U.S. equity index futures were higher this morning. S&P 500 futures were up 3 points in pre-opening trade. Index futures are responding to a 2.86% increase in the Shanghai Composite Index following greater release of China’s economic reforms.
Boeing added $3.87 to $139.95 after announcing aircraft sales at the Dubai airshow valued at over $100 billion.
Fertilizer stocks moved higher on news that a Russian billionaire has acquired a 21.75% interest in Uralkali. Uralkali previously triggered selling pressure on fertilizer stocks when the company said that it would discontinue an agreement to jointly market fertilizer with a Belaruskali. The change in ownership raises the possibility that a joint agreement to effectively control fertilizer prices will resume. Potash Corp added $0.60 to $33.00.
Goldcorp (GG $24.34) is expected to open higher after Citigroup upgraded the stock from Neutral to Buy. Target is $28.00.
Microsoft fell $0.61 to $37.23 after Bank of America/Merrill downgraded the stock from Neutral to Under Perform. Target is $30.
Nucor (NUE $53.61) is expected to open lower after Citigroup downgraded the stock from Buy to Neutral. Target is $55.
Baxter International (BAX $68.13) is expected to open higher after Credit Suisse upgraded the stock from Neutral to Outperform. Target was raised from $73 to $80.
Economic News This Week
October Retail Sales to be released at 8:30 AM EST on Wednesday are expected to increase 0.1% versus a decline of 0.1% in September. Excluding auto sales, October Retail Sales are expected to increase 0.1% versus a gain of 0.4% in September.
October Consumer Prices to be released at 8:30 AM EST on Wednesday are expected to be unchanged versus a gain of 0.2% in September. Excluding food and energy, October Consumer Prices are expected to increase 0.1% versus a gain of 0.1% in September.
October Existing Home Sales to be released at 10:00 AM EST on Wednesday are expected to slip to 5.16 million units from 5.29 million units in September.
September Business Inventories to be released at 10:00 AM EST on Wednesday are expected to increase 0.3% versus a gain of 0.3% in August.
FOMC Meeting Minutes are to be released at 2:00 PM EST on Wednesday.
Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to slip to 335,000 from 339,000 last week.
October Producer Prices to be released at 8:30 AM EST on Thursday are expected to decline 0.2% versus a drop of 0.1% in September. Excluding food and energy, October Producer Prices are expected to increase 0.1% versus a gain of 0.1% in September.
The November Philadelphia Fed Index to be released at 10:00 AM EST on Thursday is expected to fall to 11.9 from 19.8 in October
Canada’s October Consumer Prices to be released at 8:30 AM EST on Friday are expected to remain unchanged versus a gain of 0.2% in September.
September Retail Sales to be released at 8:30 AM EST on Friday are expected to increase 0.5% versus a gain of 0.2% in August
The Bottom Line
Economic sensitive sectors with strong positive seasonality traits (e.g. Industrials, Consumer Discretionary, Technology and most recently Materials) are leading equity markets on the upside. Preferred strategy is to accumulate equity markets and sectors with favourable seasonality on weakness in order to take advantage of the October 28th to May 5th period of strength.
Equity Trends
The S&P 500 Index gained 27.57 points (1.56%) last week. Trend remains up. The Index closed at an all-time high. The Index remains above its 20 day moving average. Short term momentum indicators have returned to overbought levels.
The TSX Composite Index added 104.24 points (0.78%) last week.
Upward trend was confirmed on Friday on a move above 13,471.06 (Score: 1.0). The Index remains above its 20 day moving average (Score: 1.0). Strength relative to the S&P 500 Index changed from neutral to negative (Score: 0.0). Technical score based on the above indicators slipped to 2.0 from 2.5 out of 3.0. Short term momentum indicators have returned to overbought levels.
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