5 Oct 2012
Market Summary
Afterall, it was a flat to bullish day. However, the internals shows a rather weak participation. 606 Million shares traded in NYSE, with the UVOL outpacing the DVOL by just a little... Not forgetting that we have our ECB and BOE maintaining their rates unchanged.
Market Internals
Leaders and Laggards
Technical Updates
With SPX and DJI hitting their resistance and NASDAQ lagging behind on Friday, this doesn't look good at all.... NASDAQ was lagging because AAPL dropped by around 2% on Friday. So NASDAQ nowadays can be quite misleading...
Commentaries
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Commodities
Crude Oil, Coffee, Rice and Wheat made some serious movement on Friday... Crude went below $90 again. While Coffee sunk approx 4%..
Treasuries
Weekly Analysis
Week 39
Technical Updates
Commentaries
Weekly Wrap
Dow +34.79 at 13615.4, Nasdaq -13.27 at 3136.19, S&P -0.47 at 1460.93
Equities began the day on a higher note despite mixed jobs data. After reaching session highs within the first hour, the major averages reversed and spent the remainder of the day sliding towards the unchanged level. As a result, the S&P 500 ended flat while the Dow advanced 0.3% to close at its best level in five years.
Nonfarm payrolls were reported at 114K versus the 120K Briefing.com consensus. The prior reading was revised up to 142K from 96K. Meanwhile, nonfarm private payrolls added 104K against the 130K consensus. The unemployment rate was reported at 7.8% versus the 8.1% consensus.
In addition, hourly earnings increased by 0.3% while the expectations called for an uptick of 0.2%. Lastly, average workweek ticked up to 34.5 from 34.4.
The materials sector led the way. Within the group, steel producers outperformed. AK Steel (AKS 4.87, +0.05) and Steel Dynamics (STLD 11.91, +0.18) added 1.0% and 1.5%, respectively.
Telecom stocks were the biggest laggard. However, the underperformance was due to notable weakness in a single stock. Inteliquent (IQNT 7.70, -1.36) fell 15.0% after Robert W. Baird downgraded the stock from ‘outperform' to ‘neutral' and lowered its price target from $15 to $10. Originally, Robert W. Baird upgraded the stock in the spring on the expectation of a financial engineering catalyst. Although that catalyst was achieved, the firm says results have unfortunately deteriorated more than expected and there now appears to be increased material risk to forward estimates.
Other telecom names were generally higher and the iShares Dow Jones US Telecom ETF (IYZ 25.76, +0.16) added 0.6%. Two sector components which have been in the headlines recently showed gains. Leap Wireless (LEAP 6.18, +0.33) and Sprint (S 5.20, +0.11) gained between 2.2% and 5.6%. Earlier, reports suggested that Sprint plans on holding a second meeting to discuss a possible offer for MetroPCS (PCS 12.65, -0.04).
The Dow Jones Transportation Average continued its recent streak of outperformance and settled higher by 0.7%. Within the bellwether complex, 16 out of 20 stocks advanced and trucking stocks were the top performers. Con-Way (CNW 27.98, +0.27), CH Robinson(CHRW 60.31, +0.41), JB Hunt (JBHT 55.20, +0.94), and Landstar (LSTR 48.96, +0.58) all posted gains between 0.7% and 1.7%.
Southwest Airlines (LUV 8.97, -0.13) was the main decliner among transportation stocks, down 1.4%.
Despite weakness in Southwest, other air carriers outperformed. China Eastern Airlines(CEA 16.08, +0.28) advanced 1.8% while United Airlines (UAL 21.07, +0.26) added 1.3%.
Solar stocks were under pressure after Avian Securities downgraded First Solar (FSLR 20.07, -2.48) from ‘positive' to ‘negative.' The downgrade results from reliability issues related to the junction box on modules supplied by First Solar. The company commented on the issue by saying approximately 232,000 modules may develop loose cord plates over time, but the issue is not expected to have a material impact on earnings. As a result, FSLR slid 11.0%.
Other solar stocks also showed weakness as the Guggenheim Solar ETF (TAN 16.52, -0.49) settled lower by 2.9%.
Consumer credit increased by $18.1 billion in August. This follows prior month's reading of a $3.3 billion decrease, and is higher than the $5.0 billion that had been broadly expected among economists polled by Briefing.com.
There is no economic data of note scheduled to be released on Monday or Tuesday of next week. Note that the bond market will be closed on Monday in observance of Columbus Day. The stock market, however, will be open.
Week in Review: Stocks Climb Higher Despite Macroeconomic Headwinds
Monday's session started with an extension of the bullish sentiment observed in overseas action. Following a higher open, U.S. equities got an additional boost from the ISM Index which was reported at 51.5 against the expectations of a 49.7 reading. After rallying to session highs, the Dow held the bulk of its gains, while the S&P 500 and Nasdaq spent the remainder of the session in a slow retreat towards the unchanged line. As a result, the Dow climbed 0.6%, the S&P 500 added 0.3%, and the Nasdaq slipped 0.1%. HealthcareServices Group (HCSG 23.76, +0.22) gained 4.2% after UBS initiated coverage of the stock with a ‘buy' rating.
On Tuesday, the major averages got off to a strong start, but the bullish bias faded shortly after the open. Headlines out of Europe provided another risk-off signal as reports suggested that a Spanish aid request is not imminent. After marking their session highs during the first five minutes of trade, the key indices spent most of the session trending lower. However, a rally in the final hour of trading lifted the S&P 500 and Nasdaq into positive territory while the Dow closed with a small loss of 0.2%. Biotech stocks showed strength and the iShares Nasdaq Biotechnology ETF (IBB 147.18, +0.36) added 1.1%.
Wednesday's session began lower as the major averages showed indecision in the early going. After chopping around the flat line during the first hour of trade, the key indices reached their session highs at the midway point. Unable to hold those levels, stocks returned to the middle of the day's range before buyers re-emerged in the final hour. As a result, the S&P 500 added 0.4%. Netflix (NFLX 66.56, -0.11) jumped 10.8% after Citigroup pointed to a survey which showed an improvement in customer satisfaction.
On Thursday, stocks began the day with a bullish bias. The rally reached session highs 30 minutes after the open when the August factory orders report indicated a 5.2% decrease. The number was not positive in itself, posting its worst reading since January 2009. However, it was better-than-feared as expectations called for a 6.0% pullback. After marking session highs, stocks spent the remainder of the day hovering near those levels. As a result, the S&P 500 closed with a gain of 0.7%. The financial sector was the top performer, and the SPDR Financial Select Sector ETF (XLF 16.06, 0.00) settled higher by 1.5%.
The coming week is quite light with economic data, so I believe it will be a pretty flat week, especially with all the indices facing their major resistance at their previous high. To be able to break above the resistance... I guess the bulls will need more commitment and confidence that the market can go higher... Else... Bears will come in and jump out of the window...
Market Call(Week 39): DOWN
Market Call(8 Oct): DOWN
Market Call(8 Oct): DOWN
Date: 8 Oct 2012
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