4 Nov 2013 AMC- Market began to consolidate...

4 Nov 2013 AMC- Market began to consolidate...

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 0.4%

·         Germany's DAX: + 0.3%

·         France's CAC: + 0.4%

·         Spain's IBEX: + 0.4%

·         Portugal's PSI: + 1.1%

·         Italy's MIB Index: + 0.8%

·         Irish Ovrl Index: -0.6%

·         Greece ATHEX Composite: -1.3%

Before Market Opens

S&P futures vs fair value: +4.20. Nasdaq futures vs fair value: +13.00.
The S&P 500 futures trade higher by 0.4%.

Markets across Asia ended mostly lower as only China's Shanghai Composite (unch) and India's Sensex (+0.2%) managed to stay out of the red. The flat trade in China came after Saturday's improved Non-Manufacturing PMI (56.3 actual v. 55.4 expected) while the small gain for India's Sensex lifted trade to an all-time high for a fifth straight session. Elsewhere, Thailand's SET (-2.9%) was pressured after protestors took to the streets in repose to government efforts to pass a blanket amnesty bill for people charged with offenses during prior political clashes. There was no other notable data from the region. 

·         In Japan, the Nikkei was closed for Culture Day. 

·         Hong Kong's Hang Seng shed 0.3% amid light trade. Casino stocks were pressured as MGM China and Sands China gave up 2.2% and 1.4%, respectively. Heavyweight Tencent Holding was also weak, giving up 1.4%. 

·         In China, the Shanghai Composite settled flat following reports the city of Shenzhen was upping minimum down payments for second homes. Developers were weak as Vanke and Poly Real Estate both fell more than 1.0%. 

Major European indices hold modest gains with Great Britain's FTSE (+0.6%) in the lead. Among headlines of note, European Central Bank member Jorg Asmussen said interest rates in Germany are too low, but would not comment on this week's upcoming ECB rate decision. In economic data, Eurozone Manufacturing PMI held steady at 51.3, as expected. Separately, Sentix Investor Confidence rose to 9.3 from 6.1 (6.0 forecast). Germany's Manufacturing PMI increased to 51.7 from 51.5 (51.5 forecast). Great Britain's Construction PMI rose to 59.4 from 58.9 (58.9 expected). French Manufacturing PMI slipped to 49.1 from 49.4 (49.4 expected). Italian Manufacturing PMI ticked down to 50.7 from 50.8 (51.0 consensus). Elsewhere, Spain's Manufacturing PMI increased to 50.9 from 50.7 (50.9 forecast). 

·         In Germany, the DAX is higher by 0.4% with K+S trading well ahead of the remaining names. The fertilizer stock holds a solid gain of 7.5%. Deutsche Bank is the weakest performer, down 0.8%. 

·         France's CAC trades up 0.4% as growth-sensitive companies lead. Lafarge and EADS are both up near 2.5%. Financials have displayed relative weakness as Credit Agricole and Societe Generale trade little changed. 

·         Great Britain's FTSE holds an advance of 0.6% as miners display strength. Antofagasta, Fresnillo, and Rio Tinto are all up between 2.3% and 3.2%. Defense names lag with Meggitt and Rolls-Royce Holdings down 2.8% and 0.2%, respectively.

Market Internals

Market Internals -Technical-
The Nasdaq closed up 15 (+0.37%) at 3937, the S&P 500 closed up 6 (+0.36%) at 1768, and the Dow closed up 24 (+0.15%) at 15639. Action came on mixed volume (NYSE 600 mln vs. avg. of 720; NASDAQ 1738 mln vs. avg. of 1709), with advancers outpacing decliners (NYSE 2045/1005, NASDAQ 1672/856) and new highs outpacing new lows (NYSE 146/14, NASDAQ 108/38).

Relative Strength: 
Clean Energy-PBW +3.7%, Oil and Gas Exploration-XOP +3.08%, Metals and Mining-XME +3.04%, Gold Miners-GDX +3.03%, Steel-SLX +2.43%, Poland-EPOL +2.06%, Chile-ECH +2.04%, Austria-EWO +2.02%, South Africa-EZA +1.36%, Egypt-EGPT +1.25%.

Relative Weakness: 
Volatility-VXX -2.57%, Coffee-JO -2.15%, Natural Gas-UNG -2.06%, Thailand-THD -1.68%, Lithium-LIT -1.62%, Greece-GREK -1.57%, Copper-JJC -1.28%, South Korea-EWY -0.3%, Hong Kong-EWH -0.19%, Columbia Index-GXG -0.15%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Small Caps Lead Stocks Higher
The major averages kicked off the new trading week with modest gains as the S&P 500 added 0.4%. The Russell 2000 (+1.1%) outperformed, but its relative strength came after the small cap index struggled to keep pace with the last week's advance in the broader market. 

Outside of the notable outperformance among small caps, today's session unfolded in an uneventful fashion. Overseas markets did little to upset the state of affairs as Japan's Nikkei was closed for Culture Day while China's Shanghai Composite ended flat despite its Non-Manufacturing PMI rising to a 14-month high of 56.3 from 55.4. 

All ten sectors ended in the green, but only energy (+1.3%) and telecom services (+0.8%) posted gains in excess of 0.4%. Energy was responsible for pacing much of the advance as the sector rallied throughout the session. Meanwhile, crude oil ended little changed at $94.59 per barrel. 

The other commodity-linked sector, materials (+0.4%), displayed relative strength as steelmakers rallied in reaction to a Goldman Sachs upgrade of AK Steel (AKS 5.00, +0.40) and U.S. Steel (X 26.91, +1.13). The broader Market Vectors Steel ETF (SLX 49.68, +1.18) ended higher by 2.4%. 

Elsewhere, industrials (+0.3%) settled essentially in-line with the broader market, but the underperformance of top sector components like Boeing (BA 132.79, -0.24) and General Electric (GE 26.43, -0.11) overshadowed the strength of transports. The Dow Jones Transportation Average rose 1.2% as 19 of 20 components registered gains. Norfolk Southern (NSC 86.84, -0.16) was the lone decliner, shedding 0.2%. 

Although the S&P was able to finish at its session high, it did so without the participation of financials as the sector ended near its flat line. 

Three of four countercyclical groups (consumer staples, health care, and utilities) trailed the broader market with staples lagging even after Kellogg (K 62.72, +0.43) reported a bottom-line beat on in-line revenue. In addition, the company announced plans to cut 7.0% of its workforce to reflect a challenging environment. 

Treasuries held modest gains throughout the session as the 10-yr yield shed two basis points to 2.60%. 

Trading volume was well below average as less than 600 million shares changed hands on the floor of the New York Stock Exchange. 

Due to the partial government shutdown, the Census Bureau released the factory orders reports for August and September at the same time. Orders increased 1.7% in September after declining 0.1% in August. July factory orders were revised down from -2.4% to -2.8%. The Briefing.com consensus expected factory orders to increase 1.8% in September and 0.3% in August. 

The recent volatility in factory orders was a result of significant, up-and-down monthly moves in aircraft orders. Nondefense aircraft orders increased 57.7% in September after a 5.4% increase in August and a 58.9% decrease in July. 

Tomorrow, the October ISM Services report will be released at 10:00 ET.

Commodities

Closing Commodities: Crude Oil Falls Just Slightly, Gold Rises 0.1%

·         Dec crude oil brushed a session high of $95.11 per barrel in morning pit trade and later dipped into the red and to a session low of $94.43 per barrel. It eventually settled at $94.59 per barrel, or 2 cents below the unchanged line

·         Dec natural gas traded in the red today, falling as low as $3.41 per MMBtu. It settled at its session high of $3.45 per MMBtu, booking a loss of 1.7%. Dec gold traded in the black as the dollar index chopped around in negative territory.

·         The yellow metal rose to a session high of $1320.80 per oujce in morning floor trade but lost steam heading into the close. IT erased most of the earlier gains and settled just 0.1% higher at $1314.70 per ounce.

·         Dec silver chopped around slightly below the unchanged line for most of the session. It pulled-back in late afternoon pit action to a session low of $21.69 per ounce and settled with a 0.7% loss at $21.70 per ounce.

 NYMEX Energy Closing Prices

  Dec crude oil fell $0.02 to $94.59/barrel 

·         Crude oil rose to a session high of $95.11 in morning pit trade and later dipped to a session low of $94.43. It eventually settled 2 cents below the unchanged line. 

  Dec natural gas fell 6 cents to $3.45/MMBtu 

·         Natural gas traded in the red today, trading as low as $3.41. It settled with a 1.7% loss at its session high. 

  Dec heating oil settled unchanged at $2.88/gallon 

  Dec RBOB gasoline fell 2 cents to $2.53/gallon

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn fell 1 cent to $4.26/bushel 

·         Dec wheat fell 5 cents to $6.63/bushel 

·         Jan soybeans rose 4 cents to $12.56/bushel 

·         Dec ethanol fell 1 cent to $1.64/gallon 

·         Jan sugar (#16 (U.S.)) rose 0.03 of a penny to 21.60 cents/lbs

COMEX Metals Closing Prices

  Dec gold rose $1.60 to $1314.70/ounce 

·         Gold traded higher today as the dollar index chopped around in negative territory. The yellow metal rose to a session high of $1320.80 in morning floor trade but lost steam heading into the close. It erased most of the earlier gains and settled just 0.1% higher.

  Dec silver fell $0.15 to $21.70/ounce 

·         Silver chopped around slightly below the unchanged line for most of the session. It slipped further in late afternoon pit action and settled just above its session low of $21.69, booking a 0.7% loss. 

  Dec copper fell 5 cents to $3.25/lbs

Treasuries

Treasuries Eke Out a Gain: 10-yr: +07/32..2.611%..USD/JPY: 98.57..EUR/USD: 1.3518

·         Treasuries booked small gains amid an uneventful trade. 

·         The complex ticked into positive territory early at the onset of trade, and never relinquished its gains. Tight overnight ranges persisted into U.S. trade with action becoming more lackluster as the session wore on. 

·         A modest bid dropped yields in the belly of the curve as much as 2bps as the 10y slipped to 2.600%. Choppy trade saw action trapped in a 3bp range (2.590-2.620%) as traders remain wary ahead of Friday's jobs report. 

·         The 30y lagged the rest of the complex as a gain of a few ticks dropped its yield 0.5bps to 3.691%. Click here to see an intraday yields chart.

·         A slightly curve developed as the 2-10-yr spread tightened to 229.5bps. 

·         Precious metals were mixed with gold +$1 @ $1314 and silver -$0.20 near $21.65. 

·         Data: ISM Services (10) 

·         Fed Speak: Richmond's Lacker will travel to Charlotte, NC to discuss "Starting Early in Workforce Development" (13:15).

Next Day In View 

Economic Commentary

Economic Summary: September Factory orders slightly below expectations; Bullard repeats that he is concerned about low inflation; ISM Services tomorrow at 10:00
Economic Data Summary:

·         August Factory Orders -0.1% vs Briefing.com consensus of 0.3%; July was revised to 2.8% from -2.4%

·         September Factory Orders 1.7% vs Briefing.com consensus of 1.8%; August was revised to -0.1% from

Fed/Treasury Events Summary:

·         St. Louis Fed's Bullard (voting FOMC member, typically dovish) on CNBC discussed taper timing; says we've made substantial progress in labor force, but inflation is low and there is plenty of room on Fed's balance sheet to continue. Bullard says low inflation allows the Fed to be patient about tapering, and cumulative progress would be the strongest argument for tapering. Bullard said it is possible that the Fed could do more QE, but is not likely given current circumstances.

Upcoming Economic Data:

·         October ISM Services due out Tuesday at 10:00 (Briefing.com consensus of 54.0; September was 54.4)

Upcoming Fed/Treasury Events:

·         Fed Governor Jerome Powell (voting FOMC member, typically moderate) to speak today at 11:40

·         Boston Fed President Eric Rosengren (voting FOMC member) to speak today at 16:25

·         Richmond Fed President Jeffrey Lacker (not a voting FOMC member, typically hawkish) to speak tomorrow at 13:15

·         San Francisco Fed President John Williams (not a voting FOMC member, typically moderate) to speak tomorrow at 17:10

Other International Events of Interest

·         China's Non-Manufacturing PMI rose to a 14-month high of 56.3 from 55.4.

·         Eurozone Manufacturing PMI held steady at 51.3, as expected. Separately, Sentix Investor Confidence rose to 9.3 from 6.1 (6.0 forecast). 

On other news.... 

Currencies 

Dollar Edges Lower: 10-yr: +07/32..2.606%..USD/JPY: 98.57..EUR/USD: 1.3515
The Dollar Index has spent the entire session in the red with action hovering just off the lows near 80.60. An uninspiring trade has persisted throughout the U.S. session as trade looks likely to halt its five-day win streak. Click here to see a daily Dollar Index chart.

·         EURUSD is +25 pips at 1.3510 as action has managed to shrug off this morning's disappointing Italian and Spanish Manufacturing PMI data. The single currency found support near 1.3450 as buyers steeped in to defend the 50 dma. Eurozone data includes EU economic forecasts and Spanish unemployment change, but this week's main event is Thursday's ECB decision. 

·         GBPUSD is +50 pips at 1.5960 as buyers are in control following the Britain's Construction PMI beat. The 1.500/1.5950 support level will remain in focus over the coming days as the bulls look to defend the 50 dma. A breakdown of the level sets up a likely test of the 1.5650 region. Britain's BRC Retail Sales Monitor will cross the wires tonight while Services PMI is due out tomorrow. 

·         USDCHF is -20 pips at .9100 as action struggles at the 50 dma for a second session. The pair tested the .9150 area in early trade, but has been unable to hold on to its gains as sellers stepped in at key resistance. Switzerland's CPI is due out tomorrow. 

·         USDJPY is -10 pips at 98.60 amid a lackluster session. Trade has been limited to just a 30 pip range as Japanese banks were closed for Culture Day. Bank of Japan Governor Haruhiko Kuroda will speak tonight in Osaka. 

·         AUDUSD is +70 pips at .9505 as the pair advances for the first time in nine days. The hard currency will be in focus tonight as the Reserve Bank of Australia is expected to hold its Cash Rate steady at 2.50%. 

·         USDCAD is +5 pips at 1.0425 as action holds just off its best levels. Some early selling probed the 1.0400 support level, but so far that area has been able to hold.

Jason's Commentaries


What a flat start to the week. Dow was up 0.15%, S&P500 shoot up last minute to flat itself more than 0.3%, not exactly a very bullish start to the week. Volumes were standing at 657m shares traded on the NYSE and the internals were pointing to a flat day. Exxon Mobil and Apple was the main factors pushing S&P500 to be the leader of the 3 indices. Nothing much to note. Futures were down after 3pm ET and have been pushing lower. I wonder would the price in start early this week ahead of the employment report?

Market Call: DOWN

Date: 5 Nov 2013