29 April 2014 AMC- Market went higher ahead of FOMC statements. Possible Pricing in expected

29 April 2014 AMC- Market went higher ahead of FOMC statements. Possible Pricing in expected

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 1.0%

·         Germany's DAX: + 1.5%

·         France's CAC: + 0.8%

·         Spain's IBEX: + 1.4%

·         Portugal's PSI: + 1.1%

·         Italy's MIB Index: + 2.2%

·         Irish Ovrl Index: + 0.8%

·         Greece ATHEX Composite: + 0.1%

Before Market Opens

S&P futures vs fair value: +8.80. Nasdaq futures vs fair value: +16.20.
The S&P 500 futures trade nine points above fair value.

Most major Asian indices ended higher, while Japan's Nikkei was closed for Showa Day. Also of note, South Korea's Samsung reported above-consensus earnings for the first quarter, but the stock did not rally as operating profits saw the second consecutive decline and the company guided for no change in capital expenditure spending in 2014.

In economic data, New Zealand's trade surplus expanded to NZD920 million from NZD793 million (expected surplus of NZD937 million) as imports increased NZD4.16 billion (expected NZD4.10 billion, prior NZD3.74 billion) and exports rose NZD5.08 billion (consensus NZD4.98 billion, NZD4.53 billion). South Korea's Current Account surplus narrowed to $6.65 billion from $7.54 billion. 

·         Japan's Nikkei was closed. 

·         Hong Kong's Hang Seng gained 1.5%, rallying into the close as telecom and property names provided support. China Mobile, Hang Lung Properties, and Sino Land all gained between 3.6% and 4.6%. 

·         China's Shanghai Composite added 0.8%, settling on its session high. Shanghai Industrial Development and Xinjiang Urban Construction both surged the limit, 10.0%. 

Major European indices trade higher across the board after the release of a full slate of economic data. Eurozone Consumer Confidence ticked up to -9.0 from -9.3, as expected. Separately, Business and Consumer Survey slipped to 102.0 from 102.5 (expected 103.0) and Industrial Sentiment fell to -4.0 from -3.3 (consensus -3.3). Also of note, M3 Money Supply rose 1.1% year-over-year (expected 1.4%, prior 1.3%) and Private Loans fell 2.2% year-over-year (consensus -2.1%, previous -2.2%). Germany's CPI fell 0.2% month-over-month (expected -0.1%, prior 0.3%), while the year-over-year reading increased 1.3% (consensus 1.4%, previous 1.0%). Great Britain's GDP rose 0.8% quarter-over-quarter (expected 0.9%, previous 0.7%), while the year-over-year reading increased 3.1% (consensus 3.2%, prior 2.7%). French Consumer Confidence fell to 85 from 88 (expected 88). Italian Retail Sales slipped 0.2% month-over-month (consensus 0.4%, previous 0.0%), while Business Confidence improved to 99.9 from 99.3 (expected 99.5). Spain's Unemployment Rate increased to 25.93% from 25.73% (consensus 25.85%). 

·         France's CAC is higher by 0.6%. Orange leads with a gain of 4.3% after showing an improvement in its cost structure. Consumer names lag, with L'Oreal down 1.5%. 

·         Great Britain's FTSE trades up 0.9% with Shire in the lead. The drug maker is higher by 5.7% amid reports Allergan is looking into bidding for the company. Miners are among the laggards with Antofagasta, Fresnillo, and Randgold Resources down between 1.0% and 2.4%. 

·         Germany's DAX holds an advance of 1.1%. Financials outperform as Commerzbank and Deutsche Bank sport respective gains of 2.8% and 2.3% after Deutsche Bank reported better than expected results.

U.S. Equities

·         Equity futures point to a firm open on this Tuesday morning 

·         The trend as of late has been the market vastly outperforming on Tuesdays with the S&P 500 gaining in 14 of 16 sessions so far in 2014 

·         The FOMC begins a two-day policy meeting, and it is widely anticipated tomorrow will bring another $10 bln taper of the Fed's QE program

o    S&P Futures +5 @ 1871

o    Dow Futures +38 @ 16,435

o    Nasdaq Futures +7 @ 3548

Asia

·         Markets ended mostly higher across Asia

·         China's Shanghai Composite (+0.8%) saw a late-day boost following reports Guangxi Province was easing property restrictions

·         That news also benefited Hong Kong's Hang Seng (+1.5%), which saw half of its gains in the final 30 minutes of trade

·         Australia's ASX (-0.9%) slid off its best level in six years

·         India's Sensex (-0.8%) saw a third day of selling following Thursday's record-high close

Market Internals

Market Internals
The Nasdaq closed up 29 (+0.72%) at 4104, the Dow closed up 87 (+0.53%) at 16535, and the S&P 500 closed up 9 (+0.48%) at 1878. Action came on near average volume (NYSE 724 mln vs. avg. of 727; NASDAQ 1787 mln vs. avg. of 2005), with advancers outpacing decliners (NYSE 1865/1265, NASDAQ 1377/1232) and mixed new highs/lows (NYSE 119/28, NASDAQ 32/58). 

Relative Strength: 
Coffee-JO +4.27%, Biotechnology-XBI +3.8%, Junior Gold Miners-GDXJ +2.77%, Biotechnology-IBB +2.7%, Social Media-SOCL +2.59%, Eastern Europe-ESR +2.04%, Mexico-EWW +1.83%, Middle East and Africa-GAF +1.78%, Indonesia-IDX +1.53%, Italy-EWI +1.41%.

Relative Weakness: 
Volatility-VXX -1.83%, Rare Earths-REMX -1.34%, Australia-EWA -0.71%, Copper-JJC -0.69%, Regional Banks-KRE -0.62%, Silver-SLV -0.48%, Swiss Franc-FXF -0.36%, Japan-EPP -0.28%, Vietnam-VNM -0.15%, Belgium-EWK -0.11%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Nasdaq Leads Stocks Higher
The stock market rallied on Tuesday, with the S&P 500 (+0.5%) posting its second consecutive gain as eight sectors ended in the green. Momentum names, meanwhile, rebounded from yesterday's relative weakness, which allowed the Nasdaq Composite (+0.7%) to finish ahead of the benchmark index.

Equity indices began the session on an upbeat note, slowly building on their early gains throughout the afternoon. The energy sector (+0.4%) powered the opening advance thanks to better than expected earnings from BP (BP 50.29, +1.25) and Valero Energy (VLO 56.84, -1.13). BP surged 2.6%, while Valero displayed early strength, but spent the session in a steady retreat from its opening high, which mirrored the price action of the entire sector.

The solid early gain in the energy sector kept the S&P 500 in the green during the first hour of action, while the Nasdaq briefly dipped into the red. The short-lived weakness in the tech-heavy index resulted from the underperformance of top-weighted components, but those names were able to rebound. For its part, the broader technology sector advanced 0.7%, finishing only behind the financial sector (+1.0%).

The economically-sensitive financial sector drew strength from a slew of top components, with Bank of America (BAC 15.24, +0.29) leading the charge. The stock gained 1.9% following yesterday's 6.3% loss. International financials had an even better showing, with Deutsche Bank (DB 44.45, +0.88) gaining 2.0% after reporting above-consensus results. Also of note, Standard & Poor's lowered the ratings of 15 European banks—including Deutsche Bank—to ‘Negative' from ‘Stable,' but the stock saw little reaction to the news.

In addition to receiving support from two of its largest sectors, the market was also underpinned by the health care space (+0.6%), where Dow component Merck (MRK 58.72, +2.04) rallied 3.6% in reaction to its bottom-line beat. Biotechnology, meanwhile, played along today as the iShares Nasdaq Biotechnology ETF (IBB 229.09, +6.03) gained 2.7%.

On the downside, consumer staples (-0.4%) and utilities (-0.4%) posted modest losses, with the utilities sector narrowing its 2014 gain to 13.4%.

Treasuries finished the session with slim gains, punctuating their session-long retreat from overnight lows. As a result, the benchmark 10-yr yield slipped one basis point to 2.69%.

Participation was essentially in line with average as 724 million shares changed hands at the NYSE floor.

Today's economic data featured two reports: 

·         The Conference Board's Consumer Confidence Index fell to 82.3 in April from an upwardly revised 83.9 (from 82.3) in March. The Briefing.com consensus pegged the Consumer Confidence Index at 83.5. The Present Situation Index fell to 78.3 in April from 82.5 in March. The Expectations Index increased slightly, from 84.8 in March to 84.9 in April. The overall decline in confidence was a little unusual. Typically, confidence levels trend with employment conditions, equity prices, gasoline costs, and media reports. Extremely low layoff levels coupled with a generally rising stock market in April resulted in a large increase in the University of Michigan Consumer Sentiment Index. Those factors were expected, yet they failed to push the Consumer Confidence Index higher. 

·         The Case-Shiller 20-city Home Price Index for February rose 13.2% while a 13.0% increase had been expected by the Briefing.com consensus. This follows the previous month's increase of 13.2%. 

Tomorrow, the weekly MBA Mortgage Applications Index will be released at 7:00 ET and the ADP Employment Change for April (Briefing.com consensus 215,000) will be announced at 8:15 ET. The advance reading of Q1 GDP (Briefing.com consensus 1.0%) will be released at 8:30 ET, while the Chicago PMI report (consensus 56.5) for April will cross the wires at 9:45 ET. Finally, the Federal Open Market Committee will release its latest policy directive at 14:00 ET. 

·         S&P 500 +1.6% YTD 

·         Dow Jones Industrial Average -0.3% YTD 

·         Nasdaq Composite -1.8% YTD 

·         Russell 2000 -3.6% YTD

Commodities

Closing Commodities: Crude Oil Gains 0.4%, Closing Above $101/Barrel

·         June gold chopped around slightly below the unchanged level for most of today's floor trade as the dollar index traded higher.

·         The FOMC began a two-day meeting on rates and policy and will issue a rate decision tomorrow. The yellow metal lifted from its session low of $1289.20 per ounce set in early morning action and peaked at a session high of $1302.00 per ounce. It eventually settled at $1296.20 per ounce, or 0.2% lower.

·         July silver spent its entire pit session in the red, trading as low as $19.36 per ounce. It settled with a 0.4% loss at $19.54 per ounce, slightly below its session high of $19.57 per ounce.

·         June crude oil extended yesterday's gains, advancing as high as $102.25 per barrel. Prices pulled back in late morning action and brushed a session low of $100.87 per barrel. The energy component eventually settled with a 0.4% gain at $101.27 per barrel.

·         June natural gas climbed into positive territory after touching a session low of $4.76 per MMbtu in morning action. It brushed a session high of $4.85 per MMBtu and settled with a 0.8% gain at $4.83 per MMBtu.

 COMEX Metals Closing Prices

  June gold fell $2.80 to $1296.20/oz 

·         Gold chopped around slightly below the unchanged line for most of today's pit trade as the dollar index traded higher. The FOMC began a two-day meeting on rates and policy and will issue a rate decision tomorrow. The yellow metal lifted from its session low of $1289.20 set in early morning action and peaked at a session high of $1302.00. It eventually settled with a 0.2% loss. 

  July silver fell $0.08 to $19.54/oz 

·         Silver spent its entire floor session in the red, trading as low as $19.36 in early morning action. It settled slightly below its session high of $19.57, cutting losses to 0.4%. 

  July copper fell 2 cents to $3.07/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         July corn rose 8 cents to $5.22/bushel 

·         July wheat rose 7 cents to $7.16/bushel 

·         July soybeans rose 18 cents to $15.16/bushel 

·         May ethanol rose 3 cents to $2.30/gallon 

·         July sugar (#16 (U.S.)) fell 0.17 of a penny to 24.34 cents/lbs

NYMEX Energy Closing Prices

  June crude oil rose $0.42 to $101.27/barrel 

·         Crude oil extended yesterday's gains, climbing as high as $102.25. Prices pulled back in late morning action and brushed a session low of $100.87. The energy component eventually settled with a 0.4% gain. 

  June natural gas rose 4 cents to $4.83/MMBtu 

·         Natural gas climbed into positive territory after touching a session low of $4.76 in morning action. It brushed a session high of $4.85 and settled with a 0.8% gain. 

  June heating oil rose 2 cents to $2.96/gallon 

  June RBOB rose 2 cents to $3.01/gallon

Treasuries

Long Bond Lags: 10-yr: +01/32..2.696%..USD/JPY: 102.57..EUR/USD: 1.3809

·         Treasuries booked small losses, but finished on session highs as steady buying persisted throughout the session. Click here to see an intraday yields chart.

·         Overnight selling had yields up a handful of bps at the long end with trade slipping to session lows following the Case-Shiller 20-city Index (12.9% actual v. 13.0% expected) miss.

·         The complex endured some chop before the in-line consumer confidence (82.3) reading brought buyers out of the woodwork. 

·         Maturities climb to session highs ahead of the lunch hour and put in their highs as details of the Apple bond offering crossed the wires. 

·         Apple announced it will raise $12 bln through a mixed offering, which will presumably be used as part of their capital allocation plan. 

·         The long bond lagged throughout the session before finishing +3.2bps @ 3.491%. Early weakness had the yield looking like it was going to test 3.550% resistance, but sellers exhausted before that came to fruition. 

·         The 10y closed +1.8bps @ 2.695%. The benchmark yield closed in the middle of the 2.600%/2.800% range that has been in place for the past three months. 

·         A +1.6bp advance saw the 5y tick up to 1.741%. The yield narrowly avoided its highest close in three weeks as action slipped below 1.745% ahead of the cash close. 

·         A steeper curve persisted as the 5-30-yr spread widened to 175bps. 

·         Precious metals lost ground with gold slipping -$3 to $1296 and silver falling $-0.10 to $19.49.

·         Data: MBA Mortgage Index (7), ADP Employment Change (8:15), GDP-Adv. (8:30), Employment Cost Index (8:30), Chicago PMI (9:45), and the FOMC rate decision (14).

Next Day In View 

Economic Commentary

Economic Summary: Consumer Confidence misses expectations; Q1 GDP tomorrow at 8:30; Fed decision tomorrow at 14:00
Economic Data Summary:

·         February Case Schiller 20 City Index 12.9% vs Briefing.com consensus of 13.0%; January was 13.2%

·         April Consumer Confidence 82.3 vs Briefing.com consensus of 83.6; March was revised to 83.9 from 82.3

o    The overall decline in confidence was a little unusual. Typically, confidence levels trend with employment conditions, equity prices, gasoline costs, and media reports. Extremely low layoff levels coupled with a generally rising stock market in April resulted in a large increase in the University of Michigan Consumer Sentiment Index. Those factors were expected, yet they failed to push the Consumer Confidence Index higher.

Fed/Treasury Events Summary:

·         The Fed has begun a two day meeting.  The policy statement will be released tomorrow at 14:00 (no press conference or economic projections).

Upcoming Economic Data:

·         Weekly MBA Mortgage Applications due out Wednesdsay at 7:00 (Briefing.com consensus of ; Last Week was -3.3%)

·         April ADP Employment Change due out Wednesdsay at 8:15 (Briefing.com consensus of 215K; March was 191K)

·         First Quarter GDP- Advance due out Wednesdsay at 8:30 (Briefing.com consensus of 1.0%; Fourth Quarter was 2.6%)

·         First Quarter Chain Deflator Advance due out Wednesdsay at 8:30 (Briefing.com consensus of 1.8%; Fourth Quarter was 1.6%)

·         First Quarter Employment Cost Index due out Wednesdsay at 8:30 (Briefing.com consensus of 0.5%; Fourth Quarter was 0.5%)

·         April Chicago PMI due out Wednesdsay at 9:45 (Briefing.com consensus of 56.5; March was 55.9)

On other news.... 

Currencies 

Dollar Nears Key 80.00 Resistance: 10-yr: unch..2.694%..USD/JPY: 102.55..EUR/USD: 1.3808

·         The Dollar Index lingers near session highs as trade probes the 79.80 level. Click here to see a daily Dollar Index chart.

·         Today's small bid has the Index on track to halt its five-day skid, and puts the key 80.00 area in focus ahead of tomorrow's FOMC rate decision. 

·         EURUSD is -40 pips @ 1.3810 as sellers take control for the first time in six days. The single currency saw an early bid despite mostly disappointing data emerging from the region, but trade quickly reversed into the red after German CPI printed a cooler than anticipated -0.2% MoM(-0.1% MoM expected). The cooler than expected reading has reignited speculation the ECB will launch a QE-type program. Support in the 1.3800 area remains in focus. Eurozone data is heavy as CPI Flash Estimate, French consumer spending, German retail sales, German unemployment rate, and Spanish Flash GDP are due out tomorrow. 

·         GBPUSD is +20 pips @ 1.6825 as action contends with its best closing print since November 2009. Sterling has seen little response to the British GDP miss with action stuck in a 50 pip amid today's session. The 1.6800 area has provided support for much of the past two weeks, and remains in play. 

·         USDCHF is +40 pips @ .8845 as buyers take control following five days of selling. Action continues to be a derivative of the euro with today's bid provoking a test of three-week highs. Swiss data is limited to KOF Economic Barometer. 

·         USDJPY is +10 pips @ 102.60 as trade fights to hold onto its gains. Earlier this morning, the pair hit a three-week high of 102.80, but sellers have managed push the pair back towards the 102.50 pivot. Japan's preliminary industrial production and average cash earnings will cross the wires ahead of the Bank of Japan rate decision. 

·         AUDUSD is +10 pips @ .9270 as trade has won back yesterday's losses. Traders continue to monitor support in the .9250 region, which has held up since late-March. 

·         USDCAD is -75 pips @ 1.0950 as action presses to a three-week low. Today's selling comes following several failed attempts to retake resistance in the 1.1050 area, and has action probing the 100 dma. Canada's GDP and Raw Materials Price Index are scheduled for tomorrow.

Jason's Commentaries


It happened again... Market decided to price into the heavy economy news coming out this week... and ahead of May.. The initial session was very bullish with some profit taking then continued rallying till the close. Volumes were surprisingly at 739.1m shares traded on the NYSE. The Tech staged an upbeat last night as Google and HP led the way gaining over 2%. To contribute to the gain, the biotech sector also rallied which overun the drag caused by Staples and Utilities. On the technical side, the amount of divergence happening in the market is pointing that we're almost at the high... Russells remain weak despite the S&P500 is all the way at the high. Nasdaq is still on the downtrend. Depending on the data, we're likely to end up higher this week.    

Market Call: ABSTAIN

Date: 30 April 2014