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Cannon Trading Futures Blog: Daily Support and Resistance Levels

Wednesday, October 17, 2007

Morning Call: S&Ps boosted by strong earnings from Intel and Yahoo; MBA purchase apps rise +2.1% in some positive housing market news; Overseas stocks are mixed this morning.

Barchart.com U.S. Morning Call for Wednesday, October 17, 2007

U.S. Preview

  • Overseas stocks are mixed this morning. The European DJ Stoxx 50 is down -0.14% this morning. Asian stocks closed mixed today. The Nikkei index closed -1.07%, China closed -0.90%, and South Korea closed -1.16%. However, The Hang Seng closed +1.19% and Singapore closed +0.76%.

  • Mortgage apps – This morning's MBA purchase mortgage sub-index rose +2.1%, and matched last week's increase of +2.1%. The back-to-back increases were mildly positive signs for the US housing market that home buying may be picking up, although the purchase mortgage data is likely overstating the number of mortgages that are actually closing due to tighter lending restriction and application submissions to multiple banks. Meanwhile, the refi sub-index fell by -1.1%. The overall MBA index rose slightly by +0.7%.

  • CPI – Today's Sep CPI report is expected to show an increase of +0.2% m/m both overall and core. In August, the overall CPI was down -0.1% and the core CPI was up +0.2%. On a year-on-year basis, the Sep CPI is expected to rise to +2.8% from +2.0% in Aug due to higher crude oil prices. However, the core CPI is expected to remain unchanged from August at +2.1%. The August level of +2.1% was a 2-year low and is well below the peak of +2.9% seen in September 2006. However, the +2.1% level is still slightly above the generally accepted +2.0% ceiling for inflation, meaning the Fed will remain on guard about the inflation outlook.

  • Housing starts – Today's Sep housing starts report is expected to show a –3.8% decline to 1.280 mln, adding to the –2.6% decline seen in August to 1.331 mln. The August level was a 17-year low and a further decline today would represent a new 17-year low. The housing starts series has now fallen by a total of 42% from the record high of 2.292 mln units posted in January 2006. Housing starts are likely to continue to fall due to the high levels of unsold home inventories held by US homebuilders and because of the recent mortgage crisis which has reduced the number of people that can qualify to buy a new home. Fed Chairman Bernanke and Treasury Secretary Paulson is the last two days have both warned that the US housing sector is likely to continue to be a drag on the US economy. Citigroup earlier this week warned about an increase in mortgage defaults in Q4.

Overnight U.S. Stock News
  • Dec S&Ps this morning are trading +5.60 on the stronger than expected earnings reports late yesterday from Intel and Yahoo. The US stock market yesterday continued lower and added to Monday's losses (Dow -0.51%, S&P 500 -0.66%, Nasdaq Composite -0.58%). The stock market yesterday moved lower on continued worries about the housing sector after warnings by both Fed Chairman Bernanke and Treasury Secretary Paulson that the housing problems are not over. In addition, Wells Fargo and KeyCorp reported weaker than expected earnings.

  • Intel (INTC) is up 5% in European trading this morning after the company late yesterday reported strong Q3 earnings and issued Q4 revenue guidance of $10.5-11.1 billion, which was above the analyst consensus of $10.4 billion. Goldman Sachs responded by raising its price target on Intel by 7.1% to $30 and Citigroup raised its price target by 6.5% to $33.

  • Altria this morning reported Q3 EPS ex-items of $1.21, which was higher than the analyst consensus of $1.14.

  • Yahoo (YHOO) is up 8% in European trading this morning after the company late yesterday reported earnings of 11 cents per share, which was above the analyst consensus of 8 cents.

  • Coca-Cola is up +0.5% and Ebay is up 3% in European trading this morning ahead of their respective earnings reports today.

  • Bristol-Myers Squibb (BMY) rallied 2% in after-hours trading yesterday after news that the company received FDA approval for a breast cancer treatment drug.

  • CSX (CSX) rallied 2.3% in after-hours trading yesterday after the company reported Q3 earnings of 91 cents, which was well above the analyst consensus of 62 cents.

Today's U.S. Market Focus
  • Dec 10-year T-notes are trading +3 ticks on anticipation of a weak housing starts report this morning and continued strength from this week's increased worries about the US housing sector. Dec T-note prices yesterday closed +5.5 ticks on renewed risk concerns with (1) the weak US stock market, (2) yesterday's weaker than expected bank earnings reports, and (3) warnings that the mortgage and banking system crisis is not over from Fed Chairman Bernanke.

  • The dollar/yen is slightly lower this morning by -0.12 yen while the euro/dollar is little changed. The dollar index yesterday closed mildly higher on a little short-covering. The dollar/yen yesterday slid for the second day and posted a new 2-week low as the yen saw strength on the exit of yen carry trades.

  • Nov crude oil this morning is trading -20 cents and Nov gasoline is trading -0.31 cents on a little long liquidation pressure. Nov crude oil prices yesterday extended the sharp 1-week rally and posted another new record high of $88.20, finally closing +$1.48 at $87.61. Nov gasoline yesterday closed +1.62 cents at a new 3-month high of 217.37. The market remains nervous about a possible Turkish invasion of northern Iraq to root out Kurdish separatists. The market consensus for today's weekly DOE report is for a 1.5 mln bbl rise in crude oil, inventories, a +500,000 bbl rise in gasoline inventories, a -800,000 bbl decline in distillate inventories, and a -0.3 point decline in the refinery operating rate to 87.5%.

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $2.5 bln listed by mkt cap): MO-Altria Group (BEST earnings consensus $1.14 per share), JPM-JPMorgan Chase (.90), KO-Coca-Cola (.68), ABT-Abbott Labs (.66), UTX-United Technology Corp (1.16), EBAY-Ebay (.33), ALL-Allstate (1.69), ITW-Illinois Tool (.88), SYK-Stryker Corp (.55), Washington Mutual (.23), BLK-Blackrock (1.90), NTRS-Northern Trust (.87), NE-Noble Corp (1.18), BOT-CBOT Holdings (1.18), KMP-Kinder Morgan (.43), MI-Marshall & Ilsley (.83), GCI-Gannett (1.00), ETE-Energy Transfer (.23), SOV-Sovereign Bancorp (.20), CMA-Comerica (1.22), CTXS-Citrix Systems (.38), CIT-CIT Group (1.24), APH-Amphenol Corp (.46), AMLN-Amylin Pharm (-.39), ADS-Alliance Data (.94), AMR-AMR Corp (.76), TMK-Torchmark (1.37), RX-IMS Health (.40), MAN-Manpower (1.38), ETFC-ETrade Financial (.11), PBCT-People's United (.20)

Global Financial Calendar
Wednesday 10/17/2007
United States
0700 ET Weekly MBA mortgage applications, previous +2.4% with purchase sub-index +2.1% and refi sub-index +2.7%.
0830 ET Sep CPI expected +0.2% m/m and +2.8% y/y, Aug –0.1% m/m and +2.0% y/y. Sep CPI ex food and energy expected +0.2% m/m and +2.1% y/y, Aug +0.2% m/m and +2.1% y/y.
0830 ET Sep housing starts expected –3.8% to 1.280 mln, Aug –2.6% to 1.331 mln. Sep building permits expected –2.8% to 1.285 mln, Aug –4.8% to 1.322 mln.
1400 ET Fed's Beige Book.
1430 ET Treasury Undersecretary for international affairs, David McCormick, holds a press briefing to discuss the agenda for the Oct 19 G-7 meeting.
2045 ET Fed Reserve Bank of Kansas City President Thomas Hoenig speaks about the economy and monetary policy in Tulsa, Oklahoma.
n/a Treasury announces amount of 5-yr TIPS to be auctioned (previous $8 bln).
Japan
0100 ET Final Aug Japan leading economic index expected +27.3%, previous +30.0%. Final Aug coincident index expected +85.0%, previous +83.3%.
0200 ET Final Sep Japan machine tool orders, previous +15.9% y/y.
United Kingdom
0430 ET Minutes of previous Bank of England monetary policy meeting.
0430 ET Sep UK jobless claims change expected –4,000, Aug –4,200. Sep claimant count rate expected unch at 2.6%.
0430 ET Aug UK avg earnings including bonus 3-mo/yr over yr expected +3.6%, July +3.5%. Aug avg earnings ex bonus 3-mo/yr over yr expected +3.6%, July +3.5%. Aug ILO unemployment rate 3-months expected unch at 5.4%. Aug manufacturing unit wage cost 3-mo/yr over yr, July +0.8%.
Canada
0830 ET Aug Canadian wholesale sales expected +0.1% m/m, July +2.0% m/m.

Morning Quote Board
Morning Quotes (ET) Last Chg %chg Updated
US Stock Futures
S&P (Globex) (Z7) 1553.20 5.60 0.36% 06:36:18
DJIA (CBOT) (Z7) 14011 39 0.28% 06:34:48
European Stocks
Europe DJ Stoxx 50 3858.22 -5.43 -0.14% 06:31:45
London UK FTSE Index 6625.70 11.40 0.17% 06:31:46
German Dax Index 7953.13 -9.51 -0.12% 06:31:47
French CAC 40 Index 5786.60 12.24 0.21% 06:46:30
Asian Stocks
Japan Nikkei Index 16955 -183 -1.07% 03:00:21
Hong Kong Hang Seng 29299 344 1.19% 04:01:30
China CSI 300 Index 5824 -53 -0.90% 03:01:19
Australian S&P 200 6680.1 -11.9 -0.18% 02:47:05
Singapore Str. Times 3839.73 29.01 0.76% 05:05:28
South Korea KOSPI 200 250.48 -2.95 -1.16% 02:01:30
US Interest Rates
10yr T-notes (CBT)(Z7) 108.285 0.030 0.09% 06:36:44
Cash 10yr T-note Price 100.285 0.030 0.09% 06:44:01
Cash 10yr T-note Yield 4.635 -0.012 -0.26% 06:43
5yr T-note (CBT)(Z7) 106.215 0.025 0.07% 06:36:34
Cash 5yr T-note Price 99.220 0.025 0.08% 06:46:01
Cash 5yr T-note Yield 4.320 -0.018 -0.41% 06:45
30-yr T-bond (CBT)(Z7) 110.20 0.07 0.20% 06:36:36
Cash 30yr T-bond Price 101.190 0.030 0.09% 06:45:31
Cash 30yr T-bond Yield 4.897 -0.006 -0.12% 06:45
Eurodollars (CME)(Z7) 95.060 -0.015 -0.02% 06:31:19
Eurodollars (CME)(H8) 95.325 0.010 0.01% 06:19:43
Asian & European Rates
10-yr JGBs (TSE) (Z7) 135.36 0.63 0.47% 02:00:00
EuroyenTibor(SGX)(Z7) 99.130 0.010 0.01% 05:09:26
Bunds (Eurex) (Z7) 111.82 0.12 0.11% 06:31:37
Euribor (Eurex) (Z7) 95.505 -0.03 -0.03% 05:34:41
UK Gilts (Liffe) (Z7) 106.35 0.09 0.08% 06:31:40
Short Stlg (Liffe) (Z7) 93.87 0.02 0.02% 06:29:18
Forex
US Dollar/Japanese Yen 116.81 -0.12 -0.10% 06:46:47
EuroFX / US Dollar 1.4172 -0.0001 -0.01% 06:46:46
SwissFranc/US Dollar 1.1826 0.0000 0.00% 06:46:42
British Pound (per USD) 2.0335 0.0007 0.07% 06:46:31
Canadian Dlr (perUSD) 0.9798 0.0007 0.07% 06:46:42
Yen (Globex) (Z7) 0.862 -0.0012 -0.12% 06:36:46
Euro FX (Globex) (Z7) 1.419 0.0007 0.05% 06:36:36
SwissFranc (Globex)(Z7) 0.8493 0 0.00% 06:36:46
British Pound(Glbx)(Z7) 2.0299 0.0019 0.09% 06:36:36
Canadian$ (Globex)(Z7) 1.0211 0 0.00% 06:35:42
Commodities
Gold (Comex) (Z7) 763.6 1.6 0.21% 06:16:42
Crude Oil (Nymex) (X7) 87.41 -0.20 -0.23% 06:16:48
Gasoline (Nymex) (X7) 217.06 -0.31 -0.14% 06:14:38
Heating Oil(Nymex)(X7) 232.68 -1.19 -0.51% 06:13:49
NaturalGas(Nymex)(X7) 7.356 -0.011 -0.15% 06:05:44
Sincerely,
Ilan Levy-Mayer, M.B.A
Yahoo IM ilanlevy1970
310-859-9572
800-454-9572
Fax 310-859-0547
9301 Wilshire Blvd. Suite #515
Beverly Hills, Ca 90210
The finest compliment I can receive is a referral from a trusted client.
 
IMPORTANT PLEASE NOTE:  TRADING COMMODITY FUTURES AND OPTIONS INVOLVE SUBSTANTIAL RISK OF LOSS.  THE RECOMMENDATIONS CONTAINED IN THE LETTER IS OF OPINION AND DOES NOT GUARANTEE ANY PROFITS.  THERE IS NOT AN ACTUAL ACCOUNT TRADING THESE RECOMMENDATIONS.   THESE ARE RISKY MARKETS AND ONLY RISK CAPITAL SHOULD BE USED.  PAST PERFORMANCES ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

posted by Cannon Trading at 6:31 AM

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