25 Nov 2013 AMC- Dow rallied into a new high but unable to hold the high

25 Nov 2013 AMC- Dow rallied into a new high but unable to hold the high

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 0.3%

·         Germany's DAX: + 0.9%

·         France's CAC: + 0.6%

·         Spain's IBEX: + 0.1%

·         Portugal's PSI: + 0.2%

·         Italy's MIB Index: -0.2%

·         Irish Ovrl Index: + 0.4%

·         Greece ATHEX Composite: + 2.5%

Before Market Opens

S&P futures vs fair value: +4.10. Nasdaq futures vs fair value: +12.20.
The S&P 500 futures trade higher by 0.3%.

Markets across most of Asia were higher as the combination of Friday's advance on Wall Street and a nuclear deal with Iran sparked the overnight bid. India's Sensex (+1.9%) saw the biggest advance as hopes emerged the nuclear deal with Iran will put downward pressure on oil prices. Elsewhere, Japan's Nikkei (+1.5%) rallied on comments from Bank of Japan Governor Haruhiko Kuroda suggesting the possibility of negative interest rates. China's Shanghai Composite (-0.5%) lagged as tensions with Japan over the conflict regarding the Senkaku Islands appear to be on the rise. Hong Kong's Hang Seng (-0.1%) ended little changed. Data from the region was light with Singapore's inflation rate advancing 2.0% year-over-year and Taiwan's industrial production rising 0.8% year-over-year. 

·         In Japan, the Nikkei advanced 1.5% as action climbed to a six-month high. Heavyweight Softbank provided support with a 5.4% gain as investors continued to pile in following Friday's announcement by Dan Loeb's Third Point that it had taken a stake in the company. Exporters benefited from the weaker yen with Honda Motor adding 1.6% and TDK gaining 2.9%. 

·         Hong Kong's Hang Seng shed 0.1% as trade holds near the February highs. Property stocks weighed as Hang Lung Properties and Sino Land lost 2.8% and 1.3%, respectively. Heavyweight Tencent Holdings was the best performer, advancing 3.2%. 

·         In China, the Shanghai Composite settled lower by 0.5% as trade pushed back below the 200-day moving average. Energy stocks weighed with Sinopec tumbling 4.0% after one of its pipelines exploded, killing 55. The explosion put pressure on other energy names such as PetroChina, which gave up 1.5%. 

Major European indices hold gains across the board with Germany's DAX (+1.0%) providing leadership. The first session of the week has gotten off to a relatively quiet start with one headline of note coming out of Germany where Finance Minister Wolfgang Schaeuble said he believes contagion risks have disappeared from the eurozone. Participants received several economic data points. Great Britain's BBA Mortgage Approvals came in at 42,800 (45,200 expected, 43,200 prior). France's Business Survey held steady at 98 (97 expected). Italian non-EU trade surplus expanded to EUR2.90 billion from EUR0.32 billion. Spain's PPI ticked down 0.2% (+0.1% expected, +0.1% last). Lastly, Swiss employment level rose to 4.20 million from 4.17 million, as expected. 

·         Great Britain's FTSE trades higher by 0.3% with travel names displaying strength. EasyJet and International Consolidated Airlines Group hold respective gains of 1.7% and 2.7%. On the downside, energy names lag as BG Group trades lower by 0.6% and Tullow Oil sports a loss of 1.1%. 

·         In France, the CAC holds a gain of 0.6% as financials contribute to the strength. Credit Agricole and Societe Generale are higher by 0.9% and 2.1%, respectively. Health care supplier Essilor International lags with a loss of 0.8%. 

·         Germany's DAX trades up 1.0% as 27 of 30 components register gains. Dialysis provider Fresenius Medical has spiked 7.3% after U.S. officials confirmed Medicare reimbursement cuts would be phased in rather than introduced at once.

Market Internals

Market Internals -Technical-
The Nasdaq closed up 3 (+0.07%) at 3995, the Dow closed up 8 (+0.05%) at 16073, and the S&P 500 closed down 2 (-0.13%) at 1803. Action came on below average volume (NYSE 636 mln vs. avg. of 729; NASDAQ 1740 mln vs. avg. of 1791), with decliners outpacing advancers (NYSE 1361/1700, NASDAQ 1335/1240) and new highs outpacing new lows (NYSE 241/61, NASDAQ 281/35). 

Relative Strength: 
Cotton-BAL +1.67%, Greece-GREK +1.3%, Coffee-JO +1.28%, Biotechnology-IBB +0.98%, Biotechnology-XBI +0.93%, U.S. Health Care-IHF +0.85%, Israel-EIS +0.5%, Germany-EWG +0.47%, Sweden-EWD +0.41%, Indian Rupee-ICN +0.31%.

Relative Weakness: 
Thailand-THD -2.53%, Oil Services-OIH -2.49%, China 25 Index-FXI -1.98%, Latin America 40-ILF -1.73%, BRICs-EEB -1.61%, Russia-RSX -1.57%, Social Media-SOCL -1.56%, Rare Earths-REMX -1.53%, Gasoline-UGA -1.45%, Clean Energy-PBW -1.41%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Holiday-Shortened Week Starts on Lower Note
The S&P 500 began the holiday-shortened week on a lower note, shedding 0.1%. The Dow Jones Industrial Average and Nasdaq outperformed, but their gains were limited to less than 0.1% apiece.

Stocks held modest gains through the vast majority of the session, but a final-hour sell off sent the S&P 500 to a fresh low. Despite today's retreat, the benchmark index remains higher by 2.6% in November.

Energy (-0.8%) and materials (-0.7%) led the afternoon sell off after lagging throughout the session. The energy sector was pressured by crude oil futures, which fell 0.8% to $94.03 per barrel. Oil futures were able to erase a portion of their losses after being down as much as 1.1% in reaction to the nuclear deal with Iran that was reached over the weekend.

Meanwhile, steelmakers weighed on the materials sector as the Market Vectors Steel ETF (SLX 47.80, -0.47) lost 1.0%.

Elsewhere, industrials (-0.4%) joined the final-hour sell off as Boeing (BA 133.00, -2.97) fell 2.2% amid news the company has warned airlines about a potential engine icing risk. The engine maker, General Electric (GE 26.73, -0.35), lost 1.3%. However, there were some pockets of strength among industrials as the Dow Jones Transportation Average outperformed with a gain of 0.3%.

The afternoon weakness also claimed three countercyclical groups—consumer staples (-0.2%), telecom services (-0.3%), and utilities (-0.4%)—while health care outperformed with a gain of 0.4%. Biotechnology was largely responsible for the relative strength as the iShares Nasdaq Biotechnology ETF (IBB 222.79, +2.16) added 1.0%.

Outside of health care, only consumer discretionary (+0.1%) and financials (+0.1%) eked out narrow gains.

Treasuries ended modestly higher with the 10-yr yield off one basis point at 2.74%.

Trading volume was well below average as just over 620 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic data was limited to October pending home sales, which ticked down 0.6%. The reading followed last month's revised decrease of 4.6% (from 5.6%), and was worse than the 1.3% increase forecast by the Briefing.com consensus.

Tomorrow, building permits for September and October will be reported at 8:30 ET while the September Case-Shiller 20-city Index and September FHFA Housing Price Index will be released at 9:00 ET. The day's data will be topped off with the 10:00 ET release of the November Consumer Confidence Index. 

·         Russell 2000 +32.4% YTD 

·         Nasdaq +32.3% YTD 

·         S&P 500 +26.4% YTD 

·         DJIA +22.7% YTD

Commodities

Closing Commodities: Crude Oil Falls 0.8% on Iran Deal; Natural Gas Gains On Cold Weather
Dec crude oil traded in negative territory today as the dollar index rose on an international nuclear deal with Iran. The agreement lifts some sanctions on the Middle Eastern nation's oil, gold, precious metals and auto parts. The energy component brushed a session low of $93.08 per barrel when floor trade opened and inched slightly higher as the session progressed. It eventually settled at $94.03 per barrel, or 0.8% lower. 

Natural gas, on the other hand, rose for a fourth consecutive session as forecasts called for colder weather. It dipped to a session low of $3.80 per MMBtu after trading as high as $3.88 per MMBtu earlier in the session but regained momentum in afternoon pit trade. Natural gas eventually booked a 0.8% gain as it settled at $3.84 per MMBtu. 

Dec gold traded slightly lower today as the stronger dollar index weighed on prices. The yellow metal traded as low as $1226.80 per ounce in early morning pit trade but managed to erase most of the loss. It chopped around just below the unchanged level for most of the session and settled 0.2% lower at $1241.40 per ounce. 

Dec silver lifted from its session low of $19.64 per ounce set moments after pit trade opened and traded near the breakeven level. It brushed a session high of $19.99 per ounce and eventually settled at $19.87 per ounce, or 0.1% higher.

COMEX Metals Closing Prices

  Dec gold fell $2.90 to $1241.40/ounce 

·         Gold traded slightly lower today as the dollar index rose on an international nuclear deal with Iran. The agreement lifts some sanctions on the Middle Eastern nation's gold, precious metals, oil and auto parts. The yellow metal traded as low as $1226.80 in early morning pit trade but managed to erase most of the loss. It chopped around just below the unchanged level for most of the session and settled 0.2% lower. 

  Dec silver rose $0.02 to $19.87/ounce 

·         Silver came off its session low of $19.64 set moments after floor trade opened and traded near the breakeven level. It brushed a session high of $19.99 and eventually settled with a 0.1% gain. 

  Dec copper rose 2 cents to $3.23/lb

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn rose 2 cents to $4.25/bushel

·         Dec wheat rose 3 cents to $6.52/bushel 

·         Jan soybeans rose 9 cents to $13.28/bushel 

·         Dec ethanol fell 8 cents to $1.96/gallon 

·         Jan sugar (#16 (U.S.)) fell 0.20 of a penny to 20.20 cents/lbs

NYMEX Energy Closing Prices

  Jan crude oil fell $0.80 to $94.03/barrel 

·         Crude oil traded in the red today as the dollar index rose on an international nuclear deal with Iran that would lift some sanctions on the nation's oil, gold, precious metals and auto parts. The energy component brushed a session low of $93.08 when floor trade opened and inched slightly higher as the session progressed. It eventually settled with a 0.8% loss. 

  Jan natural gas rose 3 cents to $3.84/MMBtu 

·         Natural gas extended gains for a fourth consecutive session as forecasts called for colder weather. Despite dipping to a session low of $3.80 after trading as high as $3.88, natural gas regained momentum in afternoon pit trade and settled 0.8% higher. 

  Jan heating oil fell 1 cent to $3.03/gallon 

  Jan RBOB gasoline fell 4 cents to $2.67/gallon

 

Treasuries

Treasuries Settle Little Changed: 10-yr: +01/32..2.738%..USD/JPY: 101.50..EUR/USD: 1.3516

·         Treasuries ended little changed amid a quiet session. 

·         The complex erased its early losses ahead of the pending home sales miss (-0.6% actual v. 1.3% expected) before spending the remainder of the session in a tight range. 

·         Little reaction could be seen in response to the solid $32 bln 2y note auction. The auction drew 0.300% (0.303% when issued) and a solid 3.54x bid/cover as a light indirect bid (22.4%) was offset by solid direct bidder demand (27.3%). Primary dealers ended up with 51.3% of the supply. 

·         Maturities in the belly of the curve saw yields slip -1bp, pushing the 10y down to 2.741% at the cash close. Click here to see an intraday yields chart.

·         The long bond ended little changed with its yield holding above 3.835%. 

·         The 2-10-yr spread remained stuck at 246bps. 

·         Precious metals reversed to their highs with gold +$6 @ $1250 and silver +$0.18 near $20.05. 

·         Tomorrow's Data: September and October releases of building permits (8:30), the Case-Shiller 20-city Index, FHFA Housing Price Index (9), and consumer confidence (10).

·         Tomorrow's Auction: $35 bln 5y notes.

Next Day In View 

Economic Commentary

Economic Summary: Pending home sales show unexpected decline; Housing starts/permits tomorrow at 8:30
Economic Data Summary:

·         October Pending Home Sales -0.6% vs Briefing.com consensus of 1.3%; September was -5.6%

Upcoming Economic Data:

·         September Housing Starts due out Tuesday at 8:30 (Briefing.com consensus of 915K; August was 891K)

·         October Housing Starts due out Tuesday at 8:30 (Briefing.com consensus of 920K; September was )

·         September Building Permits due out Tuesday at 8:30 (Briefing.com consensus of 932K; August was 918K)

·         October Building Permits due out Tuesday at 8:30 (Briefing.com consensus of 932K; September was )

·         September Case Schiller 20 City Index due out Tuesday at 9:00 (Briefing.com consensus of 13.0%; August was 12.8%)

Upcoming Fed/Treasury Events:

·           The Treasury is scheduled to auction off $96 bln in new debt next week. Results for each auction will be announced at 13:00

o    Monday $32 bln in 2 year notes

o    Tuesday: $35 bln in 5 years notes

o    Wednesday $29 bln 7 year notes

On other news.... 

Currencies 

Dollar Presses 81.00: 10-yr: unch..2.741%..USD/JPY: 101.71..EUR/USD: 1.3511
The Dollar Index sits just off session highs as trade presses the 81.00 level. Action has been rather lackluster with trade limited to just a 20 cent range. Click here to see a daily Dollar Index chart.

·         EURUSD is -45 pips at 1.3510 as sellers have been in control throughout the session. Today's weakness comes after commentary out this weekend saw more ECB officials note negative interest rates remain a possibility. The 1.3550 area has presented some difficulty over the latter part of November as sellers defend the 50 dma. 

·         GBPUSD is -70 pips at 1.6150 as trade saw some pushback at the October highs. Minor support rests in the 1.6100 region, and will be watched closely as Britain's Inflation Report hearings will take place tomorrow. 

·         USDCHF is +55 pips at .9120 as trade has recovered most of Friday's losses. Many continue to monitor the .9000 support level, which is all that stands in the way of a retest of the October lows (.8900). 

·         USDJPY is +45 pips at 101.70 as action prints at its best levels since the end of May. Fueling today's advance were comments from Bank of Japan Governor Kuroda which suggested the potential for negative interest rates. The minutes from the latest Bank of Japan policy meeting will be released tonight. 

·         AUDUSD is -30 pips at .9155 as sellers remain in control for a fourth session. Today's selling has the hard currency on track for a fourth day of losses as trade tests support in the region. A breakdown of current levels ignites a retest of the September lows near .8900. 

·         USDCAD is +40 pips at 1.0555 as trade looks likely to put in its best close since late-July. The 1.0600 area remains key.

Jason's Commentaries


Market went through a very volatile session last night. Started with some bearish bias which caused by the drag on Nasdaq in the first half an hour of trading, then rallied all the way to 2pm ET where Dow broke the high once again. However, the market wasn't able to hold the high and started losing all its gain in the trading session. Internals were mixed towards the downside but VIX finally got some bounce, closing at 12.86. Volumes remained around 625m shares traded on the NYSE. Volatility is expected to be worst with such low volumes. Both Energy and Material sectors were the worst laggard with Energy losing 0.91% and Materials losing 0.63%. Healthcare, Discretionary and Financials were the only gainers with less than 0.5%. The gain on the Dow was due to the gain in Goldman Sachs, Walmart, American Express and Caterpillar, which are able to shrug the drag on IBM, GE and Boeing. I reckon the market is likely to go through some volatility today and we're likely to head south a little ahead of the Thanksgiving holiday. Stay safe and enjoy shopping on Black Friday. 

 

Market Call: FLAT to downside

Date: 26 Nov 2013