10 Jan 2014 AMC - Non-farm payrolls proved to be disappointing, but unemployment rate dips

10 Jan 2014 AMC - Non-farm payrolls proved to be disappointing, but unemployment rate dips

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 0.7%

·         Germany's DAX: + 0.6%

·         France's CAC: + 0.6%

·         Spain's IBEX: + 0.6%

·         Portugal's PSI: + 0.2%

·         Italy's MIB Index: + 0.3%

·         Irish Ovrl Index: -0.3%

·         Greece ATHEX Composite: + 0.5%

Before Market Opens 

S&P futures vs fair value: +5.00. Nasdaq futures vs fair value: +9.70.
The S&P 500 futures trade five points above fair value after a disappointing December jobs report knocked them off their highs.

Markets across Asia ended mixed, seeing some indecision ahead of today's U.S. nonfarm payroll report. China released its December trade data, which showed a narrower than expected surplus of $25.60 billion ($31.15 billion expected, $33.80 billion previous). Exports climbed 4.3% year-over-year while imports jumped 8.3% year-over-year. Elsewhere, the latest Indian trade data showed a larger than anticipated deficit of $10.10 billion ($8.70 billion expected, $9.20 billion previous). Also of note, Australia's HIA New Home Sales climbed 7.5% month-over-month (-3.8% last). 

·         Japan's Nikkei eked out a small gain of 0.2%. Trade was buoyed by heavyweight Fast Retailing, which added 3.3% after reporting better than expected first quarter results.

·         Hong Kong's Hang Seng ticked up 0.3% amid a choppy trade. Real estate developers outperformed as China Resources Land, Hang Lung Properties, Henderson Land Development, and Sino Land all gained close to 2.0%. Casino stocks saw some profit-taking with Sands China sliding 3.0% and Galaxy Entertainment giving up 1.4%. 

·         China's Shanghai Composite lost 0.7%, falling to five-month lows as trade was pressured not only as a result of the country's narrower than expected trade surplus, but also on concerns over the wave of IPOs set to come to market ahead of the Lunar New Year. Citic Securities lost 2.5% and China Railway Construction fell 2.8%. 

European indices hold gains across the board with Great Britain's FTSE (+0.9%) leading the way. Investors received several economic data points. Eurozone GDP rose 0.1% quarter-over-quarter, as expected. The year-over-year reading pointed to a contraction of 0.3% (-0.4% forecast, -0.4% last). Great Britain's industrial production was unchanged month-over-month (0.4% forecast, 0.3% last) while the year-over-year reading rose 2.5% (3.1% forecast, 3.2% prior). Separately, manufacturing production was flat month-over-month (0.4% consensus, 0.2% last) while the year-over-year reading climbed 2.8% (3.3% forecast, 2.6% prior). French industrial production rose 1.3% month-over-month (0.4% expected, -0.5% last). Spain's industrial production increased 2.6% year-over-year (1.2% expected, -0.8% prior). Swiss unemployment rate held steady at 3.2%, as expected. Separately, CPI slipped 0.2% month-over-month (-0.1% forecast, 0.0% last).

Among news, Standard & Poor's affirmed Germany's sovereign debt rating at ‘AAA,' citing steady growth. 

·         In France, the CAC is higher by 0.7% with exporter Renault in the lead. The stock trades higher by 3.6%. On the downside, industrial names Alstom and Legrand trade lower by 0.4% and 1.2%. 

·         Germany's DAX trades up 0.8% as 24 of 30 components register gains. Lufthansa is the top index component, trading higher by 8.2% after saying fuel costs are expected to decline this year. Chemical manufacturer Lanxess underperforms with a loss of 1.8%. 

·         Great Britain's FTSE trades higher by 0.9%. Tullow Oil leads with a gain of 5.7% amid takeover speculation. Food retailer Tesco lags, trading lower by 1.0%.

Market Internals

Market Internals -Technical-
The Nasdaq closed up 18 (+0.44%) at 4175, the S&P 500 closed up 4 (+0.23%) at 1842, and the Dow closed down 8 (-0.05%) at 16437. Action came on slightly below average volume (NYSE 656 mln vs. avg. of 685; NASDAQ 2027 mln vs. avg. of 1738), with advancers outpacing decliners (NYSE 2221/1493, NASDAQ 1493/1100) and new highs outpacing new lows (NYSE 221/12, NASDAQ 181/15). 

Relative Strength: 
Biotechnology-XBI +5.48%, Junior Gold Miners-GDXJ +5.18%, Indonesia-IDX +4.59%, Corn-CORN +4.07%, Silver Miners-SIL +3.52%, Gold Miners-GDX +3.48%, South Africa-EZA +2.85%, Turkey-TUR +2.58%, Mexico-EWW +2.46%, India-INP +2.24%.

Relative Weakness: 
Volatility-VXX -2.37%, Canadian Dollar-FXC -0.45%, U.S. Dollar-UUP -0.41%, U.S. Health Care-IHF -0.36%, Financial Services-IYG -0.33%, Banks-KBE -0.24%.

Leaders and Laggards

Technical Updates

 

Commentaries 

Closing Market Summary: Stocks End Mixed Following Weak Jobs Report
The major averages ended the first full week of 2014 on a mixed note. The S&P 500 added 0.2% while the Dow Jones Industrial Average shed less than 0.1%. For the week, the S&P 500 gained 0.6% while the Dow slipped 0.2%.

Prior to the open, it was reported that job growth slowed considerably in December with the addition of just 74,000 jobs. This was well below the Briefing.com consensus, which called for a reading of 197,000. The unemployment rate plunged to 6.7% from 7.0% but that was a result of another sharp drop in the labor force participation rate. Furthermore, aggregate wages fell 0.1% after increasing 0.7% in November. The drop is expected to put downward pressure on consumption growth unless consumers decide to lower their savings rate.

The disappointing report pressured the dollar while metals and Treasuries rallied, suggesting a fair amount of participants expect the Fed to delay the next round of tapering. The dollar index finished near its low (-0.5% at 80.64) while Treasuries ended on their highs (10-yr yield -10 bps at 2.86%). Meanwhile, gold futures advanced 1.4% to $1246.60/ozt.

The strength in precious metals underpinned miners, which contributed to the strength of the materials sector. The Market Vectors Gold Miners ETF (GDX 22.01, +0.74) jumped 3.5% while the broader sector ended ahead of the remaining cyclical groups with a gain of 0.4%. Even though the sector displayed strength, there were still some pockets of weakness. Namely, Alcoa (AA 10.11, -0.58) fell 5.4% after missing bottom-line estimates by two cents. The company said it expects to see global aluminum demand grow at 7.0% in 2014, which matches last year's growth rate.

Outside of materials, the discretionary sector (+0.4%) was another notable outperformer among growth-sensitive groups. Homebuilders provided significant support as the iShares Dow Jones US Home Construction ETF (ITB 24.76, +0.35) jumped 1.4% amid today's retreat in yields.

Speaking of lower yields, they also factored into the outperformance of rate-sensitive telecom services (+0.4%) and utilities (+1.4%). The other two countercyclical groups were mixed as health care (+0.4%) outperformed while consumer staples (+0.2%) ended in-line with the S&P 500.

On the downside, the financial sector (-0.1%) was the lone decliner. Citigroup (C 54.72, -0.48) underperformed the other majors with a loss of 0.9%.

Despite the mixed finish, participants did not show strong demand for volatility protection as the CBOE Volatility Index (VIX 12.18, -0.71) fell 5.5%, ending at its lowest level of 2014.

Trading volume was well below average as only 655 million shares changed hands on the NYSE floor.

Outside of the aforementioned nonfarm payrolls, investors received another data point today. 

·         In November, wholesale inventories increased 0.5%, down from a 1.3% (from 1.4%) gain in October. The Briefing.com consensus expected wholesale inventories to increase 0.2%. Inventory growth over the past few months has been extremely strong, yet similar gains in sales suggest inventory growth trends can remain on the current path. Sales rose 1.0% in November after increasing 1.1% in October. 

On Monday, the December Treasury Budget will be reported at 14:00 ET. 

·         Russell 2000 +0.1% YTD 

·         Nasdaq -0.1% YTD 

·         S&P 500 -0.3% YTD 

·         DJIA -0.8% YTD 

Commodities

Closing Commodities: Gold Rises 0.7% On The Week, Silver Gains 0.1%

·         Commodities traded higher today as the dollar index fell following weak U.S. jobs data released this morning. The nonfarm payrolls report showed that only 74,000 jobs were added in December, which was well below the 197,000 Briefing.com consensus

·         Feb gold extended yesterday's gains as it popped from its session low of $1226.60 per ounce and continued to trend upwards. It eventually settled 1.4% higher at $1246.60 per ounce, booking a weekly gain of 0.7%

·         Mar silver rallied off its session low of $19.66 per ounce and consolidated near the $20.10 per ounce level until late afternoon pit action. It settled 2.8% higher at $20.23 per ounce, gaining 0.1% for the week

·         Feb crude oil chopped around in positive territory, rising as high as $93.00 per barrel. It eventually settled with a 1.1% gain at $92.66 per barrel. Despite today's strength, the energy component fell 1.4% over the week

·         Feb natural gas trended higher to a session high of $4.10 per MMBtu but pulled back slightly in afternoon floor action. It settled 1.2% higher at $4.06 per MMBtu, booking a 5.6% weekly loss.

COMEX Metals Closing Prices

  Feb gold rose $17.30 to $1246.60/oz 

·         Gold extended yesterday's gains as it got a boost from weak U.S. jobs data released early this morning. The dollar index slid into negative territory after the nonfarm payrolls report showed that only 74,000 jobs were added in December, which was well below the 197,000 Briefing.com consensus. The yellow metal popped from its session low of $1226.60 and continued to trend upwards. It eventually settled 1.4% higher, booking a weekly gain of 0.7%. 

  Mar silver rose $0.55 to $20.23/oz 

·         Silver also gained support on the weak U.S. jobs report. Prices rallied off their session low of $19.66 and consolidated near the $20.10 level until late afternoon pit action. Silver then brushed a session high of $20.25 and settled just below that level, booking a gain of 2.8%. Given today's strength, silver rose 0.1% over the week. 

  Mar copper rose 4 cents to $3.34/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Mar corn rose 20 cents to $4.32/bushel 

·         Mar wheat fell 16 cents to $5.68/bushel 

·         Mar soybeans rose 4 cents to $12.78/bushel 

·         Feb ethanol rose 5 cents to $1.97/gallon 

·         Mar sugar (#16 (U.S.)) rose 0.38 of a penny to 20.37 cents/lbs

 

NYMEX Energy Closing Prices

  Feb crude oil rose $0.98 to $92.66/barrel 

·         Crude oil traded higher as the dollar index fell following a weaker-than-anticipated nonfarm payrolls report. The energy component rose as high as $93.00 and eventually settled with a 1.1% gain. Despite today's strength, crude oil booked a 1.4% loss for the week. 

  Feb natural gas rose 5 cents to $4.06/MMBtu 

·         Natural gas also spent today's floor trade in positive territory. It trended higher to a session high of $4.10 but pulled back slightly in afternoon floor action. It settled 1.2% higher, booking a 5.6% weekly loss. 

  Feb heating oil rose 2 cents to $2.94/gallon 

  Feb RBOB rose 3 cents to $2.67/gallon

Read

Treasuries

Treasuries Drift Near Highs: 10-yr: +23/32..2.884%..USD/JPY: 104.06..EUR/USD: 1.3660

·         Treasuries hold on their best levels of the session as action drifts into the noon hour. 

·         The complex saw a flat overnight trade before an onslaught of buying surfaced as a result of the disappointing nonfarm payroll report. 

·         Yields in the belly of the curve continue to lead the way lower. 

·         A drop of almost -6bps has pushed the 2y down to 0.386%. 

·         The 5y is -9.5bps @ 1.650%, and continues to test support in the area. That level remains under close watch as a breakdown puts 1.550% in play. 

·         A -8bp decline in the 10y has the benchmark yield looking at its lowest close in more than three weeks. Recent action was unable to take the 3.000% level, and now traders are forced to watch 2.850% support. 

·         Buying at the long end has the 30y -5.5bps @ 3.818%. A breakdown of 3.750/3.800% support sets up a potential test of the 200 dma (3.557%). 

·         A flatter curve persists as the 2-10-yr spread trades tighter @ 250bps. 

·         Precious metals remain bid with gold +$15 @ $1244 and silver +$0.42 @ $20.10.

Treasuries Rally on Weak Nonfarm Payroll Report: 10-yr: +29/32..2.863%..USD/JPY: 104.08..EUR/USD: 1.3665

The Week in Review

·         Treasuries saw strong gains this week, which were capped off by Friday's surge following the disappointing nonfarm payroll report (74K actual v. 197K expected). The unemployment rate fell to 6.7% (7.0% expected, 7.0% previous). Click here to see an intraweek yields chart.

·         The rest of the week's data was mixed as factory orders slightly outpaced estimates (1.8% actual v. 1.7% expected) and ISM Services missed (53.0 actual v. 54.6 expected). 

·         Auctions this week started off on a downbeat note, but improved each day. 

·         Tuesday's disappointing $30 bln 3y note auction drew 0.799% and a light 3.25x bid/cover (12-auction average 3.35x) as a weak indirect takedown (27.9%) was partially offset by a strong direct bid (22.6%). 

·         Wednesday's average $21 bln 10y note reopening drew 3.009% (3.007% when issued), its highest since May 2011, and saw a slightly weak 2.61x bid/cover. A strong indirect bid (46.6%) helped offset the weak takedown by directs (13.6%). 

·         Thursday's $13 bln 30y reopening impressed, drawing 3.899% (when issued 3.908%) and a solid 2.57x bid/cover as both indirect (44.4%) and direct (17.5%) bidders saw larger than usual takedowns. The at-auction yield was the highest since July 2011. 

·         The 2y shed -3bps on the week, finishing @ 0.374%. The yield ticked briefly above the 0.450% threshold, its highest since shortly after the debt ceiling was raised in September, but ended the week @ 0.370%. 

·         Mid-week selling ran the 5y above 1.750%, but a late-week bid caused the yield to fall -11bps from last week's close. The 5y ended Friday's trade @ 1.623%. 

·         Buying had the biggest impact on longer durations. 

·         The 10y probed the 3.000% level, but was never able to cleanly retake the mark. Buying over the course of the week dropped the benchmark yield -13bps to 2.860%. The 10y is now less than 2bps above its close on December 17, the day before the Fed announced its taper. 

·         A similar bid at the long end dropped the 30y -13bps to 3.796%. Friday's buying pushed the yield below both its 50 and 100 dma while dropping action to its lowest close since November 26. 

·         Only the 3y advanced this week, tacking 1bp to 0.771%. 

·         Aggressive flattening along the yield curve saw the 2-10-yr spread tighten to 249bps. 

The Week Ahead 

·         Monday's data is limited to the Treasury budget (14). ATL's Lockhart will be on his home turf, giving his economic outlook (12:40). 

·         Tuesday will see retail sales, import/export prices (8:30), and business inventories (10). Philly's Plosser will provide his economic outlook (12:45) ahead of Dallas' Fisher discussing his "U.S. Regional and Economic Outlook" (13:20). 

·         Data picks up on Wednesday with the weekly MBA Mortgage Index (7), PPI, Empire Manufacturing (8:30), and the Fed's Beige Book (14). Chicago's Evans will be in Coralville, IA, speaking at the Corridor Economic Forecast Luncheon (12:50) and ATL's Lockhart will discuss the economy and monetary policy (17:20). 

·         Thursday's data includes initial and continuing claims, CPI (8:30), net long-term TIC flows (9), Philly Fed, and the NAHB Housing Market Index (10). Fed Chairman Ben Bernanke will be in Washington D.C., speaking on "Central Banking after the Great Recession: Lessons Learned and Challenges Ahead" (11:10). SF's Williams will also be in Washington, presenting a paper on "Monetary Policy at the Zero Bound: Putting Theory into Practice" (9:15).

·         Data concludes for the week on Friday with housing starts, building permits (8:30), industrial production, capacity utilization (9:15), and Michigan Sentiment (9:55).

 


On other news.... 

Capesize drybulk shipping rates tank 27.5% overnight (or -$6,606) to $17,452/day. Drybulk shipping rates start 2014 on a bad note, driven by capesize rate performance
The overall Baltic Dry Index (BDI) dropped 11% overnight to 1,512. Panamax rates fell 1.5% to $12,921/day and supramax rates rose 0.2% (or $29) to $12,448/day.

Capesize rates have declined in every session so far in 2014 and just got slammed overnight, which is negative for related shippers (see below for who has what exposure).

Exposure of ships by company is as follows:

·         The companies with capesize ships include DSX, DRYS, GNK, SBLK, NMM and NM

·         Shippers that have Panamax ships are DRYS, DSX, GNK, NM, PRGN, NMM and SB

·         Shippers that have Supramax ships are EGLE

·         Shipping companies with exposure to both Capesize and Panamax ships include DRYS, DSX, NMM and NM

Description of ship type:

·         Capesize ships haul coal, iron ore and other related commodity raw materials across the ocean

·         Panamax ships mainly carry coal, grain and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers

·         Supramax mainly carry dry cargo such as iron ore, cement, fertilizers, coal and food grains

Currencies 

Dollar Posts Lowest Close of 2014: 10-yr: +28/32..2.868%..USD/JPY: 104.00..EUR/USD: 1.3670

·         The Dollar Index hovers on session lows near 80.60 with trade on track to post its lowest close of 2014. Click here to see a daily Dollar Index chart.

·         Buying into this morning's nonfarm payroll report lifted trade to session highs near 81.10, but the weak data has led to selling pressure on the greenback over the remainder of the session. 

·         Current action is testing support aided by both the 50 and 100 dma. 

·         EURUSD is +60 pips @ 1.3670 as trade holds at one-week highs. Early selling dropped the single currency onto support in the 1.3575 area, but today's reversal following the jobs report now has trade testing 1.3650/1.3700 resistance. Eurozone industrial production is due out. 

·         GBPUSD is -5 pips @ 1.6475 as trade has managed to recover the majority of its early losses. Sterling was pressured following this morning's disappointing BRC Retail Sales Monitor (0.4% YoY actual v. 0.6% YoY previous) and manufacturing production (0.0% MoM actual v. 0.4% MoM expected) report, sliding down to 1.6400 support. However, trade has staged a dramatic reversal in the face of the downtick in the NIESR GDP Estimate (0.7% actual v. 0.8% previous) as today's jobs data carried more weight. British data includes CPI, PPI input, and RPI. 

·         USDCHF is -45 pips @ .9020 as trade presses lower for a second session. The two-day slide has dropped action below both the 100 dma, and has trade probing the 50 dma. The .8960/.8980 area provides the next level of support. 

·         USDJPY is -75 pips @ 104.05 after early action tested and stalled at the late-December/early-January highs near 105.50. The 104.00 support level is under careful watch as a breakdown sets up a potential retest of the 100 dma (102.38). Japanese banks are closed for Coming-of-Age-Day. 

·         AUDUSD is +95 pips @ .8995 as action looks likely to halt its three-day skid. Today's strength in the hard currency comes despite the disappointing trade data out of China, and has action looking at its best close in a month. Australian data includes ANZ Job Advertisements and home loans. China's new loans are tentatively scheduled to cross the wires. 

·         USDCAD is +50 pips @ 1.0890 as action remains on track for a fifth straight day of gains. Today's Canadian employment change (-45.9K actual v. 14.4K expected) was disappointing, as was the uptick in the unemployment rate to 7.2% (6.9% previous, 6.9% expected). Any positive close will mark the best since October 2009. The Bank of Canada Business Outlook Survey will be released on Monday.

Weekly Analysis
Week 2



Technical Updates

Briefing's Commentaries

Week in Review: Spinning Wheels 

On Monday, the S&P 500 was unable to log its first gain of 2014 despite staging an afternoon rally. The benchmark index registered its third consecutive loss, shedding 0.3% as six of ten sectors finished in the red. Equities began the day on a modestly higher note, but the early gains evaporated during the opening hour as the broader market followed the Nasdaq Composite into the red. The tech-heavy index was hit with widespread selling pressure that weighed on many top components and biotechnology. Shares of eBay (EBAY 52.16, +0.09) settled lower by 2.8% after receiving a downgrade.

Tuesday's session saw the S&P 500 settle higher by 0.6%. The index notched its high during the initial 90 minutes and spent the remainder of the session in a narrow range. Meanwhile, the Nasdaq (+1.0%) inched to a fresh high during the late afternoon. Nine of ten sectors registered gains while materials (-0.2%) spent the day in negative territory. The sector was pressured by steelmakers with Market Vectors Steel ETF (SLX 47.37, +0.43) falling 0.4%.

The major averages ended the Wednesday session on a mixed note as the Nasdaq added 0.3%, the Dow shed 0.4% while the S&P 500 essentially split the difference, ending flat. Equity indices began the day on a lower note, but the Nasdaq and S&P 500 staged swift rallies to new highs. The two indices hovered near their best levels of the session for the remainder of the trading day, but tested their lows during the final hour. Six of ten sectors ended in the red with rate-sensitive consumer staples (-0.7%), telecom services (-1.7%), and utilities (-0.6%) leading the slide as higher yields weighed.

Thursday saw another mixed close as the S&P 500 added less than a point while the Dow Jones Industrial Average (-0.1%) and Nasdaq (-0.2%) posted modest losses. Stocks displayed early strength, but sellers were quick to knock the indices off their opening highs. The Nasdaq outperformed out of the gate, but ultimately led the broader market into the red. Despite the late-morning weakness, the S&P 500 was able to find support at Wednesday's low where dip buyers stepped up and helped the index return to its flat line. Individual sectors ended with an even split as five groups posted gains while the other five ended lower.



Next Week In View



Economic Commentaries

Economic Summary: Nonfarm payrolls came in sharply below expectations; Unemployment rate drops to 6.7% due to Labor force decline; Kocherlakota says Fed should do more (comments prior to jobs report)
Economic Data Summary:

·         December Nonfarm Payrolls 74K vs Briefing.com consensus of 197K; November was 203K

·         December Nonfarm Private Payrolls 87K vs Briefing.com consensus of 198K; November was 196K

·         December Unemployment Rate 6.7% vs Briefing.com consensus of 7.0%; November was 7.6%

·         December Hourly Earnings 0.1% vs Briefing.com consensus of 0.2%; November was 0.2%

·         December Average Workweek 34.4 vs Briefing.com consensus of 34.5; November was 34.5

·         November Wholesale Inventories 0.5% vs Briefing.com consensus of 0.2%; November was 1.4%

o    Inventory growth over the past few months has been extremely strong, yet similar gains in sales suggest inventory growth trends can remain on its current path. Sales rose 1.0% in November after increasing 1.1% in October. Both durable and nondurable inventory levels increased 0.5% in November. 

o    Notable Job Gainers:

§  Manufacturing +9K

§  Retail trade +55K

§  Temporary help services +40K

o    Notable Job Losses

§  Construction -16K

§  Information -12K

§  The only way to classify this report is awful. Private payrolls added only 87,000 jobs, down from a 226,000 gain in November and well below the consensus expectation of 198,000 new private jobs. Even worse, the average workweek dropped to 34.4 hours from 34.5 hours and hourly earnings only increased 0.1%, down from a 0.2% gain in November. Taken altogether, aggregate wages fell 0.1% in December after increasing 0.7% in November. The drop in wages will put downward pressure on consumption growth unless consumers decide to lower their savings rate. 

§  Another sharp drop in the labor participation rate was responsible for the unemployment rate falling to 6.7% in December from 7.0% in November. That is the lowest unemployment rate since October 2008. 

Fed/Treasury Events:

·         Minneapolis Fed President Narayana Kocherlakota (voting FOMC member, dovish) said the Fed should do more to help economy based on low inflation and high unemployment. Briefing Note: Narayana Kocherlakota has been very dovish recently. His comments are in line with prior statements.  His comments were made prior to the jobs report.

Upcoming Economic Data:

·         December Treasury Budget due out Monday at 14:00 (Briefing.com consensus of ; Novmeber was -$1.2 bln)

Upcoming Fed/Treasury Events:

·         Saint Louis Fed President James Bullard (not a voting FOMC member, dovish) to speak today at 13:05

Other International Events of Interest

·         China released its December trade data, which showed a narrower than expected surplus ($25.6 bln actual v. $32.6 bln expected, $33.8 bln previous). Exports climbed 4.3% YoY while imports jumped 8.3% YoY. 

Jason's Commentaries

The employment reports on Friday proved to be very confusing for the market to digest. At the start of the trading session, the market immediately turned into a a massive downtrend which wiped out the market makers gaps. However, by midday, the market started reversing back to it's opening level.

The non-farm payrolls proved to be very disappointing, with 74k jobs added to the economy. Jobs has been averaging approx 200k jobs per month. However, what made the market confused is that the unemployment rate(U3) went down to 6.7% instead of 7%.  However, under the U6 unemployment rate, U6 did not change from last month's data. U6 remained at 13.1% unemployment. 

On the internals, we've got volumes at 645.3m shares traded and the internals were showing much of a divergence. Clearly showed that the market was totally confused over the employment report. The biggest gainer of the market on Friday is Utilities, gaining 1.43% while the other sectors remained flat. Financials were the only sector down, with a loss of 0.18%. On the technical side, we've got the indices having hanging men across all the indices, in daily and weekly perspective. Showing signs of more sideways trend to go. I reckoned we are likely to be sidelined in the consolidation region until the earnings season rock the market hard. Alcoa has officially kick start its earning season on Thursday with a beat in topline, a miss on bottom line. Since more companies will be announcing earnings in the next 2 weeks, stay safe of the extra volatility in the market.  

Market Call: FLAT to downside

Date:13 Jan 2014