3SOF

September 21, 2010
Overnight U.S. Stock News...

•   Dec S&Ps this morning are trading slightly higher by 0.40 points (+0.04%) as the market awaits the outcome of today's FOMC meeting . The stock market yesterday rallied the entire day and finished sharply higher (Dow +1.37%, S&P 500 +1.52%, Nasdaq Composite +1.74%). The S&P 500 and the Dow rallied to 4-month highs while the Nasdaq climbed to a 4-1/4 month high. Bullish factors included (1) carry-over strength from a rally in European stock markets after Moody's Investors Service and Fitch Ratings affirmed their top-tier credit ratings on the UK and Germany, respectively, along with reduced European sovereign-debt concerns after Irish Finance Minister Lenihan said that his country won't require a EU bailout and Irish Central Bank Governor Honohan said that costs related to the country's banking system remain "manageable," (2) gains in homebuilder stocks led by Lennar after the fourth-largest US homebuilder reported Q3 earnings that topped estim ates as margins widened, (3) increased M&A activity after IBM announced a $1.7 billion takeover of Netazza Corp., and (4) data from research form Birinyi Associates that said US companies have announced $258 billion in stock buybacks so far this year, higher than the $52 billion in the first three quarters of 2009, and the largest increase for any Jan-to-Sep period since at least 2000 when Birinyi first began tracking the data.

•   Bearish factors included (1) concerns the European economy may be slowing after the monthly report from the Bundesbank said that growth in Germany, Europe's largest economy, slowed "markedly" in Q3 as the global recovery weakened, (2) the unexpected stagnation in the Sep NAHB housing market index which remained unchanged at a 1-1/2 year low of 13 versus expectations of +1 to 14, (3) weakness in producers of pulp and paper after Deutsche Bank AG said containerboard prices didn't increase as previously expected in August, and (4) the action by Deutsche Bank AG to cut their year-end estimate for the S&P 500 Index to 1,275 from an earlier estimate of 1,375, citing a slowing economy.

September 22, 2010
Overnight U.S. Stock News...

•   Dec S&Ps this morning are down -3.20 points. The stock market yesterday rallied to its high following the post-FOMC meeting statement but faded into the close and finished mixed (Dow +0.07%, S&P 500 -0.26%, Nasdaq Composite -0.28%). The Dow posted a 4-1/4 month high. The S&P 500 climbed to a 4-month high but shed its gains and closed lower. The Nasdaq rallied to a 4-1/2 month high but erased its gains and finished lower. Bearish factors included (1) weakness in commodity producers after crude oil and metals prices declined, (2) concern that the labor market remains weak after the US Labor Department said payrolls dropped in 36 US states in Aug and that joblessness climbed in 27 states, and (3) the Fed's post-FOMC statement that said the pace of recovery has "slowed in recent months," and that employers "remain reluctant to add to payrolls."

•   Bullish factors included (1) reduced concern that the European sovereign-debt crisis will worsen after successful government bond auctions in Spain and Ireland, (2) a rally in homebuilders after the stronger than expected Aug US housing starts (+10.5% to 598,000 versus expectations of +0.7% to 550,000), (3) the stronger than expected Aug US building permits which is a proxy of future activity (+1.8% to 569,000 versus expectations of +0.2% to 560,000), (4) a sharp increase in M&A activity as data from Bloomberg shows that there has been $526 billion of deals announced worldwide this quarter, the most in 2 years, and (5) the post-FOMC statement in which the Fed said it is "prepared to provide additional accommodation if needed."

•   Adobe Systems (ADBE) tumbled 16% in European trading after the company said late yesterday that Q4 revenue will be $950 million to $1 billion, lower than analysts' estimates of $1.03 billion, as the company cited slower demand from back-to-school shoppers and Japanese buyers.

•   PMC-Sierra (PMCS) slipped 4.1% in pre-market trading after the chipmaker reduced its Q3 sales forecast to $163 million at most, below analysts' estimates of $173.5 million.

Dow Jones Industrial Average...

The Dow is headed for a test of resistance at 10700. Twiggs Money Flow (21-day) recovered above 15%, signaling rising buying pressure. The index is unlikely to reverse direction before the month-end and may well break resistance, indicating an advance to 11500, but it would be prudent to wait for retracement in October to test the new support level. Reversal below the former primary support level at 9900 is unlikely at present, but would indicate a primary down-swing, with a target of 8700.

Target calculations: 10700 + ( 10700 - 9900 ) = 11500 and 9700 - ( 10700 - 9700 ) = 8700

September 23, 2010
Overnight U.S. Stock News...

•   Dec S&Ps this morning are down -7.40 points as growth slows in Europe. The stock market yesterday traded weaker most of the session and finished moderately lower (Dow -0.20%, S&P 500 -0.48%, Nasdaq Composite -0.63%). Bearish factors included (1) concern about the sustainability of the economic recovery after July FHFA home prices fell more than expected (-0.5% m/m versus expectations of -0.2% m/m) with the -3.3% y/y drop the eighth consecutive y/y decline, (2) weakness in bank stocks after Deutsche Bank cut Morgan Stanley and Goldman Sachs Q3 earnings estimates, citing weak trading revenue, (3) the decline in airline stocks after American Airlines said its mainline unit revenue will increase 11% at most in Q3, below estimates for a 12% increase, and (4) the prediction from Yale University economist Shiller that 7 years of "bad times" may lie ahead for the US economy as it recovers from the financial crisis that began in 2007 as employment and GDP growth remain stagnant.

•   Bullish factors included (1) the report from Moody's Investors Service that the number of US companies at greatest risk of default dropped to 195 as of Sep 1, the lowest amount in two years as the Fed's efforts bolstered the economy, (2) the prediction from Mirae Asset Securities that the S&P 500 Index may surge 32% by the second half of 2011 to 1,500 as a rally in silver, the precious metal most used in industry, signals a pickup in economic growth, and (3) the decline in the 10-year T-note yield to a 3-week low of 2.50%.

•   Vertex Pharmaceuticals (VRTX) fell 4.4% in European trading after the drug developer said it will sell $375 million of convertible senior subordinated notes due in 2015.

September 24, 2010
Overnight U.S. Stock News

•   Dec S&Ps this morning are higher by +4.90 points. The stock market yesterday swung between gains and losses until a late-day slide left them closing lower (Dow -0.72%, S&P 500 -0.83%, Nasdaq Composite -0.32%). Bearish factors included (1) carry-over weakness from a decline in European stocks after growth in Europe's services and manufacturing industries weakened more than expected when the Sep Euro-Zone PMI composite fell to its lowest level in 7 months, along with a widening in the bond spreads of Portugal and Ireland to record levels over comparable German bunds, signaling heightened sovereign-debt concerns, (2) the unexpected increase in weekly US initial unemployment claims (+12,000 to 465,000 versus expectations of unchanged at 450,000), (3) the action by Bank of America to cut its year-end forecast for the S&P 500 to 1,250 from 1,300, citing concern that American taxes will rise and hold the economic recovery back, (4) the slide in real estate com panies and financials after former Fed Chairman Volcker said the US mortgage market is "absolutely broken," and (5) the prediction from Goldman Sachs Group that action by Congress to let all of the roughly $270 billion in tax cuts lapse would subtract almost 10% from annualized disposable income growth in Q1 of 2011, which may erase any GDP growth in the first half of next year.

•   Bullish factors included (1) the stronger-than-expected Aug existing home sales (+7.6% to 4.13 million versus expectations of +7.1% to 4.10 million), (2) the larger-than-expected increase in Aug leading indicators (+0.3% versus expectations of +0.1%), and (3) strength in technology stocks after Piper Jaffray raised its estimates for iPad sales and lifted Apple's 2011 earnings estimates and Red Hat surged after reporting better-than-expected Q2 profit.

•   Nike (NKE) rose 4.1% in European trading after the company late yesterday reported Q1 profit of $1.14 a share, well ahead of analysts' estimates of $1.00 as it said orders in China surged 25% and sales in North America continued to rebound on a growing apparel business.

•   TIBCO Software (TIBX) jumped 7% in pre-market trading after the company reported Q3 adjusted earnings of 17 cents a share, beating analysts' estimates of 15 cents.

September 27, 2010
Overnight U.S. Stock News...

•   Dec S&Ps this morning are up +1.00 point. The stock market last Friday strengthened throughout the day and ended sharply higher (Dow +1.86%, S&P 500 +2.12%, Nasdaq Composite +2.33%). The S&P 50 and the Dow posted 4-1/2 month highs and the Nasdaq posted a 4-3/4 month high. Bullish factors included (1) carry-over support from a rally in European stocks after the Sep German IFO business climate unexpectedly increased to a 3-year high, which may help sustain the economic recovery, (2) the larger-than-expected increase in Aug durable goods orders ex-transportation (+2.0% versus expectations of +1.0%), which helped lift industrial stocks on signs business investment is holding up, (3) a rally in chipmakers on speculation of increased M&A activity after the CEO of Oracle said his company, the world's second-largest software maker, may buy a chipmaker, and (4) strength in commodity, energy and raw materials producers after the sinking dollar prompted ralli es in most commodities, with the price of silver climbing to a 30-year high and gold posting a record high.

•   Bearish factors included (1) the unexpected stagnation in Aug new home sales (unchanged at 288,000 versus expectations of +6.9% to 295,000), (2) comments from Richmond Fed President Lacker who said recently passed financial regulation overhaul legislation may fall short of what is needed to reduce the threat of future banking-sector meltdowns, and (3) weakness in for-profit schools after US Ecucation Secretary Duncan said his department will delay the release of proposed limits on the colleges' access to student grants and loans until early 2011 from Nov 1.

•   Best Buy (BBY) may be active to the upside today after a weekend article in Barron's said the consumer-electronics retailer may gain as much as 30% in the next year as it increases sales with new product offerings and "superior" customer service.

Dow Jones Industrial Average...
The Dow broke through resistance at 10700, signaling an advance to 11200 in the short-term. Twiggs Money Flow (13-week) respect of the zero line indicates buying pressure. The long-term target for a breakout above 11200 would be 12700*, but it would be prudent to wait for retracement in October to confirm the new support level (at 10700).

Target calculations: 11200 + ( 11200 - 9700 ) = 12700 

Stocks rally as we approach the end of the third quarter, but fund managers may be supporting prices to window-dress their balance sheets. Expect a mid-October retracement (as in 2007) to test the new support level.

The Dow Global index ($DJWO) broke through resistance at 228, signaling the start of a primary up-trend. Twiggs Money Flow (13-week) holding above the zero line strengthens the signal. It would be prudent, however, for long-term investors to wait for a mid-October retracement to confirm the breakout.

September 28, 2010
Overnight U.S. Stock News...

•   Dec S&Ps this morning are trading slightly higher by +1.20 points (+0.11%) as the market awaits today's US economic reports. The stock market yesterday traded on either side of unchanged until early afternoon when they fell apart into the close and finished on their lows (Dow -0.44%, S&P 500 -0.57%, Nasdaq Composite -0.48%). The S&P 500 and the Dow rallied to 4-1/2 month highs and the Nasdaq climbed to a 4-3/4 month high, but they shed their gains and closed lower. Bearish factors included (1) carry-over weakness from a decline in European stocks on increased European sovereign-debt concerns after Moody's cut Anglo Irish Bank's senior debt to the lowest investment grade rating, Caa1 from Ba1, and said that Greek banks' loan losses and deposit outflows are keeping them at risk of credit-rating downgrades, and (2) the prediction from Standard & Poor's that the era of sovereign-rating downgrades is likely to continue because of budget deficits and dem ographic pressures on public finances.

•   Bullish factors included (1) increased M&A activity after Unilever agreed to buy Alberto Culver for $3.7 billion, Wal-Mart plan's to buy South Africa's Massmart Holdings Ltd. in a transaction worth $4.6 billion, and Southwest Airlines offer to purchase AirTran for about $1.4 billion, (2) the action by Bank of America Merrill Lynch to hike its Q3 earnings estimates for S&P 500 companies to between $21 and $21.75, higher than earlier estimates of $20.50, citing an easing of economic headwinds, and (3) the 9 bp drop in the 10-year T-note yield to 2.514%.

September 29, 2010
Overnight U.S. Stock News...



.Dec S&Ps this morning are down -1.40 points. The stock market yesterday sank early but recovered its losses the rest of the day and finished modestly higher (Dow +0.43%, S&P 500 +0.49%, Nasdaq Composite +0.41%). Bullish factors included (1) strength in health-care companies which rallied after the US Supreme Court agreed to hear an appeal by pharmaceutical companies seeking to block hospitals and health clinics from suing for violations of a federal program that lets them buy medicines at a discount, (2) the prediction from Citigroup that investors' sentiment on US stocks has fallen to "panic" levels, which is an indication that the equity market will rise over the next 6 to 12 months, (3) comments from ECB Council member Liikanen who said there will be no double dip in the global economy and the easing of growth will be "temporary," and (4) the slide in the 10-year T-note yield to a 1-month low of 2.446%

.Bearish factors included (1) carry-over weakness from a fall in European stocks after Standard & Poor's said the price of bailing out nationalized lender Anglo Irish Bank could exceed $47 billion and the difference in yield between Portuguese and Irish 10-year bonds against German bunds widened to records, which fueled concern the European sovereign-debt crisis may worsen, (2) the larger-than-expected decline in Sep US consumer confidence which tumbled to a 7-month low (-3.7 to 48.5 versus expectations of -1.4 to 52.1), (3) the bigger-than-expected drop in the Sep Richmond Fed manufacturing index which fell to its lowest level in 9 months (-13 to -2 versus expectations of -6 to 5), and (4) the report from the US Census Bureau that said US median household income fell 3% y/y in 2009 to $50,221, the second straight annual drop, which may keep US consumer spending constrained as incomes remain weak.

.Hewlett-Packard (HPQ) rose 1.2% in pre-market trading after interim CEO Lesjak said the company expects 2011 earnings excluding costs of $5.05 to $5.15 a share on sales of $131.5 billion to $133.5 billion, higher than analysts' estimates of earnings of $5.01 a share on sales of $131.7 billion.

.Carnival (CCL) gained 1.1% in pre-market trading after Goldman Sachs raised its recommendation on the world's biggest cruise-ship operator to "buy" from "neutral," citing a "solid improvement" in cruise demand.

September 30, 2010
Overnight U.S. Stock News...



.Dec S&Ps this morning are down -2.80 points after the Irish government said it will cost as much as $68 billion to bail out its banking system. The stock market yesterday chopped on either side of unchanged the entire session and finished the day slightly lower (Dow -0.21%, S&P 500 -0.26%, Nasdaq Composite -0.13%). Bearish factors included (1) concerns the European sovereign-debt crisis is worsening after the yield spread between Irish 10-year bonds and German bunds widened to a record 454 bp and the spread between Spanish 10-year bonds and bunds widened to a 2-1/2 month high of 198 bp, (2) weakness in bank stocks after Goldman Sachs analyst Ramsden predicted that investment bank earnings are likely to be soft in Q3 due to "muted activity" in fixed income and equities, and (3) the action by Liberty Mutual to shelve its initial public offering to raise $1.3 billion due to an "unfavorable environment."

.Bullish factors included (1) carry-over support from strength in Chinese manufacturing which accelerated for a second month after the Sep China HSBC purchasing managers' index climbed +1.0 to 52.9, its highest level in 5 months, (2) strength in mining companies and energy and raw-material producers after a slump in the dollar index to an 8-month low prompted a rally in commodities with crude oil posting a 2-week high, copper climbing to a 5-1/2 month high and gold rallying to a record high, and (3) comments from Boston Fed President Rosengren who said the Fed still has the tools to boost an "anemic" recovery and should consider further action to cut unemployment and raise the inflation rate.

October 1, 2010
Overnight U.S. Stock News...



.Dec S&Ps this morning are up +3.00 points as better-than-extimated growth in Chinese manufacturing spurs optimism that the global econoic recovery is intact. The stock market yesterday erased an early rally and finished moderately lower (Dow -0.44%, S&P 500 -0.31%, Nasdaq Composite -0.33%). The S&P 500 rose to a 4-1/2 month high and the Dow and Nasdaq climbed to 4-3/4 month highs, but all the indexes gave up their gains and closed lower. Bearish factors included (1) concerns the European sovereign-debt crisis is worsening after Moody's Investors Service downgraded Spain's top credit rating one level to Aa1 and the Irish government said it will cost as much as $68 billion to bail out its banking system, (2) quarter-end profit taking in industrial companies such as Caterpillar (up +20% in Sep) and in technology companies such as Apple (up +17% in Sep), and (3) the prediction from well-known bank analyst Meredith Whitney that the US government will face p ressure to bail out struggling states within the next 12 months or face the potential of widespread defaults in the $2.8 trillion municipal bond market.

.Bullish factors included (1) the larger-than-expected drop in the latest weekly initial unemployment claims (-16,000 to 453,000 versus expectations of -5,000 to 460,000), (2) the unexpected increase in the Sep Chicago purchasing managers index (+3.7 to 60.4 versus expectations of -1.0 to 55.7), and (3) the unexpected upward revision to Q2 GDP (1.7% annualized from the previously reported 1.6% annualized).

.Accenture PLC (ACN) climbed 2.4% in pre-market trading after the company forecasted net revenue will be $5.6 billion to $5.8 billion for the quarter ending in Nov, higher than analysts' projections of $5.62 billion.

Monday, October 4, 2010
Overnight U.S. Stock News...



*Dec S&Ps this morning are down -5.30 points. The stock market last Friday traded on either side of unchanged and finally settled modestly higher (Dow +0.39%, S&P 500 +0.44%, Nasdaq Composite +0.09%). Bullish factors included (1) carry-over support from the better-than-estimated growth in Chinese manufacturing after the Sep China purchasing managers' index expanded at its fastest pace in 4-months, which spurred optimism that the global economic recovery is intact, (2) the stronger-than-expected Aug personal income (+0.5% versus expectations of +0.3%) and Aug personal spending (+0.4% versus expectations of +0.3%), which is positive for the sustainability of the economic rebound, (3) the unexpected increase in Aug construction spending (+0.4% versus expectations of -0.4%), (4) strength in energy producers after crude oil climbed to a 1-1/2 month high, and (5) the stronger-than-expected Sep US University of Michigan consumer confidence (+1.6 to 68.2 versus expe ctations of +0.4 to 67.0).

*Bearish factors included (1) the weaker-than-expected Sep ISM manufacturing index which expanded at its slowest pace in 10 months (-1.9 to 54.4 versus expectations of -1.8 to 54.5) as the ISM's measures of new orders and production dropped to their lowest levels since Jun 2009, and (2) concerns the European economy may struggle after Aug German retail sales unexpectedly declined for a second month and the Aug Euro-Zone unemployment rate remained unchanged at an upwardly revised 10.1%, its highest level in 12 years, and (3) a post-meeting statement from European finance ministers which increased European sovereign-debt concerns when they said Europe's recovery is "fragile and uncertain," and their warning that "the risks related to the sovereign-debt market could have a contagious effect on the banking sector."

*AT&T (T) fell 1% in European trading after the largest US phone company agreed to pay $300 million to the IRS in Q4 to settle a dispute about the company's 2008 tax return.

*Schlumberger Ltd. (SLB) slipped 1.6% in pre-market trading as a fall in crude oil prices undercut support for the world's biggest oilfield-services contractor.

Wednesday, October 6, 2010
Overnight U.S. Stock News...



**Dec S&Ps this morning are up +2.10 points. The stock market yesterday rallied right from the opening and finished the day sharply higher (Dow +1.80%, S&P 500 +2.09%, Nasdaq Composite +2.36%). The S&P 500 rallied to a 4-3/4 month high and the Dow climbed to a 5-month high. Bullish factors included (1) carry-over support from a rally in Japanese stocks after the BOJ cut interest rates and expanded its quantitative easing measures, which fueled speculation that other central banks, including the Fed, will join Japan's efforts to stoke economic growth, (2) the stronger-than-expected Sep ISM non-manufacturing index (+1.7 to 53.2 versus expectations of +0.5 to 52.0), (3) gains in bank stocks after JPMorgan Chase predicted that the banking industry will top Q3 earnings estimates because of strong sales of mortgage loans and higher net interest income, and (4) strength in raw materials and energy producers after a plunge in the dollar index to an 8-1/2 month l ow prompted a rally in most commodities, with crude oil climbing to a 1-3/4 month high and silver surging to a 30-year high.

**Bearish factors included (1) concerns that the European sovereign-debt crisis will worsen after Moody's Investors Service said that it placed Ireland's AA2 credit rating on review for possible downgrade, along with the quarterly report from the European Commission that warned European companies' reluctance to borrow in the wake of the financial crisis may restrain investment and demand and lead to a "protracted" period of weak economic growth, and (2) the report from the IMF that said banking risks have increased over the past 6 months and governments must be ready to recapitalize or restructure some institutions as "imminent funding pressures" loom with more than $4 trillion of bank debt needing to be rolled over in the next 2 years.

**M&T Bank (MTB) fell 2.9% in pre-market trading after Allied Irish Bank said it will start selling its 22.4% stake in the bank, valued at $2.2 billion, in a US public offering.

Thursday, October 7, 2010...
Overnight U.S. Stock News

•   Dec S&Ps this morning are up +1.50 points. The stock market yesterday traded higher into early afternoon and then faded into the close and finished mixed (Dow +0.21%, S&P 500 -0.07%, Nasdaq Composite -0.80%). The Dow rallied to a 5-month high. Bearish factors included (1) the unexpected decline in the Sep ADP employment change (-39,000 versus expectations of +20,000), which fell for the first time in the last 8 months and stokes concern that Friday's Sep nonfarm payrolls report may be weaker than expected, (2) the IMF's action to cut its forecast for US growth this year to 2.6%, down from a July estimate of 3.3% and to cut its 2011 US growth forecast to 2.3% from an earlier forecast of 2.9%, citing a "slow" rebound restrained by a lack of consumer spending, (3) the prediction from Goldman Sachs that the US economy is likely to be "fairly bad" with the economy growing at a 1.5% to 2.0% pace with unemployment rising to 10% within the next 6 to 9 months or "very bad" in which the economy returns to an "outright recession," (4) concern the European sovereign-debt crisis is worsening after Fitch Ratings cut Ireland's long-term credit rating, and (5) the warning from Harvard economics professor Feldstein who said that US home prices may fall again unless the government provides new aid enabling owners to refinance their mortgages.

•   Bullish factors included (1) the action by the OECD to raise its estimate for the combined growth rate among its 33 member countries to 0.9% in Q2, up from a 0.7% estimate in Aug, on signs that investment began picking up for the first time since 2008, (2) the recommendation from the chief strategist from the Royal Bank of Canada that investors increase their holdings of US stocks after RBC upped their recommendation of US equities to "neutral" from "below benchmark" on an improvement in economic indicators, and (3) the plunge in the 10-year T-note yield to a 1-3/4 year low of 2.35%.
•   MEMC Electronic Materials (WFR) gained 2.3% in European trading after Jim Cramer said on his "Mad Money" show that the company which makes silicon wafers used in technology and solar industries, is "cheap" and may rise in Q4.

•   Immucor (BLUD) sank 18% in pre-market trading after the company forecast that adjusted earnings in fiscal 2011 will not exceed $1.18 a share, compared with analysts' estimates of $1.28 a share.