10 Sep 2013 AMC

10 Sep 2013 AMC

Market Summary 

European Markets Closing Prices
European markets are now closed; stock markets across Europe performed as follows:

·         UK's FTSE: + 0.8%

·         Germany's DAX: + 2.1%

·         France's CAC: + 1.9%

·         Spain's IBEX: + 2.0%

·         Portugal's PSI: + 1.3%

·         Italy's MIB Index: + 0.5%

·         Irish Ovrl Index: + 1.0%

·         Greece ATHEX Composite: + 1.6%

Before Market Opens

S&P futures vs fair value: +8.00. Nasdaq futures vs fair value: +14.00.
The S&P 500 futures trade higher by 0.7% as investors react to the lowered likelihood of military action against Syria after the country agreed to put its chemical weapons under international control.

It was a sea of green across Asia as all of the major bourses ended with gains. China's Shanghai Composite (+1.2%) saw a solid advance after the country reported industrial production surged 10.4% year-over-year (9.9% expected). That was enough to lift markets even as new loans printed a light CNY711 billion (CNY931 billion expected). Elsewhere, Japan's Nikkei (+1.5%) rallied after the latest Bank of Japan minutes suggested the central bank will stay the course. Also providing a lift was the weak yen, which fell to a one and a half-month low against the greenback. India's Sensex (+3.7%) outperformed as markets returned from holiday, but it was Indonesia's Jakarta Composite (+4.0%) that led the advance. The JCI is up 13.5% over the past two weeks. Data from the region saw India's trade deficit narrow to INR690 billion (INR733 billion previous), Australia's NAB Business Confidence climb to 6 (-3 previous), and South Korea's unemployment rate hold at 3.2%. 

·         In Japan, the Nikkei rose 1.5% as trade gained for the eighth time in ten sessions. Infrastructure names remained strong thanks to the Tokyo Olympics as Kajima tacked on another 7.8% to follow up yesterday's surge of more than 8.0%. Real estate stocks were also firm with Mitsubishi Real Estate gaining 2.0%. Shares of Nintendo tumbled 7.3% after the company was excluded from the Nikkei. 

·         Hong Kong's Hang Seng added 1.0%, climbing for the eighth time in nine days. European retailer Esprit fell more than 7% following its disappointing earnings. 

·         In China, the Shanghai Composite settled higher by 1.2% with trade registering its heaviest volume in three years. Airlines led as China Eastern jumped 9.9% and Air China tacked on 4.5%. Meanwhile, financials lagged following reports banks have not yet been contacted about the potential offering of preferred shares. Agricultural Bank of China lost 1.5%. 

Major European indices trade at their best levels of the day. Among headlines of note, the European Parliament has postponed its vote on a banking union plan to the upcoming Thursday. Economic data was limited as French industrial production fell 0.6% month-over-month (0.6% expected, -1.4% prior) and Italian GDP was revised down to -0.3% quarter-over-quarter from -0.2% (-0.2% expected). The year-over-year reading was also revised lower to -2.1% from -2.0% (-2.0% forecast). 

·         Great Britain's FTSE is higher by 0.9% with financials and miners providing support. Royal Bank of Scotland and Standard Chartered hold respective gains of 3.4% and 3.9%. With regard to miners, Glencore Xstrata and Rio Tinto are both up near 3.0%. 

·         In France, the CAC holds a gain of 1.7% as 39 of 40 components trade in positive territory. Financials AXA, Credit Agricole, and Societe Generale are in the lead with gains between 3.1% and 4.2%. Oil company Total is the lone decliner, down 0.3%. 

·         Germany's DAX trades up 1.9% with 29 of 30 components in the green. Technology company Infineon Technologies and building materials producer HeidelbergCement trade higher by 3.9% and 3.5%, respectively. On the downside, Fresenius SE is lower by 0.8%.

Market Internals

Market Internals -Technical-
The Dow closed up 128 (+0.85%) at 15191, the S&P 500 closed up 12 (+0.73%) at 1684, and the Nasdaq closed up 23 (+0.62%) at 3729. Action came on above average volume (NYSE 773 mln vs. avg. of 668; NASDAQ 1760 mln vs. avg. of 1522), with advancers outpacing decliners (NYSE 2006/1072, NASDAQ 1673/850) and new highs outpacing new lows (NYSE 210/40, NASDAQ 204/15). 

Relative Strength: 
Egypt-EGPT +4.69%, Indonesia-IDX +2.87%, Wind Energy-FAN +2.35%, Poland-EPOL +2.30%, Israel-EIS +2.30%, India-INP +2.16%, Transportation-IYT +2.14%, Steel-SLX +2.02%, MLP Index-AMJ +1.89%, Semiconductors-SMH +1.80%.

Relative Weakness: 
Junior Gold Miners-GDXJ -4.33%, Volatility-VXX -3.70%, Silver Miners-SIL -3.11%, Oil-USO -1.55%, Commodities-GSG -1.34%, Japanese Yen-FXY -0.73%, Thailand-THD -0.62%, Brazilian Real-BZF -0.51%, Chile-ECH -0.42%, Swiss Franc-FXF -0.25%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Cyclical Sectors Lead Stocks Higher
The S&P 500 climbed 0.7% as all ten sectors settled in positive territory. 

Stocks registered the bulk of their gains during the opening hour after upbeat economic data from China combined with Syria's agreement to put its chemical weapons under international control lured participants into equities. 

In addition to sparking a risk bid, the lowered likelihood of military action against Syria caused a handful of safe-haven assets to slide. Crude oil and gold futures sold off in the morning before spending the remainder of the session near their lows. Gold fell 1.6% to $1364.90 per troy ounce while oil slumped 2.0% to $107.29 per barrel. Treasuries also faced some selling, which sent the benchmark 10-yr yield higher by four basis points to 2.96%. 

With the Syrian situation remaining fluid, tonight's presidential address at 21:00 ET is expected to receive significant attention. The speech is likely to focus on finding a diplomatic solution while reserving the right for military action should Syria fail to comply. 

The retreat in oil prices weighed on the energy sector, which ended flat. Meanwhile, most other cyclical groups finished ahead of the broader market. 

Industrials (+1.4%) ended in the lead thanks to all-around strength. The largest sector member, General Electric (GE 23.87, +0.48) rose 2.1% and transportation companies also rallied across the board. The Dow Jones Transportation Average climbed 1.9% as lower oil prices contributed to the outperformance. Industrials were followed by the financial sector, which gained 1.2%. Goldman Sachs (GS 165.14, +5.65) paced the sector's advance after it was announced the investment bank along with Nike (NKE 66.82, +1.42) and Visa (V 184.59, +6.04) will enter the Dow Jones Industrial Average following next Friday's close. The trio will replace Alcoa (AA 8.06, -0.03), Bank of America (BAC 14.61, +0.13), and Hewlett-Packard (HPQ 22.27, -0.09) in the price-weighted index. 

The technology sector (+0.6%) traded in-line with the S&P through the first half of the session, but was pressured by its largest component during afternoon trade. Apple (AAPL 494.64, -11.53) lost 2.3% after its product refresh event was met with investor disappointment. 

With regard to countercyclical sectors, consumer staples (+0.1%) and health care (+0.6%) lagged while utilities (+0.7%) ended in-line. The weakest group of the third quarter, telecom services (+1.1%), narrowed its quarter-to-date loss to 5.1% as Verizon (VZ 46.47, +0.56) gained 1.2% after the company's bond offering received significant interest. 

Given the lowered likelihood of military involvement in Syria, the CBOE Volatility Index (VIX 14.52, -1.11) registered its first close below 15.00% for the first time since August 26.

Today's session received solid participation as 773 million shares changed hands on the floor of the New York Stock Exchange. 

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET and July wholesale inventories will cross the wires at 10:00 ET.

Commodities

COMEX Metals Closing Prices

	·         Dec gold fell $22.50 to $1364.00/ounce ·         Dec silver fell $0.71 to $23.01/ounce ·         Dec copper fell 2 cents to $3.26/lbs

NYMEX Energy Closing Prices

·         Oct crude oil fell $2.14 to $107.39/barrel

·         Oct natural gas fell 3 cents to $3.58/MMBtu

·         Oct heating oil fell 5 cents to $3.07/gallon

·         Oct RBOB gasoline fell 6 cents to $2.74/gallon

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

	·         Dec corn rose 5 cents to $4.69/bushel ·         Dec wheat rose 5 cents to $6.46/bushel ·         Nov soybeans rose 1 cent to $13.56/bushel ·         Oct ethanol rose $0.01 to $1.89/gallon ·         Nov sugar (#16 (U.S.)) fell 0.06 of a penny to 21.03 cents/lbs

Treasuries

Treasuries End on Lows: 10-yr: -12/32..2.964%..USD/JPY: 100.33..EUR/USD: 1.3265
Treasuries fell for the first time in three days with action settling on the lows thanks to some late selling. Sellers were in charge from the get go as the stronger than expected Chinese industrial production data fueled a flight into risk assets, causing money to move out of Treasuries. Traders also had to grapple with headlines regarding the potential conflict in Syria with the latest indicating President Obama wants to delay the Congressional vote will in order to give time for Syria to consider Russia's proposal for an agreement. A late-morning bid dropped yields to their lowest levels of the session, but selling resumed despite today's solid $31 bln 3-yr note auction. The auction drew 0.913% and a 3.29x bid/cover as a strong showing from both indirect (33.1%) and direct (20.0%) bidders left primary dealers with just 46.9% of the supply. Afternoon selling caused yields to leak back to their highs by the cash close with the belly of the curve continuing to see the biggest impact. The benchmark 10-yr yield tacked on another 6 bps today to finish at 2.959%, but did manage to once again avoid its first 3.000% print in more than two years. A steeper curve developed on the selling, causing the 2-10-yr spread to widen to 248.5 bps. Elsewhere, precious metals remained heavy with gold falling ! to $1366 and silver shedding $0.65 to near $23.05. Wednesday will see the weekly MBA Mortgage Index (7) and wholesale inventories (10). Treasury will reopen $21 bln 10-yr notes.

Next Day In View 

Economic Commentary

Economic Summary: July JOLTS Job Openings decline MoM; President Obama to speak tonight at 21:00 on Syria; Wholesale Inventories due out tomorrow at 10:00
Economic Data Summary:

·         July JOLTS - Job Openings 3.69 M (June was revised to 3.87 M from 3.94 M)

Upcoming Economic Data:

·         Weekly MBA Mortgage Applications due out Wednesday at 7:00 (Briefing.com consensus of ; Last Week was 1.3%)

·         July Wholesale Inventories due out Wednesday at 10:00 (Briefing.com consensus of 0.2%; June was -0.2%)

Upcoming Fed/Treasury Events:

·         President Obama to address nation on Syria tonight at 21:00

·         The Treasury will auction off $65 bln in new debt this week. Results for each auction will be announced at 13:0

o    Tuesday: $31 bln in 3 year notes

o    Wednesday: $21 bln in 10 year notes

o    Thursday: $13 bln in 30 year bonds

Other International Events of Interest

·         China's retail sales increased 13.4% year-over-year (13.2% expected, 13.2% previous), industrial production climbed 10.4% year-over-year (9.9% forecast, 9.7% consensus), and fixed asset investment rose 20.3% year-over-year (20.2% expected, 20.1% previous). In addition, the M2 money stock increased 14.7% (14.1% consensus, 14.0% last). 

On other news.... 

NBC reporting that Syria will declare chemical weapons and sign chemical weapons convention (168.26 +0.93)

Apple confirms iPhone 5s, iPhone 5c(504.41 -1.76)
Co confirmed the iPhone 5s featuring an all-new A7 chip, making iPhone 5s the world's first smartphone with 64-bit desktop-class architecture. "iPhone 5s redefines the best smartphone experience in the world with amazing new features all packed into a remarkable thin and light design, including an all-new 8 megapixel iSight camera with True Tone flash and introducing Touch ID, an innovative way to simply and securely unlock your phone with just the touch of a finger. iPhone 5s comes with iOS 7, the most significant iOS update since the original iPhone, engineered for 64-bit technology and featuring hundreds of great new features, including Control Center, Notification Center, improved Multitasking, AirDrop®, enhanced Photos, Safari®, Siri® and iTunes Radio." 

iPhone 5s comes in gold, silver or space gray, and will be available in the US for a suggested retail price of $199 (US) for the 16GB model and $299 (US) for the 32GB model and $399 (US) for the 64GB model. iPhone 5s will be available in the US, Australia, Canada, China, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the UK on Friday, September 20. A new iPhone 4S 8GB model will also be available for free.

Co also confirmed the iPhone 5c, featuring an all-new design in five colors—blue, green, pink, yellow and white. "iPhone 5c is built on a foundation of features people know and love like the beautiful 4-inch Retina® display, blazing fast performance of the A6 chip, and the 8 megapixel iSight® camera—all while delivering great battery life. iPhone 5c comes with more LTE bands than any other smartphone in the world, a new FaceTime HD camera, and iOS 7, the most significant iOS update since the original iPhone." 

iPhone 5c comes in blue, green, pink, yellow and white and will be available in the US for a suggested retail price of $99 (US) for the 16GB model and $199 (US) for the 32GB model. iPhone 5c will be available in the US, Australia, Canada, China, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the UK on Friday, September 20, and customers can pre-order their iPhone 5c beginning Friday, September 13. A new iPhone 4S 8GB model will also be available for free.






Currencies 

Dollar Gives Up Gains: 10-yr: -09/32..2.951%..USD/JPY: 100.30..EUR/USD: 1.3265
The Dollar Index has given up its early gains with action now holding little changed near 81.80. An early bid provided a test of the 82.00 level, but bulls were unable to retake support as sellers put up a stiff defense. Traders must be wary of the 81.75 area as the 200-day moving average lurks at the level. Click here to see a daily Dollar Index chart.

·         EURUSD is +15 pips at 1.3265 as trade holds just off the best levels of the session. Early weakness developed after the French industrial production miss, but a headline indicating Fitch reaffirmed its ‘AAA' rating of the ESM has allowed bulls to regain the upper hand. The single currency remains on track for a third day of gains with trade testing resistance at current levels. 

·         GBPUSD is +40 pips at 1.5730 as trade looks as though it will post its sixth advance in the past seven sessions. The 1.5700 level has offered resistance in recent trade, but action has managed to climb through that level with trade now on pace to post its best close since February. British data is heavy with the Average Earnings Index, claimant count change, and unemployment rate crossing the wires. 

·         USDCHF is +20 pips at .9340 as action hovers near the 50- and 200-day moving averages. A breakdown of the .9300 level will spell trouble for the bulls as it means a potential retest of the key .9200 support region. 

·         USDJPY is +70 pips at 100.30 as trade looks to close at its best level in one and a half months. Bulls continue to set their sights on 101.00 as a breakout above that level sets up a possible retest of the May highs near 103.00. Japan's BSI Manufacturing Index is due out tonight. 

·         AUDUSD is +80 pips at .9305 as trade probes the important .9300 area. The bull run off the late-August lows has tacked on 400 pips, and has bulls hoping to test the 100-day moving average (.9410). Australian data is limited to Westpac Consumer Sentiment. 

·         USDCAD is -20 pips at 1.0350 amid a rather uneventful session. Today's selling marks the fifth loss in the last six days, and provided an early test of the 100-day moving average (1.0330). Key trendline support off the September lows lurks just below 1.0300.

Jason's Commentaries


Nasdaq is leading the high once again. I'm definitely turning bull... Dow closed with another 127 points once again. Market started with a bullish bias which last till 11am which reversed slightly. However, by 12am market regained its bullish momentum once again and went all the way up to the closing bell. In the S&P500, Apple sunk 2.28% as they unveil their new Iphone 5c and 5s while the majority of the S&P500 components was in the green. Industrials and the Financials were the main leaders for last night rally once again with 1.45% and 1.17% gain respectively. Internals were bullish and VIX went down to 14.53. Volume were healthy as well with 773m shares traded. As Syria's conflict is unlikely to happen, with Russia's interference, the market is starting to react to it. CNBC reported that Syria will be declaring their chemical weapons and signing the chemical weapon convention. On the technical updates, the market is likely to take some pauses before breaking up higher. I'm expected the market to continue to break the new highs before the QE ends.

Market Call: FLAT to upside

Date: 11 Sep 2013