14 Aug 2013 AMC

14 Aug 2013 AMC

Market Summary 

Market Internals

The Dow closed down 113 (-0.73%) at 15338, the S&P 500 closed down 9 (-0.52%) at 1685, and the Nasdaq closed down 15 (-0.41%) at 3669. Action came on below average volume (NYSE 622 mln vs. avg. of 745; NASDAQ 1545 mln vs. avg. of 1622), with decliners outpacing advancers (NYSE 1002/2076, NASDAQ 1028/1442) and mixed new highs/lows  (NYSE 100/253, NASDAQ 119/26). 

Relative Strength: 
Gold Miners-GDX +5.55%, Silver Miners-SIL +3.78%, Cocoa-NIB +1.71%, Coffee-JO +1.70%, Metals and Mining-XME +1.68%, Indonesia-IDX +0.97%, Vietnam-VNM +0.92%, Russia-RSX +0.68%, South Africa-EZA +0.67%, Poland-EPOL +0.60%.

Relative Weakness: 
Egypt-EGPT -3.10%, Clean Energy-PBW -2.26%, U.S. Home Construction-ITB -2.16%, Homebuilders-XHB -1.73%, Retail-RTH -1.16%, Social Media-SOCL -1.16%, Israel-EIS -0.87%, Greece-GREK -0.61%, Taiwan-EWT -0.6%, Belgium-EWK -0.52%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Dow -0.7%, S&P 500 -0.5%, Nasdaq -0.4%, Nasdaq 100 -0.4%, S&P 400 -0.7%, Russell 2000 -0.4%

The S&P 500 settled lower by 0.5% after broad-based selling persisted throughout the session.

Equities were confined to a downtrend from the open, and even the news of the first expansionary eurozone GDP reading in 18 months could not spark a bid.

Nine of ten sectors registered losses while technology posted a fractional gain of 0.01%.

The tech sector climbed into the lead early this afternoon as Apple (AAPL 498.50, +8.93) advanced 1.8% after Omega Advisors disclosed having a position in the stock. The relative strength of the largest sector component overshadowed the underperformance of chipmakers. The PHLX Semiconductor Index lost 1.6%.

While technology was able to end in the green, the materials sector shed 0.2% after spending the majority of the session in positive territory. Gold miners made a significant contribution to the sector's outperformance as the Market Vectors Gold Miners ETF (GDX 28.70, +1.51) spiked 5.6%. On a related note, gold futures climbed 1.1% to $1334.60 per troy ounce.

Outside of materials and technology, only energy (-0.4%), financials (-0.4%), and telecom services (-0.2%) ended slightly ahead of the broader market. Meanwhile, several influential sectors weighed. Health care (-0.8%), consumer staples (-0.7%), consumer discretionary (-1.1%), and industrials (-0.8%) lagged.

Notably, industrials slumped amid weakness in transportation-related companies. The Dow Jones Transportation Average fell 0.8% as 16 of 20 components ended in the red.

The discretionary sector was another significant laggard. Retailers registered losses and Macy's (M 46.33, -2.17) fell 4.5% after missing on earnings and revenue. In addition, the company lowered its full-year 2014 earnings guidance below consensus.

Home builders also contributed to the sector's underperformance. The iShares Dow Jones US Home Construction ETF (ITB 20.81, -0.46) lost 1.9% to widen its August decline to 6.6%.

Elsewhere, treasuries were trapped in a narrow range, and the benchmark 10-yr yield shed one basis point to end at 2.71%.

Below-average volume was the story once again as only 622 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic news was limited to just two data points.

July PPI was unchanged (0.3% Briefing.com consensus) while core PPI ticked up 0.1% (0.2% Briefing.com consensus). The halting aspect of the report is that the lack of inflation pressure isn't really indicative of an economy that is gaining momentum. The PPI report is a data point that the Fed could view as a reason to hold off on tapering in September.

Separately, the weekly MBA Mortgage Index remained in a downtrend as today's 4.7% fall marked the twelfth decline out of the past fourteen readings.

Tomorrow, weekly initial claims, July CPI, core CPI, and August Empire Manufacturing will all be reported at 8:30 ET. June net long-term TIC flows will be released at 9:00 ET while July industrial production and capacity utilization will be reported at 9:15 ET. The busy day of data will be topped off with the 10:00 ET release of the August Philadelphia Fed Survey and the NAHB Housing Market Index.

DDS +5.1%, A +3.2%, QTWW +1.3%, VIPS -10.4%, CSCO -9.5%, NTAP -4.0% following earnings/guidance

The S&P 500 settled lower by 0.5% after broad-based selling persisted throughout the session.

Today after the close the following companies were scheduled to reported earnings: A, AVNW, BLUE, CACI, CSCO, DDS, HIMX, NTAP, NTES, RENN, SLW, SUMR, VIPS

Futures are lower after hours: S&P 500 futures are -1.48 from fair value of 1682.78 and Nasdaq100 futures are -13.53 from fair value of 3129.03.

Tomorrow morning before the open eight economic reports are scheduled to be released: 1) Initial Claims (Consensus 339k), 2) Continuing Claims (Consensus 3000k), 3) CPI (Consensus 0.2%), 4) Core CPI (Consensus 0.2%), 5) Empire Manufacturing (Consensus 6.0), 6) Net Long-Term TIC Flows, 7) Industrial Production (Consensus 0.4%), and 8) Capacity Utilization (Consensus 78.0%).

Tomorrow before the open the following companies are scheduled to report earnings: ARX, BGG, DANG, EL, GK, KSS, PAAS, PRGO, RRGB, SOL, WMT

Commodities

Closing Commodities: Crude Oil Gains 0.1%, Silver Rises 2.1%

·         Sep crude oil spent most of today's pit trade in negative territory, touching a session low of $105.60 per barrel. The dip came despite inventory data that showed a draw of 2.812 mln barrels when a smaller draw of 1.5 mln barrels was anticipated. However, the energy component managed to erase the earlier losses as it headed into the close and settled 0.1% higher at $106.86 per barrel.

·         Sep natural gas traded higher in a fairly tight range between $3.33 and $3.38 per MMBtu. It eventually settled 1.5% higher at $3.34 per MMBtu.

·         Precious metals rose today as the dollar index traded in negative territory.

·         Dec gold came off its session low of 1318.40 per ounce and settled with a 0.9% gain at $1333.10 per ounce, or just below its session high of $1334.90 per ounce.

·         Sep silver lifted off its session low of $21.42 per ounce and booked a 2.1% gain as it closed at $21.78 per ounce.

NYMEX Energy Closing Prices

·         Sep crude oil rose $0.09 to $106.86/barrel 

o    Crude oil chopped around in negative territory for most of today's session as inventory data showed a draw of 2.812 mln barrels when a smaller draw of 1.5 mln barrels was anticipated. The energy component dipped to a session low of $105.60 in late morning action but managed to erase the loss as it headed into the close. It settled slightly below its session high of $107.03, booking a gain of 0.1%. 

·         Sep natural gas rose 5 cents to $3.34/MMBtu 

o    Natural gas traded higher in a fairly tight range between $3.33 and $3.38. It eventually settled just above its session low, booking a gain of 1.5%. 

·         Sep heating oil rose 1 cent to $3.05/gallon 

·         Sep RBOB gasoline rose 4 cents to $2.98/gallon

CBOT Agriculture and Ethanol Closing Prices

·         Dec corn rose 7 cents to $4.55/bushel 

·         Sep wheat rose 2 cents to $6.30/bushel 

·         Nov soybeans rose 11 cents to $12.38/bushel 

·         Sep ethanol rose 6 cents to $2.20/gallon

 

Treasuries

10-Yr:+03/32..2.712%.. USD/JPY:98.14.. EUR/USD:1.3259
Treasuries Drift Higher Amid Sleepy Session: Treasuries booked small gains amid a lackluster session. The complex traded in a tight range throughout the session as a light session for news and data produced yet another sleepy session. Trade slipped to session lows ahead of this morning's tame PPI number (0.0% actual v. 0.3% expected) before ticking back to its highs as the number provided some push back against Fed tapering concerns. The session also included some late-day headlines from St. Louis Fed head James Bullard, who insisted more data must be digested before a decision can be made as to whether or not the Fed should slow its asset purchases. Yields were confined to a 2 bp range, with the 10-yr ending little changed near 2.712%. Traders remain on the lookout as the key yield holds just below its two-year high. The action had little impact on the yield curve as the 2-10-yr spread narrowed to 238 bps. Elsewhere, precious metals closed on their highs as gold rallied $14 to $1335 and silver jumped $0.45 to bear $21.80. Thursday's data slate is full with initial and continuing claims, CPI, core CPI, Empire Manufacturing (8:30), net long-term TIC flows (9), industrial production, capacity utilization (9:15), Philly Fed, and the NAHB Housing Market Index (10).

Next Day In View 

On other news.... 

  Cisco (CSCO) is expected to report Q4 non-GAAP EPS of $0.51 (vs. $0.50-0.52 guidance and $0.47 last year) on revs of $12.41 bln (+6.2% YoY, guided for +4-7% to ~ $12.16-12.51 bln). Co also guided for non-GAAP gross margins of 61-62%. Co will guide for 1Q14 on the call, with consensus calling for non-GAAP EPS of $0.51 on revs of $12.46 bln. The options market is currently pricing in a move of ~ 6% in either direction by Aug expiration; JNPR, ALU, QQQ.

  NetApp (NTAP) is expected to report Q1 EPS of $0.49 (vs. $0.45-0.50 guidance and $ last year) on rev of $1.53 bln (+6%) vs. $1.475-1.575 bln guidance. Q2 guidance will compare to estimates of $$0.63 and $1.62 bln. The stock hit a 16 month high on Monday.

  HiMax Tech (HIMX) is expected to report non-GAAP EPS of $0.11 (vs. $0.09 last year) on revenue of $208.6 mln (+10% YoY). HIMX is expected to guide for the third quarter where consensus stands at $0.12 for EPS and $223.8 mln. The options market is currently pricing in a move of ~10% in either direction by weekly expiration (Friday). Stock popped 30%+ on July 22 after Google invested in the co to expand capacity for a component in the Google Glass.

  Wal-Mart (WMT) is expected to report Q2 EPS of $1.25 on sales of $118 bln (in-line with the co's last updated guidance). Included with Q2 results will be Q3 EPS/comps guidance and updated FY14 EPS outlook. Expectations are for Q3 EPS of $1.17 and FY14 $5.30 (in-line with prior guidance of $5.20-5.40). Key drivers include updated FY14 outlook (has not been updated since Feb), comps and any changes in sales trends. WMT results/guidance tend have broad implications—especially for the retail segment—and can provide insight into overall consumer sentiment; TGT; XRT.








Currencies 

10-Yr:+03/32..2.707%.. USD/JPY:98.11.. EUR/USD:1.3257
Dollar Survives Test of 81.60 Support: The Dollar Index has hovered near the flat line throughout the session amid a rather uneventful trade. The Index saw an early test of the 81.60 support level, which is aided by the 200-day moving average, but the area was able to hold and trade returned to the flat line. 

·         EURUSD is flat at 1.3260 as trade checks up on support in the area. The single currency has seen a lackluster trade despite today's news the region has emerged from its 18-month long recession (although Greece's data was not included). French and Italian banks are closed for Assumption Day. 

·         GBPUSD is +70 pips at 1.5515 as trade retests the 200-day moving average following today's solid claimant count change report. If bulls are able to clear the 1.5550 area, look for an attempt to reclaim the June highs near 1.5750. Britain's retail sales will cross the wires tomorrow. 

·         USDCHF is +20 pips at .9350 as trade tests the 50- and 200-day moving averages. Today's advance has the pair higher for a fourth straight day with action looking claim the .9350 resistance level. 

·         USDJPY is -15 pips at 98.10 amid a sleepy session. Current levels will be watched closely over the coming days as the 50- and 100-day moving averages converge with trendline resistance off the May highs. The 94.00 area sets up as a key support level. 

·         AUDUSD is +35 pips at .9130 as the modest two-day skid looks to be coming to an end. Early action was able to hold the .9100 level, and with a move through the 50-day moving average (.9215), a test of the important .9300 level will be forthcoming. Australia's MI Inflation Expectations are due out tonight. 

·         USDCAD is -10 pips at 1.0330 as trade drifts amid an absence of data and news out of Canada. The pair testes the 50-day moving average (1.0360) early in the session, but was unable to hold the level.

Jason's Commentaries



Last night came as a surprised where the market broke down below 15,400 level. Market started with a bearish bias and market attempted a reversal at 11am ET, which failed to regain any losses. The Dow was the heaviest laggard amongst all 3 indices, as Johnson & Johnson, Home Depot, Boeing and United Technologies lagged heavily in the index with -2.48%, -2.52%, -1.94%,-1.63% respectively. There were only 6 Dow components that were up while the rest were all down. In the S&P500, Apple was the only component which is up more than 1% with 1.82% gain. As a result, the Consumer Discretionary was the heaviest laggard and Tech is the only one lagging less than -0.09%. Volume was decent comparing to other days with 621.7m shares traded and the rest of the internals were showing a little mixed results. On the Technical perspective, Dow broke below its important support level and I'll be expecting a deeper retracement to come. While on the commodities, Crude Oil came in for a draw of 2.81m barrels while expecting 1.5m barrels. But Crude Oil ended much higher last night. And as of 15 Aug, 0615 ET, Crude is at $107.87 per barrel. As we're expecting the CPI report, Unemployment claims and Philly Fed report coming out, I reckon any failure to hit expectation will likely drive the market down somemore. 

Market Call: FLAT to downside

Date: 15 Aug 2013