Daytrading, Eminis, Forex trading, Swing Trading MARKET ANALYSIS - 493723

Markets may totter in reaction to mixed earnings news and pre-announcements. Oil is edging up although it has come off its recent highs above the $63 a barrel mark. The brokerage space could see some upside on better than expected results from Goldman Sachs ( | | | ).

A bigger than expected drop in October trade deficit could instill some confidence in traders. Nonetheless, much of today's market sentiment depends on the Fed decision and the nuances implied by the accompanying policy statement. The major U.

S. averages hovered in positive territory throughout Monday's session, barring brief weakness early in the session. The Dow Industrials advanced 20.

99 points or 0.17% to 12,329 and the S P 500 Index rose 3.20 points or 0.

23% to 1,413. The technology weighted Nasdaq Composite Index closed up 5.50 points or 0.

23% at 2,443. Commenting on the markets' advances since mid-July, Raymond James investment strategist Jeffrey Saut said that the current unnatural state of the equity markets continues to leave him cautious. Typically, markets rally and then correct by 25% and then re-rally if the momentum is strong enough.

Saut believes that if the S P can vault above the 1,415 level with conviction, then it could face resistance around the 1,440-1,445 levels. The Fed is expected to maintain rates unchanged at 5.25% for the fourth consecutive month at its December meeting.

Alfred Goldman from AG Edwards expects no change in the fed funds target. However, Goldman believes that the focus will be on the committee's forward-looking language. Morgan Stanley is of the view that there will not be a significant substantive change in the language in the official policy statement.

Specifically, the firm expects the Fed to retain a tightening bias. Nonetheless, the Fed is likely to acknowledge that economic growth has deteriorated and that inflation pressures may gradually abate. Over time, the Fed's rhetoric on inflation risks is expected to change, as the year-over-year rate of core inflation has begun to pullback in the past month.

If inflation goes out of the picture, the fed gains the freedom to cut rates to reinvigorate growth. However, there are contrarian calls too. ABN AMRO forecasts that the Fed will tighten interest rate further and take it to 5.

5% by the end of 2007. The firm premises its expectation on the fact that the underlying inflation remains well above the FOMC's preferred target range, and tight labor market conditions imply that price pressure remains skewed to the upside. However, there is no denying of the fact that the economic growth prospects look insipid, with a majority of economists predicting below-trend growth to continue in the near term.

Richard Berner and David Greenlaw of Morgan Stanley estimate that GDP growth will average a 2% rate for the three quarters ending in the first quarter of 2007, which represents a 0.6% reduction from their earlier estimates issued a month back. The duo expect the U.

S. economy to grow at a 1-1/2% rate in the fourth quarter of 2006 and pick up momentum slowly, while it is expected to return to a trend-like growth of 3% in the summer of 2007. With the near term weakness in growth, inflationary pressures are expected to subside gradually.

Accordingly Berner and Greenlaw expect the Fed to stay in hold mode for much of 2007 and begin to ease gradually, as inflation curls up with their target range late next year and into 2008. The analysts expect the twin recessions in the housing market and the auto industry to ebb gradually, leading to a quickening in the pace of overall growth. Oil is edging up $0.

26 to $61.48 a barrel after closing Monday's session down $0.81 at $61.

22 a barrel. Gold is losing $0.50 and is currently trading at $634.

30. On Monday, gold futures rose $3.80 to $634.

80 an ounce. On the currency front, the dollar is strengthening against the euro and the yen. A dollar is currently worth 117.

045 yen, while it is trading at 1.3234 against the euro. The major Asian markets closed Tuesday's session on a mixed note.

The Australian, Chinese, Japanese, New Zealand and Singaporean markets ended higher, while the rest of the markets retreated. Japan's Nikkei 225 average hovered in positive territory throughout Tuesday's session, although it finished below the highs of the day. The index gained 109.

79 points or 0.66% to 16,638, as export dependent auto and technology stocks rose sharply. Comsys Holdings climbed 2.

57% and Denso Corp. gained 2.27%.

Fanuc was up 2.05%. Honda Motor rose 1.

45% and Isuzu Motors soared 3.04%. Suzuki Motor and Toyota Motor advanced 2.

48% and 1.26%, respectively. Toho Zinc rallied 3.

21%. Itochu Corp. climbed 2.

36% compared to a 2.43% advance by brokerage Nomura Holdings. Pioneer Corp.

and Sanyo were up over 3% each. Sharp rose 1.97% and Sony firmed up by 2.

13%. However, Ajinomoto, Furukawa Electric, Inpex Holdings, JFE Holdings, Kawasaki Kisen, Kobe Steel, Mitsubishi Chemicals, Mitsui Engineering Shipping, Mitsui Mining Smelter and Nippon Steel were all down over 1% each. Hitachi Zosen slipped 2.

46%. The Bank of Japan's preliminary estimates revealed that Japan's corporate goods price index rose 2.7% on a year-over-year basis in November.

However, the pace og growth trailed the 2.8% rate recorded in October. The central bank also noted that the export price index and the import price index advanced 1.

9% and 8%, respectively. However, monthly comparisons suggested a 0.1% slippage in the corporate goods price index.

The export price index declined at a monthly rate of 0.5% compared to a 1.5% decline in the import price index.

On a monthly basis, prices of petroleum coal products and non-ferrous metals slipped 1.1% and 1.8%, respectively.

However, iron steel prices were up 1.1%. Agriculture, fishery forestry products climbed 1.

5% and scrap waste prices rose 1.1%. Ignoring a positive start, Hong Kong's Hang Seng Index slipped below the unchanged line in the first hour of trading and was found languishing in negative territory for the rest of the session.

The index closed down 17.49 points or 0.09% at 18,907 after recovering from the day's low of 18,820.

Cheung Kong declined 1.52%, while Wharf Holdings and Shopping Property fell 0.73% and 1.

24%, respectively. Sino Land closed flat, while Hang Lung Property gained 1.24%.

HSBC rebounded and recorded a gain of 0.50%, while Hang Seng Bank closed flat. China Mercantile Holding slumped 4% and Cathay Pacific retreated by about 1.

98%. Yue Yuen Ind and CNOOC were down 1.99% and 1%, respectively.

FIH receded 1.21%. However, China Resources climbed 3.

15%. Esprit Holdings, China Unicom, China Netcom and Cosco Pacific were all up over 1%. South Korea's Kospi, which opened higher, reversed course and charted a path of steadily decline throughout the rest of session.

The index closed down 13.75 points or 0.99% at 1,377.

Analysts attributed the weakness to trepidation ahead of the expiration of futures and options. Kookmin Bank fell 2.25%.

Technology stocks also came under selling pressure on reports that Samsung Electronics and LG Philips LCD were being investigated for price fixing. Samsung eased 0.66%, while LG Philips slumped 4.

26%. However, steel maker POSCO and Hyundai Motor were up 1.37% and 0.

31%, respectively. Australia's All Ordinaries surrendered most of its early gains and ended up 0.60 points or 0.

01% at 5,456. Sentiment was mixed, with consumer discretionary, financial, gold, industrial, property trust, consumer staple and telecom stocks witnessing buying interests, while the rest of the sectors traded mostly lower. Energy stocks acted as a big drag on the market.

Miners BHP Billiton and Rio Tinto were down for the second straight day. Among the four major banks, only ANZ advanced modestly. However, media stocks News Corp.

, PBL, Seven Network and John Fairfax declined in the session. After a near 400-point loss on Monday, India's Sensex slumped 404.41 points or 3.

02% to 12,995 in Tuesday's session, pressured by a report that suggested that industrial production grew at a pace less than what economists had been expecting. The index has been trading lower for the past three sessions. Selling pressure was witnessed in small-cap, mid-cap and blue chip stocks.

Capital good, public sector unit, metal, healthcare, auto and bank stocks came under significant selling pressure. India's industrial production grew at a 6.2% rate in October, according to a report released by the Government.

The increase represented the slowest pace of growth in the current fiscal year. The slowdown was mainly due to a slackening in the pace of manufacturing production, which advanced 6% in October. The major European markets are posting losses in Tuesday's session.

The French CAC 40 Index and the German DAX Index are down 0.26% and 0.05%, respectively.

The U.K. FTSE 100 Index is receding about 0.

08%. In Paris, utilities Suez and Gaz de France, oil giant Total and finance stocks AGF, Credit Agricole, Societe Generale, Axa and BNP Paris are all retreating. Also moving lower are the shares of Mittal Steel ad STMicroelectronics.

However, Lagardere is climbing about 2.70%. Carrefour is advancing more than 1.

30%. Veolia Environment, Bouygues, Alstom and Danone are also seeing some buying interest. Among Frankfurt stocks, Continental and Deutsche Boerse are declining over 1% each.

TUI, Thyssenkrupp, Bayerische Hypo- Vereinsb., Volkswagen, Man, Deutsche Post, Allianz and Fresenius Medical Care are receding. On the other hand, Henkel is up more than 1.

30%. Adidas, Altana, Linde, Schering, BASF, Bayer, Metro, Schering and Commerz Bank are also posting gains. The Zew Institute's Indictor of economic sentiment for Germany rebounded in December.

The index rose by 9.5 points to -19 points in December, although it still remains significantly below its historical average of 33.7 points.

The current economic situation index increased to 63.5 points in December from 53 points in November, while the economic expectation index improved by 8 points to -3. In the U.

K., ICI is advancing more than 1.80%.

Cadbury Schweppes is rallying over 1.75% after it said in its trading update that it is performing in-line with its expectations. However, the company said that a recent salmonella contamination will cost the company 30 million pounds, higher than the initially estimated 20 million pounds.

Other noteworthy gainers include department store operator Tesco, beverage maker Scottish Newcastle, grocery retailer Sainsbury, Morrison Supermarkets, Associated British Foods and Smiths Group. Smiths Group revealed that it secured a 2.2 million pounds contract to supply anti-chemical warfare equipment to the Norwegian armed forces.

BT Group and Vodafone are also posting gains. However, financial, utility and mining stocks are revealing weak sentiment. Reuters and utility stock Drax Group are the worst decliners thus far in the session.

The U.K. 's consumer prices rose at a faster than anticipated pace in November and is attributed as one of the reasons for the lackluster performance on Tuesday.

The U.K. National Statistical Office revealed that the consumer price index rose at a 2.

7% rate in November, which represents record growth. In October, the index was up 2.4% on an annual basis.

The statistical body noted that the largest upward effect came from transport prices and prices of recreation and culture. In October, the U.S.

trade gap narrowed to a deficit of $58.9 billion from a deficit of $64.3 billion in September, according to a report released by the Commerce Department.

October's deficit was the smallest since the August of 2005. Economists had estimated the deficit to come in at $63.5 billion for the month.

Exports were up 0.22% in October after they increased at a 0.48% rate in September.

Meanwhile, imports declined at a 2.73% rate in October compared to a 1.09% fall in September.

The deficit on trade in goods declined by $5.2 billion to $65.1 billion in October, while the services surplus increased $0.

2 billion to $6.2 billion. The October deficit in oil trade narrowed to $18.

76 billion from $22.63 billion in September, while the trade gap with China widened to $24.37 billion in October from $22.

96 billion in September. On a year-over-year basis, the September trade balance narrowed by $7.3 billion, as export growth of 13.

84% outpaced the import growth rate of 4.16%. The Treasury Budget, a monthly account of the surplus or deficit of the federal government, is expected to be released at 2 PM ET on Tuesday.

The changes in the budget balance is keenly watched to know the budgetary trends and the thrust of the fiscal policy. The Treasury budget for the month of November is expected to reveal a deficit of $74 billion for October. The Federal Open Market Committee is scheduled to meet on Tuesday to deliberate on its monetary policy.

A decision is expected at 2.15 PM ET on the same day. Alnylam Pharma ( | | | ) may come under pressure after it announced its intention to sell about 4.

7 million shares in a public offering. Pharmaceutical Product Development ( | | | ) fell in Monday's after hours session after it raised its revenues estimate for the full year to $1.15 billion from its earlier estimate of $1.

13-$1.14 billion. The consensus estimate calls for revenues of $1.

16 billion for the year. The company also said it expects earnings of $1.48-$1.

54 per share on revenues of $1.34-$1.39 billion for fiscal year 2007.

Analysts, on average, expect earnings of $1.56 per share on revenues of $1.38 billion for the year.

Rackable Systems ( | | | ) may come under pressure after it revealed that its Vice President of worldwide sales, Thomas Gallivan is resigning effective January 5th. Citigroup (C) may react to its announcement that it has appointed Robert Druskin as its Chief Executive Officer. Another stock that could take the spotlight on a management change is Verizon Communication ( | | | ), which revealed that its President and Vice Chairman Lawrence Babbio is planning to retire by the end of the first quarter of 2007.

United Parcel Service ( | | | ) is likely to be in focus over its announcement that it will offer buyout agreements to 650 employees. Texas Instruments ( | | | ) could retreat after the chipmaker slashed its fourth quarter earnings from continuing operations estimate to 37-40 cents per share from its earlier estimate of 40-60 cents per share. The company also lowered its revenue guidance to $3.

35-$3.50 billion from $3.46-$3.

75 billion. Wall Street, on average, estimates earnings of 42 cents per share on revenues of $3.60 billion for the fourth quarter.

The company attributed much of the weakness to a slowdown in semiconductor sales. To make matters worse, the company forecasts that semiconductor orders will further weaken in the typically slow first quarter. However, Devon Energy ( | | | ) and Anadarko Peteroleum ( | | | ) could firm up after they announced that they have discovered oil in a Gulf of Mexico well.

On the other hand, Crane ( | | | ) may see some weakness after it lowered its fiscal year 2006 earnings estimate to $2.60-$2.64 per share from its earlier estimate of $2.

64-$2.70 per share. The company now expects earnings of 54-58 cents per share for the fourth quarter, lower than its earlier estimate of 58-64 cents per share and the consensus estimate of 63 cents per share.

The company said the downside was due to higher than expected losses at Dixie-Narco, which was purchased recently. Nasdaq ( | | | ) may react to its announcement that it has launched a hostile bid for the London Stock Exchange after the U.K.

exchange spurned its take over approach. Best Buy ( | | | ) is retreating in pre-market trading after it reported that its fiscal year 2006 third quarter earnings increased to 31 cents per share from 28 cents per share reported in the year-ago period. The bottom line results trailed the consensus estimate of 35 cents per share.

Sales rose about 16% to $8.47 billion, ahead of the consensus estimate of $8.41 billion.

Looking forward, the company projects earnings of $2.65-$2.80 per share for fiscal year 2006, while Wall Street, on average, targets earnings of $2.

81 per share. The company nudged up the lower end of its same store sales outlook for the year to 4% from 3% estimated earlier. However, Salesforce.

com ( | | | ) is firming up in pre-market trading after it raised its revenue estimate for fiscal year ending January 31st, 2008 to $710-$720 million from its earlier estimate of $700 million. The consensus estimate calls for earnings of $710.89 million for the year.

Goldman Sachs ( | | | ) is up modestly in pre-market trading after it said its fourth quarter earnings were $6.59 per share, higher than the year-ago earnings of $3.35 per share.

Net revenues were up 47% to $9.41 billion. Analysts, on average, had estimated earnings of $6 per share on revenues of $8.

81 billion. Dollar General ( | | | ) is expected to be in focus after it said it reversed to a loss of 2 cents per share compared to a profit of 20 cents per share in the year-ago quarter. The recent quarter's earnings include charges amounting to $79.

2 million. Net sales were up 7.6% to $2.

21 billion, slightly shy of the consensus estimate of $2.24 billion.