Two Credit Suisse downgrades + The equities indicator yelling sell!

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead.

MARKETS WRAP

S&P 500 TECHNICALS

THE CALENDAR

Canadian CPI warmed up significantly last month, up 0.7% month-on-month. It was also a beat on both the headline and core measures year-on-year. US retail sales also came in hot, providing a little more impetus for the Fed to hike by at least 50 basis points next month.

And later today, we'll get the second half of the Australian labour force data double-header. Yesterday, the Q3 wage price index showed a 1% rise nationally quarter-on-quarter. That takes the year-on-year growth rate to 3.1%, still a far way away from inflation. Providing there are no huge shocks at 11:30am AEDT, a 25 basis points hike is going to become the default call for the Reserve Bank at its December meeting.

THE CHART

Chris Watling of Longview Economics loves his combination of asset allocation and technical analysis, and this chart is a perfect example of the work he does so well. The in-house model covering the S&P 500 has breached the "sell" indicator (the first black line) for the first time since 2008. It means equities are now less attractive than bonds, which pairs nicely with what some professionals have noted in their 2023 markets outlook (Fidelity, for instance).

STOCKS TO WATCH

Following yesterday's Commonwealth Bank (ASX: CBA) quarterly result, the brokers have been scathing in their reviews. Goldman Sachs said the result didn't justify its fundamentals - and Credit Suisse went one better downgrading the stock to an underperform from neutral. 

After all these rate rises, the broker believes the good news is baked into the price. It adjusted its FY23-25 EPS forecasts for the bank downward as well. The target price falls $5+ to $97.50/share.

(Incidentally, there were also downgrades to the CBA stock at Evans & Partners, Jefferies and JP Morgan - proving premia has to be earned.)

And... fresh off its full-year earnings report, Incitec Pivot (ASX: IPL) is now rated NEUTRAL instead of outperform. It also believes all the good news is priced into this stock, with news of a $400 million share buyback still not enough to woo the brokers over. 

A FUNNY TO FINISH

Hans Lee wrote today's report.

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