The Trader's Path: 5 Sep 2012 AMC

5 September 2012
Market Summary

This is definitely a very choppy day in the market... Awaiting for major data coming out from Europe and US this week... Luckily I took my profits off the table before the crazy gyration starts...

Market Internals

It was really some fierce fight between the bulls and bears yesterday... but judging by the economic calendar, i presume that people are taking their long/short positions off or starting to hedge again their positions that created such gyration

Leaders and laggards

As you can see... it's flat...

Technical Updates

On the technicals, the major indices found support at 1400 and 13000. A major catalyst is need to make or break this trend. And we'll know it tomorrow.

Commentaries

Stock Market Update

16:15 ET Dow +11.54 at 13052.66, Nasdaq -5.79 at 3069.27, S&P -1.50 at 1403.44 :[BRIEFING.COM] Equities spent the majority of the session chopping around the unchanged line. The early morning volatility coincided with a Bloomberg TV report which indicated the European Central Bank bond purchase program is said to pledge unlimited, sterilized buying of bonds. However, the exuberance was short-lived as European Central Bank officials declined to comment, and reports out of Germany suggested Chancellor Angela Merkel would only support the program in the near-term. Afternoon trade was mostly quiet as the S&P 500 remained in a narrow range before closing lower by 0.1%.

The telecom sector got off to a strong start and maintained its gains throughout the day.Sprint (S 4.95, +0.15) advanced 3.1% as it outperformed other holdings within theiShares Dow Jones US Telecom ETF (IYZ 24.39, +0.13).

The Dow Jones Transportation Average continued its recent streak of underperformance; however, individual components within the group showed significant divergence. Shares of major airlines saw a relatively strong bid as United Continental Holdings (UAL 19.07, +0.97) led the major carriers with a 5.4% gain. Delta Air Lines (DAL 8.89, +0.33) added 3.9% after announcing August consolidated passenger unit revenue increased by 4.0% on a year-over-year basis. Meanwhile, companies specializing in logistics slipped afterFedEx (FDX 85.80, -1.74) lowered its first quarter guidance, citing weaker global demand. FedEx shed 2.0% while UPS (UPS 71.94, -1.76) slid 2.4% and Con-way (CNW 29.97, -1.21) ended lower by 3.9%.

Financial stocks have traded mostly in-line with the broader market. However, several names diverged from the rest of the group. Goldman Sachs (GS 109.94, +3.53) was the best performer as it ended higher by 3.3%. On the downside, American Express (AXP 57.19, -1.42) dipped 2.2% as it trailed the other majors. Elsewhere, European financials were mostly higher with UBS (UBS 11.38, +0.29) and Credit Suisse (CS 19.24, +0.34) posting gains of 2.6% and 1.8%, respectively.

Restaurant operator Bloomin' Brands (BLMN 13.86, +0.41) advanced 3.1% after delivering its first earnings report as a publically traded company. The quarterly report showed second quarter earnings growth of 23.0% compared to the same period last year. Meanwhile, two names which began trading within the past twelve months also finished on a positive note. Facebook (FB 18.58, +0.85) closed higher by 4.8% after announcing Chief Executive Officer, Mark Zuckerberg, has no intention to sell any shares for at least twelve months. Meanwhile, Jefferies initiated coverage of the stock with a ‘buy' rating and a $30.00 price target. Zynga (ZNGA 2.92, +0.09) rose by 3.2% as it benefited from the strength in Facebook.

Nokia (NOK 2.38, -0.45) slumped 15.9% after the company unveiled its new Lumia 920 phone which features an improved camera and wireless charging capabilities. The phone is based on the Windows operating system, developed by Microsoft (MSFT 30.39, +0.01).

Productivity data for the second quarter showed an increase of 2.2%, which was an improvement over the 1.6% increase that had been reported in the preliminary reading. It is also better than the 1.8% increase that had been broadly expected. Unit labor costs for the first quarter were revised lower to reflect a 1.5% increase after they had reportedly increased by 1.7% in the preliminary reading. Economists polled by Briefing.com had expected that unit labor costs would tick down in the revised reading to reflect an increase of 1.4%.

A handful of economic data points will be released tomorrow. Challenger job cuts will be reported at 7:30 ET. ADP Employment Change is scheduled for an 8:15 ET release, while initial and continuing claims will hit the wires at 8:30 ET. The ISM Services report will top off the day's data at 10 ET.

Also of note, the European Central Bank will announce its interest rate decision at 7:45 ET which will be followed by Mario Draghi's press conference at 8:30 ET. In addition, the Bank of England will opine tomorrow morning at 7:00 ET. The central bank is expected to keep both its benchmark interest rate and its asset purchase program steady at 0.50% and GBP375 billion. ..NYSE Adv/Dec 1407/1553. ..NASDAQ Adv/Dec 1078/1381.

After Hours

17:20 ET MIND +5.5%, GIS +0.9%, PAY -10.7% following earnings/guidance :

Equities spent the majority of the session chopping around the unchanged line. The early morning volatility coincided with a Bloomberg TV report which indicated the European Central Bank bond purchase program is said to pledge unlimited, sterilized buying of bonds. However, the exuberance was short-lived as European Central Bank officials declined to comment, and reports out of Germany suggested Chancellor Angela Merkel would only support the program in the near-term. Afternoon trade was mostly quiet as the S&P 500 remained in a narrow range before closing lower by 0.1%.

Today after the close the following companies reported earnings: ABM, AVAV, FCEL, HRB, HWD, KFY, MTRX, MW, MIND, SEAC, SIGM, STEI, PAY, VRNT

Futures are higher after hours: S&P 500 futures are +1.93 from fair value of 1402.27 and Nasdaq100 futures are +2.26 from fair value of 2765.99.

Tomorrow morning before the open three economic reports are scheduled to be released: 1) Challenger Job Cuts, 2) ADP Employment Change (Consensus 143k), and 3) Initial Claims (Consensus 373k) and Continuing Claims (Consensus 3300k).

Tomorrow before the open look for the following companies to report: HOV, LAYN, MPR, NAV, UTIW

Commodities