Editor Note: I highly recommend a regular monday visit to this Don Vialoux report. Today he analyses an astonishing 50 plus Stocks, Commodities and Indexes.
Buy in October and go away
History shows that the best time to “buy the equity market” each year is near the end of October. When is the best time to “buy the equity market” this year?
….read more of Don Vialoux’s National Post article HERE.
S&P 500 futures were up 6 points in pre-opening trade. Futures are responding to weakness in the U.S. Dollar as well as encouraging news from China and from the semiconductor industry. China’s Purchasing Manager’s Index rose again last month to reach an 18 month high implying accelerated economic growth. The Semiconductor Association announced that world wide semiconductor sales in the third quarter rose 19.7% on a year over year basis.
Commodities priced in U.S. Dollars moved higher including gold, copper and crude oil.
CIT Group moved into Chapter 11 bankruptcy over the weekend. The stock has fallen to $0.38 this morning from a close at $0.72 on Friday. The move had been anticipated and did not influence equity index futures.
Analysts are starting to take a more positive stance on the North American forest product industry. Credit Suisse upgraded Weyerhaeuser this morning and boosted its target price from $34 to $37. Domtar is up 5% after RBC Capital upgraded the stock from Outperform to Top Pick. Target was raised to $70. Also, Raymond James upgraded Domtar from Market Perform to Outperform. Demand for lumber and fine papers is increasing. Lumber prices broke to a two month high on Friday. ‘Tis the season for forest product stocks to move higher!
Target goes from $100 U.S. to $50 U.S. Citigroup suggests that new competition will reduce growth prospects.
Ford gained 9% after reporting better than expected third quarter earnings. Consensus was a loss of $0.12 per share. Actual was an operating profit of $0.26 per share.
Yum! Brands added 2% after RBC Capital raised its rating from Sector Perform to Outperform.
Cott Corp. was upgraded by Bank of America/Merrill to Outperform from Sector Perform.
Economic News This Week
The economic focuses this week are on the FOMC meeting on Wednesday and the October employment report on Friday.
September Construction Spending to be released at 10:00 AM EST on Monday is expected to decline 0.2% versus a gain of 0.8% in August.
October ISM to be released at 10:00 AM EST on Monday is expected to improve to 53.0 from 52.6.
September Factory Orders to be released at 10:00 AM EST on Tuesday are expected to improve 0.9% versus -0.8% in August.
October ADP report to be released at 8:15 AM EST on Wednesday is expected to fall 190,000 versus a fall of 254,000 in September.
October ISM Services to be released at 10:00 AM EST on Wednesday are expected to improve to 51.5 versus 50.9 in September.
Meeting minutes from the FOMC meeting to be released at 2:15 PM EST on Wednesday are expected to maintain the Fed Fund rate at 0.25%.
Preliminary third quarter Production to be released at 8:30 AM EST on Thursday is expected to improve 6.5% versus a gain of 6.6% in the second quarter.
October Non-farm Payrolls to be released at 8:30 AM EST on Friday are expected to decline by 175,000 versus a decline of 263,000 in September. The October Unemployment Rate is expected to increase to 9.9% from 9.8% in September. October Hourly Earnings are expected to improve 0.1% versus 0.1% in September.
September Wholesale Inventories to be released at 10:00 AM EST on Friday are expected to decline 1.0% versus a 1.3% decline in August.
Earnings News
This week is the busiest week for third quarter earnings reports on both sides of the border.
Monday sees Cameco, FNX Mining, Ford, Humana, Kinross, Magna International, Power Corp. and West Fraser.
Tuesday sees Archer Daniels, Emerson Electric, Hudbay Mining, Kraft, Pitney Bowes, Russell Metals, Saputo, Talisman, Viacom and Yamana.
Wednesday sees Aecon, Agrium, Baker Hughes, Cisco, Comcast, Enbridge, Fannie Mae, Goldcorp, IAMGold, Pulte Homes, Time Warner, TransCanada and Yellow Pages.
Thursday sees Biovail, Cdn. Natural Resources, Fortis, Gerdau AmeriSteel, Great West Life, Linamar, Manitoba Telecom, ManuLife, Sun Life, Thomson Reuters and Wendy’s
Friday sees Brookfield Asset Management and Suncor.
Equity Index Trends
The ratio of S&P 500 stocks in an uptrend to a downtrend (i.e. the Up/Down ratio) plunged last week from 5.91 to (289/131=) 2.21 (including 22 stocks that broke support on Friday). The Up/Down ratio continues to trend lower from an intermediate overbought level.
Bullish Percent Index for S&P 500 stocks dropped last week from 84.40% to 74.8% and fell below its 15 day moving average. The Index remains intermediate overbought and has established a downtrend. .
……view the analysis of more than 50 Charts HERE