Market Outlook January 4th 2010 - January 8th

Market Outlook

- US : US indices reached new highs for the year last week but consolidated Thursday, leaving a mixed picture for the week. Trading volume remained thin and should pick up again from Monday. Shares in the Semiconductors (+1.3%), Tech. Hardware (+0.97%) and Diversified Financials (+0.23%) gained while shares in the Transportation (-1.44%), Retailing (-1.63%) and Real Estate (-2.07%) consolidated. Technically, indices may continue to trade up this week as long as the S&P 500 holds above the 1110 area. The 4Q earnings season will kick off on January 11 with Alcoa's results.

- EUROPE : European markets traded up last week driven by gains in the Basic Resources (+3.92%), Utilities (+1.41%) and Personal & Household Goods (+1.29%) 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.

  January 4th - January 8th

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 broken above its MT bearish channel upper boundary and should post a further up move. LONG @ 88 with 92.50 or even 95 in sight.

Company preview

Bed Bath & Beyond (USD 38.61 ; -2.23% ; BBBY ; BBBY.O)
On Wednesday, Bed Bath & Beyond, the US nationwide retailer, is expected to post 3Q EPS of $0.43 compared to $0.34 a year ago on sales of around $1.9bln vs $1.78bln. Earlier, the Co was rated "overweight" at Morgan Stanley with a price target at $43. From a technical point of view, the stock levelled off from its 50D MA and now consolidates below a strong $40 resistance. The flat 50D MA calls for a continuation of the trading in place between $35 & $40.

Monsanto (USD 81.75 ; -0.26% ; MON ; MON.N)
On the same day, Monsanto may release a break-even result in the 1Q compared with last year's profit of $0.9 per share on sales of $1.96bln vs $2.65bln. Recently, the board declared a quarterly dividend of 26.5 cents per share, payable on January 29. Besides, CEO Hugh Grant reaffirmed its confidence in the Co to achieve its 2012 operational targets. Technically, the price remains well supported by a key horizontal level at $80. Hence, As long as this threshold remains as a support, further advance may be considered to $85 then $87.5.

Lennar Corp (USD 12.77 ; -3.77% ; LEN ; LEN.N)
Thursday, Lennar Corp could announce a 4Q loss of around $0.3 a share vs EPS of $0.43 a year earlier on revenue of appx. $835m vs $1.28bln. Earlier, the US home builder was upgraded to "outperform" from "neutral" at Credit Suisse. From a chartist point of view, the stock bounced on a MT key level at $11.50 but is still capped by a bearish trend line since last September. We expect a ST consolidation before an up move to test the $13.6 resistance at first.

Constellation Brands (USD 15.93 ; 1.01% ; STZ ; STZ.N)
The same day, Constellation Brands is expected to unveil 3Q EPS of $0.52 vs $0.6 a year ago on sales of appx. $910m vs $1.03bln. Recently, the Co was upgraded to "neutral" from "sells" at Goldman Sachs. In addition, the Co agreed to sell its UK cider assets to C&C Group Plc for £45m. Technically, the stock still remains under pressure below its $16.25 threshold. Since the 20D MA reversed down, we are negative to see a further pullback towards $15.

Apollo Group (USD 60.58 ; 3.66% ; APOL ; APOL.O)
On Thursday, Apollo Group could report 1Q EPS of $1.46 compared with $1.12 a year earlier on sales of $1.2bln vs $971m a year ago. Last month, the for-profit education company agreed to pay $67.5m to the US government to resolve a University of Phoenix recruiting lawsuit. From a technical view, the stock might be well forming a "rounding bottom", the $63 resistance should be tested in sight before any further upsides to $70 as a first target.

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

Corporate Calendar January 4th - January 8th

Economic Calendar (CET) January 4th - January 8th