Thursday 12 December 2013

11 Dec 2013 AMC- Russells led stocks lower


11 Dec 2013 AMC- Russells led stocks lower
Market Summary 


European Markets Closing Prices
European markets are now closed; stock markets across Europe performed as follows:
·         UK's FTSE: -0.2%
·         Germany's DAX: -0.4%
·         France's CAC: -0.1%
·         Spain's IBEX: -0.8%
·         Portugal's PSI: -0.2%
·         Italy's MIB Index: -1.4%
·         Irish Ovrl Index: -0.8%
·         Greece ATHEX Composite: -0.3%

Before Market Opens



S&P futures vs fair value: +1.50. Nasdaq futures vs fair value: +1.50.
The S&P 500 futures continue to hover just above fair value.

Asian markets ended lower across the board with China's Shanghai Composite (-1.5%) and Hong Kong's Hang Seng (-1.7%) seeing notable losses. Coal and industrial names paced the decline after the National Development and Reform Commission said next year's coal consumption will be under tighter control.

Investors received several economic reports. Japan's Corporate Goods Price Index ticked up 0.1% month-over-month (-0.1% prior) while the year-over-year reading increased 2.7% (2.5% prior). Both figures met expectations. Separately, core machinery orders rose 0.6% month-over-month (0.6% forecast, -2.1% prior) while the year-over-year reading climbed 17.8% (15.0% consensus, 11.4% last). South Korea's unemployment rate ticked down to 2.9% from 3.0% (3.0% forecast). Separately, the M2 Money Supply increased 7.4% (6.7% last). India's trade surplus narrowed to $9.22 billion from $10.56 billion (-$11.00 billion expected) as exports grew $24.60 billion ($27.27 billion previous) and imports increased $33.83 billion ($37.83 billion prior). Australia's Westpac Consumer Sentiment fell 4.8% (1.9% prior). 
·         In Japan, the Nikkei lost 0.6% with exporters pacing the decline. Citizen Holdings, Konica Minolta, and Mitsubishi lost between 2.8% and 3.1%. Yahoo Japan was a notable outperformer, climbing 4.7%. 
·         Hong Kong's Hang Seng slid 1.7%. China Coal Energy and China Shenhua Energy weighed, falling 3.9% each. 
·         In China, the Shanghai Composite settled lower by 1.5%. Anhui Hengyuan Coal-Electricity Group and Datong Coal Energy lost 2.2% and 2.1%, respectively. 
Major European indices hold modest gains as they rebound from yesterday's selling. Italy's MIB (-0.4%) underperforms as Prime Minister Enrico Letta prepares to face a confidence vote. Prior to the vote, Mr. Letta spoke in front of the Lower House, saying institutional reform will be his main focus for the next 18 months. Economic data was limited. Germany's CPI ticked up 0.2% month-over-month (0.2% last) while the year-over-year reading reflected an increase of 1.3% (1.3% prior). Both figures met expectations. Elsewhere, France's current account deficit narrowed to EUR2.10 billion from EUR3.60 billion. Separately, nonfarm payrolls ticked down 0.1% quarter-over-quarter, as expected (-0.1% last). 
·         Germany's DAX is higher by 0.3% with Bayer and Daimler among the leaders. The two names hold gains close to 1.0% apiece. On the downside, fertilizer producer K+S lags, trading lower by 1.3%. 
·         Great Britain's FTSE trades up 0.4%. Defense contractors are among the leaders with BAE Systems and Rolls-Royce Holdings trading higher by 2.6% and 1.1%, respectively. 
·         In France, the CAC sports an advance of 0.8% as growth-sensitive names provide support. Alstom and Lafarge are higher by 1.3% and 3.3%, respectively.



Market Internals




Market Internals
The Nasdaq closed down 57 (-1.4%) at 4004, the S&P 500 closed down 20 (-1.13%) at 1782, and the Dow closed down 130 (-0.81%) at 15843. Action came on slightly above average volume (NYSE 727 mln vs. avg. of 696; NASDAQ 1789 mln vs. avg. of 1761), with decliners outpacing advancers (NYSE 618/2533, NASDAQ 606/1971) and new lows outpacing new highs (NYSE 49/172, NASDAQ 57/43).

Relative Strength: 
Volatility-VXX +4.69%, Natural Gas-UNG +2.17%, Cotton-BAL +1.79%, Copper-JJC +0.75%, Base Metals-DBB +0.67%, Columbia Index-GXG +0.37%, Japanese Yen-FXY +0.33%, Canadian Dollar-FXC +0.1%, Swiss Franc-FXF +0.09%, Chinese Yuan-CYB +0.08%. 

Relative Weakness: 
Gold Miners-GDX -3.81%, Vietnam-VNM -3.72%, Biotechnology-XBI -3.66%, Coal-KOL -3.46%, China 25 Index-FXI -3.26%, Silver Miners-SIL -3.07%, BRICs-EEB -2.68%, Indonesia-IDX -2.49%, Turkey-TUR -2.45%.







Leaders and Laggards








Technical Updates








Briefing's Commentaries 




Closing Market Summary: Russell 2000 Leads Stocks Lower Again
Equity indices settled on their lows following a steady, session-long slide. Similar to yesterday, small-caps paced the retreat as the Russell 2000 fell 1.6%, extending its December loss to 3.6%. The S&P 500 settled lower by 1.1%, widening its month-to-date decline to 1.3%.

There was no specific news catalyst behind today's slide, which had the markings of broad-based profit-taking. Seven of ten sectors settled with losses of 1.0% or more while only two groups finished above their respective lows.

Top-weighted financial (-1.5%) and health care (-1.6%) sectors trailed throughout the session, which emboldened sellers and prevented dip-buyers from turning the tide. Interestingly, the largest S&P 500 sector, technology, outperformed with a loss of 0.9% even as the tech-heavy Nasdaq (-1.4%) lagged.

The outperformance of the tech sector was largely due to big gains in the shares of MasterCard (MA 790.57, +26.96) and Visa (V 205.66, +6.23). The pair posted respective gains of 3.5% and 3.1% after MasterCard announced a 10-1 stock split, increased its quarterly dividend by 83.0%, and announced a new share repurchase program in the amount of $3.50 billion. Furthermore, Visa's strength contributed to outperformance of the price-weighted Dow Jones Industrial Average (-0.8%).

Even though the Dow outperformed, only five index components finished in positive territory and Visa was the only listing that added more than 1.0%. Other advancers included Coca-Cola (KO 40.13, +0.28) and Procter & Gamble (PG 84.02, +0.37) while the broader consumer staples sector eked out a gain of 0.2%.

Finding shades of green in other areas proved particularly difficult today as bonds and commodities sold off. The 10-yr note fell 10 ticks, sending its yield higher by four basis points to 2.84%. Crude oil (-1.1% to $97.40) and gold futures (-0.7% to $1252.50/ozt) also retreated while copper bucked the trend, climbing 0.6% to $3.286/pound.

With stocks ending on their lows, the CBOE Volatility Index (VIX 15.36, +1.45) finished at its highest level since mid-October.

Participation was right in-line with average as just over 725 million shares changed hands on the floor of the New York Stock Exchange.

Among news of note, negotiators in Washington secured a two-year budget agreement that aims to reduce sequester cuts by $63 billion and lower the deficit by roughly $20 billion. The deal has yet to receive full Congressional approval with votes in the House and the Senate expected to take place next week.

The weekly MBA Mortgage Index ticked up 1.0% following last week's 12.8% fall.

Separately, the Treasury budget deficit declined to $135.20 billion in November from $172.10 billion in November 2012. Since the data are not seasonally adjusted, the November deficit cannot be compared to the decline in October. The Briefing.com consensus expected the budget deficit to fall to $140.00 billion.

The Congressional Budget Office released their budget preview earlier in the week and predicted a shortfall of $140 billion. The market was well aware of the CBO's forecast, therefore the reaction to the budget data was limited.

Tomorrow, weekly initial claims, November Retail Sales, and November export prices ex-agriculture and import prices ex-oil will all be reported at 8:30 ET. The day's data will be topped off with the 10:00 ET release of the October Business Inventories report.
·         Nasdaq +32.6% YTD
·         Russell 2000 +29.7% YTD
·         S&P 500 +25.0% YTD
·         DJIA +20.9% YTD








Commodities




Closing Commodities: Crude Oil Ends Today's Session 1.1% Lower Following Inventory Data
·         Jan crude oil slipped further into negative territory today on higher-than-anticipated builds in gasoline and distillate inventories.
·         Although the EIA reported that crude oil inventories had a draw of 10.6 mln barrels when consensus called for a draw of 2.7-3.0 mln, gasoline stockpiles rose 6.7 mln vs expectations for a build of 1.7-2.0 mln barrels. Distillate inventories rose 4.5 mln barrels when consensus called for a smaller build of 1.5-1.6 mln.
·         The energy component pulled back from its session high of $98.43 per barrel set moments after pit trade opened and brushed a session low of $97.20 per barrel. It settled with a 1.1% loss at $97.47 per barrel. Jan natural gas, on the other hand, came off its session low of $4.21 per MMBtu and broke into positive territory in late morning pit action. It trended higher for the remainder of the session and settled with a 2.4% gain at its session high of $4.34 per MMBtu.
·         Feb gold spent most of today's floor trade chopping around in negative territory. It dipped to a session low of $1254.60 per ounce in morning action and eventually settled 0.3% lower at $1256.80 per ounce.
·         Mar silver rose to a session high of $20.48 per ounce moments before equity markets opened but lost steam as the session progressed. It erased most of the earlier gains and closed just 0.1% higher at $20.35 per ounce.



COMEX Metals Closing Prices
  Feb gold fell $4.20 to $1256.80/ounce 
·         Gold spent most of today's session chopping around in negative territory. It dipped to a session low of $1254.60 in morning pit trade and eventually settled with a 0.3% loss. 
  Mar silver rose $0.02 to $20.35/ounce 
·         Silver rose to a session high of $20.48 moments before equity markets opened but trended lower as the session progressed. It erased most of the earlier gains and settled just 0.1% higher. 
  Mar copper rose 3 cents to $3.30/lbs





CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
·         Mar corn rose 3 cents to $4.39/bushel 
·         Mar wheat rose 1 cent to $6.41/bushel 
·         Jan soybeans rose 5 cents to $13.44/bushel 
·         Jan ethanol fell 7 cents to $1.93/gallon 
·         Mar sugar (#16 (U.S.)) rose 0.27 of a penny to 20.34 cents/lbs




NYMEX Energy Closing Prices
  Jan crude oil fell $1.08 to $97.47/barrel 
·         Crude oil fell deeper into negative territory on higher-than-anticipated builds in gasoline and distillate inventories. Although the EIA reported that crude oil inventories had a draw of 10.585 mln barrels when consensus called for a draw of 2.7-3.0 mln, gasoline stockpiles rose 6.7 mln vs expectations for a build of 1.7-2.0 mln. Distillate inventories rose 4.5 mln when consensus called for a smaller build of 1.5-1.6 mln. The energy component pulled back from its session high of $98.43 set moments after pit trade opened and brushed a session low of $97.20 before settling with a 1.1% loss. 
  Jan natural gas rose 10 cents to $4.34/MMBtu 
·         Natural gas, on the other hand, came off its session low of $4.21 and broke into positive territory in late morning action. It trended higher for the remainder of the session and settled 2.4% higher at its session high. 
  Jan heating oil settled unchanged at $3.02/gallon 
  Jan RBOB gasoline fell 3 cents to $2.66/gallon




Treasuries


Treasuries Snap Three-Day Winning Streak: 10-yr: -05/32..2.843%..USD/JPY: 102.45..EUR/USD: 1.3788
·         Treasuries fell for the first time in four days as sellers took control in afternoon trade. 
·         The complex hovered little changed for much of the morning, seeing little reaction to news a budget deal has been reached on Capitol Hill
·         This afternoon's sloppy 10y note reopening sparked a selloff that ran yields to session highs ahead of the cash close. Click here to see an intraday yields chart.
·         The reopening drew 2.824% (when issued 2.815%) and a light 2.61x bid/cover (12-auction average 2.74x) as a strong showing from indirect bidders (48.9%) helped offset a weak direct bid (10.5%). Primary dealers ended up with just more than 40% of the supply. 
·         A +4bp advance ran the 5y to 1.489% where trade settled less than 2bps below Friday's three-month high closing print. 
·         The 10y tested the 2.800% level early on, but climbed to almost 2.845% by session's end. 
·         At the long end, the 30y tacked on +5.1bps to finish @ 3.880%. 
·         Today's selling swung the yield curve steeper as the 2-10-yr spread widened to 254.5bps
·         Precious metals lost ground with gold -$9 @ $1252 and silver -$0.03 @ $20.28. 
·         Data: Initial and continuing claims, retail sales, retail sales ex-auto, import/export prices (8:30), and business inventories (10). 
·         Auction: $13 bln 30y bond reopening.






Next Day In View 


Economic Commentary



Economic Summary: MBA Mortgage Index increases following last weeks decline; Retail Sales tomorrow at 8:30
Economic Data Summary:
·         Weekly MBA Mortgage Index 1.0% (Last Week was -12.8%)
Upcoming Economic Data:
·         November Treasury Budget due out Wednesday at 14:00 (Briefing.com consensus of -$140.0 bln; October was -$172.1 bln)
·         Weekly Initial Claims due out Thursday at 8:30 (Briefing.com consensus of 315K; Last Week was 298K)
·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 2.75 M ; Last Week was 2.744 M )
·         November Retai Sales due out Thursday at 8:30 (Briefing.com consensus of 0.6%; October was 0.4%)
·         November Retail Sales Ex-Auto due out Thursday at 8:30 (Briefing.com consensus of 0.3%; October was 0.2%)
·         November Export Prices Ex-Ag due out Thursday at 8:30 (October was -0.4%)
·         November Import Prices Ex-Oil due out Thursday at 8:30 (October was 0.0%)
·         October Business Inventories due out Thursday at 10:00 (Briefing.com consensus of 0.3%; September was 0.6%)
Upcoming Fed/Treasury Events:
·         The Treasury is expected to auction off $64 bln in new debt this week. Results for each auction will be announced at 13:0
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
·         Hong Kong's Hang Seng (-1.7%) and China's Shanghai Composite (-1.5%) led to the downside as traders speculated Beijing may cut its 2014 growth target to 7.0% (currently at 7.5%). Compounding the weakness was selling of coal-related names, which continue to lag as pollution levels across the Mainland remain hazardous. Following the close, China released its latest new loans data, showing a jump of CNY625 bln (CNY585 bln expected). 

On other news.... 





EIA Inventory Data
The EIA reports that for the week ending Dec 6: 
·         Crude oil inventories had a draw of 10.585 mln (consensus called for a draw of 2.7-3.0 mln)
·         Gasoline inventories had a build of 6.717 mln (consensus called for a build of 1.7-2.0 mln)
·         Distillate inventories had a build of 4.541 mln (consensus called for a build of 1.5-1.6 mln)
·         Change in refinery utilization is at +0.2%





Currencies 




Dollar Looking at Fourth Loss in Five Days: 10-yr: -05/32..2.846%..USD/JPY: 102.56..EUR/USD: 1.3790
The Dollar Index is staring at its fourth loss in the past five sessions as trade clings to small losses. Yesterday's weakness saw the greenback slide below the 80.00 level for the first time since late-October, and trade appears destined for another close below the mark as a sleepy session drifts towards the close. 
Click here to see a daily Dollar Index chart.
·         EURUSD is +35 pips @ 1.3795 as buyers are in control for a seventh straight sessionThe single currency pierced 1.3800 for the first time in one and a half months, but trade has stalled at the level as bears attempt to defend the October highs. Eurozone industrial production and the ECB Monthly Bulletin are due out tomorrow. European Central Bank head Mario Draghi will discuss ECB policy in front of the European Parliament. 
·         GBPUSD is -60 pips @ 1.6385 as trade slips off yesterday's close, which marked the best since August 2011. Early selling saw sterling test minor help in the 1.6330 area, but buyers quickly emerged to provide support. A breakdown of that level sets up a test of more solid support in the 1.6200 region. 
·         USDCHF is -15 pips @ .8860 as sellers hammer away for a seventh straight day. The recent skid has turned the attention of many traders towards the .8600/.8800 region as it is the final level of support before trade pulls back to levels last seen when the Swiss National Bank instituted its EURCHF floor. The Swiss National Bank will opine tomorrow with markets expecting no change to its Libor Rate of less than 0.25%. 
·         USDJPY is -30 pips @ 102.55 as sellers remain in control for a second session. Early weakness dropped action to 102.15, but a persistent afternoon bid has allowed the pair to retake minor support near 102.50. Today's disappointing core machinery orders was the latest data point to miss expectations, and comes amid chatter the Bank of Japan is looking to further ease policy. 
·         AUDUSD is -80 pips @ .9070 with today's selling wiping away three days of gains. The hard currency failed yet again at .9150, causing some to turn their attention towards the December lows near .9000. Australia's employment change and unemployment rate will follow tonight's release of MI Inflation Expectations. The Reserve Bank of New Zealand will announce its latest Official Cash Rate at the top of the hour. No change is expected from the current 2.50%.
·         USDCAD is -5 pips @ 1.0595 amid a sleepy session. The small dip has the pair looking at a fifth straight loss as trade settles into minor support in the area. Canada's New Home Price Index will be released tomorrow.







Jason's Commentaries


Market happened to be dragged down by Russells last night earlier than I expected. Market started bearish and stayed bearish throughout the trading session. Took profit off the table last night as Russells dragged every other indices down as well. The biggest laggard is Russells, touching the 1100 level. All other indices is hitting their respective support levels as well. Volumes were standing at 738.3m shares traded on NYSE, and all other internals were all convergent. Healthcare and Materials sector was the heaviest hit at 1.72% and 1.70% respectively. That doesn't look well for the market as the Santa Claus rally should be happening soon. While looking ahead, we're having the Unemployment Claims coming out and PPI coming out on Friday. If the economic report stays good, I believe we will be able to stay flat, else, the market will take the opportunity to short the market down. 



Market Call: FLAT
Date: 12 Dec 2013

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