13 Dec 2013 AMC - Market ended flat after 3 days of consecutive losses

13 Dec 2013 AMC - Market ended flat after 3 days of consecutive losses

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: -0.1%

·         Germany's DAX: -0.1%

·         France's CAC: -0.2%

·         Spain's IBEX: 0.0%

·         Portugal's PSI: -0.5%

·         Italy's MIB Index: 0.0%

·         Irish Ovrl Index: -0.2%

·         Greece ATHEX Composite: -2.5%

Before Market Opens 

S&P futures vs fair value: +2.30. Nasdaq futures vs fair value: +9.00.
Recent action saw index futures trim their pre-market gains. At this juncture, the S&P 500 futures trade two points above fair value.

Markets ended mixed across Asia as a lack of tradable data and news made for an uneventful session. 

·         Japan's Nikkei added 0.4% as the yen fell to a fresh five-year low against the dollar. Heavyweight fast retailing provided support, climbing 2.4%. Meanwhile, real estate names were weak as Sumitomo Realty shed 0.7% and Mitsui Fudosan gave up 0.4%. 

·         Hong Kong's Hang Seng tacked on 0.1% amid a sleepy trade. Mainland financials outperformed as Bank of Communications and Bank of China added 1.1% and 0.8%, respectively.

·         China's Shanghai Composite saw a fourth day of losses, slipping 0.3%. Telecom stocks lagged as ZTE gave up 1.0% and China United Network lost 0.9%. 

Major European indices held modest gains through the first half of the session, but dropped to lows in recent action. Among news of note, debt levels in Italy and Spain have hit record levels with Italy's general government debt reaching EUR2.085 trillion and Spain's debt/GDP ratio climbing to 93.4%.

Participants received just a handful of economic reports. Eurozone quarterly employment was unchanged (0.0% expected, 0.0% prior) while the year-over-year reading reflected a 0.8% decrease (-1.1% prior). Germany's WPI ticked down 0.2% month-over-month (-0.4% expected, -1.0% prior). Spain's CPI ticked up 0.2% on a monthly and annualized basis. Both readings met expectations. Swiss PPI ticked down 0.1% month-over-month (-0.2% expected, -0.4% prior) while the year-over-year reading fell 0.4% (-0.5% expected, -0.3% last). 

·         Great Britain's FTSE trades flat. ARM Holdings is a notable outperformer, trading higher by 4.7% amid reports Google is considering choosing ARM processors over Intel in its servers. On the downside RSA Insurance is lower by 16.4% after Chief Executive Officer Simon Lee resigned. 

·         In Germany, the DAX is lower by 0.1%. Financials trade mostly lower with Commerzbank, Deutsche Boerse, and Muenchener Re down between 0.2% and 0.8%. Materials producers K+S and ThyssenKrupp outperform with gains close to 1.0% apiece. 

·         France's CAC is higher by 0.1%. Bank shares are pacing the advance with AXA, BNP Paribas, and Societe Generale up between 1.0% and 2.6%. Pernod Ricard is the weakest index component, down 1.7%.

Market Internals

Market Internals -Technical-
The Dow closed up 16 (+0.10%) at 15755, the Nasdaq closed up 3 (0.06%) at 4001, and the S&P 500 closed flat at 1775. Action came on below average volume (NYSE 627 mln vs. avg. of 696; NASDAQ 1507 mln vs. avg. of 1756), with advancers outpacing decliners (NYSE 1745/1320, NASDAQ 1509/1049) and mixed new highs/lows (NYSE 55/117, NASDAQ 54/33).

Relative Strength: 
Coffee-JO +3.88%, South Africa-EZA +1.7%, Technology-Software-IGV +1.6%, Australia-EWA +1.15%, Sweden-EWD +1.13%, Wind Energy-FAN +1.12%, Shipping-SEA +1.11%, Junior Gold Miners-GDXJ +1.1%, Turkey-TUR +0.97%, Peru-EPU +0.96%.

Relative Weakness: 
Greece-GREK -2.94%, Corn-CORN -1.96%, Indonesia-IDX -1.64%, Grains-JJG -1.17%, Oil-USO -0.94%, Japan-EWJ -0.84%, Thailand-THD -0.78%, Sugar-SGG -0.58%, Cocoa-NIB -0.52%, Austria-EWO -0.52%.



 

 

Leaders and Laggards

Technical Updates

Commentaries 

Closing Market Summary: Stocks End Down Week on Flat Note
The stock market experienced a flat finish to an otherwise-forgettable week. The S&P 500 shed less than one point, maintaining its December loss of 1.7%. Small-caps outperformed as the Russell 2000 gained 0.4%, but the index remains lower by 3.1% this month.

Equities registered opening gains, but the early strength faded during the first 30 minutes of action, sending the major averages to their lows. The key indices spent the rest of the morning near their flat lines before staging a modest afternoon rally. However, selling pressure returned during the late afternoon, sending the S&P 500 back to unchanged for the day.

Today's rally attempts were fueled by the relative strength of four cyclical sectors as consumer discretionary (+0.3%), financials (+0.1%), industrials (+0.4%), and materials (+0.4%) outperformed throughout the session.

The discretionary sector displayed notable strength from the get go as media names advanced in reaction to news Charter Communications (CHTR 131.54, -0.45) is preparing an open letter to purchase Time Warner Cable (TWC 131.41, +0.35) for no more than $140 per share. However, Time Warner narrowed its gain to just 0.3% after a follow-up report indicated the proposed offer would be below $135 per share.

Elsewhere, the industrial sector advanced with help from defense contractors and transports. The PHLX Defense Index gained 0.6% while the Dow Jones Transportation Average added 0.4%.

Also of note, the materials space ended in the lead as steelmakers and miners outperformed. The Market Vectors Steel ETF (SLX 47.71, +0.30) settled higher by 0.6% while the Market Vectors Gold Miners ETF (GDX 21.11, +0.10) gained 0.5% as gold futures increased 0.8% to $1235.10 per troy ounce.

The other commodity-linked sector, energy (-0.4%), ended at the bottom of the leaderboard as crude oil fell 1.0% to $96.53 per barrel. The sector was also pressured by Anadarko Petroleum (APC 78.30, -5.37), which lost 6.4% after the company was held liable for upwards of $14.50 billion in damages in the Tronox bankruptcy case.

Similar to energy, three of four countercyclical groups ended in the red while health care (+0.04%) outperformed.

Despite today's flat finish, the CBOE Volatility Index (VIX 15.77, +0.23) suggested the presence of some demand for volatility protection. The near-term volatility measure registered its third consecutive gain, ending at its highest level since mid-October.

Treasuries registered slight gains, sending the 10-yr yield lower by one basis point to 2.87%.

Participation was well below average as only 627 million shares changed hands on the floor of the New York Stock Exchange.

Among news of note, the House of Representatives passed the budget deal with a 332-94 vote. The bill will now head to the Senate with a vote expected to take place on Tuesday.

Today's economic data was limited to the November PPI report, which pointed to a downtick of 0.1% while core producer prices rose 0.1%. Both readings matched expectations.

On Monday, the December Empire Manufacturing survey as well as the third quarter productivity and unit labor costs will all be reported at 8:30 ET. The October net long-term TIC flows report will be released at 9:00 ET while November industrial production and capacity utilization will be released at 9:15 ET. 

·         Nasdaq +32.5% YTD

·         Russell 2000 +30.3% YTD

·         S&P 500 +24.5% YTD

·         DJIA +20.2% YTD

Commodities

COMEX Metals Closing Prices

  Feb gold rose $10.40 to $1235.10/ounce 

·         Gold rose for the first time in three sessions despite a slightly stronger dollar index. The yellow metal came off its session low of $1228.50 set at pit trade open and brushed a session high of $1238.10 in morning action. It eventually settled 0.8% higher, booking a 0.5% gain for the week. 

  Mar silver rose $0.13 to $19.60/ounce 

·         Silver also traded in positive territory today. It advanced as high as $19.74 in morning floor trade and settled with a 0.7% gain, rising 0.4% over the week. 

  Mar copper rose 1 cent to $3.31/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Mar corn fell 9 cents to $4.25/bushel 

·         Mar wheat fell 5 cents to $6.29/bushel 

·         Jan soybeans rose 1 cent to $13.27/bushel 

·         Jan ethanol fell 6 cents to $1.77/gallon 

·         Mar sugar (#16 (U.S.)) fell 0.25 of a penny to 19.73 cents/lbs

NYMEX Energy Closing Prices

  Jan crude oil fell $0.93 to $96.53/barrel 

·         Crude oil traded in negative territory today, slipping to a session low of $96.26 in morning pit action. Prices rose to a session high of $97.05 but pulled back heading into the close. The energy component eventually settled 1.0% lower, bringing losses for the week to 1.2%. 

  Jan natural gas fell 3 cents to $4.36/MMBtu 

·         Natural gas rose to a session high of $4.44 in late morning pit trade but slipped back into negative territory as the session progressed. It settled just above its session low of $4.35, booking a 0.7% loss. Despite today's weakness, natural gas gained 5.8% for the week. 

  Jan heating oil settled unchanged at $2.98/gallon 

  Jan RBOB settled unchanged at $2.63/gallon

Treasuries

Treasuries See Weekly Losses Ahead of Next Week's FOMC Rate Decision: 10-yr: +02/32..2.872%..USD/JPY: 103.14..EUR/USD: 1.3731
The Week in Review  

·         Treasuries lost ground this week amid a mostly uneventful trade as participants positioned themselves ahead of next week's FOMC meeting. 

·         The issue on everyone's mind is whether or not the Fed will announce the beginning of the end of its bond-buying program. Recent data has mostly outperformed expectations, causing an increase in chatter a tapering could be announced as early as next week's meeting. 

·         Of course, some believe any such announcement will not occur until Janet Yellen takes over as Fed Chairwoman (vote scheduled for next week). 

·         A bit of good news emerged from Capitol Hill as a two-year budget deal was announced. The agreement reverses $63 bln of sequester cuts in exchange for promises of future reductions. The vote has passed the House, and is scheduled in the Senate for Tuesday. 

·         This week's data continued the run of better than expected results as retail sales (0.7% actual v. 0.6% expected) and the Treasury budget ($135.2 bln actual v. $140.0 bln expected) topped estimates while wholesale inventories (1.4% actual v. 0.3% expected) and business inventories (0.7% actual v. 0.3% expected) saw larger than anticipated builds. 

·         Auctions started off on a positive note as Tuesday's strong $30 bln 3y note auction drew 0.631% (0.637% when issued) and a solid 3.55x bid/cover. A strong showing from indirect bidders (38.4%) helped offset a weak takedown by directs (12.0%). 

·         However, Wednesday's $21 bln 10y note reopening was sloppy, drawing 2.824% (when issued 2.815%) and a light 2.61x bid/cover (12-auction average 2.74x) as a strong showing indirect bidders (48.9%) helped offset a weak direct bid (10.5%). Primary dealers ended up with just more than 40% of the supply. 

·         The results were not any better on Thursday as the $13 bln 30y reopening drew 3.900% (3.890% when issued) and a weak 2.35x bid/cover as a strong indirect takedown (46.0%) helped partially offset a light direct bid (12.5%). 

·         This week's selling concentrated on the belly of the curve, where the 3y climbed +7bps to 0.683%, and posted it highest close since the middle of October. 

·         The 5y tacked on 5bps over the course of the week, ending @ 1.532%, a three-month high. Action early in the week saw the yield test what was previously resistance in the 1.450% area; and that level held, setting up a potential move into the 1.650% region. 

·         The 10y added +2bps to close the week @ 2.868%. Action never really threatened last Friday's high yield of 2.932%. 

·         A flat week at the long end saw the 30y settle little changed @ 3.873%. Trade over the past month has threatened the 3.900% level, but has yet to breakout. 

·         Curve flattening saw the 2-10-yr spread tighten to 254.5bps. 

The Week Ahead 

·         Data kicks off for the week on Monday as Empire Manufacturing, productivity-rev., unit labor costs (8:30), net long-term TIC flows (9), industrial production, and capacity utilization (10) are released. 

·         Tuesday will see CPI, core CPI, current account balance (8:30), and the NAHB Housing Prince Index (10). Treasury will auction $32 bln 2y notes. 

·         Wednesday is the most anticipated day of the week as the FOMC will announce its latest rate decision (14). Data due out includes the weekly MBA Mortgage Index (7), three months of housing starts figures, and building permits(8:30). Treasury will hold a $35 bln 5y note auction. 

·         Data continues to flow on Thursday with initial and continuing claims (8:30), existing home sales, Philly Fed, and leading indicators (10). Treasury will auction $29 bln 7y notes.

·         Friday's data is limited to GDP - Third Estimate (8:30).

On other news.... 








Currencies 

Dollar Holds Little Changed Amid Sleepy Trade: 10-yr: +04/32..2.868%..USD/JPY: 103.11..EUR/USD: 1.3730
The Dollar Index hovers little changed near 80.25 during what has been a rather uneventful session. Most of the day's action has been in locked in a tight range 10 cent range between 80.20/80.30 as a lack of news and data has made for a lackluster trade. Click here to see a daily Dollar Index chart.

·         EURUSD is -25 pips @ 1.3725 as trade dips for a second session. Recent action has seen the single currency stall near the 1.3800 resistance area, which corresponds with levels last seen in November 2011. A breakdown of the 1.3700 area sets up a likely move into solid 1.3600 support. Flash Manufacturing and Services PMI data from across the eurozone is due out on Monday. ECB head Marion Draghi will be in Brussels to testify on monetary policy. 

·         GBPUSD is -65 pips @ 1.6285 as sellers remain in control for a third day. Today's weakness has pushed sterling below minor support in the 1.6300 area, and marks a 38.2% retracement of the move off the November lows. The 1.6200 area is home to meaningful support. 

·         USDCHF is +20 pips @ .8905 as a light bid persists for a second session. Recent selling pressured the pair to its worst level in more than two years, and bulls must retake .9050 if they wish to mitigate any technical damage that has been done. 

·         USDJPY is -20 pips @ 103.15 as trade has seen a sharp reversal off this morning's high. An overnight bid lifted trade to 103.92, a five-year high, but the gains have not been able to hold thanks to a lack of follow-through buying. Minor support in the 101.75/102.00 area will be watched closely with a breakdown setting up a potential test of parity. Japan's Tankan Manufacturing Index and Tankan Non-Manufacturing Index will cross the wires Sunday evening. 

·         AUDUSD is +20 pips @ .8955 as a steady buying throughout the U.S. session has run action back into the green. The hard currency saw an early test of the .8900 area, but that level was able to hold as buyers emerged in defense of the August lows. The .9000 area will provide some minor resistance after providing some support in early December. China's HSBC Flash Manufacturing PMI will be released late on Sunday. 

·         USDCAD is -40 pips @ 1.0595 as trade has given back virtually all of yesterday's gains amid today's reversal. Support in the 1.0575 area remains in focus with a breakdown producing a pullback to 1.0500 support that is helped by the 50 dma (1.0472). Canada's foreign securities purchases are scheduled for Monday.

Weekly Analysis
Week 38



Technical Updates



 

 
 
Briefing's Commentaries

Week in Review: Santa Claus Rally on Hold 

On Monday, the stock market did not generate too much excitement following a broad-based rally on Friday. The major indices stood their ground (for the most part) amid a lack of conviction from buyers and sellers alike. The day was not a case so much of the stock market going up as it was a case of some influential stocks going up to keep the major indices on a winning path. In fact, decliners were just about even with advancers at the NYSE and led by a 3-to-2 margin on the Nasdaq. Apple (AAPL 554.43, -6.11) and Google (GOOG 1060.79, -9.17) were key drivers of the S&P 500 and Nasdaq Composite whileExxonMobil (XOM 95.31, -0.05), Chevron (CVX 119.90, -1.09), and Goldman Sachs (GS 168.39, +0.06) were key drivers specifically of the price-weighted Dow Jones Industrial Average.

Tuesday's session saw the major averages spend the trading day in a steady downtrend. Despite persistent selling pressure, the 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. Countercyclical sectors lagged throughout the day with consumer staples and health care falling 0.9% and 0.4%, respectively.

Wednesday featured a continuation of the selling from the previous day. Similar to Tuesday, small-caps paced the retreat as the Russell 2000 fell 1.6%. The S&P 500 settled lower by 1.1%, widening its month-to-date decline to 1.3%. 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 major averages finished the Thursday session on a lower note. The S&P 500 lost 0.4% while the Nasdaq shed 0.1%. The Russell 2000, which paced the retreat on Tuesday and Wednesday, added 0.2%, trimming its December loss to 3.5%. After spending the first half of the session in a steady retreat, the S&P 500 found technical support in the 1772 area. Upon reaching that level, the index reversed sharply, and marched back to its flat line. There was no particular catalyst responsible for the turn, but steady inflows into influential cyclical sectors paved the way for a broad-market rebound. Although the S&P 500 battled back to its flat line, final-hour selling pressured the index to a modest loss.



Next Week In View



Economic Commentaries

Economic Summary: PPI in line with expectations; Industrial Production Monday at 9:15
Economic Data Summary:

·         November PPI -0.1% vs Briefing.com consensus of -0.1%; October was -0.2%

·         November Ciore PPI 0.1% vs Briefing.com consensus of 0.1%; October was 0.2%

o    There was nothing unusual in the PPI data. As expected, a 0.7% decline in gasoline prices led overall energy prices to fall 0.4%. The drop in energy prices was responsible for the decline in overall producer prices. Food prices were flat after increasing 0.8% in October. That smoothes out what had been some big up and down moves in the fall. Excluding food and energy, core prices edged up 0.1% in November after increasing 0.2% in October. The consensus expected core PPI to increase 0.1%. 

Upcoming Economic Data:

·         December Empire Manufacturing due out Monday at 8:30 (November was -2.2%)

·         Third Quarter Productivity Revenue due out Monday at 8:30 (Second Quarter was 1.9%)

·         Third Quarter Unit Labor Costs due out Monday at 8:30 (Second Quarter was -0.6%)

·         October Net Long Term TIC Flows due out Monday at 9:00 (September was $25.5 bln)

·         November Industrial Production due out Monday at 9:15 (October was -0.1%)

·         November Capacity Utalization due out Monday at 9:15 (October was 78.1%)

Other International Events of Interest

·         India's Sensex (-1.0%) pushed lower as sellers took control amid speculation the Reserve Bank of India will hike its Repo Rate at next week's meeting in order to combat inflation. Interest rate sensitive were among the hardest hit as ICICI Bank sank 4.2% and Hero Motocorp shed 3.0% to lead their respective sectors lower. 

Jason's Commentaries

Market ended flat on Friday with very low volumes of 606m shares traded on the NYSE on Friday night. Market started with a bearish bias which subsequently ended up with little action through the day. Dow was the main leader on Friday night as Visa gains, with influence of Mastercard's stock splits. However, the Tech sector did not do very well as Micosoft, Apple, Google, Intel and Cisco all went down more than 0.75%. Of the sectors, Materials was the strongest leader of 0.48% and Energy and Tech was the worst performer. However, this is to be expected on Friday. We're likely to see some action on Monday when the market reopens.

Moreover, we're having a lot of news coming out this week. The FOMC Statements and projections are coming out on Wednesday, The housing data coming out on Thursday... What a week with major volatility..  

On the weekly perspective, we're having very bearish candlesticks pattern forming on all 4 indices and it's definitely pointing to the downside. With such correction coming, i would be expecting it to drop to 1710 on the S&P500. Which will likely mean that... there is likely to have NO Santa Claus rally this year. And which means that.... next year is going to be... BEAR.  

Market Call:DOWN

Date: 16 Dec 2013