10 Dec 2013 AMC- Market started to retrace on light volumes during Holiday Season
Market Summary
Before Market Opens
S&P futures vs fair value:
-5.10. Nasdaq futures vs fair value: -7.50.
The S&P 500 futures trade lower by 0.3%.
Major Asian markets ended modestly lower with Japan's Nikkei (-0.3%) and Hong Kong's Hang Seng (-0.3%) pacing the regional decline. In Japan, Prime Minister Shinzo Abe has suffered a notable drop in the polls with Kyodo News citing a 10.3 percentage point decline to 47.6%. This comes amid the passage of a highly-controversial secrecy bill. Elsewhere, China's Shanghai Composite settled little changed. In economic data, China's Fixed Asset Investment increased 19.9% year-over-year (20.0% forecast, 20.1% prior), industrial production increased 10.0% year-over-year (10.1% forecast, 10.3% prior), and retail sales increased 13.7% year-over-year (13.3% forecast, 13.3% prior). Elsewhere, Japan's M2 Money Stock rose 4.3% year-over-year (4.1% last), as expected. Separately, the Tertiary Industry Activity Index declined 0.7% month-over-month (0.3% forecast, 0.0% prior). Also of note, the Household Confidence Index rose to 42.5 from 41.2 (44.2 forecast) and Machine Tool Orders rose 15.4% (8.4% prior). Australia's Home Loans increased 1.0% month-over-month (1.0% forecast, 3.5% prior) and the NAB Business Confidence Index ticked down to 5 from 6.
The S&P 500 futures trade lower by 0.3%.
Major Asian markets ended modestly lower with Japan's Nikkei (-0.3%) and Hong Kong's Hang Seng (-0.3%) pacing the regional decline. In Japan, Prime Minister Shinzo Abe has suffered a notable drop in the polls with Kyodo News citing a 10.3 percentage point decline to 47.6%. This comes amid the passage of a highly-controversial secrecy bill. Elsewhere, China's Shanghai Composite settled little changed. In economic data, China's Fixed Asset Investment increased 19.9% year-over-year (20.0% forecast, 20.1% prior), industrial production increased 10.0% year-over-year (10.1% forecast, 10.3% prior), and retail sales increased 13.7% year-over-year (13.3% forecast, 13.3% prior). Elsewhere, Japan's M2 Money Stock rose 4.3% year-over-year (4.1% last), as expected. Separately, the Tertiary Industry Activity Index declined 0.7% month-over-month (0.3% forecast, 0.0% prior). Also of note, the Household Confidence Index rose to 42.5 from 41.2 (44.2 forecast) and Machine Tool Orders rose 15.4% (8.4% prior). Australia's Home Loans increased 1.0% month-over-month (1.0% forecast, 3.5% prior) and the NAB Business Confidence Index ticked down to 5 from 6.
·
In
Japan, the Nikkei shed 0.3%
with technology pacing the decline. Konami, Sony, and Trend Micro lost between
1.9% and 2.6%. Yahoo Japan outperformed, jumping 5.5%.
·
Hong
Kong's Hang Seng ended lower by
0.3% as retailers Li & Fung and Want Want China Holdings fell 1.8% and
1.4%, respectively. Energy names displayed relative strength as CNOOC added
0.8%.
·
In
China, the Shanghai Composite
settled flat following an uneventful session. Financial China Vanke
outperformed, rising 0.6%.
Major European indices spent the
first half of the session near their flat lines, but have since dropped to
lows. France's CAC (-0.6%) and Germany's DAX (-0.6%) are pacing the decline
with the widely-followed EURJPY carry also sliding. The pair has retreated from
the 142.15 area to just below 141.50, where it currently trades. Among news of
note, The Financial Times reports that Germany and France are nearing an
agreement on the structure of the elusive banking union. In a speech this
morning, Mario Draghi also urged European governments to complete the union as
quickly as possible.
Economic data was plentiful. French industrial production decreased 0.3% month-over-month (0.1% forecast, -0.3% prior). Italian industrial production decreased 0.5% year over-year (-2.5% forecast, -2.9% prior) while the month-over-month reading ticked up 0.5% (0.2% forecast, 0.2% prior). Third quarter GDP was unchanged quarter-over-quarter (-0.1% forecast, -0.1% prior) while the year-over-year reading declined 1.8%(-1.9% forecast, -1.8% prior). Great Britain's industrial production increased 3.2% year-over-year (3.2% expected, 2.2% prior) and 0.4% month-over-month (0.3% forecast, 0.9% prior). The country's trade deficit narrowed to GBP9.73 billion from GBP10.10 billion (-GBP9.35 billion forecast). Lastly, Norwegian CPI increased 0.1% month-over-month (0.1% forecast, 0.1% prior). Separately, PPI increased 3.2% year-over-year (2.7% forecast, 2.3% prior).
Economic data was plentiful. French industrial production decreased 0.3% month-over-month (0.1% forecast, -0.3% prior). Italian industrial production decreased 0.5% year over-year (-2.5% forecast, -2.9% prior) while the month-over-month reading ticked up 0.5% (0.2% forecast, 0.2% prior). Third quarter GDP was unchanged quarter-over-quarter (-0.1% forecast, -0.1% prior) while the year-over-year reading declined 1.8%(-1.9% forecast, -1.8% prior). Great Britain's industrial production increased 3.2% year-over-year (3.2% expected, 2.2% prior) and 0.4% month-over-month (0.3% forecast, 0.9% prior). The country's trade deficit narrowed to GBP9.73 billion from GBP10.10 billion (-GBP9.35 billion forecast). Lastly, Norwegian CPI increased 0.1% month-over-month (0.1% forecast, 0.1% prior). Separately, PPI increased 3.2% year-over-year (2.7% forecast, 2.3% prior).
·
Great
Britain's FTSE is lower by 0.5%
with TUI Travel (-2.5%) pacing the decline after lowering its guidance for the
first half of 2014. On the upside, Weir Group outperforms, trading higher by
3.2%.
·
In
France, the CAC holds a loss
of 0.6% as defense contractors EADS and Safran lag. The two names hold
respective losses of 3.2% and 1.9% after EADS announced plans to cut nearly
6,000 jobs.
·
Germany's DAX trades down 0.7% as exporters weigh. BMW and
Volkswagen are lower by 1.3% and 1.0%, respectively.
Market Internals
Market Internals -Technical-
The Dow closed down 52 (-0.33%) at 15973, the S&P 500 closed down 6 (-0.32%) at 1803, and the Nasdaq closed down 8 (-0.2%) at 4060. Action came on slightly below average volume (NYSE 619 mln vs. avg. of 696; NASDAQ 1710 mln vs. avg. of 1760), with decliners outpacing advancers (NYSE 1254/1843, NASDAQ 895/1693) and new highs outpacing new lows (NYSE 105/79, NASDAQ 88/38).
Relative Strength:
Social Media-SOCL +4.54%, Junior Gold Miners-GDXJ +4.08%, Silver Miners-SIL +4.01%, Coffee-JO +3.45%, Peru-EPU +3.1%, Greece-GREK +1.46%, Platinum-PPLT +1.09%, Indonesia-IDX +0.73%, Mexico-EWW +0.63%, Turkey-TUR +0.62%.
Relative Weakness:
Heating Oil-UHN -1.34%, Egypt-EGPT -1.33%, Regional Banks-KRE -1.06%, Oil Services-OIH -1.04%, Utilities-XLU -0.99%, Telecommunications-IYZ -0.98%, Singapore-EWS -0.98%, Sweden-EWD -0.89%, Nordic 30-GXF -0.71%, France-EWQ -0.62%.
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Closing Market Summary: Russell 2000
Leads Stocks Lower
The major averages spent the entire session in a steady downtrend, but despite persistent selling pressure, today's losses were limited in scope. The Dow, S&P 500, and Nasdaq shed between 0.2% and 0.3% while the Russell 2000 lagged, falling 0.9%.
The underperformance of the Russell 2000 was likely owed in part to tax-loss selling, which tends to pick up this time of year. Small-caps often feel that pinch in a stronger fashion than large-cap issues since individual retail investors factor more prominently in the behavior of small-cap stocks. Large-cap stocks, on the other hand, have a stronger institutional shareholder base that may be less sensitive to the timing of tax-loss harvesting at year-end due to being tax exempt or having different taxable years.
U.S. equities began the session with modest losses, tracking the performance of their European counterparts. An early bid lifted the Nasdaq and S&P 500 briefly into positive territory, but a second round of selling into the European close pushed the indices back into the red where they spent the remainder of the session.
Countercyclical sectors lagged throughout the day with consumer staples and health care falling 0.9% and 0.4%, respectively. The health care space was pressured by biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 219.64, -1.85) lost 0.8%. Meanwhile, the other two defensively-geared sectors—telecom services (-0.8%) and utilities (-1.0%)—ended at the bottom of the leaderboard.
Things looked a bit different on the cyclical side where all six groups finished in-line or ahead of the broader market. However, only materials (+0.3%) and discretionary shares (+0.1%) were able to register gains.
The materials sector received significant support from miners. The Market Vectors Gold Miners ETF (GDX 22.03, +0.82) jumped 3.9% as gold futures advanced 2.3% to $1262.00 per troy ounce.
Elsewhere, the discretionary space drew strength from momentum names as Amazon.com (AMZN 387.78, +2.89), eBay (EBAY 51.92, +0.23), and Netflix (NFLX 363.10, +7.43) gained between 0.4% and 2.1%.
Also of note, financials settled in-line with the broader market even as Goldman Sachs (GS 169.73, +2.06) outperformed with a gain of 1.2%. It is worth mentioning that the Volcker Rule received clearance from all five regulatory agencies today, but CFTC Commissioner Bart Chilton said the Rule is unlikely to be implemented before 2015.
Treasuries climbed throughout the day with the 10-yr yield falling five basis points to 2.80%.
Trading volume was well below average as only 619 million shares changed hands on the floor of the New York Stock Exchange.
In today's economic data, wholesale inventories increased 1.4% in October after increasing an upwardly revised 0.5% (from 0.4%) in September. The Briefing.com consensus expected wholesale inventories to increase 0.3%. The increase in inventories followed a sizable gain in overall inventories in the third quarter. It was expected that inventory growth would slow considerably throughout the fourth quarter.
Durable inventories increased 0.4% in October. Big gains in autos (2.7%) and furniture (1.3%) offset declines in computer (-5.7%) and professional (-1.4%) equipment. Meanwhile, nondurable inventories increased 3.0% in October, up from a 1.4% September gain. Almost two-thirds of the increase in nondurable goods inventories was the result of a 17.0% increase in farm product inventories.
Separately, the Job Openings and Labor Turnover Survey came in at 3.925 million, which follows the prior reading of 3.913 million.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and the November Treasury Budget will cross the wires at 14:00 ET.
The major averages spent the entire session in a steady downtrend, but despite persistent selling pressure, today's losses were limited in scope. The Dow, S&P 500, and Nasdaq shed between 0.2% and 0.3% while the Russell 2000 lagged, falling 0.9%.
The underperformance of the Russell 2000 was likely owed in part to tax-loss selling, which tends to pick up this time of year. Small-caps often feel that pinch in a stronger fashion than large-cap issues since individual retail investors factor more prominently in the behavior of small-cap stocks. Large-cap stocks, on the other hand, have a stronger institutional shareholder base that may be less sensitive to the timing of tax-loss harvesting at year-end due to being tax exempt or having different taxable years.
U.S. equities began the session with modest losses, tracking the performance of their European counterparts. An early bid lifted the Nasdaq and S&P 500 briefly into positive territory, but a second round of selling into the European close pushed the indices back into the red where they spent the remainder of the session.
Countercyclical sectors lagged throughout the day with consumer staples and health care falling 0.9% and 0.4%, respectively. The health care space was pressured by biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 219.64, -1.85) lost 0.8%. Meanwhile, the other two defensively-geared sectors—telecom services (-0.8%) and utilities (-1.0%)—ended at the bottom of the leaderboard.
Things looked a bit different on the cyclical side where all six groups finished in-line or ahead of the broader market. However, only materials (+0.3%) and discretionary shares (+0.1%) were able to register gains.
The materials sector received significant support from miners. The Market Vectors Gold Miners ETF (GDX 22.03, +0.82) jumped 3.9% as gold futures advanced 2.3% to $1262.00 per troy ounce.
Elsewhere, the discretionary space drew strength from momentum names as Amazon.com (AMZN 387.78, +2.89), eBay (EBAY 51.92, +0.23), and Netflix (NFLX 363.10, +7.43) gained between 0.4% and 2.1%.
Also of note, financials settled in-line with the broader market even as Goldman Sachs (GS 169.73, +2.06) outperformed with a gain of 1.2%. It is worth mentioning that the Volcker Rule received clearance from all five regulatory agencies today, but CFTC Commissioner Bart Chilton said the Rule is unlikely to be implemented before 2015.
Treasuries climbed throughout the day with the 10-yr yield falling five basis points to 2.80%.
Trading volume was well below average as only 619 million shares changed hands on the floor of the New York Stock Exchange.
In today's economic data, wholesale inventories increased 1.4% in October after increasing an upwardly revised 0.5% (from 0.4%) in September. The Briefing.com consensus expected wholesale inventories to increase 0.3%. The increase in inventories followed a sizable gain in overall inventories in the third quarter. It was expected that inventory growth would slow considerably throughout the fourth quarter.
Durable inventories increased 0.4% in October. Big gains in autos (2.7%) and furniture (1.3%) offset declines in computer (-5.7%) and professional (-1.4%) equipment. Meanwhile, nondurable inventories increased 3.0% in October, up from a 1.4% September gain. Almost two-thirds of the increase in nondurable goods inventories was the result of a 17.0% increase in farm product inventories.
Separately, the Job Openings and Labor Turnover Survey came in at 3.925 million, which follows the prior reading of 3.913 million.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and the November Treasury Budget will cross the wires at 14:00 ET.
·
Nasdaq +34.5% YTD
·
Russell 2000 +31.8%
YTD
·
S&P 500 +26.4%
YTD
·
DJIA +21.9% YTD
Commodities
Closing
Commodities: Gold And Silver Hold Strong Gains
Commodities ended mixed this morning with metals higher and energy and
agriculture mixed.Gold and silver ended today's session with strong gains and finished just under its HoD. Feb gold ended today $31.90 higher at $1261/oz, while Mar silver gained 0.80% to $20.33/oz.
Crude oil held gains ahead of inventory data with the Jan contract rising $0.85 higher at $98.55/barrel. Jan nat gas rose $0.12 to $4.24/MMBtu.
COMEX
Metals Closing Prices
·
Feb gold rose $31.90 to
$1261/ounce
·
Mar silver rose $0.80 to
$20.33/ounce
·
Mar copper rose 2 cents
to $3.27/lb
CBOT
Agriculture and Ethanol; Grains end mixed following USDA WASDE report
·
Mar corn gains 2 cents
at $4.36/bushel
·
Mar wheat fell 11 cents
to $6.40/bushel
·
Jan soybeans rose 13
cents to $13.39/bushel
·
Jan ethanol rose 1 cent
to $2.00/gallon
NYMEX
Energy Closing Prices
·
Jan crude oil rose $0.85
to $98.55/barrel
·
Jan natural gas rose 12
cents to $4.24/MMBtu
·
Jan heating oil fell 3
cents to $3.02/gallon
·
Jan RBOB gasoline fell 3
cents to $2.69/gallon
Treasuries
Treasuries
Climb to Best Levels in a Week: 10-yr: +13/32..2.801%..USD/JPY:
Treasuries rallied for a second day, running maturities to their best
close in a week.
A steady bid persisted throughout the session as modest weakness in
global equities produced an underlying bid.
The complex saw some early profit-taking following the large
build in wholesale inventories (1.4% MoM actual v. 0.3% MoM expected)
before climbing back towards its best levels of the session ahead of today's 3y
note auction.
The strong 3y auction drew 0.631% (0.637% when issued)
and a solid 3.55x bid/cover as the indirect bid (38.4%) helped offset a weak
takedown by directs (12.0%).
Trade lifted to its best levels of the day as traders digested the
results, and then spent the remainder of the session near the highs.
Longer durations outperformed with both the 10 and 30y
shedding -6bps. Click here to see an intraday
yields chart.
The 10y ended @ 2.797%, slipping below what was previously key
resistance in the 2.800% region. That area will be watched closely over the
coming days.
At the long end, the 30y closed @ 3.829% to finish the session roughly
15bps off Friday's high. The 3.750% area is one to monitor as both the 50
and 100 dma lurk in the vicinity.
The 5y lagged its longer-dated peers as a -4.8bp decline dropped action
to 1.449%. Action over the coming days will be followed closely as the area had
served as a lid on action for much of the past three months until last week's
breakout.
Buying flattened the yield curve with the 2-10-yr spread narrowing to
250bps.
Precious metals went off near their highs with gold +$25 @ $1259 and
silver +$0.60 @ $20.30.
Tomorrow's Data: MBA Mortgage Index (7) and the Treasury budget
(14).
Tomorrow's
Auction: $21 bln 10y note reopening.
Next Day In View
Economic Commentary
Economic Summary: Wholesale
inventories rise faster than expected
Economic Data Summary:
Economic Data Summary:
·
October Wholesale
Inventories +1.4% vs Briefing.com consensus of 0.3%; September was revised to
0.5% from 0.4%
o The increase in inventories comes after a huge
gain in overall inventories in the third quarter. It was expected that
inventory growth would slow considerably throughout the fourth quarter.
o Durable inventories increased 0.4% in October.
Big gains in autos (2.7%) and furniture (1.3%) offset declines in computer
(-5.7%) and professional (-1.4%) equipment.
·
October JOLTS - Job
Openings 3.925 mln (September was 3.913 M)
Upcoming Economic Data:
·
Weekly MBA Mortgage
Index due out Wednesday at 7:00 (Last Week was -12.8%)
·
November Treasury Budget
due out Wednesday at 14:00 (October was -$172.1 bln)
Upcoming Fed/Treasury Even
·
The Treasury is expected
to auction off $64 bln in new debt this week. Results for each auction will be
announced at 13:00
o Tuesday: $30 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 Shanghai
Composite (UNCH) ended little changed after industrial production (10.0% YoY
actual v. 10.2% YoY expected) and fixed asset investment (19.9% actual v. 20.1%
expected) both fell just short of estimates.
On other news....
Currencies
Dollar Breaks Below 80.00: 10-yr:
+12/32..2.802%..USD/JPY: 102.71..EUR/USD: 1.3767
The Dollar Index holds just off session lows with action set to post its first sub-80.00 close since the end of October. Today's weakness has the greenback on track for its third decline in four sessions while pushing action back down towards the October lows near 79.20. Click here to see a daily Dollar Index chart.
The Dollar Index holds just off session lows with action set to post its first sub-80.00 close since the end of October. Today's weakness has the greenback on track for its third decline in four sessions while pushing action back down towards the October lows near 79.20. Click here to see a daily Dollar Index chart.
·
EURUSD is +35 pips @ 1.3775 as trade tests the
October highs and looks likely to register a sixth day of gains. The single
currency has seen a tailwind from chatter suggesting European peers are moving
closer to a banking union; however, no deal has yet been announced. Any close
above the 1.3800 area marks the best since November 2011.
·
GBPUSD is +25 pips @ 1.6445 as action
readies for its best close since August 2011. Sterling was able to shrug
off this morning's wider than expected trade deficit, and saw some buyers step
in following the NIESR GDP Estimate uptick to 0.8% (0.7% previous). The 1.6700
area remains key on the upside.
·
USDCHF is -35 pips @ .8865 as sellers have
pressured the pair to its lowest level since November 2011. The .8800 area
will now be viewed as support, but traders should keep an eye on .8600 as a
breakdown of that level may result in a retest of the record low near .7200 set
in August 2011.
·
USDJPY is -60 pips @ 102.65 as today's weakness has
erased virtually all of yesterday's gains. The pair is under pressure despite
both the BSI Manufacturing Index and Tertiary Industry Activity falling short
of estimates, and continuing the string of disappointing data out of
Japan. Traders remain on the lookout for more potential easing from the
BOJ. Japan's core machinery orders will be released later this evening.
·
AUDUSD is +55 pips @ .9165 as buyers take control for
the third time in four sessions. Participants continue to watch the
.9150 level closely as a breakout is likely to provoke a test of
resistance in the .9300 area that is helped by the 100 dma (.9265). Australia's
Westpac Consumer Sentiment is due out tonight.
·
USDCAD is -20 pips @ 1.0605 as trade presses
lower for a fourth day. Little support exists until the 1.0500 area.
Jason's Commentaries
Market decided to went sideways a little bit as Russells decided to drag the market down. On the broader spectrum, we have the Dow and the S&P500 going down at 0.33% and 0.32% respectively, but Russells 2000 went down 0.9%. Facing the high, there might be some good profit taking going on before entering the earnings season. Volumes was light last night, at 631m shares traded on the NYSE. Financials were able to shrug off quite a bit of drag as they are announcing their adaptation to the Volcker Rule. With the Volcker Rule, Financials are likely to be affected very greatly. It seems that the market is treating that as a non-event. The biggest laggard last night was Utilities and Consumer Staples with 0.99% and 0.86% respectively. While we are having the Fed Budget Balance today, I reckon it's not very likely to rock the market. However, the retail sales and PPI report coming on Thursday and Friday might be some mover. Meanwhile, we're starting to form Dojis on the indices and it might be signifying it's the top. The main question is.. are we going to have a Santa Claus rally or have to rallied enough? I reckon we might be entering into a sideways market.
Market Call: FLAT
Date: 11 Dec 2013
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