21 Jan 2014 AMC- Dow lagged as IBM reported lousy earnings

21 Jan 2014 AMC- Dow lagged as IBM reported lousy earnings

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: 0.0%

·         Germany's DAX: + 0.2%

·         France's CAC: 0.0%

·         Spain's IBEX: -0.9%

·         Portugal's PSI: -0.4%

·         Italy's MIB Index: + 0.1%

·         Irish Ovrl Index: + 0.2%

·         Greece ATHEX Composite: -2.0%

Before Market Opens

S&P futures vs fair value: +8.80. Nasdaq futures vs fair value: +18.70.
The S&P 500 futures trade nine points above fair value.

Markets across Asia ended mostly higher as only Taiwan's Taiex (-0.3%) saw losses. Tuesday trade was supported by a large CNY255 billion injection by the People's Bank of China as the central bank looks to flood the system with liquidity ahead of the Lunar New Year. The long weekend saw the release of the China's latest GDP figure, which pointed to a fourth-quarter rise of 1.8% (2.0% forecast) while the annualized reading increased 7.7% (7.5% expected). In other regional data, Hong Kong's inflation rate held steady at 4.3% year-over-year and Malaysia's unemployment rate ticked up to 3.4% from 3.3%. 

·         Japan's Nikkei gained 1.0% with added support coming from the weaker yen. Exporters were in favor as Toyota Motor added 1.5% and Nikon climbed 1.7%. 

·         Hong Kong's Hang Seng added 0.5% amid a choppy trade. PC maker Lenovo continued its recent outperformance, climbing 2.8%. Meanwhile, financials were strong as Construction Bank of China and Industrial & Commercial Bank of China rallied 3.0% and 2.7%, respectively. 

·         China's Shanghai Composite advanced 0.9%, marking its first gain in three days as shares edged off five-month lows. Financials were strong after the PBOC action with Shanghai Pudong Development adding 1.0%. On the downside, oil giant CNOOC plunged 5.4% after their production forecast fell well short of previous estimates. 

Major European indices hold modest gains after ending the Monday's session little changed. Since Monday, participants received several economic data points. Eurozone's ZEW Economic Sentiment rose to 73.3 from 68.3 (70.2 forecast). Germany's ZEW Economic Sentiment slipped to 61.7 from 62.0 (64.0 consensus) while the Current Conditions component ticked up to 41.2 from 32.4 (34.1 expected). Separately, PPI ticked up 0.1% month-over-month (-0.1% previous) while the annualized reading fell 0.5% (-0.8% prior). Both figures met expectations. Italy's Industrial New Orders rose 2.3% month-over-month (1.5% expected, -2.3% previous) while the year-over-year reading increased 3.0% (1.2% last). Spain's Industrial New Orders fell 2.2% year-over-year (0.7% consensus, -4.0% prior). Great Britain's CBI Industrial Trends Orders fell to -2 from 12 (10 consensus).

Among news of note, Deutsche Bank released its quarterly results ahead of schedule, reporting a larger-than-expected loss and saying it expects headwinds to continue in the coming months. Elsewhere, the leader of Italy's Democratic Party, Gianni Cuperlo, has resigned. 

·         Great Britain's FTSE trades higher by 0.1% with consumer names in the lead. Associated British Foods, Coca-Cola, and Unilever are all up between 2.0% and 3.0%. Miners lag with Anglo American, Randgold Resources, and Rio Tinto all down close to 2.2%. 

·         In France, the CAC holds a gain of 0.3% as financials outperform. BNP Paribas and Societe Generale trade higher by 2.8% and 1.1%, respectively. Industrial name Alstom lags with a loss of 12.8% after cutting its guidance. 

·         Germany's DAX is higher by 0.4% with banks contributing to the advance. Commerzbank trades up 0.8% and Deutsche Bank holds a gain of 1.1%.

Market Internals

Market Internals
The Nasdaq closed up 28 (+0.67%) at 4226, the S&P 500 closed up 5 (+0.28%) at 1844, and the Dow closed down 44 (-0.27%) at 16414. Action came on slightly above average volume (NYSE 737 mln vs. avg. of 682; NASDAQ 1909 mln vs. avg. of 1747), with advancers outpacing decliners (NYSE 2040/1087, NASDAQ 1627/994) and new highs outpacing new lows (NYSE 235/23, NASDAQ 237/13).

Relative Strength: 
Junior Gold Miners-GDXJ +3.83%, Silver Miners-SIL +3.25%, Natural Gas-UNG +3.16%, Oil and Gas Exploration-XOP +2.46%, Biotechnology-XBI +2.14%, Poland-EPOL +1.47%, Peru-EPU +1.41%, United Kingdom-EWU +0.91%, Belgium-EWK +0.88%.

Relative Weakness: 
Greece-GREK -3.16%, Chile-ECH -2.09%, Steel-SLX -1.97%, Silver-SLV -1.74%, Columbia Index-GXG -1.43%, Volatility-VXX -1.34%, Wind Energy-FAN -1.31%, Thailand-THD -1.21%, Israel-EIS -1.19%, Coffee-JO -1.12%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks End Mixed Despite Upbeat Earnings
The major averages began the abbreviated week on a mixed note as the Nasdaq added 0.7% while the Dow Jones Industrial Average shed 0.3%. For its part, the S&P 500 rose 0.3% as eight of ten sectors finished in the green.

Stocks began the day with solid gains but the early strength faded quickly when the S&P 500 was unable to extend above the 1850 level during the opening minutes. That rejection emboldened sellers, who promptly drove the indices to their lows. Adding insult to injury was the fact that today's mostly better-than-expected earnings failed to entice buyers.

On that note, 16 out of the 17 companies that reported this morning met or exceeded their Capital IQ consensus estimates. Forest Laboratories (FRX 68.00, -0.74), Halliburton (HAL 49.78, -0.88), and Dow components Johnson & Johnson (JNJ 94.03, -1.03), Travelers (TRV 85.00, -1.47), and Verizon (VZ 47.68, -0.68) all beat estimates but settled lower.

The notable weakness among the three Dow members pressured the price-weighted index, which had to contend with losses in 18 of its 30 components. The second-largest member, IBM (IBM 188.43, -1.66), lost 0.9% ahead of its earnings report set for an after-hours release.

One name that rallied following its earnings beat was Delta Air Lines (DAL 32.08, +1.01). The stock jumped 3.3%, which provided support to the Dow Jones Transportation Average (+0.6%). However, the industrial space was unable to keep pace with the broader market as the top sector component, General Electric (GE 26.29, -0.29), lagged after announcing a pair of acquisitions.

Similar to industrials, consumer discretionary (-0.2%) and financials (+0.1%) lagged while the remaining cyclical groups—energy (+0.5%), materials (+0.6%), and technology (+0.5%)—finished ahead of the broader market. Notably, the materials sector was boosted by Dow Chemical (DOW 45.93, +2.86), which surged 6.6% after Third Point took a big stake in the company and called for a spinoff of its petrochemical business.

On the countercyclical side, telecom services (-0.7%) lagged while consumer staples (+0.3%), health care (+0.5%), and utilities (+1.2%) outperformed. The health care sector received support from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 251.99, +4.56) rose 1.9%. In turn, this also factored into the outperformance of the Nasdaq Composite.

Treasuries ended modestly lower with the 10-yr yield up one basis point at 2.83%.

Participation was a bit above average as 740 million shares changed hands at the NYSE.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET. 

·         Nasdaq +1.2% YTD 

·         Russell 2000 +1.1% YTD 

·         S&P 500 -0.3% YTD 

·         DJIA -1.0% YTD

Commodities

Closing Commodities: Natural Gas Advances 2.3%; Precious Metals End Lower

·         Commodities were mixed today, with energy trading higher while precious metals chopped around in negative territory. 

·         Feb gold traded lower despite a decline by the dollar index. The yellow metal brushed a session low of $1235.10 per ounce in morning pit trade and spent the remainder of the session trading slightly above that level. It eventually settled with a 0.8% loss at $1241.70 per ounce. 

·         Mar silver also spent the floor session in the red, slipping to a session low of $19.66 per ounce in early morning action. It then trended higher, trimming losses to 2.2% for the day as it settled at $19.85 per ounce. 

·         Mar crude oil chopped around in positive territory, extending Friday's gains. It touched a session high of $95.46 per barrel in morning floor action and eventually settled 0.4% higher at $94.98 per barrel. 

·         Feb natural gas also traded higher, rising as high as $4.45 per MMBtu. With momentum holding steady, it settled with a 2.3% gain at $4.43 per MMBtu.

COMEX Metals Closing Prices

  Feb gold fell $10.10 to $1241.70/oz 

·         Gold traded lower today despite a decline by the dollar index. The yellow metal brushed a session low of $1235.10 in morning pit trade and spent the remainder of the session trading slightly above that level. It eventually settled with a 0.8% loss. 

  Mar silver fell $0.45 to $19.85/oz 

·         Silver also spent today's floor session in negative territory. It slipped to a session low of $19.66 in early morning action but then trended slightly higher, trimming losses to 2.2% for the day. 

  Mar copper rose 1 cent to $3.35/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Mar corn rose 1 cent to $4.25/bushel 

·         Mar wheat fell 1 cent to $5.62/bushel 

·         Mar soybeans fell 35 cents to $12.81/bushel 

·         Feb ethanol settled unchanged at $1.89/gallon 

·         Mar sugar (#16 (U.S.)) rose 0.03 of a penny to 20.31 cents/lbs

NYMEX Energy Closing Prices

  Mar crude oil rose $0.39 to $94.98/barrel 

·         Crude oil chopped around in positive territory today, extending Friday's gains. It touched a session high of $95.46 in morning floor action and eventually settled with a 0.4% gain.

  Feb natural gas rose 10 cents to $4.43/MMBtu 

·         Natural gas also traded higher today, rising as high as $4.45 in early morning floor trade. With momentum holding steady, it settled with a 2.3% gain. 

  Mar heating oil settled unchanged at $2.95/gallon

  Mar RBOB settled unchanged at $2.63/gallon

Treasuries

Treasuries Erase Early Losses, Finish Flat: 10-yr: unch..2.826%..USD/JPY: 104.30..EUR/USD: 1.3556

·         Treasuries finished flat as a morning bid erased the overnight losses. Click here to see an intraday yields chart.

·         The long bond outperformed all day long with a modest +6/32 advance dropping the 30y -1.8bps to 3.739%. Today's bid dropped the 30y to its lowest level in two and a half months, and has action nearing a test of the important 3.700% level. 

·         A flat session for 10s saw the benchmark yield slip -0.2bps to 2.825%. The 10y closed at its lowest level in over a month, and looks likely to test support in the 2.750% area that is helped by the 100 dma.

·         The 5y lagged for most of the day, tacking on +1.1bps and finishing @ 1.641%. 

·         A flatter curve took hold as the 2-10-yr spread tightened to 243.5bps. 

·         Precious metals lost ground with gold sliding -$10 to $1242 and silver falling -$0.41 to $19.90. 

·         Data: MBA Mortgage Index (7).

Next Day In View 

Economic Commentary

Economic Summary: No US data today; China 2013 GDP at 7.7%
Upcoming Economic Data:

·         Weekly MBA Mortgage Applications due out Wednesday at 7:00 (Last Week was 11.9% )

Other International Events of Interest

·         The long weekend saw the release of the China's latest GDP figure, which registered a print of 7.7%; just below the previous reading of 7.8%, but above the 7.6% that was expected.

On other news.... 

Currencies 

Dollar Hovers Little Changed: 10-yr: +01/32..2.827%..USD/JPY: 104.20..EUR/USD: 1.3548

·         The Dollar Index clings to small losses near 81.15 as trade fights to win back the flat line. Click here to see a daily Dollar Index chart.

·         An early bid ran the Index to almost 81.40 before steady selling over the course of the morning dropped trade back into the red. 

·         EURUSD is flat @ 1.3550 as action has clawed back the early losses. The single currency saw some weakness following the German ZEW Economic Sentiment miss, but has managed to check up on support in the area. 

·         GBPUSD is +50 pips @ 1.6475 as buyers remain in control for a third session. Sterling has tacked on more than 100 pips during the three-day advance after holding 1.6300 support, and with a breakout through 1.6500 will see a retest of the 2014 highs near 1.6600. British data is heavy as Average Earnings Index, claimant count change, and public sector net borrowing accompany the release of the latest Bank of England MPC votes.

·         USDCHF is +15 pips @ .9110 as action presses resistance in the area. An early bid ran the pair above .9150, but trade has slipped off the two-month high. Swiss data is limited to ZEW Economic Expectations.

·         USDJPY is +5 pips @ 104.20 ahead of tonight's Bank of Japan rate decision. While recent chatter has suggested the Bank of Japan will, at some point, increase its asset purchase program, expectations are low any increase will come at tonight's meeting. Support in the 104.00 area looms large, and a breakdown sets up a retest of 103.00. 

·         AUDUSD is -5 pips @ .8805 as trade looks for a second day of gains following four straight losses. The hard currency has managed to hold yesterday's lows, providing some hope for the bulls. Australia's CPI, trimmed mean CPI, and Westpac Consumer Sentiment will cross the wires tonight. 

·         USDCAD is +25 pips @ 1.0970 as trade remains on track to close at its best level since September 2009. The pair climbed above the 1.1000 level in early trade, but has slipped off the highs as traders position themselves for tomorrow's Bank of Canada rate decision.

Jason's Commentaries


MY TOS IS UNABLE TO LOAD BECAUSE OF THE STUPID UPDATE!!! 

My current blog post will be lacking of Charts. Nonetheless, I'm going ahead with my DMA. 

The market was clearly divergent last night, and going through a massive gyration. Dow Jones was the only laggard amongst the indices due to the lousy earnings from IBM. IBM beats by $0.13 yet misses on revenues. The other main laggard in Dow was Intel and Goldman Sachs, both went really red last night, with more than 1.5% losses. Volumes were standing at 752m shares traded on the NYSE. We have the UVOL outpacing the DVOL but TRIN was clearly divergent. As the earnings season continues, we're likely to have more volatility in the market, which means it is going to be great for day traders. Meanwhile stay tight and watch out for big industrials earnings.... So far GE has sunk and led the industrials down. 

Market Call: DOWN

Date: 22 Jan 2014