24 April 2014 AMC- Market been through a very volatile session as Apple rallied on stock splits

24 April 2014 AMC- Market been through a very volatile session as Apple rallied on stock splits

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: + 0.1%

·         France's CAC: + 0.6%

·         Spain's IBEX: + 0.4%

·         Portugal's PSI: -0.1%

·         Italy's MIB Index: + 0.7%

·         Irish Ovrl Index: -0.7%

·         Greece ATHEX Composite: 0.0%

Before Market Opens

S&P futures vs fair value: +12.00. Nasdaq futures vs fair value: +65.00.
The S&P 500 futures trade 12 points above fair value.

Asian markets ended the Thursday session on a mixed note after the release of several economic data points. Japan's Corporate Services Price Index rose 0.7% year-over-year (expected 0.8%, previous 0.7%), while the Foreign Bonds Buying report indicated net sales in the amount of JPY463.90 billion (previous purchases of JPY114.60 billion). The Reserve Bank of New Zealand hiked its official cash rate to 3.0% from 2.75%, as expected, and raised its GDP target to 3.5% from 3.3%, citing pent-up demand and inflationary pressures. South Korea's GDP rose 0.9% quarter-over-quarter (consensus 0.8%, previous 0.9%), while the year-over-year reading jumped 3.9% (expected 3.8%, prior 3.7%). 

·         Japan's Nikkei lost 1.0%, ending near its session low amid weakness in exporter shares. NEC, Sony, and Toshiba lost between 2.3% and 4.2%. Stocks related to the materials sector outperformed, with Nisshin Steel and Sumitomo Metal Mining both up near 4.0%. 

·         Hong Kong's Hang Seng posted a modest gain of 0.2% as consumer names displayed relative strength. Belle International, Li & Fung, and Sands China gained between 1.0% and 1.4%. Power Assets Holdings was the weakest performer, falling 3.2%. 

·         China's Shanghai Composite lost 0.5%, registering its second consecutive decline as industrials and utilities weighed. Shenyang Jinshan Energy and Zhejiang Hangxiao Steel Structure both lost near 6.5%. 

Major European indices trade higher across the board. Mario Draghi discussed eurozone monetary policy once again, saying any worsening in the medium-term outlook for inflation could trigger the deployment of an asset purchase program.

Economic data was limited. Germany's Ifo Business Climate Index rose to 111.2 from 110.7 (consensus 110.5), as Business Expectations improved to 107.3 from 106.4 (expected 105.8) and Current Assessment ticked up to 115.3 from 115.2 (forecast 115.7). Great Britain's CBI Distributive Trades Survey jumped to 30 from 13 (expected 17). French Business Survey slipped to 100 from 101, as expected. Also of note, Swiss trade surplus narrowed to CHF2.05 billion from CHF2.30 billion (expected CHF 2.14 billion). 

·         Germany's DAX is higher by 0.5% with industrials in the lead. Deutsche Post and Deutsche Lufthansa are both up near 1.5%. Utilities lag as E.ON and RWE hold respective losses of 0.6% and 0.1%. 

·         Great Britain's FTSE trades up 0.6%. Drug maker AstraZeneca leads with a gain of 5.4% after beating earnings estimates. Consumer names Associated British Foods and Unilever lag. The two hold respective losses of 1.1% and 1.5%. 

·         In France, the CAC is higher by 0.9%. Alstom is the top performer, up 12.1%, amid reports General Electric is looking into buying the company for about $13 billion. Carrefour lags, down 3.1%.

U.S. Equities

·         Equity futures suggest strong gains at the open 

·         The Nasdaq (+1.6%) leads the way after strong quarterly reports from Apple (AAPL), Citrix Systems (CTXS), Facebook (FB) 

·         The early bid should put the DJIA and S&P 500 within striking distance of their record-high closes

·         The VIX (13.27) remains near three-month lows

·         Initial Claims (329K actual v. 312K expected)

·         Continuing Claims (2680K actual v. 2750K expected)

·         Durable Orders (2.6% actual v. 2.0% expected)

·         Durable Orders -ex Transportation (2.0% actual v. 0.5% expected)

o    S&P Futures +6 @ 1879

o    Dow Futures +17 @ 16,477

o    Nasdaq Futures +55 @ 3610

Asia

·         Markets finished mixed across Asia 

·         Japan's Nikkei (-1.0%) lagged after Prime Minister Shinzo Abe announced a trade deal with the United States has yet to be completed

·         On the Mainland, China's Shanghai Composite (-0.5%) slid as traders began bracing for the next wave of IPOs

·         Hong Kong's Hang Seng (+0.2%) eked out a small gain

·         Australia's ASX (+0.2%) climbed to its best level in six years

·         India's Sensex (+0.5%) rallied to a record peak despite the hotter than anticipated Wholesale Price Index (5.7% YoY actual v. 5.3% YoY expected, 4.7% YoY previous)

·         The Reserve Bank of New Zealand hiked its key rate 25 bps to 3.00%, as expected

Market Internals

Market Internals -Technical-
The Nasdaq closed up 21 (+0.52%) at 4148, the S&P 500 closed up 3 (+0.17%) at 1879, and the Dow closed flat at 16502. Action came on near  average volume (NYSE 646 mln vs. avg. of 720; NASDAQ 1993 mln vs. avg. of 2001), with mixed advancers/decliners (NYSE 1586/1509, NASDAQ 1105/1507) andnew highs outpacing new lows (NYSE 134/16, NASDAQ 58/26).

Relative Strength: 
U.S. Home Construction-ITB +2.44%, Copper-JJC +1.84%, Volatility-VXX +1.34%, Silver-SLV +1.23%, U.S. Health Care-IHF +1.2%, Greece-GREK +0.83%, Singapore-EWS +0.82%, Chile-ECH +0.81%, Latin America 40-ILF +0.71%, Brazilian Real-BZF +0.69%.

Relative Weakness: 
Eastern Europe-ESR -3.01%, Junior Gold Miners-GDXJ -2.82%, Russia-RSX -2.27%, Regional Banks-KRE -1.8%, Cocoa-NIB -1.62%, Banks-KBE -1.45%, Silver Miners-SIL -1.4%, Middle East and Africa-GAF -1.34%, Vietnam-VNM -1%, Columbia Index-GXG -0.74%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Tech Shares Climb While Dow Jones Lags
The Nasdaq Composite (+0.5%) and S&P 500 (+0.2%) posted modest gains on Thursday, but not before enduring a morning dip into the red, which took place in reaction to reports indicating Russia has commenced military exercises on the Ukrainian border.

The news from Europe knocked the key indices from their early highs, while giving a boost to safe-haven assets like gold futures (+0.5% to $1290.80/ozt), Treasuries (10-yr yield -1 bps to 2.69%), and the Japanese yen (102.30 vs USD); however the morning spike in safety flows was retraced partially, while equities rallied off their lows with the technology sector (+1.1%) setting the pace.

Tech shares (and the Nasdaq) received significant support from the shares of Apple (AAPL 567.77, +43.02), which surged 8.2% after the top-weighted tech company handily beat earnings expectations. In addition, Apple increased its share buyback to $90 billion and announced a 7:1 stock split, which will go into effect on June 2.

Apple notwithstanding, the market heard from several other tech names like Citrix Systems (CTXS 60.00, +4.01), Facebook (FB 60.87, -0.49), F5 Networks (FFIV 105.98, -2.21), and Texas Instruments (TXN 48.47, +2.01), all of which reported better than expected earnings.

Elsewhere, the discretionary sector (+0.5%) was the only other noteworthy pocket of strength, thanks to a boost from homebuilders. DR Horton (DHI 23.13, +1.78) gained 8.3% after reporting above-consensus results, while the broader iShares Dow Jones US Home Construction ETF (ITB 23.90, +0.57) advanced 2.4%. The discretionary space also received significant support from Amazon.com (AMZN 337.15, +12.57), which rallied 3.9% ahead of its after-hours earnings release.

Even though two of the four largest sectors displayed relative strength, that was not the case with the other two top-weighed groups. Health care (-0.2%) and financials (-0.1%) lagged throughout the session, with the relative weakness in health care largely due to the underperformance of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 229.62, -1.37) lost 0.6%, but managed to close above its 20-day moving average (228.55).

Also of note, the industrial sector (-0.2%) ended among the laggards after several components reported earnings. 3M (MMM 136.65, -1.34) and UPS (UPS 98.64, -0.60) missed expectations, while Caterpillar (CAT 105.28, +1.90) reported well ahead of estimates. For its part, United Continental (UAL 41.53, -4.53) also beat bottom-line estimates, but slumped 9.8%.

Participation remained relatively light as less than 650 million shares changed hands at the NYSE.

Reviewing today's data: 

·         The initial claims level increased to 329,000 for the week ending April 19 from an upwardly revised 305,000 (from 304,000) for the week ending April 12. The Briefing.com consensus expected the claims level to increase to 312,000. A 24,000 increase from the previous week may seem like a lot, but it took place at a time when the Department of Labor normally has difficulty adjusting for the Easter holiday. In all likelihood, the low claims levels at the beginning of the month were a result of seasonal biases and not a change in layoff trends. Claims are likely to stabilize in the 320,000 -- 330,000 range over the next few weeks. 

·         Durable goods orders increased 2.6% in March after increasing a downwardly revised 2.1% (from 2.2%) in February. The Briefing.com consensus expected durable goods orders to increase 2.0%. For the past few months, durable goods orders have been reliant on Boeing for growth. That wasn't necessarily the case in March as demand strengthened across the board. Transportation orders were still important, up 4.0% after increasing 6.7% in February, but were not the sole provider of growth. Durable goods orders excluding transportation increased 2.0% in March, up from a 0.1% increase in February. That was also well above the consensus expectation of a 0.5% gain. 

Tomorrow, the final reading of the Michigan Consumer Sentiment survey for April (Briefing.com consensus 82.6) will be released at 9:55 ET. 

·         S&P 500 +1.6% YTD 

·         Dow Jones Industrial Average -0.5% YTD 

·         Nasdaq Composite -0.7% YTD 

·         Russell 2000 -1.5% YTD

Commodities

Closing Commodities: Natural Gas Ends 0.4% Following Data; Gold Rises 0.5%

·         Precious metals began pit trade in the red but rallied sharply into positive territory moments after equity markets opened.

·         June gold brushed a session low of $1268.50 per ounce in early morning action and popped to a session high of $1299.00 per ounce. It then consolidated near the $1290.00 per ounce level and settled with a 0.5% gain at $1290.80 per ounce.

·         May silver traded as low as $18.98 per ounce in early morning pit trade and rallied to a session high of $19.91 per ounce. It eventually settled at $19.69 per ounce, or 1.3% higher.

·         June crude oil also traded higher, brushing a session high of $102.37 per barrel. It settled with a 0.5% gain at $101.95 per barrel.

·         May natural gas touched a session high of $4.79 per MMBtu shortly after inventories were released. However, it retreated into negative territory as investors digested the data which showed a build of 49 bcf vs expectations for a build of 36-42 bcf.

·         The energy component dipped to a session low of $4.67 per MMBtu and settled with a 0.4% loss at $4.71 per MMBtu.

COMEX Metals Closing Prices

·         June gold rose $6.00 to $1290.80/oz 

·         May silver rose $0.25 to $19.69/oz 

·         May copper rose 6 cents to $3.12/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn fell 2 cents to $5.02/bushel

·         May wheat rose 15 cents to $6.91/bushel

·         May soybeans rose 4 cents to $14.73/bushel

·         May ethanol fell 5 cents to $2.22/gallon

·         July sugar (#16 (U.S.)) fell 0.14 of a penny to 24.54 cents/lbs

NYMEX Energy Closing Prices

·         June crude oil rose $0.48 to $101.95/barrel 

·         May natural gas fell 2 cents to $4.71/MMBtu 

·         June heating oil rose 4 cents to $3.01/gallon 

·         June RBOB rose 1 cent to $3.05/gallon

Treasuries

Treasuries See Mixed Trade: 10-yr: +03/32..2.689%..USD/JPY: 102.32..EUR/USD: 1.3826

·         Treasuries ended mixed amid a choppy trade. Click here to see an intraday yields chart. 

·         The complex held small losses ahead of the cash open, and slumped to its worst levels of the session following the strong durable orders (2.6% actual v. 2.0% expected) data.

·         Reports out of Eastern Europe suggesting Russian troops have begun conducting exercises on the Ukraine border ran maturities to their best levels of the session, but yields managed to hold important support and bounced into the in-line $29 bln 7y note auction. 

·         The auction drew 2.317% (WI 2.317%) and a 2.60x bid/cover (12-auction average 2.57x). A solid indirect bid (49.9%) provided support at directs (19.0%) were slightly below average. Primary dealers ended up with 31.1% of the supply. 

·         Some post-auction buying caused yields to test session lows, where they closed the session. 

·         Selling weighed heaviest on the belly as the 5y rallied +3.2bps to 1.743%. Early weakness saw the yield test 1.780%, but trade was able to narrowly avoid its highest closing print in three weeks. 

·         The 10y edged up +0.2bps to 2.688%. Post-data selling provoked a test of the 200 dma (2.728%), but action slipped back onto the key 2.680% pivot by the cash close.

·         At the long end, the 30y outperformed, slipping -0.5bps to 3.464%. The yield on the long bond narrowly avoided its lowest close in 10 months, which would occur on a move below 3.450%. 

·         Flattening continued along yield curve as the 5-30-yr spread tightened to 172bps. 

·         Precious metals booked gains with gold adding $7 to $$1292 and silver climbing $0.24 to $19.68. 

·         Data: Michigan Sentiment - Final (9:55).

Next Day In View 

Economic Commentary

Economic Summary: Durable Orders top expectations; jobless claims rise faster than expected
Economic Data Summary:

·         Weekly Initial Claims  329K vs Briefing.com consensus of 312K; Last Week was revised to 305K from 304K

·         Weekly Continuing Claims  2.680 M vs Briefing.com consensus of 2.750 M ; Last Week was revised to 2.741 M from 2.739 M

·         March Durable Orders 2.6% vs Briefing.com consensus of 2.0%; February was revised to 2.1% from 2.2%

·         March Durable Goods - Ex transportation 2.0% vs Briefing.com consensus of 0.5%; February was revised to 0.1% from 0.1%

Upcoming Economic Data:

·         April Michigan Sentiment due out Friday at 9:55 (Briefing.com consensus of 82.6; March was 82.6)

Upcoming Fed/Treasury Events:

·         Treasury will issue an auction for $29 bln in 7 year notes at 13:00 today

On other news.... 

Currencies 

Dollar Drifts Amid Sleepy Session: 10-yr: +04/32..2.691%..USD/JPY: 102.27..EUR/USD: 1.3825

·         The Dollar Index hovers near the key 79.80 level as a subdued session nears its final hour of trading. Click here to see a daily Dollar Index chart.

·         Aside from a post-data spike to session highs near 80.00, the Index has spent the entire session lingering just below the break-even line as traders begin to look ahead towards next week's FOMC rate decision.

·         EURUSD is +10 pips @ 1.3825 amid a mostly uneventfully trade. The single currency has been stuck near the key 1.3800 level for the past two weeks as a sloppy holiday trade has persisted through this week. Overnight comments from ECB President Mario Draghi suggested the central bank could cut its deposit rate below zero, if necessary, but his comments appear to be further attempts to talk the single currency lower. Italian banks are closed tomorrow for Liberation Day. 

·         GBPUSD is +15 pips @ 1.6795 as action rests near its best level since November 2009. Support in the region will continue to be watched closely ahead of next week's FOMC decision. British data includes BBA Mortgage Approvals and retail sales. 

·         USDCHF is -15 pips @ .8820 as light selling persists for a third day. The losing streak comes following six straight days of gains, and has dropped action back below the 50 dma (.8832). A breakdown of .8760 puts the March lows back in the cross hairs. 

·         USDJPY is -30 pips @ 102.25 as trade dips back below the 50 dma (102.38). Traders continue to monitor the 102.50 area, which is home to a key pivot. Japanese data is limited to Tokyo Core CPI. 

·         AUDUSD is -30 pips @ .9255 as action slides onto support dating back to late March/early April. The hard currency saw a sharp sell off overnight, but has managed to stabilize during U.S. trade. Australian banks are closed for Anzac Day. 

·         USDCAD is flat @ 1.1030 as an uneventful session nears the close. An absence of tradable news/data out of Canada has kept trade lingering near resistance in the area helped by the 50 dma.

Jason's Commentaries


Apple has been the single most influential stocks that moved the market last night. Though it was volatile, the market managed to gain higher grounds as Apple moved the Nasdaq and the S&P500. Amazon was another huge segment contributed to its gains. Volumes were at 660m shares traded on the NYSE last night. Internals were pointing towards a flat day but yet the Nasdaq and S&P500 gained as Apple and Amazon led. I reckon that the market is likely to take profit today as it's the Friday and after such a long rally. The bulls are likely to take a rest day today. 

Market Call: DOWN

Date: 25 April 2014