"Beige Book", "Housing starts", "Existing Home sales", "Leading Indicators"

We are into Q3 earnings season and the results have been positive so far, particularly technology companies. The number of companies rising their earnings guidance has jumped quite a bit! You may need to be forward looking rather than using historical data in order to benefit from this up swing. Adding fuel to the earnings season is the demise of the US dollar. All in all, this makes the dollars that you have in the bank CD all the more less value when you view it from an international investor's perspective. So holding on to the dollar may not be prudent any more.

Since the equities are in the overbought zone, starting a new long position can only be short term. The economic indicators are not boding well with the equity rally. That makes the argument stronger for an equity rally to be short term.

The US consumer is still in doldrums - September retail sales was -1.5% with all the government incentives ending. The Core consumer prices came in little hotter at +0.2%.

When you look back at the past year's performance, only four sectors have exceeded S&P500's performance - Consumer discretionary (huh? - yeah, its true) , Energy, Materials and technology. Telecom, Utilities and Consumer staples are the most undervalued with respect to S&P 500.

Conditions currently favor the equities outside the US, particularly the ones relates to commodities. You would want to look at ETFs from Latin America - ILF, EWZ, BRF, etc.. Not necessarily buy into them right away, but a good pull back can help.

Next Week's economic calendar:

• Core PPI, Housing Starts - 10/20
• Fed's Beige Book - 10/21
• Leading Indicators - 10/22
• Existing Home sales - 10/23

Last week's market Sectors Returns and Internals:

• SP 500: 1.51% 
•  Volatility Index, VIX = 21.43
• Short term bond rate = 1.93%
  
• Small Cap (IWM): 0.42%
• Latin America (ILF): 3.95%
• Europe (IEV or EFA): 2.85%
• Emerging Markets (EEM): 2.26%
• Commodities (DBC): 5.29%
• Long term Bonds (TLT): -0.47%
• US Dollar, 5 DMA = 75.71
• Gold, (GLD) 5 DMA = 103.61

NYSE (New Highs - New lows), 5 DMA =295.2
NYSE (Advances-Declines), 5 DMA = 97.6
10 year Treasury yield = 3.43%

Put/Call Ratio, total of equity/Index = (not able to get this data freely anymore)
Bull/Bear Ratio, Investors Intelligence survey =

-Nidhi