5 Aug 2013 AMC

5 Aug 2013 AMC

Market Summary 

Market Internals

The Nasdaq closed up 14 (+0.38%) at 3690, the Dow closed up 30 (+0.19%) at 15658, and the S&P 500 closed up 3 (+0.16%) at 1710. Action came on below average volume (NYSE 682 mln vs. avg. of 774; NASDAQ 1638 mln vs. avg. of 1652), with mixed advancers/decliners (NYSE 1562/1503, NASDAQ 1168/1329) and new highs outpacing new lows(NYSE 202/56, NASDAQ 234/17).

Relative Strength: 
Greece-GREK +3.81%, Poland-EPOL +3.01%, Social Media-SOCL +2.43%, Mexico-EWW +2.16%, Coffee-JO +2.11%, U.S. Home Construction-ITB +1.98%, Egypt-EGPT +1.92%, Columbia Index-GXG +1.70%, Homebuilders-XHB +1.52%, 20+ Year Treasuries-TLT +1.10%.

Relative Weakness: 
Volatility-VXX -2.40%, Gold Miners-GDX -2.22%, India-INP -1.83%, Thailand-THD -1.51%, Natural Gas-UNG -1.12%, Grains-JJG -1.10%, Gasoline-UGA -0.95%, Indian Rupee-ICN -0.91%, Peru-EPU -0.56%, Canadian Dollar-FXC -0.42%.

Leaders and Laggards

The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top 20 % gainers

·         Technology: ATVI (18.08 +19.89%), GIB (33.88 +13.65%), SYMC (26.52 +10.1%), CTRX (58.23 +9.19%), FB (38.05 +9.11%)

·         Services: MW (30.86 +13.5%), LTD (58.4 +8.08%), MPEL (26.19 +8.05%)

·         Industrial Goods: CNH (48.37 +9.28%), ROK (100.1 +8.52%), FAST (50.24 +8.37%)

·         Healthcare: ALXN (117.28 +8.97%)

·         Financial: PFG (44.37 +10.85%), MA (645.57 +7.91%)

·         Consumer Goods: BUD (98.15 +10.14%), TSLA (138 +9.25%)

·         Basic Materials: PXD (181.21 +12.53%), CHK (24.95 +10.45%), EMN (82.41 +9.05%), CF (193.34 +8.81%)

Thsi week's top 20 % losers

·         Technology: VIT (10.19 -5.91%), CCI (69.3 -5.52%)

·         Services: HTZ (24.99 -7%)

·         Healthcare: VRTX (79.44 -7.87%)

·         Financial: BCS (17.46 -11.01%), V (184 -7.93%), HCP (42.81 -6.84%), HDB (33.35 -6.52%), VTR (64.95 -6.41%), ING (7.97 -5.68%), IBN (32 -5.49%)

·         Consumer Goods: COH (53.33 -10.46%)

·         Basic Materials: POT (28.91 -21.26%), MOS (40.98 -19.86%), JAG (6.64 -8.29%), TAT (1.25 -6.72%), RDS-B (66.75 -6.07%), TLM (11.19 -5.88%), HDY (3.22 -5.85%), REN (12.82 -5.8%)

Technical Updates

Commentaries 

The major averages began today's session in the red after the July nonfarm payrolls report missed expectations, but have managed to trim most of their losses as action holds little changed. 

Nonfarm payrolls added 162,000 jobs in July after adding a downwardly revised 188,000 (from 195,000) in June. The Briefing.com consensus expected 175,000 new payrolls. The report proved to be a disappointment as not only did payroll growth come in below expectations, but the average workweek dropped to 34.4 hours from 34.5 and average hourly earnings declined 0.1%. Altogether, aggregate wages fell 0.3%, which will put substantial downside pressure on retail sales growth. 

Meanwhile, the unemployment rate dropped to 7.4% in July from 7.6% in June. The consensus expected the unemployment rate to fall to 7.5%. However, the labor participation rate fell to 63.4% from 63.5% in June, causing about a half of the decline in the unemployment rate. 

Although stocks slipped in reaction to the data, the S&P erased less than a quarter of yesterday's gain as participants fall back on the Federal Reserve's pledge to provide support to the markets for as long as economic data continues to paint a lukewarm picture. 

Treasuries responded to the data by jumping to their highest level of the day. The benchmark 10-yr yield is lower by nine basis points at 2.62%, erasing almost the entire spike from yesterday. 

The S&P has staged a couple attempts at a rebound with the help of discretionary shares, materials, and technology. The discretionary sector trades higher by 0.5% as home builders rally broadly. The iShares Dow Jones US Home Construction ETF (ITB 22.74, +0.47) is near its high with a gain of 2.1%. 

Elsewhere, the materials sector (+0.5%) is the top performer of the day as steelmakers display strength. The Market Vectors Steel ETF (SLX 41.46, +0.26) sports an advance of 0.6%. 

Also of note, the tech sector has recently climbed into positive territory as its largest component, Apple (AAPL 460.42, +3.74), adds 0.8%. 

So far, the broader market has been kept from turning positive by the relative weakness of consumer staples, energy, and health care. Notably, the energy sector trades down 1.0% as crude oil holds a loss of 0.9% at $106.93 per barrel. On a related note, Chevron (CVX 123.43, -3.01) is lower by 2.4% after missing on earnings and revenue. 

In today's remaining data, June personal income increased 0.3% while the Briefing.com consensus expected income levels to increase 0.5%. Separately, spending increased 0.5% in June against the consensus expectation of a 0.4% increase. The personal income and spending data for June were already incorporated in the Q2 2013 GDP data. None of these data will have any impact on future revisions.

Commodities

·         Dec corn fell 4 cents to $4.63/bushel 

·         Sep wheat rose 4 cents to $6.63/bushel 

·         Nov soybeans fell 13 cents to $11.81/bushel 

·         Sep ethanol settled unchanged at $2.18/gallon 

·         Sep sugar (#16 (U.S.)) rose 0.08 of a penny to 20.13 cents/lb

Treasuries

On other news.... 








Currencies 

  EURUSD is +75 pips at 1.3285 as trade once again tests 1.3300 resistance. The single currency has pressed that level for roughly two weeks, but has yet to register a close above that mark. The 1.3200 area is home to minor support. Services PMI data from across the Eurozone accompanies Eurozone retail sales on Monday. 

  GBPUSD is +170 pips at 1.5285 as trade probes the 50- and 100-day moving averages on the heels of today's solid Construction PMI number. The pair has seen an 800 pip range over the past two months, with current action is taking place at the midpoint. Britain's Services PMI will be released on Monday. 

  USDCHF is -85 pips at .9280 after early buying failed at the 200-day moving average (.9355). Today's weakness has action testing key support in the .9200/.9250 area with a breakdown potentially provoking a test of the February lows near .9050. 

  USDJPY is -60 pips at 98.90 as action holds just off the lows. The pair tested the psychologically important 100.00 level in early trade, but was reclaim the mark as sellers provided a staunch defense. The Bank of Japan is scheduled to opine on Wednesday. 

  AUDUSD is -25 pips at .8905 as trade remains on track to close at its lowest level in three years. The pair jumped to session highs near .8970 in reaction to today's U.S. jobs report, but sellers stepped in to sell the pop. Australian data is limited to retail sales, but next week's main event will be the Reserve Bank of Australia meeting on Thursday. Australian banks will be closed on Monday. China's Non-manufacturing PMI will cross the wires tonight. 

  USDCAD is +40 pips at 1.0390 as trade holds just off session highs. The pair plunged to session lows near 1.0335 in response to the nonfarm payroll data, but has seen a steady bid throughout the session. What was 1.0400 support is now providing some resistance. Canadian banks are closed Monday for Civic Day.

Weekly Analysis
Week 38



Technical Updates
















Briefing's Commentaries

Week in Review: S&P 500 Overtakes 1,700 

On Monday, the S&P 500 settled lower by 0.4% as eight 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 an active week of economic data. 

Tuesday's session saw little change in the S&P 500 while the Nasdaq advanced 0.5%. The S&P notched its high at the open before spending the rest of the session in a steady retreat. The selling intensified during afternoon action, sending the S&P into the red as participants displayed caution ahead of Wednesday's advance second quarter GDP report and the latest policy statement from the Federal Reserve. Energy and materials lagged from the open, and they finished behind the remaining cyclical sectors. 

The S&P 500 ended Wednesday flat after being unable to clear the 1,700 level, which has presented stern resistance over the past few sessions. Stocks held slim gains into the afternoon when the latest policy directive from the Federal Open Market Committee sent the Nasdaq and S&P to fresh highs. The two indices were unable to maintain those levels into the close as broad-based weakness pressured the major averages to their lows. The FOMC policy statement did not offer many surprises. As expected, the Committee decided to maintain its current policy stance in order to continue supporting the economic recovery. The Committee also said it expects a pick-up in growth from the recent pace, and that inflation below the Fed's 2.0% target could present a risk to economic performance. On a related note, the advance second quarter GDP report surpassed expectations with a reading of 1.7% against a downwardly revised first quarter growth rate of 1.1%. The Briefing.com consensus expected the second quarter reading to come in at 1.1%. 

On Thursday, the major averages settled near their highs as better-than-expected Manufacturing PMI data out of China (50.3 actual, 49.9 expected), the eurozone (50.3 actual, 50.1 expected), and the U.S. (53.7 actual, 53.1 expected) helped entice investors into bidding up global equities. The S&P 500 jumped above 1,700, a level the index had struggled with in the past few sessions, and registered a record high close of 1706.81. After jumping above 1,700 shortly after the opening bell, the S&P spent the remainder of the session trading in a seven-point range. Growth-oriented sectors displayed broad strength with financials and industrials pacing the advance.

Next Week In View

Events and conferences of interest for next week
Events and conferences of interest for next week, Aug 5th-9th, are listed below. For a complete list of next week's events, please see the events calendar.

Monday

·         Eurozone Services PMI (released overnight)

·         HP Vertica Big Data Conference

o    Scheduled to appear: DWCH

·         Anacor Pharmaceuticals (ANAC) Investor Day

Tuesday

·         Needham Software and Services Conference

o    Scheduled to appear: EPAY, XOOM, PFPT, ELLI, PRFT, FNGN, SPSC, SYNT, ULTI, TYPE, LOCK, EGAN, CNQR, MITK

·         National Grid Investor Seminar 2013

o    Scheduled to appear: NGG

·         Chicago Fed President Charlie Evans (voting FOMC member, typically dovish) to speak at 9:30

Wednesday

·         BoE Inflation Report (released overnight)

·         Integrys Energy Group, Inc. New York Analyst Day

o    Scheduled to appear: TEG

·         10 Year Treasury Note Auction

Thursday

·         Susquehanna Financial Group Investor Meetings

o    Scheduled to appear: HUM

·         2013 Women's Leadership Conference

o    Scheduled to appear: MGM

·         Goldman Sachs 12th Annual Power and Utility Conference

o    Scheduled to appear: AWK, AEP, WEC, XEL

Friday

·         China Trade Data (released overnight)

Of the companies reporting earnings for the week of August 5 - 9 some of the bigger names include:

·         Monday:

o    Pre Market - TSN, ROC

o    After Hours - PAA, UNM, FNF, KND, TEG, VNO, HOLX

·         Tuesday:

o    Pre Market - CVS, ADM, EMR, DISH, PH, FE, D, THC, SRE, MGM, HSIC, CTSH, TA, ACM, PTRY, CHTR, OMX, EXPD, SPR, TAP, SE, SMG, HAR, ZTS, SPB, ARCO

o    After Hours - DIS, MRO, CSC, EOG, CHRW, URS, DVA, CAR, CF, LYV, ALJ, ANDE, QUAD, FSLR, DPM, SD, JAZZ,

·         Wednesday:

o    Pre Market - TWX, AVT, DUK, HFC, MMC, DVN, CORE, WCG, VOYA, HII, RL, SUSS, KELYA, POM, YRCW, MPEL, VRX, AME, MOLX, CLH, SKYW, CG, AOL, 

o    After Hours - PRU, ETE, ETP, MDLZ, AGU, CTL, SXL, RIG, DK, FTR, MKL, GMCR, ARRS, BWC, CLR, AWK, BKD, GRPN, ENS, EDMC, TSLA, TWTC, 

·         Thursday:

o    Pre Market - NVO, MFC, TMUS, GLP, BCE, AES, DF, VC, AAP, WIN, HSH, CTB, FWLT, CQB, THI, BR, HSC, SNI

o    After Hours - PCLN, NSIT, RNDY, NVDA, CFN, SEM, MNST, ATLS, GXP, DV, MCP, NDLS, 

·         Friday:

o    Pre Market - MGA, NRG, TPC, BECN, WWAV

Jason's Commentaries

Finally back from my reservist... Missed out on the big day where FOMC minutes were released on Wednesday and ADP Non Farm Employment Change produced 200k jobs compared to 179k jobs on consensus. Market ended flat to the down side on Wednesday. On Thursday, market rallied 100 points as the FOMC minutes are interpreted to be more dovish than hawkish. Finally on Friday, we managed to end the day with a flat day of 0.19% gain on the Dow. Non-Farm Payrolls came in much worst than expected on Friday, by having 162k jobs added to the economy compared to a 184k expected. However, Unemployment Rate went down to 7.4%. The day started with a bearish bias across all 3 indices but after finding a bottom by 11am ET, the market started rallying all the way to the closing bell. The main leaders of the S&P500 are Apple, Visa, HP which gained 1.26%,2.70% and 2.64% respectively. Volumes came in at 660m shares on the NYSE with the UVOL and DVOL on the same level. Other internals were also showing somewhat of a mixed signal, typical of a Friday that ended up high. On the sectors, Consumer discretionary was the main leader of the S&P500 last week, where Disney spiked 1.76%, Home depot up by 2.02%, Ford Motors up by 1.8% and Time Warners Cable up by 1.95%. While the Energy sector proved to be the biggest laggard on Friday with a -0.44% performance. I believe the market is likely to make another up week with this kind of bullishness in the market and with Fed pumping up the market.

Market Call: Flat

Date: 5 Aug 2013