Market Outlook December 28th - January 1st

Market Outlook

- US : US indices reached new highs for the year last week, breaking above a rectangle pattern formation. The rally was triggered by positive economic data and gains in the Real Estate (+6.35%), Semiconductors (+5.82%) and Auto (+5.14%) sectors. Technically, indices may continue to trade up in light trading volume.

- EUROPE : European markets traded up last week driven by gains in the Oil & Gas (+1.99%), Personal & Household Goods (+1.67%) and Health Care (+1.56%) sectors. From a technical point of view on the Stoxx 600, the break of the 250 area has opened the way to further upside to 260 and even 270 in extension.

  December 28th - January 1st

Market Round up

Foreign Exchange

Euro/dollar : The pair has broken below its MT bullish channel lower boundary and is challenging its intermediary support. SHORT below 1.5150 towards 1.40 & 1.3750.

Dollar/yen : The pair has rebounded on its support and is breaking above its MT bearish channel upper boundary. LONG @ 88 with 92.50 or even 95 in sight.

Company preview

Red Hat (USD 31.36 ; 8.36% ; RHT ; RHT.N)
Last week, Red Hat, the Linux software maker delivered 3Q EPS of $0.17 vs $0.16 expected and $0.12 last year on sales of $194.3m, up 18% YoY, vs appx. $189m expected. The Co also said demand for its products is rebounding, especially in the US market. From a technical view, the stock gapped up last Wednesday and also broke above the $30 resistance. As long as $29 holds on the downside, a further bounce is highly expected to challenge $32.5 (its historical peak on 08 May 2006) then $35.

Cintas (USD 26.37 ; -8.34% ; CTAS ; CTAS.O)
Cintas, the US uniform supplier, posted last week 2Q EPS of $0.38 vs $0.43 expected and $0.47 last year on sales of $884.5m, down 1% YoY, vs $892m expected. The Co warned that 3Q analyst expectations for Cintas revenue and earnings are "too optimistic". Subsequently, JPMorgan cut its price target to $30 ("neutral") from $34 ("overweight"). Technically, the stock collapsed with a bearish gap. The downside breakout of a former rising trend line should trigger further slide to $25 and $24.

Jabil Circuit (USD 17.42 ; 20.8% ; JBL ; JBL.N)
Jabil Circuit announced last week 1Q core EPS of $0.32 vs $0.28 expected and $0.29 last year on sales of $3.1bln (as expected) compared to $3.4bln a year ago. Looking ahead, the Co indicated that it expects its net revenue for its 2Q of fiscal 2010 to be in a range from $2.9bln to $3.1bln vs a consensus of $2.9bln with core EPS between $0.20 and $0.32 vs a consensus of $0.19. As a result, the Co's price target was raised to $19 from $16 at BofA-ML. Graphically, the technical indicators are displaying "overbought" signals, therefore, a ST consolidation cannot be ruled out now before any further upside to $18 & $19.

Navistar International (USD 40.62 ; 16.89% ; NAV ; NAV.N)
Navistar International has reported 4Q/Oct adjusted EPS of $1.77 ($1.54 consensus) vs adjusted EPS of $0.56 a year ago. Sales fell to $3.28bln from $3.87bln a year ago ($3.15bn consensus). The Co expects "total truck industry retail sales volume for Class 6-8 trucks and school buses in the United States and Canada for the year ending Oct. 31, 2010, will be in the range of 175,000 to 215,000 units." From a chartist point of view, the stock jumped above its former resistance at $36.5. Since the upside momentum remains strong. A further bounce is more likely to $42.5 and $44 in extension.

Terex Corp (USD 21.24 ; 9.94% ; TEX ; TEX.N)
Before Christmas day, Terex Corp agreed to sell its mining business to Bucyrus International for $1.3bln in cash. Terex said: "the products to be divested by Terex in the transaction include hydraulic mining excavators, electric drive mining trucks, track and rotary blast hole drills, and the highwall miner, as well as the related parts and aftermarket service businesses." Following the transaction, S&P's reaffirmed the Co's "BB-" corporate credit rating and revised the outlook to "stable" from "negative". Technically, the stock reversed up from its MT major support at $18. Above $19.7, further advance should occur to $22.5 and even $25.

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

Corporate Calendar December 28th - January 1st

Economic Calendar (CET) December 28th - January 1st