31 Jan 2014 AMC - Market is going through a rough and volatile consolidation

31 Jan 2014 AMC - Market is going through a rough and volatile consolidation

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: -0.4%

·         Germany's DAX: -0.7%

·         France's CAC: -0.3%

·         Spain's IBEX: -0.4%

·         Portugal's PSI: -1.0%

·         Italy's MIB Index: 0.0%

·         Irish Ovrl Index: -0.7%

·         Greece ATHEX Composite: + 1.8%

Before Market Opens 

S&P futures vs fair value: -25.00. Nasdaq futures vs fair value: -39.50.
The S&P 500 futures trade 25 points below fair value.

Markets across Asia ended mixed amid a lackluster trade. Much of the region was closed in observance of the Lunar New Year, with closures set to continue into next week. Japanese data was heavy as National Core CPI (1.3% year-over-year versus 1.2% expected), Tokyo Core CPI (0.7% year-over-year versus 0.7% expected), household spending (0.7% year-over-year versus 1.2% expected), and preliminary industrial production (1.1% month-over-month versus 1.3% expected) were released.

Elsewhere, Australia saw a tame PPI print (0.2% quarter-over-quarter actual versus 0.7% expected), keeping a potential Reserve Bank of Australia rate cut on the table at next week's meeting. Also of note, Thailand's trade deficit narrowed to $285 million from $560 million while its current account surplus grew to $2.53 billion from $2.29 billion. 

·         Japan's Nikkei fell 0.6%, posting its lowest close since the middle of November. Automakers were pressured as a result of the strong yen as Toyota Motor lost 1.3% and Nissan Motor sank 0.8%. 

·         China's Shanghai Composite and Hong Kong's Hang Seng were closed for the Lunar New Year. 

Major European indices have spent the first half of the session in a steady decline with Germany's DAX (-2.1%) in the lead. The weakness comes after the country reported a 2.5% month-over-month decline in retail sales (0.2% expected, 0.9% prior) while the year-over-year reading tumbled 2.4% (1.9% forecast, 1.1% last). Adding to the weakness was inflation data from the eurozone as CPI increased 0.7% year-over-year while an uptick of 0.9% was broadly expected. Core CPI, however, rose an in-line 0.8% (0.7% prior). Separately, the unemployment rate held steady at 12.0% (12.1% forecast).

Elsewhere, French PPI ticked up 0.2% month-over-month (0.1% consensus, 0.5% last) while consumer spending ticked down 0.1% month-over-month (-0.4% expected, 1.4% last). Italy's PPI slipped 0.1% month-over-month (0.2% consensus, -0.1% previous) while the year-over-year reading declined 1.8% (-1.9% forecast, -1.8% last). Separately, the monthly unemployment rate ticked down to 12.7% from 12.8%, as expected. Also of note, Spain's current account surplus narrowed to EUR870 million from EUR1.71 billion. 

·         Germany's DAX is lower by 2.1% as all but one component register losses. Financials are leading the weakness with Commerzbank and Deutsche Bank down 4.3% and 4.0%, respectively. On the upside, utility company E.ON hovers just above its flat line. 

·         In France, the CAC trades down 1.8% with banks also pacing the retreat. BNP Paribas, Credit Agricole, and Societe Generale are down between 3.0% and 3.5%. On the upside, LVMH Moet Hennessy Louis Vuitton sports an advance of 5.4% after reporting upbeat results. 

·         Great Britain's FTSE holds a loss of 1.7% amid broad weakness. Royal Bank of Scotland is lower by 2.3% while consumer names like Coca-Cola HBC and Diageo display respective losses of 4.4% and 2.1%.

Market Internals

Market Internals -Technical-
The Dow closed down 150 (-0.94%) at 15699, the S&P 500 closed down 12 (-0.65%) at 1783, and the Nasdaq closed down 19 (-0.47%) at 4104. Action came on above average volume (NYSE 937 mln vs. avg. of 687; NASDAQ 2121 mln vs. avg. of 1783), with decliners outpacing advancers (NYSE 1172/1940, NASDAQ 795/1845) and new lows outpacing new highs (NYSE 55/87, NASDAQ 76/42). 

Relative Strength: 
Volatility-VXX +8.43%, Coffee-JO +4.5%, Sugar-SGG +4.46%, Egypt-EGPT +4.41%, U.S. Home Construction-ITB +1.76%, Thailand-THD +1.37%, Greece-GREK +1.34%, South Africa-EZA +1.32%, India-INP +1.27%, Agriculture-DBA +1.11%. 

Relative Weakness: 
Japan-EWJ -2.62%, Austria-EWO -2.4%, Biotechnology-XBI -2.3%, Regional Banks-KRE -1.92%, Germany-EWG -1.84%, Spain-EWP -1.79%, Pacific Index-VPL -1.74%, Gasoline-UGA -1.64%, Banks-KBE -1.63%, Biotechnology-IBB -1.62%.

 
 

Leaders and Laggards

Technical Updates

 

Commentaries 

Closing Market Summary: Stocks End Down Month on Lower Note
The stock market ended a disappointing month on a lower note as the S&P 500 lost 0.7%, extending its January decline to 3.6%. The Nasdaq outperformed, falling 0.5%, while the Dow Jones Industrial Average slid 1.0%.

Equities began the session sharply lower but a day-long rebound helped the major averages finish the trading day with more palatable losses. The S&P 500 made a very brief afternoon appearance in positive territory before retreating again in the final hour.

Today's cash session kicked off amid significant weakness in Europe where markets were flirting with losses close to 2.0%. The region-wide weakness was led by Germany after the country saw a 2.4% year-over-year drop in retail sales (+1.9% expected). A disappointing CPI reading for the eurozone (+0.7% versus 0.9% consensus) also played a part in the weakness.

Furthermore, the early selling once again coincided with yen strength as dollar/yen dropped as low as 102.00 before staging a modest recovery which accompanied the rebound in equities. Fittingly, the final hour retreat in stocks was accompanied another rally in the yen. Yen futures added 0.5% on Friday, extending their January gain to 3.0%.

Seven of ten sectors ended in the red with energy (-1.5%) seeing the largest decline. The sector was pressured by Dow component Chevron (CVX 111.63, -4.82), which tumbled 4.1% following disappointing earnings. The broader energy sector ended January behind the remaining nine groups with a loss of 6.3%.

Meanwhile, the second-weakest sector of the month, consumer discretionary, lost 1.3%, extending its January decline to 6.0%. The sector was a significant source of the morning weakness as Amazon.com (AMZN 358.69, -44.32) plunged 11.0% following its disappointing earnings and cautious guidance.

Despite the sharp loss in Amazon.com, the discretionary sector was able to climb off its lows with help from Chipotle Mexican Grill (CMG 551.96, +58.00) and homebuilders. Chipotle spiked 11.7% after reporting in-line earnings while iShares Dow Jones US Home Construction ETF (ITB 24.82, +0.43) added 1.8% as Treasury yields continued their retreat (10-yr yield -4 bps to 2.66%).

With regard to other cyclical groups, financials (-1.1%) lagged while industrials (-0.5%), materials (-0.6%), and technology (+0.2%) outperformed.

Notably, the tech sector drew strength from Google (GOOG 1180.97, +45.58), which jumped 4.0% after reporting earnings. Although the company missed its Capital IQ earnings estimate by $0.28, investors were pleased to see a 13% quarterly increase in click revenue.

On the countercyclical side, consumer staples (-0.4%), telecom services (+0.1%), and utilities (+0.8%) outperformed while health care (-0.8%) lagged.

Participation was well above average, which was likely related to month-end activity as 937 million shares traded at the NYSE.

Monday's data will be limited to the New Home Sales report for December, which will be released at 10:00 ET. It is also worth mentioning that China will release its Manufacturing PMI tonight at 20:00 ET, which is likely to generate a reaction in global markets on Monday. The general consensus expects the reading to slip from 51.0 to 50.5. 

·         Nasdaq Composite -1.7% YTD

·         Russell 2000 -2.8% YTD

·         S&P 500 -3.6% YTD

·         Dow Jones Industrial Average -5.3% YTD

Commodities

Closing Commodities: Natural Gas Books 1.8% Weekly Loss Despite Wednesday's 10% Gain
Apr gold and Mar silver surrendered morning gains as they reversed from their respective session highs of $1254.80 per ounce and $19.47 per ounce set moments after pit trade opened. Gold slipped into the red in afternoon action and settled 0.2% lower at $1239.80 per ounce. The yellow metal fell 2.0% over the week as investors reacted to the FOMC taper announcement and strong U.S. GDP data. Silver, unable to regain momentum, settled unchanged at $19.13 per ounce, booking a 3.2% loss for the week. 

Mar crude oil traded in negative territory as the dollar index posted modest gains. It came off its session low of $97.23 per barrel set at pit trade open and trended higher until late afternoon action. It then lost steam after touching a session high of $98.39 per barrel and settled with a 0.7% loss at $97.53 per barrel. Despite today's weakness, crude oil gained 0.9% over the week. 

Mar natural gas extended yesterday's losses, falling as low as $4.72 per MMBtu in late morning action on forecasts for milder weather. It gained some steam in the last hour of floor trade and settled at $4.94 per MMBtu, or 1.6% lower. Despite trading at 4 year highs earlier this week, natural gas booked a weekly loss of 1.8%.

COMEX Metals Closing Prices

  Apr gold fell $2.70 to $1239.80/oz 

·         Gold surrendered morning gains as it reversed from a session high of $1254.80 set moments after floor trade opened. It slipped into the red in afternoon action and settled 0.2% lower. The yellow metal fell 2.0% over the week as investors reacted to the FOMC taper announcement and strong U.S. GDP data. 

  Mar silver settled unchanged at $19.13/oz 

·         Silver also trended lower after advancing to a session high of $19.47 in early morning pit action. Unable to regain momentum, it settled at the break-even line, booking a 3.2% loss for the week.

  Mar copper fell 3 cents to $3.20/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Mar corn settled unchanged at $4.34/bushel 

·         Mar wheat rose 2 cents to $5.55/bushel 

·         Mar soybeans rose 8 cents to $12.84/bushel 

·         Mar ethanol settled unchanged at $1.82/gallon 

·         Mar sugar (#16 (U.S.)) fell 0.01 of a penny to 20.51 cents/lbs

NYMEX Energy Closing Prices

  Mar crude oil fell $0.72 to $97.53/barrel 

·         Crude oil traded in negative territory today as the dollar index posted modest gains. It came off its session low of $97.23 set at pit trade open and trended higher until late afternoon action. It then lost steam after touching a session high of $98.39 and settled with a 0.7% loss. Despite today's weakness, crude oil gained 0.9% over the week. 

  Mar natural gas fell 8 cents to $4.94/MMBtu 

·         Natural gas extended yesterday's losses, falling as low as $4.72 in late morning floor action on forecasts for milder weather. It managed to erase some of the earlier loss and settled 1.6% lower. Despite trading at 4 year highs earlier this week, natural gas booked a weekly loss of 1.8%. 

  Mar heating oil fell 3 cents to $3.00/gallon 

  Mar RBOB fell 4 cents to at $2.63/gallon

Treasuries

Yields Finish at Multi-Month Lows: 10-yr: +12/32..2.655%..USD/JPY: 102.17..EUR/USD: 1.3486
The Week in Review 

·         Treasuries posted moderate gains this week as the combination of uneasiness in emerging markets and the Fed announcing another $10 bln taper to its QE program sparked a safety bid. Click here to see an intraweek yields chart.

·         Tuesday saw an emergency 425bp hike by the Turkish central bank in an effort to stem the tide of foreign capital out of the country. 

·         On Wednesday, during what was the last meeting under the leadership of Ben Bernanke, the FOMC trimmed its monthly asset purchases to $65 bln. 

·         This week's data was mixed with durable orders (-4.3% actual v. 2.1% expected), new home sales (414K actual v. 457K expected), and pending home sales (-8.7% actual v. -0.2% expected) seeing notable misses while consumer confidence (80.7 actual v. 77.5 expected), GDP-Adv. (3.2% actual v. 3.0% expected), Chicago PMI (59.6 actual v. 58.0 expected), and Michigan Sentiment - Final (81.2 actual v. 80.4 expected) beat. 

·         Treasury held its first floating rate note auction with the 2y paper drawing a 0.045% spread and strong 5.67x bid/cover. Indirect bidders took down 37.8% while direct bidders were less enthusiastic with just an 8.9% takedown. Primary dealers were left with 53.2% of the supply. 

·         Tuesday's $32 bln 2y note auction drew 0.380% and an average 3.30x bid/cover. Indirect bidders saw a stronger than usual 28.4% takedown, hoping offset the slightly weak 22.3% bid from directs. Primary dealers ended up with 49.3% of the supply. 

·         Thursday's $35 bln 5y note auction was average, drawing 1.572% and a 2.59x bid/cover. Both indirect (44.5%) and direct (10.7%) bidders saw takedowns relatively in-line with their 12-auction averages. 

·         Thursday's $29 bln 7y auction saw better results, drawing 2.190% and a solid 2.65x bid/cover. Indirect (47.7%) and direct (19.9%) bids exceeded their 12-auction averages, leaving primary dealers with just 32.4% of the supply. 

·         This week's buying had the biggest impact on the belly of the curve.

·         The 5y shed -6bps and finished @ 1.510%. The yield tested 1.500% support, but was unable to break below the level as bears stepped in to defend the 100 dma (1.487%).

·         The 10y flushed -7bps on the week, settling @ 2.668%. Early action on Friday dropped the benchmark yield to 2.597%, a near three-month low. 

·         At the long end, the long bond lagged. This week's bid shaved off -3bps to 3.622% with action briefly sliding below the 200 dma for the first time since May. Support in the 3.600% area will be critical in the days ahead.

·         A flatter curve persisted as the 2-10-yr spread tightened to 233bps. 

The Week Ahead 

·          Monday's data includes ISM Index, construction spending (10), and auto/truck sales (14). Janet Yellen takes over as Fed Chairwoman. 

·         Tuesday's data is limited to factory orders (10). Richmond's Lacker will be in Winchester, VA, giving his "Economic Outlook, February 2014" (8:30). Chicago's Evans travels to Detroit, MI to discuss current economic conditions and monetary policy (12:30). 

·         Wednesday will see the weekly MBA Mortgage Index (7), ADP Employment Change (8:15), and ISM Services (10). Philly's Plosser will be in Rochester, NY to give his economic outlook (12:30). ATL's Lockhart discusses his economic outlook in Birmingham, AL (13:40). 

·         Data picks up on Thursday with Challenger Job Cuts (7:30), initial and continuing claims, trade balance, productivity-prel., and unit labor costs (8:30). Boston's Rosengren travels to Sarasota, FL to discuss the economy (17:30). 

·         Friday's data is the most anticipated of the week as nonfarm payrolls, nonfarm private payrolls, unemployment rate, hourly earnings, average workweek (8:30), and consumer credit (15) are due out.

On other news.... 

Earnings/Guidance

·         Amazon.com (AMZN) misses Q4 estimates; guides Q1 rev midpoint below consensus, operating income midpoint break even, below estimates

·         Aon (AON) beats by $0.03, misses on revs

·         Broadcom (BRCM) beats by $0.03, beats on revs; announces 9% increase in quarterly dividend to $0.12

·         Chevron (CVX) misses by $0.01, misses on revs

·         Chipotle Mexican Grill (CMG) reports EPS in-line, beats on revs

·         Chubb (CB) beats by $0.04; guides FY14 operating income below consensus

·         Computer Sciences (CSC) beats by $0.10, reports revs in-line; raises FY14 EPS

·         Dominion (D) misses by $0.08; guides Q1 EPS in-line; guides FY14 EPS in-line

·         Eastman (EMN) beats by $0.10, beats on revs; guides FY14 EPS in-line

·         Google (GOOG) misses by $0.28, reports revs in-line

·         JDS Uniphase (JDSU) beats by $0.05, beats on revs; guides Q3 revs in-line; GAAP Gross margin of 45.8%; Non-GAAP Gross margin of 48.5%

·         MasterCard (MA) misses by $0.03, reports revs in-line

·         Mattel (MAT) misses by $0.13, misses on revs

·         McKesson (MCK) misses by $0.38, beats on revs; guides FY14 EPS below consensus

·         Newell Rubbermaid (NWL) beats by $0.01, reports revs in-line; guides FY14 EPS (in-line, midpoint below consensus)

·         Simon Properties (SPG) beats by $0.04, beats on revs; guides FY14 FFO above consensus; raises quarterly dividend 8.7% to $1.25/share

·         Tyco (TYC) beats by $0.02, reports revs in-line

·         Tyson Foods (TSN) beats by $0.09, reports revs in-line; sees overall domestic protein production up ~1%

·         Wal-Mart (WMT) issues Q4 warnings, citing weather and sales impact from the reduction in the U.S. government Supplemental Nutrition Assistance Program 

·         Weyerhaeuser (WY) misses by $0.01, reports revs in-line

·         Wynn Resorts (WYNN) beats by $0.54, beats on revs 

Currencies 

Dollar Probes Key 81.20 Resistance: 10-yr: -02/32..2.670%..USD/JPY: 102.30..EUR/USD: 1.3496

·         The Dollar Index continues to hold small gains as action contends with key 81.20 resistance. Click here to see a daily Dollar Index chart.

·         EURUSD is -55 pips @ 1.3495 as sellers remain in control for a sixth straight session. The single currency has been pressured lower throughout the day, aided by a Dow Jones headline suggesting a secret meeting took place between French and German officials regarding the possibility of Greece needing further bailout funds. Another headline suggested the Bundesbank (German central bank) is calling for the end of sterilized bond purchases. Today's weakness has the pair on track to post it lowest close since the Thanksgiving holiday as action has been able to push through 1.3550/1.3600 support. A test of the 1.3400 level and the 200 dma (1.3376) cannot be ruled out. Manufacturing PMI data from across the eurozone will be released. 

·         GBPUSD is -45 pips @ 1.6440 as sellers hold the reins for the fifth time in six sessions. The recent skid has dropped sterling onto the 1.6400 support level that is helped by the 50 dma, and has action more than 200 pips off the 2014 highs. British data is limited to Manufacturing PMI. 

·         USDCHF is +30 pips @ .9055 as buying persists for a second session. The two-day advance has run the pair above both its 50 and 100 dma, but the bulls still have their work cut out as the .9200 area remains key. Switzerland's SVME PMI is due out Monday. 

·         USDJPY is -35 pips @ 102.35 as action remains locked between 102.00 support and 103.00 resistance. The pair pressed the key support level early in the session, but has come off its lows as the buying of risk assets picked up steam. Many are opting to stay on the sidelines until the range is broken. 

·         AUDUSD is -45 pips @ .8745 as trade looks to end the week right where it started. Today's tame PPI reading is notable as it keeps a potential Reserve Bank of Australia rate cut on the table at next week's meeting. The Australian economy continues to struggle on the prospects of a slowdown in China and other emerging markets, and the tame pricing data could inspire the central bank to ease conditions. Multi-year lows near .8700 will be monitored closely over the coming days. Australian data includes building approvals and ANZ Job Advertisements. China's Manufacturing PMI and Non-Manufacturing PMI will cross the wires this weekend. Chinese banks remain closed for the Lunar New Year. 

·         USDCAD is -40 pips @ 1.1120 as selling takes hold for a second day. The pair jumped to a four and half-year high of 1.1224 following the in-line Canadian GDP number (0.2% MoM) as stops were activated, but has reversed lower. The 1.1100 area provides the first level of near-term support. Canada's Raw Materials Price Index will be released on Monday.

Weekly Analysis
Week 1



Technical Updates
























Briefing's Commentaries

Week in Review: Stocks Endure Volatile Week 

On Monday, the major averages followed the sharp losses of the prior week with another shaky performance. The Dow Jones Industrial Average and S&P 500 posted respective declines of 0.3% and 0.5% while the Nasdaq (-1.1%) and Russell 2000 (-1.5%) underperformed. Stocks displayed gains at the open but the early strength faded during the initial hour as the Nasdaq headed into the red. The other indices followed suit and the broad retreat continued until about 12:20 ET when stocks reversed, and spent the afternoon in a steady climb. Moderate selling pressure returned during the final hour, knocking the indices off their afternoon highs. Although there was no news responsible for the turn, the morning selling coincided with a strengthening yen while the session low in equities matched the high point for the Japanese currency. Once the yen began weakening again, a rally in equities ensued. Similarly, the selling observed during the last 30 minutes of action coincided with the yen gaining strength once again.

The stock market halted its three-day slide on Tuesday as the S&P 500 gained 0.6%. The tech-heavy Nasdaq (+0.4%) also finished in the green, but couldn't keep pace with the S&P 500 as Apple weighed following its quarterly report. Although the largest tech company beat on earnings and revenue, investors were not pleased by below-consensus iPhone sales. In addition, disappointing guidance for the second quarter also factored into the stock's 8.0% loss. The remainder of the technology sector (-0.7%) was a bit more mixed as large-cap names like Google, Oracle, and Intel posted solid gains while Seagate tumbled 11.3% after missing earnings estimates. Outside of technology, most other cyclical groups finished ahead of the broader market with financials (+1.3%) ending in the lead.

Selling pressure returned on Wednesday as equities ended broadly lower with small caps leading the weakness. The Russell 2000 lost 1.5% while the S&P 500 fell 1.0% as nine of ten sectors finished in the red. Although the session generated plenty of excitement, some of the events that played out over the course of the day were set in motion on Tuesday. Shortly after Tuesday's session on Wall Street ended, the Central Bank of Turkey shocked the market with a 445-basis point hike to 12.00% in an attempt to halt the rapidly weakening lira. The move worked...for 15 hours. The lira strengthened after the announcement, but spent the remainder of the overnight session in a steady retreat, giving up all of its gains. Interestingly, the news of out of Turkey also gave a boost to U.S. equity futures while weighing on the yen. The moves did not hold as futures spent the night in a steady retreat while the yen rallied. The materials sector (+0.5%) withstood the broad-based weakness with help from Dow Chemical, which rallied 4.1% after beating on earnings.

On Thursday, the major averages finished near their highs with the Nasdaq surging 1.8% while the S&P 500 gained 1.1% as all ten sectors ended in the green. Stocks jumped out of the gate and continued climbing steadily into the early afternoon. The S&P 500 notched a session high of 1798.77 just before 13:00 ET, and spent the rest of the trading day near that level. The upbeat start to the session was aided by overnight gains in index futures which rallied while the Japanese yen weakened. The futures market received an additional boost an hour before the cash open when it was reported that fourth quarter GDP rose 3.2%, per the advance estimate. The Nasdaq Composite spent the entire session in the lead with the likes of Amazon.com, Google, Facebook, and Qualcomm providing support. Amazon.com and Google rallied ahead of their earnings while Facebook and Qualcomm posted respective gains of 14.1% and 3.0% after reporting better-than-expected results.

Next Week In View



Economic Commentaries

Economic summary: Personal Spending outpaces Personal Income; Employment Costs rise; Consumer Sentiment improves
Economic Data Summary:

·         December Personal Income +0.0% vs Briefing.com consensus of +0.2%; November was +0.2%

·         December Personal Spending +0.4% vs Briefing.com consensus of 0.2%; November was 0.5%

o    The big takeaway -- which again was already known from the GDP data -- from the personal income and spending release, was that consumers drastically lowered their savings rate over the past few months. The savings rate fell from 5.1% in September, when uncertainty from the potential government shutdown caused a minor gain, to 3.9% in December.

·         December PCE Price -- Core +0.1% vs Briefing.com consensus of 0.1%; November was 0.1%

·         Q4 Employment Cost Index +0.5% vs Briefing.com consensus of 0.4%; Q3 was 0.4%

o    The increase in costs was due to a large bump in wages and salaries, which increased 0.6% in the fourth quarter after increasing 0.3% in Q3.

·         January Chicago PMI 59.6 vs Briefing.com consensus of 58.0; December was revised to 60.8 from 59.1

o    While the PMI has fallen for three consecutive months, the October peak of 66.6 was never sustainable. It is very difficult for the reading to remain above 60.0 for any extended period of time. New order levels improved as that index increased to 64.6 in January from 63.3 in December. The employment index fell to 49.2 in January from 54.3.

·         January Michigan Sentiment -- Final 81.2 vs Briefing.com consensus of 80.4; pior was 80.4

o    Weaker employment conditions and a declining stock market were likely the reasons behind the modest decline in January.

Fed/Treasury Events Summary:

·         San Franciso Fed President John Williams said the Fed does not want to overreact to short term market shocks; he is not worried about the emerging market impact on the U.S. yet; he believes Dec payrolls were hurt by weather.

Upcoming Economic Data:

·         January ISM Index Monday at 10:00 (Briefing.com consensus of ; was 56.5)

·         December Construction Spending Monday at 10:00 (Briefing.com consensus of ; was +1.0%)

·         January Auto Sales Monday

Upcoming Fed/Treasury Events:

·         RBA rate decision on Monday, Feb 3 at 7:00 PM ET

·         Fed's Lacker and Evans scheduled to speak on Tuesday, Feb 4

Jason's Commentaries

Another 140 points on the Dow once again, the market is definitely going a volatile consolidation during this earnings. As the earnings are getting weaker, There might be a chance that the market will continue to consolidate. Earnings has been decent. The main laggard of the session is discretionary, energy then financials, losing 1.41%, 1.29%, 1.17% respectively. Discretionary is being dragged down by Visa and Mastercard. Financials is being dragged down by the big banks, each dropping 1% each. While the energy sector is being dragged down in sympathy by Chevron. Volumes were exceptionally high on Friday of 922m shares traded on the NYSE. Internals were pointing towards the bearish side. VIX spiked up as well.

On the technical perspective, we have Dow holding the 15700 support level, S&P500 holding the 1770 support level. If we're holding up the levels, we're unlikely to head down. However, we're having the employment reports coming up next week, if we're looking at lousy job numbers, we might crash down. Since the cold in the States has been really bad, job numbers might be affected. Moreoever, we're nearing the debt ceiling deadline, there might be extra volatility.     

Market Call: UP

Date:3 Feb 2014