29 July 2013 AMC

29 July 2013 AMC

Market Summary 

 

Market Internals

The Nasdaq closed down 14 (-0.39%) at 3599, the S&P 500 closed down 6 (-0.37%) at 1685, and the Dow closed down 37 (-0.24%) at 15522. Action came on below average volume (NYSE 579 mln vs. avg. of 773; NASDAQ 1429 mln vs. avg. of 1658), with decliners outpacing advancers (NYSE 920/2145, NASDAQ 789/1705) and new highs outpacing new lows (NYSE 92/44, NASDAQ 98/17). 

Relative Strength: 
Sugar-SGG +2.79%, Greece-GREK +1.85%, Volatility-VXX +1.29%, Platinum-PPLT +0.87%, Agribusiness-MOO +0.56%, Basic Materials-IYM +0.49%, Canada-EWC +0.39%, Japanese Yen-FXY +0.32%, Austria-EWO +0.17%, Canadian Dollar-FXC +0.10%.

Relative Weakness: 
Thailand-THD -2.85%, Cocoa-NIB -2.79%, Rare Earths-REMX -2.70%, Mexico-EWW -2.63%, Natural Gas-UNG -2.59%, Vietnam-VNM -2.36%, Japan-EWJ -2.20%, Lithium-LIT -2.15%, Indonesia-IDX -1.94%, Copper Miners-COPX -1.85%.

Leaders and Laggards

Sector Performance (% change of the day): Telecom (+0.71%), Materials (+0.51%), Utilities (+0.20%), Tech (-0.17%), Health Care (-0.29%), Consumer Staples (-0.29%), Industrials (-0.34%), Consumer Discretionary (-0.55%), Financials (-0.75%), Energy (-0.84%).

Technical Updates

Briefing's Commentaries 

Dow -0.2%, S&P 500 -0.4%, Nasdaq -0.4%, Nasdaq 100 -0.2%, S&P 400 -0.4%, Russell 2000 -0.8%

The S&P 500 settled lower by 0.4% as seven of ten sectors registered losses.

Equities began the session in negative territory after the third consecutive decline in Japan's Nikkei contributed to the cautious sentiment.

With few earnings of note and no market-moving economic data, the session proved to be relatively quiet as investors prepared for what promises to be an active week. On Wednesday morning, the advance reading of second quarter GDP will be reported while the afternoon will bring the latest policy statement from the Federal Reserve. In addition, Friday morning will bring the July employment report while quarterly earnings will continue pouring in throughout the week.

Stock indices spent the entire session in negative territory as a handful of influential groups weighed. Consumer discretionary, energy, and financial sectors lost between 0.6% and 0.8% with energy leading to the downside.

The energy space fell 0.8% as crude oil endured a volatile session, alternating between gains and losses before ending lower by 0.3% at $104.42 per barrel.

Meanwhile, another commodity-related sector, materials, received a late afternoon boost after CNBC reported that Dan Loeb's Third Point has taken a stake in CF Industries (CF 202.30, +21.30), which surged 11.8% on the news. As a result, the materials sector was the only cyclical group to settle in the green.

Elsewhere, the underperformance of all major banks weighed on the financial sector, which shed 0.8%.

Also of note, discretionary shares displayed broad weakness. Homebuilders ended generally lower even after the June pending home sales report surpassed estimates (-0.4% actual, -1.7% Briefing.com consensus). The iShares Dow Jones US Home Construction ETF (ITB 21.75, -0.08) slipped 0.4%.

Interestingly, industrials (-0.3%) finished ahead of the S&P despite the underperformance of transportation-related names. The Dow Jones Transportation Average lost 1.1% as airlines lagged. Alaska Air (ALK 59.55, -3.03) and United Continental (UAL 34.85, -1.40) settled lower by 4.8% and 3.9%, respectively.

While today's session did not produce much excitement, investors received a heavy dose of M&A news. Omnicom Group (OMC 64.75, -0.36) and Publicis Groupe announced a merger of equals while Saks (SKS 15.95, +0.64) received an offer from Hudson's Bay to be acquired for $16 per share, which represents a 4.5% premium to Friday's closing price. Separately, Perrigo (PRGO 125.17, -9.06) agreed to acquire Elan (ELN 15.46, +0.53) for $16.50 per share (10.5% premium) and Michael Baker (BKR 40.39, +10.79) entered into an agreement to be acquired by Integrated Mission Solutions for $40.50 per share. The purchase price represents a 36.8% premium.

Tomorrow, the May Case-Shiller 20-city Index will be reported at 9:00 ET while July consumer confidence will cross the wires at 10:00 ET. On the earnings front, Aetna (AET 63.40, -1.30), Goodyear (GT 17.04, +0.26), and Pfizer (PFE 29.54, +0.17) will report their results ahead of the opening bell.

Commodities

Treasuries

Treasuries Slide Amid Quiet Trade: Treasuries finished with modest losses amid a rather uneventful session. The complex gave up its overnight gains and slipped into negative territory ahead of the better than expected pending home sales data (-0.4% actual v. -1.7% expected) before dripping lower into afternoon trade. Traders remained cautious, keeping their exposure rather limited, in preparation for this week’s FOMC meeting where the Fed may provide a clearer picture as to if/when it will begin tapering its bond buying program. Today’s modest selling ran yields higher by as much as 4 bps at the long end of the curve with the 30-yr settling at 3.656%, just a couple of bps below its two-year high. Meanwhile, the 10-yr yield ticked up 2.5 bps to settle at 2.585%. Little change would be seen along the yield curve with the 2-10-yr spread holding near 226 bps. Elsewhere, precious metals booked small advances with gold rallying $8 to $1329 and silver climbing $0.05 to $19.80. Tuesday will see Case-Shiller 20-city Index (9) and consumer confidence (10).

Next Day In View 

On other news.... 

Currencies 

Dollar Hovers Little Changed: The Dollar Index holds little changed near 81.70 amid a rather quiet session. Early weakness made for a test of the 200-day moving average (81.60), but that area was able to hold, and bulls managed to run action back above the flat line. 

·         EURUSD is -15 pips at 1.3260 after another test of the 1.3300 level failed. The single currency saw some early gains following the announcement Germany would approve the next tranche of Greek aid, but has slipped back into the red as sellers defend resistance in the area. The 1.3100 area will likely represent key support going forward as both the 50- and 200-day moving averages lurk in the vicinity. Eurozone data includes GfK German Consumer Climate, German preliminary CPI, and Spanish Flash GDP. 

·         GBPUSD is -35 pips at 1.5350 after early strength failed to hold the 1.5400 level. Traders continue to keep the 1.5300 region on their radars as near-term support is helped by the 50- and 100-day moving averages. 

·         USDCHF is +25 pips at .9310 as trade lifts off a five-week low. Selling over the past three weeks has shaved close to 450 pips off the pair with trade now checking up at the .9275 support level. Bulls are hoping to retake the 200-day moving average (.9360) in a timely matter, but will have to deal with resistance in the .9440 area helped by the 50- and 100-day moving averages if they are able to do so. 

·         USDJPY is -40 pips at 97.80 as trade pushes lower for a third session. Current action is making for a test of support in the vicinity dating back to June, and a breakdown is likely to produce a move into the 94.00 area. Japan’s preliminary industrial production is due out tonight. 

·         AUDUSD is -70 pips at .9200 after an early bid struggled to retake the .9300 level. The .9140/.9155 level will be tracked over the coming days, and the inability to hold will put the recent lows near .9000 back in focus. Australian data is limited to building approvals. 

·         USDCAD is -15 pips at 1.0260 as sellers remain in control for the seventh time in the past eight sessions. Today’s weakness has dropped the pair below its 100-day moving average, putting trendline support off the September lows in focus near 1.0200. Canada’s Raw Materials Price Index is set for release tomorrow.

Jason's Commentaries


Volumes continued to be weak and market decided to end slightly down. Market started with a bearish bias but started reversing at 11am AGAIN and recovered most of its losses. It seems that the professionals are taking closing their positions before going for lunch break. Internals were showing a slight bearish sign but TRIN did not quite converge with the rest of the internals. Amongst the sectors, Energy and Financials were the biggest laggard while Materials and Utilities were the only gainers. Energy were being brought down by names like Exxon, Chervon, Slumberger, Apache and the financials stocks like Goldman Sachs, BfA, JP Morgan, Citi, Morgan Stanley, Ben Franklin were being hammered by more than 1% losses. On the technical outlook, I would say the market is holding strong on their support. If anything in all, it would be the news that will be causing the market to break that support. As we're having FOMC statements on Wednesday again, I reckon the market will consolidate with lower volumes while awaiting for the FOMC statements and the employment reports. Not much movements in the commodities except for natural gas and sugar which moved -2.61% and 2.73% respectively. 

Daily market Analysis will be taking a break from Tuesday till Thursday as the nation is requesting my service. Meanwhile, check out my friends' analysis to have more insights in the market =D 

Market Call:FLAT

Date: 26 June 2013