Stock Market Outlook for July 27, 2010
Upcoming Events for Today:
- The Case-Shiller 20-city Index for May will be released at 9:00am. Market expects an increase of 4.0% versus an increase of 3.81% previously.
- Consumer Confidence for July will be released at 10:00am. Market expects 51.0 versus 52.9 previous.
The Markets
| Market | Close | % Change | Expected ST Low | Expected ST High |
| Dow Jones Industrial Average (^DJI) | 10,525.43 | 0.97% | 9,844.94 | 10,423.60 |
| Dow Jones Transportation Average (^DJT) | 4,482.09 | 2.57% | 4,018.06 | 4,421.94 |
| Dow Jones Utility Average (^DJU) | 388.78 | 0.52% | 360.60 | 384.48 |
| S&P 500 (^GSPC) | 1,115.01 | 1.12% | 1,039.07 | 1,111.31 |
| S&P/TSE Composite (^GSPTSE) | 11,746.07 | 0.27% | 11,285.00 | 11,898.80 |
| NASDAQ Composite (^IXIC) | 2,296.43 | 1.19% | 2,123.83 | 2,294.77 |
| Austrian Traded Index (^ATX) | 2,456.94 | 2.25% | 2,261.81 | 2,431.39 |
| French CAC 40 (^FCHI) | 3,636.18 | 0.81% | 3,397.60 | 3,685.15 |
| German DAX (^GDAXI) | 6,194.21 | 0.45% | 5,909.68 | 6,230.59 |
| UK FTSE 100 (^FTSE) | 5,351.10 | 0.72% | 4,903.68 | 5,284.42 |
| Swiss Market Index (^SSMI) | 6,199.50 | -0.03% | 6,039.89 | 6,469.91 |
| Brazilian IBOVESPA (^BVSP) | 66,443.00 | 0.18% | 61,665.29 | 65,420.37 |
| Mexico’s IPC (^MXX) | 32,958.89 | 0.47% | 31,416.41 | 32,789.60 |
| Amsterdam Exchange Index (^AEX) | 337.82 | 0.20% | 313.05 | 337.55 |
| New Zealand NZX 50 INDEX GROSS (^NZ50) | 3,021.19 | 0.88% | 2,954.49 | 3,056.31 |
| China HANG SENG INDEX (^HSI) | 20,839.91 | 0.12% | 19,960.27 | 20,810.01 |
| Korea KOSPI Composite Index (^KS11) | 1,769.07 | 0.63% | 1,680.32 | 1,752.91 |
| Tokyo NIKKEI 225 (^N225) | 9,503.66 | 0.77% | 9,246.76 | 10,040.82 |
Markets rallied today on the back of FedEx’s improved outlook and housing figures that weren’t as bad as expected. FedEx announced today that it expects an EPS for the first quarter in the range of $1.05 to $1.25 as international shipments see significant growth. Analysts were expecting an EPS of around $1.10 per share. In addition to this corporate optimism was news that the housing market may not be as bad as what was previously thought. New Home Sales for June came in at 330K, trumping the 310K expected. The reading still remains the second lowest since 1963.
Positive news has flourished as of lately and has brought optimism to two uncertain areas – housing and European economic worries. The market movement has bears turning into bulls and fears of a double dip are now immediately dismissed. The market continues to follow nicely to the sector rotation model that sees industrial companies strongly performing through initial and middle recovery. Energy is the next to follow in this model and the clues of which will be witnessed in the coming days as energy companies release results.
Market technicals give reason to be cautious with overbought signals continuing to persist. In addition, key indexes have exceeded their expected trading range, implying a pullback is expected. Momentum has yet to show signs of fading and buy signals recorded on Wednesday remain intact for the time-being. Options volumes on Monday shows an approximate equivalent number of puts traded as calls with a ratio of 0.99. The interpretation of this result is that put trading is on the rise as a result of hedges being put in place to protect long positions, a bullish sign for the market.
Sectors that Moved the Market
| Sector | % Price Change | % Volume Change |
| Energy Sector (XLE) | 0.87% | -33.91% |
| Basic Materials Sector (XLB) | 0.59% | -48.94% |
| Financial Sector (XLF) | 1.37% | 13.37% |
| Health Care Sector (XLV) | 1.44% | 13.25% |
| Consumer Discretionary Sector (XLY) | 1.49% | 7.75% |
| Industrials Sector (XLI) | 1.63% | -33.64% |
| Technology Sector (XLK) | 0.63% | -42.51% |
| Utilities Sector (XLU) | 0.72% | -29.12% |
| Consumer Staples Sector (XLP) | 0.52% | -14.90% |
Industrials were the clear market leader today as homebuilders and transportation company FedEx rallied on optimistic news that renewed investors faith in the market recovery. Health care stocks also received another boost as speculation of Sanofi-Aventis’s biotech acquisition of Genzyme continued, influencing other stocks in this space to the upside.
S&P 500
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 1096.73 | 1105.87 | 1110.44 | 1119.58 | 1124.15 |
Total Returns
Yesterday: 1.12% – Trailing 5 days: 4.08% – Trailing 30 days: 3.55%
Averages for current day based on past 20 years of data
- Current Day: 0.07% with 50.00% of sessions gaining
- Next 7 days: 0.54% with 57.00% of sessions gaining (Max return: 1.49% by July 30 on Average)
- Next 30 days: 0.89% with 54.51% of sessions gaining (Max return: 2.93% by August 12 on Average)
TSE Composite
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 11642.54 | 11694.31 | 11731.38 | 11783.15 | 11820.22 |
Total Returns
Yesterday: 0.27% – Trailing 5 days: 1.52% – Trailing 30 days: 0.65%
Averages for current day based on past 10 years of data
- Current Day: –0.14% with 42.86% of sessions gaining
- Next 7 days: 0.65% with 59.50% of sessions gaining (Max return: 1.33% by July 30 on Average)
- Next 30 days: 1.42% with 52.74% of sessions gaining (Max return: 2.89% by August 11 on Average)
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