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CURRENT MARKET SENTIMENT

Sayonara, adieu 10,000!! The bull conceded 203 points while the bears
feasted on the selling pressure and mediocre economic report. 50
points came the last five minutes in an attempt to front-run the MARKET
employment rate which is expected to increase to 9.8% and payrolls to
fall by 175,000. No news is good news! The sentiment has clearly HIGHLIGHTS
changed within the last few days, sell first and ask question later. On 10/02/2009
this note, there will be an initial move down which may lead the Dow
to visit (9443-64) range and S&P(1012-16) with a possibility to “rally’ on
short covering prior to the weekend. Expect any possible upward move
to be limited to the pivot (9573-9602), S&P (1035-38), unless Uncle Sam
comes to the rescue!
PRISM CALL

The shorts are now officially

ECONOMIC NUMBERS AND DATA in control. After worse than
Time Indicator Date Actual Expectation Range Prior expected unemployment
(ET)
data, the futures are getting
8:30 Change in Oct 2 -263K -175K -260K -216K
AM Nonfarm to eaten up pre-market. We
Payrolls -100K
see a lot of volatility
8:30 Unemployment Oct 2 9.8% 9.8% 9.6% to 9.7%
AM Rate 9.9% coming.
8:30 Avg Hourly Oct 2 0.1% 0.2% 0.0% to 0.3%
AM Earning MoM 0.3%
I am buying the big down
open. This is a quick trade.
8:30 Avg Weekly Oct 2 33.0 33.1 33.0 to 33.1
AM Hours 33.2 Thereafter, I will probably
10:00 Factory Oct 2 0.0% -1.7% to 1.3% short the rallies, but hold
AM Orders 2.1% only if the market continues
to make new lows. This is
TECHNICAL an exciting yet scary type of
Indices S2 S1 Pivot R1 R2 day. You want to be in it,
but cautious.
INDU 9363 9443 9573 9704 9739
(DOW)

SPUZ 1012 1022 1038 1053 1063

(S&P)

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DOW STOCK TO WATCH
Strong Weak
WMT DD

KFT AA

TRV JPM

KO IBM

COMMODITY PRICES
Commodity Price


OIL 69.67 1.15

GOLD 998.30 2.40

FOREIGN MARKETS
Market Price
 %

FTSE 4978.07 69.74 -1.38

DAX 5468.6 89.95 -1.55

HANG SENG 20375.49 579.76 -2.77

NIKKEI 9731.87 246.77 -2.47

CHINA 2779.426 - - -

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UPGRADES / DOWNGRADES
Stocks Upgraded


Deutsche Bank upgrades Southwestern Energy (SWN 40.28) to Buy from Hold

Keefe Bruyette upgrades U.S Bancorp (USB 21.86) to Outperform from Market Perform and raised their tgt
to $28 from $21 as they believe the company is one of the highest-quality names in the BKX but is priced at
a discount on a normalized earnings basis

JP Morgan upgrades Repsol (REP 26.27) to Neutral from Underweight

Oppenheimer upgrades Intel (INTC 18.90) to Outperform from Perform and establishes a tgt of $28 based
on their belief that the PC market is poised for continued growth in 2010. The firm believes that PC growth
could exceed 10% in 2010 driven by factors including overdue hardware upgrades, lean inventories and a
rebound in IT spending. INTC is believed to be well positioned to capitalize on and even outpace market
trends through share gains in select segments, most notably server...

UBS upgrades Apple (AAPL 180.86) to Buy from Neutral based on higher iPhone expectations

Robert W. Baird upgrades Costco (COST 55.69) to Outperform from Neutral and raises their tgt to $65 from
$53 With a meaningful acceleration in EPS growth on tap (driven by a mix of easing comparisons, firming
margins, favorable FX translations) and current Street numbers too low, they are taking advantage of the
stock's recent pullback to the mid-50s to upgrade

Keefe Bruyette upgrades BB&T (BBT 25.53) to Outperform and Market Perform

Stocks Downgraded


Deutsche Bank downgrades XTO Energy (XTO 39.52) to Hold from Buy

JP Morgan downgrades Telmex (TMX 16.85) to Underweight from Neutral

Keefe Bruyette downgrades PNC Financial (PNC 48.59) to Underperform from Market Perform based on
valuation

Canaccord downgrades Rio Tinto (RTP 163.48) to Hold from Buy

UBS downgrades Avery Dennison (AVY 34.73) to Sell from Neutral

BofA/Merrill downgrades Amdox (DOX 26.75) to Neutral from Buy

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 NEWS ALERT
Major European markets down

Nikkei drops 2.5%; Hang Seng sheds 2.8%

Meredith Whitney writes op-ed article in WSJ; says small business credit crunch
continues

Large, well-capitalized companies have no problem finding credit. Small

businesses, on the other hand, have never had a harder time getting a loan.

I believe that we are only in the early stages of the second half of this credit
cycle. I expect another $1.5 trillion of credit-card lines to be removed from the
system by the end of 2010."

Global chip sales increase 5% month-on-month, SIA says

AMR E.U. says airlines’ pact may be illegal - NY Times

U.S. Senate panel set to advance healthcare overhaul – Reuters

CMCSA Comcast, NBC in deal talks – WSJ

IMF chief says Europe may lag in global recovery – Reuters

F Cruel September for car makers – WSJ

WSJ reports that U.S. auto sales fell 23% in September

Car makers sold 745,997 vehicles in September

London Exchange in talks to buy alternative platform - NY Times

FMX Mexico's FEMSA in talks over beer business deal - Reuters (44.40 )

Bernanke, in nod to critics, suggests Board of Regulators - NY Times

CIT CIT Group launches restructuring plan (1.06 ) -Update-

FSLR First Solar: News Corp will replace Wyeth in the S&P 100 and First Solar
will replace Wyeth in the S&P 500 -Update-

ACN Accenture reports EPS in-line, revs in-line; guides Q1 revs below consensus;
guides FY10 EPS below consensus, revs below consensus (36.61 -0.66)

NOC Northrop Grumman beats Boeing in $3.8 bln tanker service work -
Reuters.com (50.08 )

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 NEWS ALERT
UK house prices steady in annual terms – DJ

Euro-zone producer prices rise in August on month – DJ

AGN Allergan files federal lawsuit to allow it to share relevant information with
the medical community on the safe use of Botox for common therapeutic off-
label treatments (55.95 )

Strong dollar "very important", Geithner says - Reuters.com

IMF Strauss-Kahn says 10-12 months more of rising unemployment, according to

report – DJ

COMDX Gold and silver drop to their lowest levels of the morning, as the dollar
rallies on this morning's econ data

Gold is currently off $12.20 to $988.50 while silver is down 48 cents to $15.96

ECONX September Nonfarm Payrolls -263K vs -175K consensus, August revised to

-201K from -216K

ECONX September Unemployment Rate 9.8% vs 9.8% consensus, prior 9.7%

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