Market Outlook December 21st - 25th

Market Outlook

- US : US indices continued to consolidate last week. Gains in the Auto (+3.16%), Software (+2.04%) and Consumer Services (+1.84%) sectors were offset by declines in the Diversified Financials (-2.1%), Telecom. Services (-2.32%) and Food & Staples Retail. (-3.46%) sectors. The Fed left interest rate unchanged and reaffirmed its intention to keep them at an exceptionally low level for a prolonged period of time. Technically, indices may continue to trade up but the momentum is weak leaving a short term rectangle pattern intact. The end of the year period is likely to limit risk taking appetite from investors.

- EUROPE : European indices were mixed last week. Health Care (+2.56%), Insurance (+1.56%) and Technology (+1.5%) shined while shares in the Retail (-0.55%), Telecommunications (-0.85%) and Banks (-1.37%) sectors declined. Once again, from a technical point of view the outlook remains uncertain around the current level with the 250/52 area on the Stoxx 600 index a key level to break for further upside.

Market Round up

Foreign Exchange

Euro/dollar : The pair has broken below its MT bullish channel lower boundary, the RSI is badly directed. SHORT below 1.5150 towards 1.4250 & 1.40.

Dollar/yen : The pair is rebounding on its support but should strike against its MT declining trend line. SHORT @ 92.3 with 87.50 or even 84.80 in sight.

Company preview

Walgreen (USD 36.64 ; -5.59% ; WAG ; WAG.N)
On Monday, Walgreen, the US drug retailer is expected to unveil 1Q EPS of appx. $0.49 vs $0.42 a year ago on sales of $16.3bln vs $15bln. Recently, the Co started offering swine flu vaccinations in 27 states and the District of Columbia and also planned to make it available in all 50 states by the end of the year. Technically, the stock accelerated on the downside last week after a breakout of the $37 support. We expect a further pullback to test $35 and $34.33 (the lower boundary of the nearest bullish gap) in the coming days.

Jabil Circuit (USD 14.8 ; 5.26% ; JBL ; JBL.N)
The same day, Jabil Circuit, an electronic manufacturing services provider, may release 1Q EPS of $0.28 compared to $0.24 last year on sales of around $3.1bln vs $3.38bln. On December 10, the Co was rated "buy" with a price target at $16 at BofA-ML. From a technical point of view, the stock broke above a ST declining channel a year ago and now resumed its upside bias on both ST and MT views. A test of $15.5 should be in sight before further advance to $16.3.

Micron Technology (USD 8.78 ; 1.62% ; MU ; MU.N)
On Tuesday, Micron Technology could deliver 1Q EPS of $0.06 compared with last year's loss on sales of $1.6bln vs $1.4bln a year ago. Last Friday, the Co said it planned to transfer its stock exchange listing from the NYSE to the NASDAQ, effective Dec. 30, 2009. Earlier, the Co was downgraded to "equal-weight" from "overweight" at Morgan Stanley. Graphically, the stock continued to consolidate below its key level at $9.1 and may re-test it in sight. If broken out, a bullish acceleration should occur towards $10.

Cintas (USD 29.54 ; 0.72% ; CTAS ; CTAS.O)
The same day, Cintas Corp, the US firm providing laundry services to business and governments nationwide, is expected to announce its 2Q EPS of $0.43, down from $0.47 a year ago. Sales may drop to $892m vs $985m. From a chartist view, the stock is currently trading within a range between $30 and $27.5. However, the technical indicators have already started to display some strength. Hence, we expect further upside to test the upper boundary of its trading range and even its year's high at $30.85 in the forthcoming days.

Red Hat (USD 29.27 ; 3.72% ; RHT ; RHT.N)
Tuesday, Red Hat, a source software and services company, could unveil 3Q EPS of $0.16 compared with $0.12 a year earlier on sales of $188m vs $165m. Last month, Standard & Poor's Rating Services upgraded the Co's corporate credit rating to "BB+" from "BB", reflecting the Co's strong performance and consistent growth during a challenging global economic environment. Technically, the stock remains well positively oriented, backed by a MT ascending trend line. A further rebound is therefore highly expected to $31 and $33 in extension.

Selection of those events which may affect the stock prices of international Large Caps

Corporate Calendar December 21st - December 25th

Economic Calendar (CET) December 21st - December 25th