Market Outlook October 19th - 23rd

Market Outlook

- US : The S&P 500 rose 1.5% last week, despite some profit taking on Friday, driven by strong gains in the Energy (+5.1%), Transportation (+4%) and Food & Staples Retail (+3.5%). Shares in the Semiconductors, Tech. Hardware, Real Estate lost less than 1% on the week. Technically, the rise above the 1080 area has invalidated the consolidation risk and opened the way to further upside to 1100 & 1140. Only the penetration of 1060 (rising 20d moving average) would invalidate this positive scenario.

- EUROPE : In Europe, the main indices, except the Ibex, have followed Wall Street's gain driven by shares in the Oil & Gas, Basic Resources and Chemicals sectors. The dollar's weakness started to raise some concern in Europe. From a technical point of view, the STOXX 600 index has bypassed its 248 resistance area and despite Friday's pullback below this threshold the index can resume its up trend to the next 260/262 resistance area. Only the break of 238 would reverse this view.

  October 19th - October 23rd

 Market Round up

 Foreign Exchange

Euro/dollar : The pair has rebounded on its intermediary support and is challenging its bullish channel upper boundary. LONG above 1.4250 towards 1.5250 & 1.58.

Dollar/yen : The pair is on the downside and is challenging its bearish channel lower boundary, the RSI is badly directed. SHORT @ 93 with 87 or even 84.20 in sight.

Company preview

 Apple (USD 188.05 ; -1.27% ; AAPL ; AAPL.O)
Apple is expected to report today after the market close 4Q EPS of $1.43 vs $1.26 a year ago on sales of $9.2bln vs $7.5bln. Analysts will focus on the Co's ability to maintain its top line growth in a tough economic environment. Year to date the stock is up 120% and daily indicators are losing momentum, therefore some profit taking cannot be ruled out. Technically speaking, the $175 level must hold to expect further gain for the stock to its record high at $202.96.

 Texas Instruments (USD 22.75 ; -3.76% ; TXN ; TXN.N)
Texas Instruments should report after the close today 3Q EPS of $0.4 vs $0.43 a year ago on sales of $2.82bln vs $3.4bln a year ago. The Co raised its EPS guidance early September to $0.38-0.42 on revenue of $$2.73-2.87bln. UBS reaffirmed its "buy" rating last week with a price target of $28. Technically, the stock remains under pressure below a $24.3 resistance. The risk is a slide to $21 and even $20 before a bounce can be considered.

 Caterpillar (USD 54.57 ; 1.73% ; CAT ; CAT.N)
Caterpillar may announce Tuesday 3Q EPS of $0.05 on revenue of $7.2bln vs respectively $1.39 and $12.9bln a year ago. The Co forecast in August FY adjusted EPS of $1.15-$2.25 on revenue of $32-36bln. Last week, Barclays raised its price target to $58 from $43 ("equalweight" rating unchanged). Technically, the rising 50d MA maintains an upside bias, the next strong resistance is at $60. On the downside, the break of $49.5 may trigger a decline to $40.

 Fiat (EUR 10.95 ; 6% ; F ; FIA.MI)
Fiat may report Wednesday 3Q sales of appx. E12bln with a double digit million euros loss. The Co forecast in July FY net income above E100m and operating income above E1bln. Last week Bank of America ML raised its price target to E11.5 from E10 ("buy" rating unchanged). Technically, above the E10 support the rise can continue to E12 & E12.5 before some profit taking shapes.

 Morgan Stanley (USD 32.99 ; 2.8% ; MS ; MS.N)
Morgan Stanley is expected to report the same day 3Q EPS of $0.30 vs $1.32 a year ago. Last week, Goldman Sachs' results were better than expected while Bank of America reported a loss. Friday the stock closed up in a down market. Technically, above the $30 support, the stock can continue its up move to $35 & $36. The rising 50d MA at $30.1 maintains an upside bias.

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

Corporate Calendar October 19th - October 23rd

Economic Calendar (CET) October 19th - October 23rd