for $7.35/Magma share in cash...As far as the losers go, Celsion (CLSN 2.18, +0.07) dropped 22% after announcing Monday that it received unanimous recommendation by independent data monitoring committee to continue and complete phase III heat study of Thermodox as planned. Retailers Gildan Activewear (GIL 16.99, +0.63), Talbots (TLB 1.54, -0.12) and Francesca's (FRAN 16.00, +0.64) fell 25%, 19% and 18%, respectively, on earnings and guidance.

Next week brings several central bank directives, including the ECB on Thursday, which will be of great interest given increased expectations for another rate cut. The Bank of England is also due out Thursday, but there is less uncertatinty there. Additionally, Germany's Merkel and France's Sarkozy are expected to meet on Monday, which could bring influential headlines with regard to Europe's debt crisis. The U.S. calendar lightens up a bit, but Monday brings Oct. Factory Orders and Nov. ISM Services, and Friday we get the Dec. Michigan Sentiment reading.

Sector Leaders/Laggards for Friday 02 December, 2011
Leading Industries/ETFs : Regional Banks-RKH +2.5%, India-INP +2.2%, Shippers-SEA +2.2%, Palladium-PALL +2.1%, Financial Services-IYG +1.8%, Financials-XLF +1.3%, Banks-KBE +1.3%, Australia-EWA +1.2%, Turkey-TUR +1.1%, Home Builders-XHB +1.0%.

Lagging Industries/ETFs : Gold Miners-GDX -3.4%, Cocoa-NIB -2.7%, Coffee-JO -2.1%, Ag-MOO -1.6%, Natural Gas-UNG -1.4%, Silver Miners-SIL -1.4%, Taiwan-EWT -1.2%, Poland-PLND -1.1%

Other Market Moving Factors:
• Unemployment Rate Drops to 8.6%
• Nonfarm payrolls add 120,000 jobs

This week's biggest % gainers/losers
The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

• This week's top 20 % gainers
Utilities: DYN (3.15 +28.38%),
Technology: LAVA (7.17 +34.02%), CLWR (2.11 +31.82%), YOKU (19.94 +31.56%), OCZ (7.4 +29.09%), CYOU (25.41 +24.86%),
Services: CHRS (4.6 +27.41%), JBLU (4.43 +26.47%),
Industrial Goods: ZOLT (8.88 +57.19%), USG (10.56 +29.71%), LPX (7.82 +26.63%), CX (4.77 +25.53%),
Healthcare: VICL (4.68 +32.28%), INHX (15.48 +28.63%),
Financial: MBI (10.51 +36.86%), MTG (3.09 +28.75%),
Consumer Goods: CEDC (4.96 +55.74%),
Basic Materials: ZINC (8.99 +25.84%), MT (18.98 +25%), TTI (9.35 +24.83%),

• This week's top 20 % losers
Technology: GEOY (18.92 -7.15%), PWER (4.24 -6.44%), AWAY (26 -5.97%),
Services: FRAN (16.06 -20.99%), STON (24.36 -17.26%), SFLY (29.04 -13.93%), ZIP (15.17 -13%), BKS (16.05 -9.49%), SUSS (21.15 -9.4%), SSW (10.54 -6.41%), RPXC (13.3 -5.54%),
Industrial Goods: SKUL (13.87 -7.12%),
Healthcare: HSP (27.58 -6.26%),
Financial: FBC (0.57 -8.2%),
Consumer Goods: GIL (16.94 -28.4%), STKL (4.82 -6.45%), TEA (17.03 -6.11%),
Basic Materials: TX (17.1 -10.29%), GBG (0.92 -7.84%), SEMG (25.89 -5.86%),


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ECONOMIC COMMENTARY - Friday 02 December, 2011

• Japan Economic Data

- Q3 Capital Spending -9.8% vs -7.8% in Q2
- Nov Monetary Base +19.5% vs +17.0% in Oct

• Eurozone Oct PPI +0.1% vs +0.3% in Aug

• U.S. Economic Data

- November Nonfarm Payrolls 120K vs 123K
- October Nonfarm Payroll revised to 100K from 80K
- September Nonfarm Payroll revised to 210K from 158K
- November Nonfarm Private Payroll 140K vs 141K
- November Unemployment Rate 8.6% vs 9.0%; Prior 9.0%
- November Average Workweek 34.3 vs 34.3
- November Hourly Earnings -0.1% vs +0.2%

Unemployment Rate Falls to Its Lowest Level Since March 2009
Nonfarm payrolls increased by 120,000 in November after increasing an upwardly revised 100,000 (from 80,000) in October. The gain was in-line with the Briefing.com consensus forecast of 123,000 new jobs in November. Private payrolls increased by 140,000 in November, up from 117,000 in October and in-line with the consensus forecast of 141,000 jobs. That was substantially lower than the 206,000 gain reported by the ADP report. Unfortunately, wage growth weakened in November. Hourly earnings fell 0.1% after increasing 0.2% in October. Average weekly hours remained at 34.3. The decline in wages completely offset the payroll gain and aggregate earnings in November were flat. The unemployment rate declined from 9.0% to 8.6%. That is the lowest unemployment rate since March 2009 and a bright spot in the data. The drop in the unemployment rate was caused in part, however, by a 300,000 decline in the labor force. If the labor force had remained at October levels, the unemployment rate would have fallen to 8.8%. Still, that would be the lowest rate since March 2011.

Domestic Motor Vehicle Sales Reach Their Highest Level Since April 2008
The motor vehicle industry continued to pick up steam in November. Domestic motor vehicle sales increased from 10.29 mln SAAR in October to 10.34 mln SAAR in November. That was the most domestic cars sold since April 2008 and even surpassed the surge from the Cash for Clunkers tax break. Total motor vehicle sales increased from 13.22 mln SAAR October to 13.63 mln SAAR in November. That was the third consecutive month that sales have exceeded 13 mln SAAR. Domestic car sales increased to 4.36 mln SAAR in November from 4.27 mln SAAR in October. Domestic truck sales increased from 5.84 mln SAAR in October to 5.98 mln SAAR in November. Import sales increased from 3.14 mln SAAR in October to 3.30 mln SAAR in November. Sales of imports are now higher than they were immediately prior to the Japanese earthquake and tsunami.

With the notable exception of Honda (HMC) (-6% y/y), which faced new supply shortages following the recent flooding in Thailand, all major motor vehicle manufacturers showed positive growth in November. This included the first year-over-year sales gain at Toyota (TM) (+7%) since the Japanese earthquake and tsunami disrupted Japanese motor vehicle production. In all, U.S. light vehicle sales were up 14% y/y in November. Chrysler Group led the way with a whopping 45% y/y gain. General Motors (GM) and Ford (F) both lost market share in November but saw healthy sales increases at 7% and 13% respectively. Hyundai-Kai is on the verge of overtaking Honda as the number 5 supplier of motor vehicles to the U.S. market. Sales were up 29% y/y in November, and total year-to-date sales are up 27%, which is the biggest gain out of any major motor vehicle manufacturer.

• Asian Markets Close: Nikkei +0.5%; Hang Seng +0.2%; Shanghai -1.1%; Sensex +2.2%
The major Asian markets were mostly mixed today. Perhaps Asia took the opportunity to take profits ahead of the US jobs figure. There was little in the wake of macro-data points to report, but the Japan's Capital Spending came in well below expectations. The Shanghai underperformed the rest of the region, which suffered from a report from Chinese press that new yuan loans declined by 30% MoM. Perhaps, in part, the recent RRR cut had a little to do with this and it will be interesting to see if the cut will loosen lending going forward. The Bank of Korea stated they have increased their gold holdings, now making up 1.0% of reserves vs 0.7% prior. A Westpac analyst thinks the RBA will cut rate 25bps next week...Looking at currencies...the yuan closed little changed to 6.3597; the yen is weaker to 77.89.

In Japan, the Nikkei closed +0.5% as Honda Motor closed down 0.2% after announcing a 6% drop in sales.

In Hong Kong, the Hang Seng closed up 0.2% The Red Chip Index settled -0.2% while H-shares closed +0.7%.

In China, the Shanghai Composite closed down 1.1%. An interesting divergence occurred in ICBC, as shares closed up 0.8% in HK and down -0.7% in Shanghai.

In India, the Sensex (+2.2%) finished with its best weekly gain in over 2 years. Heavyweights Hindalco, Tata Steel and Tata Motors were among the top performers for the week.

• European Markets Closing Prices
UK's FTSE: + 1.0%
Germany's DAX: + 0.7%
France's CAC: + 1.0%
Spain's IBEX: + 1.5%
Portugal's PSI: + 1.5%
Italy's MIB Index: + 1.4%
Irish Ovrl Index: + 0.1%
Greece ATHEX Composite: + 2.9%

IN OTHER NEWS ...

• Treasury Secretary Geithner to meet euro leaders ahead of Dec 9 summit
Will meet with French President Nicolas Sarkozy, Italy's prime minister Mario Monti, and Spain's prime-minister elect Mariano Rajoy. Mr. Geithner will also meet ECB President Mario Draghi, German Finance Minister Wolfgang Schauble and Bundesbank President Jens Weidmann.


___________________________________________

TECHNICAL UPDATE - Friday 02 December, 2011 - AMC


Hardly any changes to the technicals but those retracement levels of 2,625 on NASDAQ and 1,254 on SPX really played up the indices on Thursday. DOW didn't make any headway but at least managed a close above the psychological 12K.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
http://img847.imageshack.us/img847/4799/dowj.jpg (http://imageshack.us/photo/my-images/847/dowj.jpg/)
12,019.42 -0.61 (-0.01%)
Volume: 150,113,475 from 143,702,302 the previous day
Range: 12,007.12 – 12,146.68

Inverted Dragonfly Doji. There's only one way this is going on Monday. But on Weekly candles, the implication is for a continuation for the coming week.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
http://img23.imageshack.us/img23/7272/ndxe.jpg (http://imageshack.us/photo/my-images/23/ndxe.jpg/)
2,626.93 +0.73 (+0.03%)
Volume: 408,136,596 from 445,438,868 the previous day
Range: 2,625.07 – 2,659.23

Bearish Meeting Lines. Also a bearish indication for Monday but for the week, more upside.

S&P 500 INDEX (SPX: CBOE)
http://img17.imageshack.us/img17/7569/spxn.jpg (http://imageshack.us/photo/my-images/17/spxn.jpg/)
1,244.28 -0.300 (-0.02%)
Volume: 664,845 from 616,267 the previous day
Range: 1,243.35 – 1,260.08

Inverted Dragonfly Doji just like DOW.


___________________________________________

MARKET INTERNALS - Friday 02 December, 2011

NYSE :
Lower than avg volume @ 875 mln, vs. 1027 mln
Advancers outpaced Decliners (adv/dec): 1852/1200
New highs outpaced new lows (hi/lo): 115/14

NASDAQ :
Lower than avg volume @ 1611 mln, vs. 1912 mln
Advancers outpaced Decliners (adv/dec): 1518/997
New highs matched the new lows (hi/lo): 44/44


Decliners outpaced Advancers by an average 1.62 to 1 on lower average volumes (-11.69%) on Thursday (avg -0.06%).

The VIX got its lowest close since October 28 at 27.41 in spite of the bearish overtones in an otherwise flat session.

Advancers outpaced Decliners by an average 1.53 to 1 on lower volumes (-15.41%) on Friday (avg 0.00%).

That was a sell off actually but the odd thing is that the number of advancers were really impressive in spite of that.

http://img208.imageshack.us/img208/412/vixb.jpg (http://imageshack.us/photo/my-images/208/vixb.jpg/)

http://img263.imageshack.us/img263/3144/intkg.jpg (http://imageshack.us/photo/my-images/263/intkg.jpg/)


___________________________________________

COMMODITIES & BONDS - Summary for Friday 02 December, 2011

Precious Metals and Energy Close Mixed - from Briefing.com
Precious metals pared their strong overnight gains during U.S. trade and ended the session mixed. Gold managed to gain $9.60 and finish at $1749 per ounce while silver was unable to hold the flat line and shed $0.33 to close the day at $32.45 per ounce. Gold and silver were trading up as much as 1.6% and 3.0% respectively before the rally in the dollar wiped away their strong gains. March copper ended up 5 cents at $3.58.

In the energy complex, crude oil prices settled with a gain of 0.7% at $100.94 after briefly slipping into negative territory before rallying into the close. Natural gas opened lower and trade sideways the entire session. The energy component finished down $0.06 at $3.58 per MMBtu. Heating oil ended higher 2 cents at $2.99, while RBOB gasoline finished up 6 cents at $2.62.

Wheat (continuous) was up 11 cents at $6.25, corn closed down 6 cents at $5.95, soybeans finished up 12 cents to end at $11.36, ethanol closed lower by 2 cents to $2.24, and sugar finished down 1 cent at $0.23.

Commodities AMC on Friday 02 December, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 100.96 +0.76 (+0.76%)
Gold (NYMEX) February 11 ($US per Troy oz.) : 1,751.30 +6.70 (+0.38%)

BONDS - Weekly Summary for Monday 28 November, 2011 to Friday 02 December, 2011

Longer Yields See Weekly Rise
Longer dated Treasuries moved lower this week as equity markets surged more than 7.0%, buoyed by Wednesday’s coordinated central bank action to provide liquidity for the global financial system. The coordinated central bank action came just hours after the People’s Bank of China announced a 50 bp cut to its reserve requirement ratio as they too tried to supply liquidity into the system. Generally better than expected economic data also sparked some selling across the complex until Friday’s rally following the U.S. jobs report. Longer dated yields were up as much as 8 bps on the week as the 30-yr bond finished at 3.036% while the 10-yr yield to climbed 5 bps to 2.042%.

The yield curve swung steeper over the course of the week as the 2-10-yr spread widened 11 bps to 179 bps.

Treasury Yields AMC on Friday 02 December, 2011:
• 2 Year Note 0.25% -0.02
• 5 Year Note 0.92% -0.05
• 10 Year Note 2.05% -0.06
• 30 Year Bond 3.03% -0.08
2/30 Spread : 278bps ( -0.06 ) ... 2/10 Spread : 180bps ( -4 )


A nice gentle rise on the curve as it steepens more ... this has left the 5 year yield just 3 bps from being one-under par.

This is confusing ... why the rush into bonds? Okay, so the market sold off its gains and it warranted some fear but the run into bonds in my opinion was overdone, especially on the long end of the curve.


___________________________________________

PREVIEW FOR THE WEEK - MONDAY 05 DECEMBER, 2011 TO FRIDAY 09 DECEMBER, 2011

Data kicks off the week on Monday with factory orders and ISM Services (10). Chicago’s Evans will give his economic outlook and discuss the Fed’s dual mandate at Ball State University in Muncie, Indiana (12:10).

There is no data scheduled for release on Tuesday.

Wednesday’s data is limited to the weekly MBA Mortgage Index (7) and consumer credit (15).

Thursday will see the release of initial and continuing claims (8:30) and wholesale inventories (10).

Data concludes for the week on Friday with the trade balance (8:30) and Michigan Sentiment (9:55).

Earnings Highlights
Monday: DG and PBY
Tuesday: AZO, BMO, LDR, LQDT, TOL, TTC, AVAV, CASY, FRAN, MW, MIND, OXM, PLAB, POWL, SAI, and VRA.
Wednesday: GU, GIII, GEF, and PSUN
Thursday: BF.B, CMN, CIEN, CONN, COST, LAYN, MPR, MEI, SFD, ALOG, CMTL, COO, ESL, FLOW, GBDC, HWD, PLL, SEAC, and SWHC.
Friday: FGP, and KMGB, and TITN.

Economic Events
Monday:
10:00 am Factory Orders
10:00 am ISM Services
Tuesday:
None Scheduled
Wednesday:
07:00 am MBA Mortgage Index
10:30 am Crude Inventories
15:00 pm Consumer Credit
Thursday:
08:30 am Initial Claims
08:30 am Continuing Claims
10:00 am Wholesale Inventories
10:30 am Natural Gas Inventories
Friday:
08:30 am Trade Balance
09:55 am Mich Sentiment

Conferences and Shareholder/Analyst Meetings of Interest
Monday:
- NVLS Mid-Quarter Update
- S, VIA, AOL and NYT at UBS Global Media and Communications Conference
- Fed's Evans
Tuesday
- WFC, BAC, C and SLM at Goldman Sachs U.S. Financial Services Conference
- HON, GWW, TYC and TYC at BoA Merrill Industrials Confernce
- BoC Rate Decision
Wednesday
- ALL, BK, AXP and JPM at Goldman Sachs Financial Services Conference
- INTC, RVBD, SNPS and DELL at Barclays Technology Conference
- COL, ITT, MON and JEC at BofA Merrill Industrials Confernce
Thursday
- TXN Mid-Quarter Update
- DAL, UAL, JBHT at Bank of America Merrill Lynch 2011 Global Transportation Conference
- LRCX, VMW, VECO and CY at Barclays Technology Conference
- BoE and ECB Rate decisions
Friday
- USDA Crop Report


___________________________________________

SUMMARY

I'm keeping it short and sweet coz I am still in K.L. and don't have a lot of time to sort this out. Expected some profit taking in the early part of trading but I reckon the market will consolidate to the upside today as it mulls over tomorrow's key European meeting. Let's not forget Friday's meeting in Brussels too.

All in all, expect either an extremely volatile week ahead or
a damn flat one before Friday.

Direction for Monday 05 December, 2011; ∆ Up

Direction for the week Monday 05 December, 2011 to Friday 09 December, 2011; ∆ Up

2011 Daily Directional Accuracy: 124/209 (59.33%)

2011 Weekly Directional Accuracy Year-To-Date: 28/46 (60.87%)

Conrad
12-06-2011, 08:10 AM
Sorry I'm late ... just got back from K.L. and just finished fighting with my internet!! *##*^%*@


U.S. MARKETS - Monday 05 December, 2011 AMC

http://img248.imageshack.us/img248/3845/dexsf.jpg (http://imageshack.us/photo/my-images/248/dexsf.jpg/)

I'm keeping it short and sweet coz I am still in K.L. and don't have a lot of time to sort this out. Expected some profit taking in the early part of trading but I reckon the market will consolidate to the upside today as it mulls over tomorrow's key European meeting. Let's not forget Friday's meeting in Brussels too.

Direction for Monday 05 December, 2011; ∆ Up

This European thing is getting tiring and I just wish they get it over and done with now. If the richer nations aren't going to help, I wish they'd come straight up and say it instead of leading the situation on because its just going to make the capitulation worse in the future. And if America is not going to be helpful, then at least put a leash on their rating agencies to stop making things worse!


___________________________________________

MARKET SUMMARY - Monday 05 December, 2011


BRIEFING.COM - Monday 05 December, 2011 AMC
Daily Sector Wrap: Stocks finish higher, but well off early highs

The U.S. markets started the day with substantial gains and held steady for most of the day, but afternoon headlines regarding the potential for negative European outlook revisions from Standard & Poors knocked the wind out of stocks.

This morning, stocks began the day with gains alongside strength in European markets as borrowing costs declined sharply in Italy and Spain. This activity followed news Italy unveiled a new austerity plan and reports that the ECB is preparing an injection of EUR1 trillion for the EU through additional bond buying. Then encouraging headlines about agreement between Germany's Merkel and France's Sarkozy helped markets add to their gains after the open.

However, this afternoon the major market averages pared their gains after headlines indicated that S&P was placing Germany and France on ‘creditwatch negative.' This knocked equities back from their highs, and then another headline that S&P will place all 17 Euro nations on ratings downgrade watch sent markets to fresh lows.

Outside of the macro headlines, today's news flow was relatively light. Before the open, it was announced that SuccessFactors (SFSF 29.44, +1.66) would be acquired by SAP for $40.00 per share in cash, representing a 52% premium over its Dec 2 closing price and an enterprise value of ~$3.4 bln.

In economic news, the ISM Services Index for November came in at 52.0, which is down slightly from the 52.9 that was posted in the prior month. It also failed to meet the Briefing.com consensus estimate of 53.4. Factory orders fell 0.4% during October, just as had been expected by those economists surveyed by Briefing.com. Orders for the prior month were revised downward to reflect a 0.1% decline.

Industry Leaders/Laggards for Monday 05 December, 2011 AMC
Leading Industries/ETFs : Software-IGV +3.1%, Vietnam-VNM +3.1%, Italy-EWI +2.8%, Oil Services-OIH +2.5%, Coffee-JO +2.4%, Airlines-FAA +2.4%, Internet-FDN +2.3%, Steel-SLX +2.3%, Rare/Strategic Metals-REMX +2.3%, Copper Miners-COPX +2.2%, South Africa-EZA +2.1%, Banks-KBE +2.1%, Financials-XLF +2.0%

Lagging Industries/ETFs : Natural Gas-UNG -3.5%, Livestock-COW -2.0%, Egypt-EGPT -1.7%, Cocoa-NIB -1.6%, Gold-GLD -1.5%, Platinum-PPLT -1.3%

Other Market Moving Factors:
• Markets pare gains on reports of negative S&P outlook change on Europe
• Europe's bourses bounce amid reports of progress in shoring up fiscal and financial conditions in continent
• Some traders chase recent gains

Companies trading lower in after hours in reaction to news:
• NS -4.5% (announced 5.25 mln stock offering)
• CLWR -4.4% (announced $300 mln stock offering)


___________________________________________

ECONOMIC COMMENTARY - Monday 05 December, 2011

• Australia Economic Data

- Nov AiG Performance of Service Index 47.7 vs 48.8 in Oct
- Nov TD Securities Inflation +2.1% vs +2.6% in Nov 2010
- Nov ANZ Job Advertisements 0.0% vs -0.6% in Oct
- Q3 Comapy Operating Profits +4.8% vs +7.3% in Q2
- Q3 Inventories -1.1% vs +1.6% in Q2

• China Nov HSBC Services PMI 52.5 vs 54.1 in Oct

• VGK Eurozone final Nov Services PMI 47.5 vs 47.8 prelim

• France final Nov Services PMI 49.6 vs 49.3 prelim

• Germany final Nov Services PMI 50.3 vs 51.4 prelim

• UK Economic Data

- UK Nov Lloyds Employment Confidence -75 vs -72 in Oct
- iShares U.K. Nov Services 52.1 vs 51.3 in Oct

• U.S. Economic Data

- Oct. Factory Orders -0.4% vs. -0.4%; prior revised to -0.1% from +0.3%
- Nov. ISM Services 52.0 vs. 53.4; prior 52.9
- Sep. Factory Orders revised down to -0.1% from +0.3%

Factory Orders Fall on Poor Aircraft Demand, Business Investment Demand Revised Higher
Factory orders declined 0.4% in October, exactly what the Briefing.com consensus expected. Orders in September were revised down from 0.3% to -0.1%. Durable goods orders were revised up from -0.7% in the advance release to -0.5%. Excluding transportation, durable goods orders were revised up from 0.7% to 1.1% Just about all of the positive revisions to durable goods in October came from stronger-than-originally-expected demand for business investment goods. Orders of nondefense capital goods excluding aircraft were revised up from -1.8% in the advance release to -0.8%. Shipments of business investment goods, which factor directly into Q4 GDP, were also revised up a percentage point from -1.1% to -0.1%. Nondurable goods orders declined 0.3% in October, down from +0.9% growth in September.

ISM Non-Manufacturing Index Slips on Weaker Employment Outlook
The ISM Non-manufacturing Survey declined from 52.9 in October to 52.0 in November. The Briefing.com consensus expected the index to expand to 53.4. The drop in the index was mainly the result of an unexpected contraction in non-manufacturing employment. Even though the employment index fell from 53.3 in October to 48.9 in November, the November jobs report already refuted the ISM results and revealed a 140,000 gain in private payrolls. In a more telling sign of the economy, business activities increased from 53.8 in October to 56.2 in November. New orders were also up from 52.4 to 53.0. Order backlogs contracted for the second consecutive month, but the rate of contraction slowed as the respective index increased from 47.0 in October to 48.0 in November.

• Asian Markets Close; Nikkei +0.6%, Hang Seng +0.7%, Shanghai -1.2%, Sensex -0.3%
The major Asian indices closed mixed as traders hold out hope that Italy's new austerity plan will provide some confidence in the region. China's Shanghai Composite (-1.2%) underperformed as more worries have emerged that there is not enough liquidity in the system as cash demands are higher at year end. Today's data showed ANZ Job Advertisements flat MoM and company operating profits up 4.8% QoQ (3.1% QoQ expected). Looking at the currencies...USDCNY is little changed at 6.3414 while USDJPY is flat at 78.00.

In Japan, the Nikkei closed +0.6% as financial stocks outperformed. Sumitomo Mitsui Financial Group rallied 2.5% to lead the space higher. Fast Retailing gained 3.6% despite reporting same store sales fell 1.0% in November. The drop in sales was still an improvement over last month which saw sales fall 4.0%.

In Hong Kong, the Hang Seng finished +0.7% as energy stocks gained on the strength in crude oil. Coal-based energy co China Shenhua Energy added 3.1% while PetroChina rose 1.0%. Financials were strong as Bank of China Hong Kong tacked on 1.1%.

In China, the Shanghai Composite settled -1.2% as solar stocks were hit hard after the U.S. Trade Commission announced it was launching an investigation into whether or not Chinese solar cos were flooding the market with low priced products in an effort to harm U.S. competitors. Shenzhen Topraysolar tumbled 6.1% and Tianwei Baobian fell 3.2% on the news.

In India, the Sensex closed -0.3% as retailers fell on news that Congress put plans on hold to open the country's retail sector to foreign competition. Pantaloon Retail tumbled 12.9% while Trent shed 3.3%.

• European Markets Closing Prices
UK's FTSE: + 0.4%
Germany's DAX: + 0.4%
France's CAC: + 1.2%
Spain's IBEX: + 1.7%
Portugal's PSI: + 1.8%
Italy's MIB Index: + 2.9%
Irish Ovrl Index: + 1.7%
Greece ATHEX Composite: + 0.4%

EARNINGS CALL

• Before market open

Dollar General (DG) beats by $0.03, reports revs in-line; raises FY12 EPS, narrows revs
Reports Q3 (Oct) earnings of $0.50 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.47; revenues rose 11.5% year/year to $3.6 bln vs the $3.57 bln consensus. Co issues in-line guidance for FY12, raises EPS to $2.29-2.32 from $2.22-2.30 vs. $2.29 Capital IQ Consensus Estimate; narrows FY12 revs to +13% YoY to ~$14.73 bln from +12-14% YoY vs. $14.71 bln Capital IQ Consensus Estimate. Same-store sales, based on the comparable 52-week periods ended January 27, 2012 and January 28, 2011, are now expected to increase in a range of ~5.6 to 5.8 percent. Same-store sales in the 2011 fourth quarter, based on comparable 13-week periods, are expected to increase ~five percent. Adjusted operating profit for the 53-week 2011 period is expected to increase ~15 percent over fiscal 2010, driven by increased sales and prudent expense management. The co expects a decrease in its gross profit rate comparable to the decrease experienced in the 39-week period as the result of purchase cost increases, higher fuel costs and weakness in discretionary spending.

IN OTHER NEWS ...

• Standard & Poor's confirms that it puts ratings on Eurozone sovereigns on CreditWatch with negative implications
Click here for the FT.com article (http://www.ft.com/intl/cms/s/0/7cf2e0ae-1f63-11e1-9916-00144feabdc0.html#axzz1fgfwOfcR)

• Lockheed Martin (LMT) was awarded $835 mln contract from the Air Force for a Foreign Military Sales Program


___________________________________________

TECHNICAL UPDATE - Monday 05 December, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,097.83 +78.41 (+0.65%)
Volume: 153,831,767 from 150,113,475 the previous day
Range: 12,021.46 – 12,186.53

http://img834.imageshack.us/img834/6742/dowz.jpg (http://imageshack.us/photo/my-images/834/dowz.jpg/)

DJI: Inverted Dragonfly Doji. There's only one way this is going on Monday. But on Weekly candles, the implication is for a continuation for the coming week.
NASDAQ: Bearish Meeting Lines. Also a bearish indication for Monday but for the week, more upside.
SPX: Inverted Dragonfly Doji just like DOW.

1,245 held SPX up while DOW found a launchpad off the 12K support. However, their candles are signaling the reemergence of the bears. NASDAQ wears two consecutive Bearish Gain candles implying that strength in the index is becoming questionable.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,655.76 +28.83 (+1.10%)
Volume: 433,560,166 from 408,136,596 the previous day
Range: 2,641.59 – 2,674.53

S&P 500 INDEX (SPX: CBOE)
1,257.08 +12.80 (+1.03%)
Volume: 681,306 from 664,845 the previous day
Range: 1,244.33 – 1,266.73


___________________________________________

MARKET INTERNALS - Monday 05 December, 2011 AMC

NYSE :
Lower than avg volume @ 891 mln, vs. 1021 mln
Advancers outpaced Decliners (adv/dec): 2360/690
New highs outpaced new lows (hi/lo): 116/8

NASDAQ :
Lower than avg volume @ 1646 mln, vs. 1906 mln
Advancers outpaced Decliners (adv/dec): 1713/827
New highs outpaced new lows (hi/lo): 64/33


Advancers outpaced Decliners by an average 1.53 to 1 on lower volumes (-15.41%) on Friday (avg 0.00%).

That was a sell off actually but the odd thing is that the number of advancers were really impressive in spite of that.

Advancers outpaced Decliners by an average 2.68 to 1 on lower average volumes (-13.32%) on Monday (avg 0.93%).

The New Lows on NASDAQ finally relented and lost to the New Highs after weeks of domination. Volumes continue to be weak in spite of the holiday season "joy" and the market is headline sensitive to Europe again as evidenced in the last hour of trading.

http://img834.imageshack.us/img834/4894/intu.jpg (http://imageshack.us/photo/my-images/834/intu.jpg/)


___________________________________________

BONDS, COMMODITIES & CURRENCIES from Briefing.com

Crude crumbles heading into the close

Gold ended lower by 0.9% at $1734.60 per ounce. Futures attempted to recoup morning losses but failed to break above the unchanged mark. They spent the afternoon session giving back that bounce and closed near levels seen in overnight trade. Reports that has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc, have rallied the dollar and pressured gold, and silver, to fresh lows. Silver ended off 0.9% at $32.37 per ounce. Silver slowly gave back its morning gains to end in negative territory on the day. March copper gained 3 cents to finish at $3.61.

Crude oil ended near unchanged at $100.99 per barrel. Futures sold off sharply on the back of the dollar rebound -spurred by the report about S&P's warning. They put in lows at $100.24 but managed to bounce off those lows ahead of the close. Natural gas ended lower by 3.4% at $3.46 per MMBtu. Futures were weighed on by mild early-week weather. Heating oil ended up 0.5 cents at $2.99 while RBOB gasoline gained 0.3 cents to finish at $2.61 (all Dec contracts).

Wheat (continuous) was down 13 cents at $6.12, corn closed down 4 cents at $5.91, soybeans finished down 10 cents to end at $11.26, ethanol closed lower by 2 cents to $2.22, and sugar finished up 1 cent at $0.24.

Commodities AMC on Monday 05 December, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 100.99 +0.03 (+0.03%)
Gold (NYMEX) February 11 ($US per Troy oz.) : 1,734.50 -16.80 (-0.96%)

Treasuries ended the day at their best levels, but still closed the cash session fractionally lower after Italy's austerity plan and an ‘agreement' between French President Nicolas Sarkozy and German Chancellor Angela Merkel was reached. The 10-yr yield hit a session high of 2.11% earlier this morning, but after several attempts to push through that level failed the yield began to ease. First came an afternoon Financial Times headline that suggested Germany, France, and four other ‘AAA' rated European sovereigns were going to be placed on ‘creditwatch negative' by S&P. Treasuries rallied back to almost unchanged on that news as the 10-yr yield dropped to 2.05%. Following the cash close another headline surfaced, this time from Bloomberg TV, which indicated all 17 Euro nations were placed on rating downgrade watch. A flatter yield curve is now in play with the 2-10-yr spread tighter by 3 bp at 175 bps.

Treasury Yields AMC on Monday 05 December, 2011:
• 2 Year Note 0.27% +0.02
• 5 Year Note 0.93% +0.01
• 10 Year Note 2.04% -0.01
• 30 Year Bond 3.02% -0.01
2/30 Spread : 275bps ( -0.03 ) ... 2/10 Spread : 177bps ( -3 )


This is confusing ... why the rush into bonds? Okay, so the market sold off its gains and it warranted some fear but the run into bonds in my opinion was overdone, especially on the long end of the curve.

The curve pivoted on its centre to flatten some. This looks very much like Op Twist in play and I reckon we're going to see more of this in the days and weeks to come especially if the bond traders stay out of the fixed income space.


___________________________________________

PREVIEW FOR TUESDAY 06 DECEMBER, 2011

There is no data scheduled for release on Tuesday.

Earnings Highlights
BMO: AZO, BMO, LDR, LQDT, TOL, and TTC.
AMC: AVAV, CASY, FRAN, MW, MIND, OXM, PLAB, POWL, SAI, and VRA.

Economic Events
None Scheduled

Conferences and Shareholder/Analyst Meetings of Interest
- WFC, BAC, C and SLM at Goldman Sachs U.S. Financial Services Conference
- HON, GWW, TYC and TYC at BoA Merrill Industrials Confernce
- BoC Rate Decision


___________________________________________

SUMMARY

BRIEFING.COM - Monday 05 December, 2011 AMC
What it all means.

The S&P 500 is up 42% over the past three years. It is up 13% over the past two years, and 2% over the past year. That almost sounds like a bull market.

Yet, it unquestionably feels like a bear market.

This is because the discussion is dominated by those who have experienced a total decline in wealth over the past five years. It will take a number of years more before total wealth for many returns to previous levels. It is hard to be upbeat under those circumstances. That is precisely one of the reasons young investors with few assets should look at current conditions as an opportunity. Now is a time to seriously consider investing for the long term. Even for more mature investors, the reality of the rise in stock prices the past few years, and the prospect of further increases, cannot be ignored.

The only relevant question for an investment today is -- will the value go up or down in the future? It makes absolutely no difference what the value was previously.

I am calling today based on pure gut feel. That's right, no technicals, macros or fundamentals ... just good ol' instinct. It helps that there is no data due out before the open so this gut feel call may not be an irrational one.

Direction for Tuesday 06 December, 2011; ∇ Down

2011 Daily Directional Accuracy: 125/210 (59.52%)

Conrad
12-07-2011, 05:55 AM
U.S. MARKETS - Tuesday 06 December, 2011 AMC

http://img84.imageshack.us/img84/7534/dexsq.jpg (http://imageshack.us/photo/my-images/84/dexsq.jpg/)

I am calling today based on pure gut feel. That's right, no technicals, macros or fundamentals ... just good ol' instinct. It helps that there is no data due out before the open so this gut feel call may not be an irrational one.

Direction for Tuesday 06 December, 2011; ∇ Down

If not for the respite from Europe in mid session, that gut feel call wouldn't be off the mark at all. NASDAQ vindicated that call for me but the other two benchmarks stayed in the black. I wouldn't regard this as a rally day as the leadership was amongst the defensive plays while Financials (-0.1%) and Tech (unch) lagged.


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MARKET SUMMARY - Tuesday 06 December, 2011


BRIEFING.COM - Tuesday 06 December, 2011 AMC
Daily Sector Wrap: Mixed Finish for Major Averages

Stocks spent the better part of the session bobbing along the neutral line before a bout of buying interest induced a broad market bounce, but that move was ultimately countered by sellers.

An absence of economic data and material corporate announcement kept stocks close to the flat line for most of the session, at least until word surfaced that officials in Europe are considering an increase in the size of proposed firewalls. Stocks responded to the report by bouncing to a solid gain.

However, a lack of leadership left stocks unable to resist the late efforts of sellers, who were successful in sending the broad market back near the neutral line. The Dow did manage to hold on for a modest gain, thanks to strength among a few blue chips. The Nasdaq ultimately settled in the red after it had lagged all session.

Neither the dollar nor the euro did much today. As such, both finished flat.

Commodities managed to overcome early weakness, resulting in a 0.2% gain for the CRB Index. Silver led the effort by rallying to just above $32.75 per ounce for a gain greater than 1% after the precious metal had been down about 2% in early pit trade.

The lack of trading catalysts kept many on the sidelines, resulting paltry trading volume. Participation is likely to remain depressed tomorrow, given that the economic calendar remains without meaningful data. That will likely keep many focused on an upcoming announcement from the European Central Bank and the outcome of a eurozone summit.

Sector Leaders/Laggards for Tuesday 06 December, 2011 AMC
Leading Sectors: Materials +0.8%, Health Care +0.5%, Telecom +0.3%, Consumer Staples +0.2%, Utilities +0.2%, Industrials +0.2%, Energy +0.1%.
Leading Industries/ETFs : Palladium PALL +5.8%, Copper Miners COPX +3.5%, Silver SLV +2.8%, Cotton BAL +1.8%, Gasoline UGA +1.3%

Unchanged Sectors: Tech unch.

Lagging Sectors: Financials -0.1%, Consumer Discretionary -0.2%.
Lagging Industries/ETFs : Russia RSX -6.2%, Emerging Eastern Europe ESR -5.0%, Taiwan EWT -2.3%, Solar TAN -2.3%, Rare/strategic Metals REMX -1.5%, Clean Energy PBW -1.4%, Oil Services OIH -1.1%

Other Market Moving Factors:
• Stocks lack leadership -- financials and tech muddle along
• Dollar drifts along neutral line
• Absence of data and corporate developments leave traders without directional cues

Companies trading higher in after hours in reaction to earnings: MIND +15.4%, MW +6.7%, SAI +1.3%

Companies trading lower in after hours in reaction to earnings: VRA -4.4%
Companies trading lower in after hours in reaction to news:
• FNFG -3.7% (announces $450 mln common stock offering and reduces the quarterly cash dividend)
• EXPR -2.2% (announces a 16 mln share common stock offering by selling shareholder)


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ECONOMIC COMMENTARY - Tuesday 06 December, 2011

• Reserve Bank of Australia cuts rates by 25bps to 4.25%
For details of this release, click here (http://www.rba.gov.au/media-releases/2011/mr-11-28.html)

• Switzerland Nov CPI -0.5% vs -0.1% in Nov 2010

• BOE minutes released; sees banks earnings deterioated since Oct
For details of this release, click here (http://www.bankofengland.co.uk/publications/records/fpc/pdf/2011/record1112.pdf)

• Eurozone GDP Q3 prelim GDP +0.2% vs +0.2% in Q2

• Bank of Canada leaves interest rates unchanged at 1.00%, as expected

• Asian Markets Close; Nikkei -1.4%, Hang Seng -1.2%, Shanghai -0.3%, Sensex CLOSED
The major Asian indices closed mostly lower after S&P warned that it was placing 15 Euro nations on review for downgrade. A loss of 0.3% dropped the Shanghai Composite to near its 2011 lows. The Reserve Bank of Australia lowered its benchmark interest rate 25 bps to 4.25% in an expected move and noted that inflation is likely to be in-line with its 2012 and 2013 targets. Data in the region was mixed as Australia's current account deficit shrank to A$5.6 bln (A$6.7 bln previous) while Indonesia's foreign exchange reserves fell to $111.32 bln ($113.96 bln previous). Looking at the currencies...USDCNY strengthened to 6.3390 while USDJPY is flat at 77.80.

In Japan, the Nikkei closed -1.4% as financials ended lower. Nomura Holdings was one of the worst performers in the space, trading down 1.9%. Automaker Toyota fell 2.1% after saying it would announce its revised forecast through March on Friday.

In Hong Kong, the Hang Seng finished -1.2% as financials were under pressure. Agricultural Bank of China dropped 1.7% while Bank of China shed 1.8%. European retailer Esprit tumbled 10% on heavy volume after the co's executive director and CFO announced his resignation.

In China, the Shanghai Composite settled -0.3% as miners saw heavy selling. Zhongjing Gold Corp. and Zijin Mining lost 3.4% and 1.4% respectively as gold prices moved lower.

In India, the Sensex was closed for Moharum.

• European Markets Closing Prices
UK's FTSE: + 0.0%
Germany's DAX: -1.3%
France's CAC: -0.7%
Spain's IBEX: + 0.1%
Portugal's PSI: -1.3%
Italy's MIB Index: -0.5%
Irish Ovrl Index: -0.6%
Greece ATHEX Composite: -2.0%

EARNINGS CALL

• Before market open

Toll Brothers (TOL) beats by $0.03, beats on revs
Reports Q4 (Oct) earnings of $0.09 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.06; revenues rose 6.3% year/year to $427.8 mln vs the $417.56 mln consensus. The co's contract cancellation rate was ~7.9% in the fourth quarter of FY 2011, compared to 8.8% in FY 2010's fourth quarter. As a percentage of beginning-quarter backlog, FY 2011's fourth-quarter cancellation rate was 3.1% compared to 3.3% in FY 2010's same period. These rates were consistent with the Company's pre-downturn historical averages. With regard to its outlook, co states: "Based on our FYE 2011 backlog and our current community count, we currently estimate that we will deliver between 2,400 and 3,200 homes in FY 2012 at an average price of between $550,000 and $575,000 per home."

IN OTHER NEWS ...

• Joy Global- JOYG had undergone a ticker change to JOY as the shares now move to NYSE effective this morning; PRGO replaces JOY in the NDX 100 index.


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TECHNICAL UPDATE - Tuesday 06 December, 2011 - AMC

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
12,150.13 +52.30 (+0.43%)
Volume: 145,919,608 from 153,831,767 the previous day
Range: 12,076.71 – 12,215.71

http://img202.imageshack.us/img202/4593/dowvb.jpg (http://imageshack.us/photo/my-images/202/dowvb.jpg/)

1,245 held SPX up while DOW found a launchpad off the 12K support. However, their candles are signaling the reemergence of the bears. NASDAQ wears two consecutive Bearish Gain candles implying that strength in the index is becoming questionable.

DOW was rejected at 12,200 and SPX at 1,265. NASDAQ wears three consecutive bearish candles with no real sentiment indication. I will be watching for that Double Top formation on the DOW very closely coz it looks very close to completion.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,649.56 -6.20 (-0.23%)
Volume: 374,593,588 from 433,560,166 the previous day
Range: 2,639.18 – 2,663.63

S&P 500 INDEX (SPX: CBOE)
1,258.47 +1.39 (+0.11%)
Volume: 595,394 from 681,306 the previous day
Range: 1,253.03 – 1,266.03


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MARKET INTERNALS - Tuesday 06 December, 2011 AMC

NYSE :
Lower than avg volume @ 802 mln, vs. 1013 mln
Advancers outpaced Decliners (adv/dec): 1524/1494
New highs outpaced new lows (hi/lo): 79/13

NASDAQ :
Lower than avg volume @ 1445 mln, vs. 1896 mln
Decliners outpaced Advancers (adv/dec): 1091/1409
New lows outpaced new highs (hi/lo): 39/45


Advancers outpaced Decliners by an average 2.68 to 1 on lower average volumes (-13.32%) on Monday (avg 0.93%).

The New Lows on NASDAQ finally relented and lost to the New Highs after weeks of domination. Volumes continue to be weak in spite of the holiday season "joy" and the market is headline sensitive to Europe again as evidenced in the last hour of trading.

Decliners outpaced Advancers by an average 1,11 to 1 on lower average volumes (-22.76%) on Tuesday (avg +0.10%).

Talk about divergence. Now, is the NASDAQ still leading us or what? Coz if it ain't, then we're looking at the end of Tech leadership which means today was bullish. If Tech is still leading, then we're in for another ride to the downside!

http://img841.imageshack.us/img841/765/intni.jpg (http://imageshack.us/photo/my-images/841/intni.jpg/)


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BONDS, COMMODITIES & CURRENCIES from Briefing.com

Early Losses Erased
It was a relatively quiet session for commodities today, although precious metals rallied throughout the latter portion of the session, recouping morning losses in the process. Gold, which ended lower by 0.2% at $1730.90 per ounce, came just shy of the unchanged mark and its session high of $1732.50. Silver futures, which closed a dime shy of its session high with a 1.2% gain at $32.77 per ounce, pushed into positive territory after they had been down about 2% this morning. March copper shed 4 cents to close at $3.58.

Crude oil closed up 0.3% at $101.28 per barrel after the energy component erased modest morning losses. Natural gas booked a 0.2% gain by finishing at $3.48 per MMBtu, shy of its session high of $3.51 per MMBtu, after fighting through morning selling pressure. Heating oil ended higher by 3 cents at $3.02, while RBOB gasoline gained 3 cents to close at $2.64 (all Dec contracts).

Commodities AMC on Tuesday 06 December, 2011:
Light Crude (NYMEX) January 11 ($US per bbl.) : 101.28 +0.29 (+0.29%)
Gold (NYMEX) February 11 ($US per Troy oz.) : 1,731.80 -2.70 (-0.16%)

Treasuries finished on session lows after the Financial Times reported the European Union is considering two rescue funds in conjunction with IMF support. Details of the supposed consideration remain unclear, but just the news sent traders out of Treasuries and into equities. After spending the majority of the session near 2.06% the 10-yr yield climbed to 2.093% at the cash close as headlines of the new plan crossed the wires. Late day selling dropped the 30-yr bond onto session lows as the 30-yr yield ended up 7 bps at 3.107%. The yield curve swung steeper on the selling with the 2-10-yr spread widening to 182.5 bps.

Treasury Yields AMC on Tuesday 06 December, 2011:
• 2 Year Note 0.25% -0.02
• 5 Year Note 0.94% +0.01
• 10 Year Note 2.08% +0.04
• 30 Year Bond 3