24 Oct 2013 AMC - Market being held up by upbeat earnings...

24 Oct 2013 AMC - Market being held up by upbeat earnings...

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 0.6%

·         Germany's DAX: + 0.7%

·         France's CAC: + 0.4%

·         Spain's IBEX: + 0.9%

·         Portugal's PSI: -0.3%

·         Italy's MIB Index: + 1.3%

·         Irish Ovrl Index: -0.4%

·         Greece ATHEX Composite: + 1.6%

Before Market Opens


S&P futures vs fair value: +4.30. Nasdaq futures vs fair value: +6.50.
The major averages are expected to display slim gains at the start of today's session. The S&P 500 futures traded higher by as much as 9 points versus fair value before retreating steadily over the course of the past two hours. At this juncture, the S&P futures hover four points above fair value.

Investors received an avalanche of earnings between yesterday's close and today's opening bell. The full list is available on the Briefing.com earnings calendar, but Ford (F 18.07, +0.55) is a notable pre-market advancer, trading higher by 3.1% on heavy volume after beating on earnings and raising its full-year 2013 guidance. On the downside, Credit Suisse (CS 32.52, -1.13) holds a pre-market loss of 3.4% after missing on earnings and revenue. 

Today's economic data was limited to weekly initial claims and the August trade balance report. The initial jobless claims count totaled 350,000, which was higher than the 341,000 that had been expected by the Briefing.com consensus. Today's tally was below the prior week count of 362,000. As for continuing claims, they fell to 2.874 million from 2.882 million. However, it should be noted the Bureau of Labor Statistics said the state of California continued working through backlogs that began in September. 

Separately, the trade deficit widened to $38.8 billion in August from a downwardly revised $38.6 billion reported in July. 

Treasuries hover near their highs with the 10-yr yield down almost three basis points at 2.48%.

Market Internals

 

Market Internals -Technical-
The Dow closed up 96 (+0.62%) at 15509, the Nasdaq closed up 22 (+0.56%) at 3929, and the S&P 500 closed up 6 (+0.33%) at 1752. Action came on above average volume (NYSE 716 mln vs. avg. of 710; NASDAQ 1928 mln vs. avg. of 1633), with advancers outpacing decliners (NYSE 1784/1285, NASDAQ 1573/960) and new highs outpacing new lows (NYSE 221/9, NASDAQ 235/16).

Relative Strength: 
Junior Gold Miners-GDXJ +4.15%, Silver Miners-SIL +3.95%, U.S. Home Construction-ITB +2.84%, Oil and Gas Exploration-XOP +2.54%, Greece-GREK +2.44%, Homebuilders-XHB +2.29%, Indonesia-IDX +1.52%, Poland-EPOL +1.28%, Italy-EWI +1.16%, Peru-EPU +1.09%. 

Relative Weakness: 
Sugar-SGG -2.15%, Cotton-BAL -2.05%, Volatility-VXX -1.49%, New Zealand-ENZL -1.22%, China 25 Index-FXI -1.15%, U.S. Health Care-IHF -1.04%, Heating Oil-UHN -0.98%, Hong Kong-EWH -0.78%, Mexico-EWW -0.78%, Turkey-TUR -0.70%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Cyclical Sectors Push Equities Higher
The major averages settled near their highs as the S&P 500 advanced 0.3% while the Dow Jones Industrial Average outperformed with a gain of 0.6%.

Overall, today's session did not generate too much excitement even with investors receiving more than 200 quarterly reports between yesterday's close and today's open. Outside of some choppy action during the first hour, equity indices climbed steadily throughout the session.

The Dow led from the start, keying off 3M's (MMM 123.49, +0.29) better-than-expected earnings. Meanwhile, the broader industrial sector (+0.7%) finished among the leaders as transports contributed to the strength. The Dow Jones Transportation Average gained 0.9% with airlines leading the pack after Alaska Air (ALK 69.68, +2.65) reported strong results.

Elsewhere, the discretionary sector (+1.0%) also provided leadership as homebuilders rallied in reaction to above-consensus earnings and revenue from PulteGroup (PHM 17.85, +1.17). The broader iShares US Home Construction ETF (ITB 23.18, +0.64) jumped 2.8%. In addition to builders, carmakers also underpinned the sector after Ford (F 17.76, +0.24) beat on earnings and issued upbeat guidance.

While five of six cyclical groups ended with solid gains between 0.5% and 1.0%, the financial sector could not make a sustained move into positive territory until the final hour. The group added just 0.1% after spending the entire session just below its flat line.

On the downside, all four countercyclical groups posted losses. Health care ended just below its flat line while consumer staples (-0.2%) and utilities (-0.2%) registered modest declines. The telecom services space (-1.0%) was the weakest sector of the day, pressured by shares of AT&T(T 34.63, -0.65) after the telecom giant reported a one-cent beat on revenue just below analyst estimates.

Treasuries ended modestly lower with the 10-yr yield up 3.5 basis points at 2.52%.

Trading volume was on the light side as just over 715 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic data was limited to weekly initial claims and the August trade balance report. Problems related to glitches from a computer upgrade in California continued to plague the initial claims data and artificially boosted headline levels. The weekly initial claims level fell to 350,000 from an upwardly revised 362,000 (from 358,000). The consensus expected claims to fall to 341,000.

The Department of Labor stated that there was no way to separate the claims from California that were biasing the data from those in the private sector that lost their jobs as a result of the government shutdown. We have no way of determining the true level of layoffs, but it is likely around 310,000 -- 330,000 since overall labor trends have not changed much over the last couple of months.

Separately, the trade deficit widened to $38.8 billion in August from a downwardly revised $38.6 billion reported in July.

Tomorrow, September durable orders will be reported at 8:30 ET, the final reading of the Michigan Consumer Sentiment Survey will cross the wires at 9:55 ET, and August wholesale inventories will be announced at 10:00 ET. 

·         DJIA +18.4% YTD 

·         S&P 500 +22.9% YTD 

·         Nasdaq +30.1% YTD 

·         Russell 2000 +31.7% YTD

Commodities

Closing Commodities: Crude Recovers Back Above $97

·         Dec crude oil rose for the first time in four sessions despite prices dipping to a session low of $95.95 per barrel in morning pit trade. The energy component broke into positive territory in early afternoon floor action and settled with a 0.3% gain at $97.12 per barrel

·         Nov natural gas dipped to a session low of $3.55 per MMBtu on inventory data that showed a build of 87 bcf when a smaller build of 79-82 bcf was anticipated. However, prices quickly jumped higher and erased the earlier losses. Natural gas held the momentum in afternoon floor action and settled 0.3% higher at $3.63 per MMBtu

·         Precious metals rose higher today as data this morning showed Initial Claims fell to 350K vs 341K Briefing.com consensus

·         Dec gold climbed as high as $1352.30 per ounce and settled with 1.2% gain at $1350.30 per ounce

·         Dec silver popped to a session high of $22.91 per ounce and eventually settled at $22.82 per ounce, or 0.9% higher

COMEX Metals Closing Prices

  Dec gold rose $16.00 to $1350.30/ounce 

·         Gold steadily rose higher today after Initial Claims data showed that initial claims fell to 350K vs 341K Briefing.com consensus. The yellow metal climbed as high as $1352.30 and settled slightly below that level, booking a 1.2% gain. 

  Dec silver rose $0.21 to $22.82/ounce 

·         Silver also spent today's floor trade in positive territory. It popped to a session high of $22.91 in early morning action and eventually settled with a 0.9% gain. 

  Dec copper fell 1 cent to $3.27/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn fell 2 cents to $4.41/bushel 

·         Dec wheat fell 4 cents to $6.97/bushel 

·         Nov soybeans rose 2 cents to $13.10/bushel 

·         Dec ethanol settled unchanged at $1.67/gallon 

·         Jan sugar (#16 (U.S.)) rose 0.04 of a penny to 22.12 cents/lbs

NYMEX Energy Closing Prices

  Dec crude oil rose $0.25 to $97.12/barrel 

·         Crude oil rose for the first time in four sessions despite prices dipping to a session low of $95.95 in morning pit trade. The energy component broke into positive territory in early afternoon floor action and settled 0.3% higher. 

  Nov natural gas rose 1 cent to $3.63/MMBtu 

·         Natural gas slipped to a session low of $3.55 following inventory data that showed a build of 87 bcf when a smaller build between 79 and 82 bcf was anticipated. However, prices quickly jumped higher and erased morning losses. Natural gas held the momentum and settled with a 0.3% gain. 

  Dec heating oil fell 2 cents to $2.90/gallon 

  Dec RBOB gasoline rose 3 cents to $2.57/gallon

Treasuries

Treasuries Leak Lower Throughout U.S. Trade, End on Lows: 10-yr: -02/32..2.511%..USD/JPY: 97.29..EUR/USD: 1.3800

·         Treasuries booked modest losses as trade leaked lower over the course of the session and finished on the lows. 

·         A small overnight bid was erased early in the session as participants dumped Treasuries in favor of persistently-bid equities. 

·         Selling was well diversified across the complex with yields ending +3.5bps. Click here to see an intraday yields chart.

·         The 10y ticked up to 2.522% at the cash close after early action failed to penetrate 2.450% support that corresponds with the 38.2% Fibonacci retracement of the May to September move (1.627%-2.984%). 

·         Today's selling swung the yield curve steeper as the 2-10-yr spread widened to 221bps. 

·         Precious metals saw a solid bid with gold +$14 @ $1348 and silver +$0.15 @ $22.75. 

·         Data: Durable orders, durable orders ex-transportation (8:30), Michigan Sentiment - Final (9:55), and wholesale inventories (10).

Next Day In View 

Economic Commentary

Economic Summary: Jobless Claims higher than expected; Trade Balance roughly in line with expectations
Economic Data Summary:

·         Weekly Initial Claims 350K vs Briefing.com consensus of 341K; Last Week was revised to 362K from 358K

·         Weekly Continuing Claims 2.874 M vs Briefing.com consensus of 2.86 M ; Last Week was revised to 2.882 M from 2.859 M

o     The consensus expected claims to fall to 341,000. The Department of Labor stated that there was no way to separate the claims from California that were biasing the data from those in the private sector that lost their jobs as a result of the government shutdown. We have no way of determining what the true level of layoffs are at the moment, but it is likely around 310,000 -- 330,000 since overall labor trends have not changed much over the last couple of months.

·         August Trade Balance -$38.8 bln vs Briefing.com consensus of -$38.6 bln; July was revised to -$38.6 bln from -$39.1 bln

o    The trade deficit has averaged roughly $39 bln each month since April and the trends do not point to an overall shift in demand for imports or exports any time soon. This compares with a steady monthly decline in the trade balance from January 2012, when the deficit was $50.2 bln, to April. Export levels declined by $0.1 bln in August, falling to $189.2 bln. Large declines in exports of nonmonetary gold (-$0.9 bln) and other petroleum products (-$0.5 bln) led to a -$1.3 bln drop in exports of industrial supplies and materials.

Upcoming Economic Data:

·         September Durable Orders due out Friday at 8:30 (Briefing.com consensus of 3.5%; August was 0.1%)

·         September Durable Orders Ex-Transportation due out Friday at 8:30 (Briefing.com consensus of 0.3%; August was -0.1%)

·         October Michigan Sentiment -- Final due out Friday at 9:55 (Briefing.com consensus of 74.5; September was 75.2)

·         August Wholesale Inventories due out Friday at 10:00 (Briefing.com consensus of 0.3%; July was 0.1%)

Other International Events of Interest

·         Eurozone Manufacturing PMI ticked up to 51.3 from 51.1 (51.4 expected) while Services PMI fell to 50.9 from 52.2 (52.4 forecast).

·         China's HSBC Manufacturing PMI rose to 50.9 from 50.2 (50.5 expected). 

On other news.... 

Natural gas inventory data follow-up
Working gas in storage was 3,741 Bcf as of Friday, October 18, 2013, according to EIA estimates. This represents a net increase of 87 Bcf from the previous week. Stocks were 92 Bcf less than last year at this time and 77 Bcf above the 5-year average of 3,664 Bcf. In the East Region, stocks were 80 Bcf below the 5-year average following net injections of 50 Bcf. Stocks in the Producing Region were 106 Bcf above the 5-year average of 1,139 Bcf after a net injection of 33 Bcf. Stocks in the West Region were 51 Bcf above the 5-year average after a net addition of 4 Bcf. At 3,741 Bcf, total working gas is within the 5-year historical range.






Currencies 

Dollar Edges Lower: 10-yr: -02/32..2.514%..USD/JPY: 97.32..EUR/USD: 1.3804
The Dollar Index holds little changed amid a quiet trade. Today's action during U.S. hours has been confined to a 20 cent range with the majority of the day spent between 79.15 and 79.25. Click here to see a daily Dollar Index chart.

·         EURUSD is +30 pips at 1.3805 as action remains on track to post its best close in nearly two years. Today's strength comes despite Flash Manufacturing and Services PMI data from across the region falling short of estimates. Little resistance exists until the 1.4100/1.4200 area. Eurozone data includes M3 money supply and German Ifo Business Climate.

·         GBPUSD is +45 pips at 1.6210 as trade lingers near the October highs which correspond the best levels of 2013. Sterling climbed back up to its overnight highs in response to comments from Bank of England Governor Mark Carney suggesting the central bank may lower borrowing costs at the discount window. The 1.5950 area should provide support on a pullback. Data out of Britain is limited to preliminary GDP. 

·         USDCHF is -10 pips at .8910 as trade looks likely to post its fifth loss in the past six sessions. Early selling dropped the pair to a fresh 23-month low, but buyers stepped in as action probed the .8900 level. 

·         USDJPY is -5 pips at 97.30 amid a rather uneventful trade. Action has spent the entire U.S. session in a tight 20 pip range while hugging the 200 dma. Many traders are opting to remain on the sidelines until the 97.00/99.00 range that has been in place over the past month is broken. Tokyo Core CPI is due out tonight. 

·         AUDUSD is +5 pips at .9620 as action climbs back to the best levels of U.S. trade. The hard currency has been under pressure today despite China's strong HSBC Flash Manufacturing PMI data as liquidity concerns in the Middle Kingdom have weighed. China's SHIBOR rates resumed their climb with overnight borrowing costs jumping 31bps to 4.09% and the 2w rate surging 101bps to 4.88%. 

·         USDCAD is +40 pips at 1.0420 as trade remains on track to close at its best level in one and a half months. The ability to hold the 1.0400 level should result in a test of the 1.0475/1.0500 area as little resistance is in the way.

Jason's Commentaries

Last night was more like a technical bounce based on the market sentiment that is going on in the market currently. Market is bullish on earnings and looking forward for the coming FOMC minutes and the NFP, coming next week. When 2 big reports coming out in the same week and the market is at the high... I'm seriously expecting some profit taking or sideways movement to happen over the next few days... Internals were mildly bullish, Consumer Discretionary and Industrials were bullish... not quite bullish but still bullish. I'm expecting some profit taking to take place today, unless there's some stuff going in the Asia Market that's gonna gyrate the market unnecessarily today.

Peace out =D

Market Call: FLAT to downside

Date: 25 Oct 2013