20 March 2014 AMC- Indices rose as Fed releases stress test results

20 March 2014 AMC- Indices rose as Fed releases stress test results

Market Summary 

 European Markets Closing Prices

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

·         UK's FTSE: -0.5%

·         Germany's DAX: + 0.2%

·         France's CAC: + 0.5%

·         Spain's IBEX: -0.1%

·         Portugal's PSI: -0.4%

·         Italy's MIB Index: + 0.6%

·         Irish Ovrl Index: -0.3%

·         Greece ATHEX Composite: -0.1%

Before Market Opens

The S&P 500 futures trade six points below fair value.

It was a sea of red across Asia as all of the major bourses ended with losses as sellers took control following the Fed's taper and change to its forward guidance. Overnight, Bank of Japan Governor Haruhiko Kuroda reiterated the central bank will maintain its policy stance until the 2.0% inflation target is reached. Economic data was limited to an in-line New Zealand GDP (0.9% quarter-over-quarter, prior 1.2%) and Hong Kong's inflation rate (3.9% year-over-year, previous 4.6%). 

·         Japan's Nikkei lost 1.7%, slumping to six-week lows. Shares of Toyota Motor sank 1.5% after the company announced it would pay $1.2 billion to settle charges in the U.S. 

·         Hong Kong's Hang Seng fell 1.8% and is now in a correction with shares down ~12% from their December highs. Internet gaming company Tencent Holdings slid 1.7% as profit growth slowed. 

·         China's Shanghai Composite slumped 1.4% to its lowest level in two months. Automaker BYD tumbled 7.3% after its earnings disappointed. 

In Europe, the major indices trade broadly lower with Great Britain's FTSE (-1.0%) displaying the largest decline while Italy's MIB (-0.2%) outperforms. Participants received just a few data points. Germany's PPI was unchanged month-over-month (expected 0.1%, prior -0.1%) while the year-over-year reading fell 0.9%, as expected (previous -1.1%). Great Britain's CBI Industrial Trends Orders improved to 6 from 3 (expected 5). The Swiss National Bank held its key interest rate at 0.00%, as expected. Separately, the trade surplus expanded to CHF2.62 billion from CHF2.55 billion (consensus CHF2.24 billion).

Among news of note, German Chancellor Angela Merkel spoke in front of parliament, saying Ukraine will be the main focus of today's European leader summit. 

·         Great Britain's FTSE is lower by 1.0% with financials trading in mixed fashion. Admiral Group, Resolution, and Hargreaves Lansdown are down between 2.2% and 4.8%. On the upside, HSBC Holdings and Royal Bank of Scotland display respective gains of 0.1% and 0.5%. 

·         In France, the CAC trades down 0.8% with Credit Agricole leading the slide. The stock trades lower by 2.9%. Energy company Technip and steelmaker ArcelorMittal are among the outperformers. The two names hold respective gains of 1.0% and 0.9%. 

·         Germany's DAX holds a loss 0.8%. Deutsche Lufthansa and Volkswagen underperform with losses close to 1.0% apiece. Chemical producer Lanxess outperforms with a gain of 4.1% after selling one of its units. 

·         Italy's MIB is lower by 0.2%. Mediaset trades lower by 1.1 while financials UniCredit, Banca Popolare dell'Emilia Romagna, and Mediobanca lead with gains between 0.2% and 1.4%.

U.S. Equities

·         Equity futures suggest a heavy open as sellers look to remain in control following yesterday's Fed taper and forward guidance alteration

·         Initial claims (320K actual v. 330K expected)

·         Continuing Claims (2889K actual v. 2883K expected)

o    S&P Futures -5 @ 1847

o    Dow Futures -35 @ 16,104

o    Nasdaq Futures -10 @ 3664

Asia

·         It was a sea of red across Asia as all of the major bourses ended with losses as sellers took control following the Fed's taper and change to its forward guidance

·         Overnight, Bank of Japan Governor Kuroda reiterated the central bank will continue asset purchases until 2% inflation is reached

·         Hong Kong's inflation rate slowed to 3.9% YoY (4.6% YoY previous)

·         Japan's Nikkei (-1.7%) slumped to six-week lows

·         Hong Kong's Hang Seng (-1.8%) is now in a correction with shares off ~12% from their December highs

·         China's Shanghai Composite (-1.4%) slumped to its lowest level in two months

·         India's Sensex (-0.4%) eased off record highs

·         Australia's ASX (-1.2%) fell to a five-week low

Market Internals

Market Internals -Technical-
The Dow closed up 109 (+0.67%) at 16331, the S&P 500 closed up 11 (+0.60%) at 1872, and the Nasdaq closed up 12 (+0.27%) at 4319. Action came on below average volume (NYSE 621 mln vs. avg. of 705; NASDAQ 1720 mln vs. avg. of 1996), with mixed advancers/advancers (NYSE 1541/1571, NASDAQ 1403/1240) and new highs outpacing new lows (NYSE 97/29, NASDAQ 137/20).

Relative Strength: 
Latin America 40-ILF +2.36%, Poland-EPOL +2.32%, Regional Banks-KRE +2.04%, Banks-KBE +1.91%, Financial Services-IYG +1.9%, Greece-GREK +1.88%, Mexico-EWW +1.79%, India-INP +1.76%, Broker-Dealers-IAI +1.76%, Semiconductors-SMH +1.68%.

Relative Weakness: 
Coffee-JO -6.43%, Russia-RSX -2.6%, Indonesia-IDX -2.48%, Sugar-SGG -2.28%, Agriculture-DBA -1.92%, Social Media-SOCL 1.8%, Natural Gas-UNG -1.74%, Japan-EWJ -1.44%, Hong Kong-EWH -1.24%, Eastern Europe-ESR -1.19%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Financials Lead Stocks Higher
The major averages finished the Thursday session on an upbeat note with the Dow Jones Industrial Average (+0.7%) in the lead. Small caps underperformed with the Russell 2000 adding 0.1% while the S&P 500 settled higher by 0.6% with nine sectors posting gains.

Stocks began the day on the defensive amid cautious action overseas, but were quick to erase their early losses. The S&P 500 climbed out of the red during the first hour of action with most European indices following suit.

The early advance was powered by the heavily-weighted financial (+1.7%) and technology (+0.7%) sectors, both of which continued their outperformance into the close. Outside of the two, the telecom services sector (+2.5%) was the only other area of relative strength, but it bears noting the group accounts for just 3.0% of the entire S&P 500.

Financials began the trading day ahead of the remaining cyclical groups and never relinquished their standing. Major sector components posted solid gains with JPMorgan Chase (JPM 60.11, +1.81) and Morgan Stanley (MS 32.79, +0.98) ending in the lead. The significant strength of the sector reflected the expected benefit from higher rates and a presumption that stress test results would show that most banks meet the Fed's capital ratio standards. Accordingly, the results, which were released after the close indicated that 29 of 30 banks passed while Zions Bancorp (ZION 32.99, +1.02) failed.

For its part, the technology sector was powered by chipmakers. Intel (INTC 25.42, +0.41) jumped 1.6% while the broader PHLX Semiconductor Index surged 1.9%. Even though most large components outperformed, that was not the case with the largest sector member—Apple (AAPL 528.70, -2.56)—which lost 0.5%.

The underperformance of Apple weighed on the Nasdaq (+0.3%) as the index could not keep up with the broader market. Biotechnology also pressured the Nasdaq Composite as indicated by a 0.5% decline in the iShares Nasdaq Biotechnology ETF (IBB 258.25, -1.22).

Elsewhere, biotechnology also factored into the underperformance of the health care sector (-0.02%), which spent the day in negative territory. Outside of health care, industrials (+0.2%) and utilities (+0.1%) spent the bulk of the session in the red, but erased their losses ahead of the close.

The industrial sector underperformed amid weakness in transports. The Dow Jones Transportation Average shed 0.1% with FedEx (FDX 136.50, -1.88) trailing the remaining index components. The stock ended lower by 1.4% despite being upgraded to ‘Market Outperform' at Avondale this morning. Interestingly, the logistics company reported disappointing earnings ahead of Wednesday's open, but the stock ended yesterday's session little changed.

Meanwhile, the utilities sector lagged as higher rates weighed. Elevated rates also took a bite out of homebuilders, sending the iShares Dow Jones US Home Construction ETF (ITB 24.57, -0.41) lower by 1.6%.

Treasuries spent the entire session in a narrow range with the benchmark 10-yr yield ending unchanged at 2.77%.

Also of note, President Obama announced additional sanctions on 16 Russian officials as well as individuals with close ties to Vladimir Putin while also targeting Bank Rossiya, which is believed to have close ties to the Kremlin. The president also signed an executive order that permits the use of sanctions against specific sectors of the Russian economy. In a swift response, Russia announced sanctions of their own against ten U.S. officials.

Economic data included weekly initial claims, February existing home sales, February Leading Indicators, and the March Philadelphia Fed Survey: 

·         The weekly initial claims level increased to 320,000 from an unrevised 315,000 while the Briefing.com consensus expected the claims level to increase to 330,000. Prior to the last couple weeks, the initial claims level—absent unexpected seasonal biases—was bounded between 330,000 and 340,000. The latest data show a slight downward move from that range, which could be the start of another stage in the improvement in labor market conditions. 

·         Existing home sales fell to a seasonally adjusted annualized rate of 4.60 million in February from an unrevised 4.62 million in January. That was exactly what the Briefing.com consensus expected. For the second consecutive month, the National Association of Realtors blamed extreme winter weather conditions as a primary catalyst for the weakness in sales demand. While sales did drop in winter weather-related areas like the Northeast and Midwest, sales in the South and West still remain well below their December levels. Even if sales recover in the weather-affected areas, overall demand remains below the 5.1 million - 5.3 million that was seen last spring and summer. 

·         The Leading Indicators report for February increased 0.5%. That followed a 0.1% increase in January, and was better than the 0.3% uptick expected by the Briefing.com consensus. 

·         Manufacturing activity in the Philadelphia region ended a temporary contraction in March as the Philadelphia Fed's Business Outlook Survey increased to 9.0 from -6.3 in February. The Briefing.com consensus expected the index to increase to 2.0. 

There is no economic data of note on tomorrow's schedule but it is worth mentioning that quadruple witching will be taking place. 

·         Nasdaq Composite +3.4% YTD 

·         Russell 2000 +3.3% YTD 

·         S&P 500 +1.3% YTD 

·         Dow Jones Industrial Average -1.5% YTD

Commodities

Closing Commodities: Precious Metals Extend Yesterday's Weakness Due To Yellen/Strong Dollar Index

·         Precious metals were under pressure today as the dollar index traded higher in response to yesterday's mentions of sooner-than-expected rate increases from the new FOMC Chair, Janet Yellen. She said interested rates could rise in "probably six months" following completion of the stimulus program.

·         Apr gold fell for a fourth consecutive session, brushing a session low of $1320.80 per ounce in early morning pit trade. It eventually settled with a 0.8% loss at $1330.20 per ounce.

·         May silver slipped to a session low of $20.14 per ounce moments after floor trade opened. It inched slightly higher for the remainder of the session and settled at $20.43 per ounce, cutting losses to 1.9%.

·         May crude oil fell for the first time in three sessions as the dollar index traded higher. The energy component dipped to a session low of $98.09 per barrel after trading as high as $99.45 per barrel in morning action. It settled at $98.87 per barrel, or 0.3% lower.

·         Apr natural gas traded lower as inventory data showed a draw of 48 bcf when a draw of 53-59 bcf was anticipated. It pulled back from its session high of $4.44 per MMBtu and brushed a session low of $4.35 per MMBtu. Unable to gain momentum, it settled with a 2.7% loss at $4.37 per MMBtu.

 COMEX Metals Closing Prices

  Apr gold fell $11.30 to $1330.20/oz 

·         Gold fell for a fourth consecutive session as the dollar index traded higher in response to yesterday's mentions of sooner-than-expected rate increases from the new FOMC chair, Janet Yellen. She said interest rates could rise in "probably six months" following completion of the stimulus program. The precious metal brushed a session low of $1320.80 in early morning pit trade and eventually settled with a 0.8% loss. 

  May silver fell $0.39 to $20.43/oz 

·         Silver also traded in the red, slipping to a session low of $20.14 moments after floor trade opened. It inched slightly higher for the remainder of the session and cut losses to 1.9%.

  May copper fell 6 cents to $2.93/lb

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn fell 10 cents to $4.78/bushel

·         May wheat fell 10 cents to $7.06/bushel 

·         May soybeans rose 3 cents to $14.34/bushel 

·         Apr ethanol rose 11 cents to $2.81/gallon 

·         May sugar (#16 (U.S.)) rose 0.03 of a penny to 22.03 cents/lbs

NYMEX Energy Closing Prices

  May crude oil fell $0.28 to $98.87/barrel 

·         Crude oil fell for the first time in three sessions as a stronger dollar index pressured prices. The energy component dipped to a session low of $98.09 after trading as high as $99.45 in morning action and settled with a 0.3% loss. 

  Apr natural gas fell 12 cents to $4.37/MMBtu 

·         Natural gas traded lower today as inventory data showed a draw of 48 bcf when a draw of 53-59 bcf was anticipated. It pulled back from its session high of $4.44 and brushed a session low of $4.35. Unable to gain momentum, it settled with a 2.7% loss. 

  May heating oil rose 1 cent to $2.91/gallon 

  May RBOB rose 3 cents to $2.89/gallon

Treasuries

Treasuries Finish Mixed: 10-yr: -03/32..2.778%..USD/JPY: 102.45..EUR/USD: 1.3777

·         Treasuries endured a flat session. Click here to see an intraday yields chart.

·         The complex saw an overnight bid as overseas markets pulled back in response to yesterday's Fed announcement, but surrendered their gains ahead of the U.S. cash open.

·         Maturities dipped to session lows following the mixed initial (320K actual v. 330K expected) and continuing (2889K actual v. 2883K expected) claims data before seeing another leg lower after Philly Fed (9.0 actual v. 2.0 expected) and leading indicators (0.5% actual v. 0.3% expected) topped expectations and existing home sales printed an in-line 4.60 mln.

·         Ranges throughout U.S. trade were tight, limited to 3bps across much of the curve. 

·         The 5y ended the day +1.3bps @ 1.708%. The yield saw an early test of trendline resistance off the September highs as action probed 1.725%, but could not breakout. Today's action did however produce the highest close in six weeks. 

·         A flat session in 10s saw the benchmark yield finish @ 2.775%. Early buying provoked a test of the 2.800% level, but that area is likely going to prove difficult to conquer as resistance there corresponds with both the 100 dma and trendline resistance off the highs from the first trading day of 2014. 

·         Outperformance continued at the long end as the 30y shed -1bp to 3.660%. 

·         A slightly flatter curve developed as the 2-10-yr spread tightened to 234.5bps. 

·         Precious metals were saddled with losses as gold fell $11 to $$1330 and silver slid $0.48 to near $20.35. 

·         Data: None.

·         Fed Speak: STL's Bullard will take place in a discussion on "Debt and Incomplete Financial Markets: A Case for Nominal GDP" (11:45).

Next Day In View 

Economic Commentary

Economic Summary: Philly Fed tops expectations; Jobless Claims rise less than expected; Existing home sales unchanged as expected; Leading Indicators beat estimates
Economic Data Summary:

·         Weekly Initial Claims 320K vs Briefing.com consensus of 330K; Last Week was 315K

·         Weekly Continuing Claims 2.889 M vs Briefing.com consensus of 2.883 M ; Last Week was revised to 2.848 M from 2.855 M

o     While sales did drop in winter weather-related areas like the Northeast and Midwest, sales in the South and West still remain well below their December levels. Even if sales recover in the weather-affected areas, overall demand remains below the 5.1 mln -- 5.3 mln that was seen last spring and summer. The details are also a little discouraging. First-time homebuyers accounted for 28% of all sales in February. That is up from 26% in January but below the 30% contribution in February 2013. At the same time, all-cash buyers accounted for 35% of buyers in February, up from 33% in January and 32% in February 2013. 

·         February Existing Home Prices 4.60 M vs Briefing.com consensus of 4.60 M ; January was 4.62 M

·         March Philadelphia Fed 9.0 vs Briefing.com consensus of 2.0; February was revised to from -6.3

o     The recovery in manufacturing was broad based. Both new (5.7 from -5.2) and unfilled (2.6 from -2.6) orders rebounded in March. That put added pressure on production and caused the shipments index to increase to 5.7 from -9.9. Employment conditions, however, were slightly weaker in March. 

·         February Leading Indicators 0.5% vs Briefing.com consensus of 0.3%; January was revised to 0.1% from 0.3%

o     Since eight of the 10 components of the index are known prior to the release, the difference between the actual and the consensus is generally small. In this case, building permits -- which were released on Tuesday -- were much stronger than the consensus expected.

Upcoming Fed/Treasury Events:

·         Saint Louis James Bullard (not a voting FOMC member, dovish) to speak tomorrow at 11:45

·         Dallas Fed President Richard Fisher (voting FOMC member, hawkish) to speak tomorrow at 13:45

·         Minneapolis Fed President Narayana Kocherlakota (March 2014 FOMC dissenter, dovish) to speak tomorrow at 16:30

Other International Events of Interest

·         Overnight, Bank of Japan Governor Kuroda reiterated the central bank will continue asset purchases until 2% inflation is reached

On other news.... 

Fed CCAR Stress Test Preview
Another round of Fed stress tests are expected this afternoon after the close. BAC, BK (just below), BBT, FITB, JPM (14-year), KEY, PNC, RF, USB (All Time), WFC (All Time) are all trading at 52-week highs. It has been normal for these banks to run up ahead of the CCAR announcements. It has also been normal to see a sell the news reaction after the initial jump on capital return plans.

The CCAR is the Fed's Comprehensive Capital and Review process that it carries out on financial institutions with assets above $50 bln that fall under bank holding companies deemed systemically important. The Fed applies 'severely adverse' economic scenarios to the bank balance sheets to make sure they are properly capitalized to deal with crisis. The minimum capital level for banks is of course 5%.

The severely adverse scenario for 2014 assumes the U.S. unemployment rate increases four percentage points, a decline in U.S. GDP of 4.75% at the end of 2014, a 50% decline in equities, and a 25% decline in home prices. It also incorporates International components including recessions in Europe and Japan and a slow down in Asia. Some of the larger institutions must incorporate a scenario where a counterparty (does business with trading and derivatives) completely defaults. There is also a 'Global Market Shock' that the Fed has described as a one-time hypothetical situation. 

·         American Express (AXP)- 2013 CCAR: Co was forced to send in an adjusted CCAR plan. It increased its dividend to $0.23 from $0.20 and said itr would buyback $4 bln in common stock in 2013. It was forced to lower its initial plan as the Fed said that plan would have dropped the co's capital under its minimum requirements; 2014 CCAR Comments: Has said it would return 50% of capital in the form of a share repurchase and use the other 50% for growth initiatives and acquisitions. 

·         Bank of America (BAC)- 2013 CCAR: Authorized a $5 bln share repurchase and redemption of approx. $5.5 bln in preferred stock; 2014 CCAR Comments: Has been quiet on the subject but has stated it feels good about its current capital levels and that it is working with the Fed in its stress test results.

·         Bank of New York Mellon (BK)- 2013 CCAR: Repurchase of $1.35 bln through 1Q14; increased dividend 15% to approx. $0.15 per share; 2014 CCAR Comments: Co has been downgraded in the G-Sifi which eases its capital requirements. Has said it has pretty good financial flexibility which it believes will be beneficial to 2014 CCAR results and plans. 

·         BB&T Corp (BBT)- 2013 CCAR: Fed objected to companies plan (them and Ally Financial were the only two) Fed did not object to the current dividend of $0.23; 2014 CCAR Comments: Says it has worked closely with the Fed. Plans on being more conservative with regards to 2014 requests. 

·         Capital One (COF)- 2013 CCAR: Increased dividend to $0.30 from $0.05; 2014 CCAR Comments: Says it requested a repurchase that would result in a total payout ratio well above 2013 which was an industry norm 50%. 

·         Citigroup (C)- 2013 CCAR: Repurchased $1.2 bln in shares, maintained its penny dividend; 2014 CCAR Comments: Goal is to increase capital return. 

·         Fifth Third Bank (FITB)- 2013 CCAR: Co increased its dividend 10% to $0.11. Board also increased share repurchase authorization to 100 mln shares; 2014 CCAR Comments: Expectations are that it will manage capital return at current levels. Will limit growth in capital from share repurchases and target a dividend consistent with the Fed's 30% payout ratio guidance.

·         Goldman Sachs (GS)- 2013 CCAR: GS was one of two (JPM) that saw conditional approval of its plan; 2014 CCAR Comments: GS has said it would return capital if that was the best use for it. Says it will not force returns if it feels that is not the most prudent use. Continues to work with the Fed on capital levels.

·         J.P. Morgan (JPM)- 2013 CCAR: Another conditional approval. JPM raised its dividend to $0.38 from $0.30 and authorized a $6 bln share repurchase in September. This was well below the original expectations; 2014 CCAR Comments: Has commented that it took into the account the large litigation settlements that were announced in 2H13. Says it would like to have the flexibility to raise its dividends and share repurchase program. 

·         Key Corp (KEY)- 2013 CCAR: $426 mln share repurchase and raised its dividend to $0.055 from $0.05; 2014 CCAR Comments: Has been relatively quiet but has said it is working with the Fed and is looking to increase returns.

·         Morgan Stanley (MS)- 2013 CCAR: Firm used its capital to purchase the remaining piece of its wealth management JV with Citigroup. A 35% interest valued at $4.7 bln; 2014 CCAR Comments: Has been upbeat in comments and believes it is the right time to increase its share repurchase and dividends. 

·         PNC Financial (PNC)- 2013 CCAR: Did not do any share repurchases due to an acquisition. It did raise its dividend 10% to $0.44 in its April board meeting; 2014 CCAR Comments: Bank has been upbeat on its capital level and ability to return to shareholders. Has not provide in-depth color on the make up of the return.

·         Regions Financial (RF)- 2013 CCAR: There were no objections to the plan. The company requested an increased quarterly dividend to $0.03/share and a plan to repurchase $350 mln in common stock and redeem up to $500 mln in trust preferred securities; 2014 CCAR Comments: The company acknowledged that it would like its dividend to be closer to where its peers are. 

·         State Street (STT)- 2013 CCAR: There were no objections to the plan. The Company requested repurchases authorization for up to $2.1 billion of common stock. The Company already increased dividend to $0.26/share from 0.24/share. 2014 CCAR Comments: The Company included a capital distribution plan consisting of dividends and common stock repurchase plans. 

·         SunTrust Bank (STI)- 2013 CCAR: There were no objections to the plan ($200 mln stock buyback program); 2014 CCAR Comments:The Company indicated it will announce plans for 2014 following the release of the stress test results.

·         US Bancorp (USB)- 2013 CCAR: There were no objections to the plan. The company recommended Board increase quarterly dividend to $23/share, an 18% increase. A one year repurchase authority was approved up to $2.25 bln, 20% higher than 2012; 2014 CCAR Comments: The Company will seek dividend increase & approval to continue repurchasing stock.

·         Wells Fargo (WFC)- 2013 CCAR: There were no objections to the plan. The Company confirmed proposed dividend rate for Q2 is 30 cents a share; 2014 CCAR Comments: The Company requested to raise dividend & repurchase more stock. 

Currencies 

Dollar Sees Second Day of Gains: 10-yr: -01/32..2.776%..USD/JPY: 102.45..EUR/USD: 1.3776

·         The Dollar Index clings to small gains near 80.25 as buyers remain in control for a second session. Click here to see a daily Dollar Index chart.

·         Today's action has been limited to a tight 15 cent range during U.S. trade as action has been trapped between 80.15/80.30. 

·         The Index is on track for its best close in three weeks with traders keeping a close eye on resistance in the 80.50 level. 

·         EURUSD is -45 pips @ 1.3770 as trade continues to work its way off session lows. Early selling caused the single currency to probe support in the 1.3750 area, but buyers quickly emerged in defense of the March lows. Eurozone currenct account balance will be released tomorrow.

·         GBPUSD is -35 pips @ 1.6495 as sellers remain in control for a fourth consecutive session. A move into the 1.6450 area is looking likely with support there being aided by the 100 dma. Britain's public sector net borrowing will cross the wires tomorrow.

·         USDCHF is +20 pips @ .8840 as a solid bid persist for a second session. Overnight, the Swiss National Bank held its Libor Rate at less than 0.25% while reiterating its EURCHF1.20 floor. Early buying ran the pair up to resistance in the .8850/.8875 area, but sellers put a fierce defense at the level. 

·         USDJPY is +10 pips @ 102.50 amid a rather uneventful trade. The pair has seen little response to Bank of Japan Governor Kuroda's overnight comments indicating the central bank will continue its asset purchase program until inflation hits its 2% target. Both the 50 and 100 dma linger near the key 102.50 level. Japanese banks are closed for Spring Equinox Day. 

·         AUDUSD is +10 pips @ .9040 as trade has reversed into the green following its early weakness. The hard currency probed the .9000 level early in overnight trade as participants shed risk, but action has seen a steady grind higher throughout the day. The 100 dma (.9025) rests just below key .90.50 support. Australia's CB Leading Index is due out tonight. 

·         USDCAD is flat @ 1.1240 as trade presses session lows. The pair climbed to nearly 1.1280 early on in the session, but it will be a struggle for action to post its best close since July 2009. The 1.1125 area marks the first level of support. Canadian data includes CPI and retail sales. 

Jason's Commentaries


Definitely did not expect such a huge bounce after the tapering news. As Fed is releasing the Stress Test results, banks rallied which dragged the whole market up as well. Not to mention important components like Microsoft and AT&T rallied more than 2.5% as well. However, the majority of the market remains flat. Internals were showing the bullish convergence. And most importantly, volumes were only at 632.1m shares traded on the NYSE. We're very likely to be consolidating in the sideways fashion for a while. Might have a little upside more to go. On the technical perspective, we're likely to face resistance 1880 level on the S&P500 soon. Nasdaq and Russells are not breaking higher yet. Meanwhile, things are likely to turn volatile. Stay safe =D 

Market Call: DOWN

Date: 21 March 2014