Market Outlook Sept 28th - October 2nd

Market Outlook

- US : The S&P500 lost more than 2% last week driven by strong WoW losses in the Real Estate (-6.13%), Cons. Durables (-5.05%) and Materials (-4.75%) sectors. The main out performers were the House. & Personal Prod., Telecom. Services and Pharma. & Bio. sectors. Technically, above 1032 on the S&P 500 the immediate trend is up with 1100 in sight but the level of confidence has dropped. Below 1032 the risk will be a further decline to a very strong support at 990. The VIX bounced after reaching a new 52w low and closed above its flat 50d MA, reinforcing the risk for a consolidation in the short term.

- EUROPE : In Europe, the main indices entered into consolidation risk mode as in the US. Shares in the Chemicals, Construction & Materials and Basic Resources led the decline. Defensive stocks in the Health Care and Telecommunications were sought after. From a technical point of view, the outlook remains positive but the confidence has weakened. On the STOXX 600, the 238/236 area must trigger a quick bounce to the 245/250 area to avoid a larger consolidation to 230/225.S

September 28th - October 2nd

Market Round up

 Foreign Exchange

Euro/dollar : The pair remains well directed and is challenging its MT bullish channel upper boundary, the RSI is still on the upside. LONG above 1.41 towards 1.4950 & 1.5250.

Dollar/yen : The pair is on the downside and is approaching its bearish channel lower boundary, the RSI is badly directed. SHORT @ 94.70 with 88.50 or even 87 in sight.

Company preview

 Walgreen (USD 33.68 ; -2.38% ; WAG ; WAG.N)
Tuesday, Walgreen, the US large drug retailer, is expected to announce 4Q EPS of $0.39 compared with $0.4 a year ago on sales of $15.7bln vs appx. $14.6bln. Recently, the Co reported August sales of around $5.22bln, an increase of 6.8% from $4.9bln last year. Sales in comparable stores increased 1.9% YoY. Technically, the stock remains capped by a key resistance at $35 but is still supported by a MT rising trend line. Hence, we expect a ST consolidation to $32 before a further bounce to $36.5.

 Nike (B) (USD 58.64 ; 0.09% ; NKE ; NKE.N)
On the same day, Nike Inc could deliver 1Q EPS of $0.97 compared to $1.03 a year earlier on sales of $4.9bln vs $5.4bln. Earlier, the Co's price target was raised to $61 from $57 at Goldman Sachs. From a technical point of view, the stock is currently testing the $60 threshold but its daily technical indicators seem to have lost their upside momentum. In which case, a ST consolidation or a pullback cannot be ruled out to $56/55 before a further rise to $62 at first.

 Smiths Group (GBp 829 ; -3.27% ; SMIN ; SMIN.L)
On Wednesday, Smiths Group, a global technology company, may release FY pre-tax profit of £350m compared with £319m a year ago on revenue of £2.68bln vs £2.32bln. Last week, the Co's price target was cut to 950p from 1100p at UBS with a "buy" rating unchanged. From a technical view, the stock extended its decline during the past trading days but is now close to a major horizontal support at 800p. Above this level, we remain positive and expect a rebound to 842p and 900p in extension.

 Pepsi Bottling (USD 36.46 ; -0.98% ; PBG ; PBG.N)
The same day in the US, Pepsi Bottling Group is expected to report 3Q EPS of $1.08, almost in line with last year on sales of $3.7bln vs $3.8bln. A week ago, the Co signed a deal with O.N.E. to distribute O.N.E. beverages in Southern California and South Florida. Earlier, the Co planned to invest $150m to set up Europe's largest bottling plant in Romania.

 Constellation Brands (USD 15.3 ; -1.61% ; STZ ; STZ.N)
Friday, KB Home, the US home builder, may deliver 3Q LPS of $0.67 compared with a loss of $0.35 per share a year earlier on revenue of $454m vs $681m. Recently, the Co announced to resume its homebuilding operations in the Mid-Atlantic region, including Maryland and Virginia. In addition, the Co was upgraded to "overweight" from "neutral" at JPMorgan. Technically, the stock has just broken above a major resistance at $19.5. Hence, above $19, a further up move is expected to $22.5 and $24 in extension.

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

Corporate Calendar September 28th - October 2nd

Economic Calendar (CET) September 28th - October 2nd