6 Aug 2013 AMC

6 Aug 2013 AMC

Market Summary 

 

Market Internals

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

S&P 500 Settles Below 1,700

Sector Performance (% change of the day): Consumer Staples (-0.14%), Telecom (-0.41%), Health Care (-0.45%), Consumer Discretionary (-0.48%), Energy (-0.49%), Tech (-0.59%), Utilities (-0.59%), Industrials (-0.76%), Financials (-0.86%), Materials (-0.96%).

Dow -0.6%, S&P 500 -0.6%, Nasdaq -0.7%, Nasdaq 100 -0.7%, S&P 400 -1.1%, Russell 2000 -1%

The S&P 500 settled lower by 0.6% as all ten sectors registered losses.

Stocks slipped out of the gate after today's better-than-expected economic data was unable to spark an opening bid.

The June trade deficit narrowed to $34.2 billion from May's downwardly revised $44.1 billion (from $45.0 billion). That was the smallest monthly trade deficit since October 2009. The Briefing.com consensus expected the deficit to fall to $43.4 billion. In the advance estimate for second quarter GDP, the Bureau of Economic Analysis assumed the trade deficit widened slightly in June. This huge downward surprise will likely add at least 0.5 percentage points to second quarter growth.

June exports increased by $4.1 billion to $191.2 billion, representing the largest amount of exports, nominal or real, on record. On the flip side, imports fell by $5.8 billion to $225.4 billion. Nearly the entire decline in imports was due to a drop in petroleum-based demand (-$2.0 billion) and a softening in cell phone imports (-$1.5 billion).

The S&P spent the first 90 minutes of the session in a steady decline as cyclical sectors pressured the index below the 1,700 level with financials, materials, and industrials leading to the downside.

All top-weighted banks ended in the red with Citigroup (C 51.48, -1.39) posting the largest loss among the majors. Meanwhile, the broader sector slid 0.9%.

Elsewhere, the materials space (-1.0%) finished at the bottom of the leaderboard as steelmakers, gold miners, and chemical producers displayed broad weakness. On a related note, gold futures fell 1.5% to $1282.90 per troy ounce while copper futures ended little changed at $3.173 per pound.

Another growth-oriented group, industrials, settled lower by 0.8% due to the underperformance of transportation-related names. The Dow Jones Transportation Average fell 1.3% as 18 of 20 components registered losses. Expeditors International (EXPD 41.21, +0.87) advanced 2.2% after beating on earnings and peer UPS (UPS 87.95, +0.09) tacked on 0.1% in sympathy.

Most cyclical sectors trailed behind the broader market, but technology and discretionary shares outperformed slightly. Although the tech sector ended off its lows, the largest component, Apple (AAPL 465.25, -4.20), slid 0.9%, and the top-weighted Dow component, IBM (IBM 190.99, -4.51), tumbled 2.3%.

In the discretionary space, media and publishing names displayed some strength after Washington Post (WPO 593.00, +24.30) agreed to sell its newspaper publishing business to Jeff Bezos. However, home builders and retailers lagged. The iShares Dow Jones US Home Construction ETF (ITB 21.90, -0.48) lost 2.1% and the SPDR S&P Retail ETF (XRT 81.97, -1.02) slumped 1.2% after American Eagle Outfitters (AEO 17.57, -2.40) issued cautious guidance.

Unlike growth-sensitive sectors, three of four countercyclical groups were able to erase a portion of their losses. Consumer staples, health care, and telecom services shed between 0.1% and 0.5% while the utilities space underperformed with a loss of 0.6%.

Today's volume was well ahead of yesterday, but at 658 million shares traded on the New York Stock Exchange, the final tally came up short of its 50-day moving average, which sits in the 768 million area.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET and June consumer credit will be released at 15:00 ET.

Commodities

Treasuries

Treasuries Finish Flat: Treasuries finished flat as tight ranges held throughout the session. Overnight buying turned into selling as European economic data topped estimates, and put an upward bias on yields into U.S. trade. This morning’s narrower than anticipated U.S. trade deficit dropped Treasuries onto their worst levels of the day before a choppy trade persisted into the $32 bln 3-yr note auction. The auction produced in-line results, drawing 0.631% and a weak 3.21x bid/cover (12-auction average 3.49x) but also a solid 41.4% takedown by indirect bidders. Post-auction buying ran maturities back to their respective flat lines, making for little change at the cash close. Yields ended more or less unchanged with the 10-yr holding steady just above 2.640%. The flat session failed to move the yield curve as the 2-10-yr spread held at 232.5 bps. Elsewhere, precious metals were pressured as gold fell $19 to $1283 and silver shed $0.25 to near $19.45. Data remains light on Wednesday with the weekly MBA Mortgage Index (7) and consumer credit (15). Treasury will hold a $24 bln 10-yr note auction. Philly’s Plosser will be in Washington D.C. discussing the economy (12:15).

Next Day In View 

On other news.... 

PXLW +29.4%, FNSR +19.7%, NSPH -21.6%, SYNC -15.2%, FSLR -8.6% following earnings/guidance

The S&P 500 settled lower by 0.6% as all ten sectors registered losses.

Today after the close the following companies were scheduled to reported earnings: TISI, SMCI, XNPT, MPWR, CSGS, GEVO, MRCY, NUAN, PSEM, REXX, ATO, BMR, CAR, CSOD, G, GLUU, SLTM, CPIX, GEOS, LQDT, MCHX, AMTG, CHUY, DPM, ENOC, EOG, FSLR, FST, GDP, SNTS, TCRD, TESO, AGII, ANDE, ARC, BIO, CCRN, CHRW, CLMS, DEI, DGI, DGIT, DIS, DVA, ENPH, ESIO, EXEL, FURX, GA, GCA, GPOR, JAZZ, LYV, MCEP, MRO, OAS, ORA, PLT, POWL, PRI, PZZA, QUAD, RLOC, SD, SYNC, TRNX, TWO, URS, Z, ALJ, AVNR, CF, GIVN, GSIG, IL, MED, RLJ, SPRD, STAN, TTGT, VVUS, BID, ONTY, XOXO, CSC, SAPE, VSAT

Other notable movers on earnings/guidance: PXLW +29.4%, MCHX +23.5%, FNSR +19.7%, UVE +16.2%, GEOS +10.9%, HCKT +8.5%, SNTS +7%, LYV +6.2%, DGIT +5.8%, CSC +4.5%, EOG +4.2%, FST +4.2%, VSAT +3.7%, FOXA +3.3%, CF +2.8%, OAS +2.6%, ENOC +1.7%, GIVN +1.6%, AVNR +1.5%, PZZA +1.1%, SEB +1.1%, MPWR +0.7%, SD +0.7%, LQMT +0.5%, DVA +0.4%, BRP +0.3%, EXK +0.3%, TCRD +0.3%, SPRD +0.2%, GFF +0.1%, NSPH -21.6%, SYNC -15.2%, ENPH -11.2%, FSLR -8.6%, Z -7.7%, GLUU -7.6%, NUAN -7.1%, GEVO -4.1%, BIO -4.1%, CAR -3.8%, VVUS -3.6%, JAZZ -3.5%, TWO -3.2%, PULS -2.7%, CHRW -2.7%, RLOC -2.5%, DIS -1.9%, AMTG -1.3%, EMKR -1.2%, PLT -1.2%, GPOR -1.2%, NYMT -0.9%, BID -0.9%, ACAD -0.9%, GCA -0.6%, CDR -0.5%, SLTM -0.4%, G -0.3%, CYNI -0.3%, CSGS -0.2%

Futures are higher after hours: S&P 500 futures are +0.42 from fair value of 1692.98 and Nasdaq100 futures are +1.21 from fair value of 3117.04.

Tomorrow morning before the open one economic report is scheduled to be released: 1) MBA Mortgage Index

Tomorrow before the open the following companies are scheduled to report earnings: SCLN, MOLX, AME, AVT, SBGI, AVA, CLH, DVN, KCG, TWX, GOLD, LINC, LXP, MMC, NJR, NWN, VRX, DUK, NCT, POM, SMP, WCG, YRCW, ARIA, BLT, CORE, CRZO, FXCM, HFC, PRIM, STE, WRES, XEC, AOL, ATRS, CSTE, CWH, EZCH, GEO, HII, INXN, KELYA, MFB, MPEL, NAVB, NICE, SKYW, SUSS, TTI, CG, SUNE, MMYT, RL, VOYA, AMSC, MITT

Currencies 

10-Yr:unch..2.643%.. USD/JPY:97.67.. EUR/USD:1.3303
Dollar Tests Key Support: The Dollar Index has been offered throughout the session with trade on pace for a third straight day of losses. Current action is pressing key support in the 81.60 area that is aided by the 200-day moving average. 

·         EURUSD is +45 pips at 1.3305 as trade contends with key resistance in the area. Today’s bid has been fueled by better than expected data out of both Germany and Italy, and has action on track to post its best close in six weeks. Eurozone data due out tomorrow is limited to German industrial production. 

·         GBPUSD is +15 pips at 1.5370 as trade ticks higher for a third session. The three-day advance comes following better than expected data in the form of Construction PMI, Services PMI, and manufacturing production, and has action probing 1.5350/1.5400 resistance as trade hold just above the 50- and 100-day moving averages. Bank of England Governor Mark Carney will speak about the latest BoE Inflation Report. 

·         USDCHF is -20 pips at 1.9255 with action on track to post its lowest close since the middle of June. Traders will be watching the .9200 region closely over the coming days as the pair has not seen a close below there since February. Swiss data is heavy with CPI, foreign currency reserves, and SECO Consumer Climate set to cross the wires tomorrow.

·         USDJPY is -60 pips at 97.65 as trade pushes lower for a third day. This region will be watched closely ahead of tomorrow night’s Bank of Japan rate decision as it represents support dating back to late June. 

·         AUDUSD is +60 pips at .8990 as trade squeezes higher despite the Reserve Bank of Australia cutting its key rate 25 bps to a record low 2.50% while also suggesting the scope for further rate cuts remains. Australia’s home loans data is due out this evening. 

·         USDCAD is +10 pips at 1.0370 amid a rather lackluster trade. The pair jumped to its best levels after the in-line Canadian trade deficit ($0.5 bln) and has remained in a tight range throughout the session. Canadian data includes building permits and Ivey PMI. 

Jason's Commentaries


The retracement came earlier than what I expected as IBM was being downgraded by Credit Sussie which eventually drag the entire market down. Market started with a bearish tone across all 3 indices. However, not all stocks were in the red. In fact most stocks were actually flat to the upside. However, the drag on the main indices were so huge that it eventually drag the market down together with IBM. As we can see from the internals, volumes increased from the previous 2 days with 658m shares traded on the NYSE and the bearish tone were consistent throughout the internals. VIX spiked a 7% as well. While on the sector performance, we can see that Financials and Materials were the 2 main laggards last night with Material losing 0.92% and Financials losing 0.9%. Tech sector did not post as much losses as the other tech components aren't doing that badly. Nonetheless, volumes has been weak for a while already and a retracement will be good to keep the market going up for the rest of the few months. On the technical side, Dow seems to find a support at 15,500 but given the situation on Thursday, I highly doubt that support level will work. Asia closed in the red as well, which are dragging the European market and US futures down as well. Nikkei posted a 4% loss which drag the Asia market down. I reckon the bearish tone will likely to continue for 1 or 2 more sessions before finding a support which will keep the market up. Meanwhile... I shall enjoy my long weekend in MBS. Take care and have an awesome Hari Raya and National Day holiday =D

Market Call: DOWN

Date: 7 Aug 2013