28 April 2014 AMC - Market ended up higher as Tech offset losses in Financials

28 April 2014 AMC - Market ended up higher as Tech offset losses in Financials

Market Summary 

European Markets Closing Prices

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

·       UK's FTSE: + 0.2%

·       Germany's DAX: + 0.5%

·       France's CAC: + 0.4%

·       Spain's IBEX: + 0.1%

·       Portugal's PSI: + 0.2%

·       Italy's MIB Index: + 0.3%

·       Irish Ovrl Index: -0.8%

·       Greece ATHEX Composite: -2.4%

Before Market Opens

S&P futures vs fair value: +6.20. Nasdaq futures vs fair value: +9.50.
The S&P 500 futures trade six points above fair value.

The major Asian markets ended mostly lower, with China's Shanghai Composite (-1.6%) posting the largest loss. Regional economic data was limited. Hong Kong's trade deficit narrowed to HKD50.40 billion from HKD53.70 billion (expected deficit of HKD42.90 billion) as exports rose 3.4% (consensus -1.1%, prior -1.3%) and imports increased 3.2% (expected -2.4%, previous 6.8%). Japan's Retail Sales rose an in-line 11.0% (prior 3.6%), which marked the sharpest increase since March 1997 and reflected strong demand for goods ahead of the sales tax increase that went into effect on April 1. 

·       Japan's Nikkei (-1.0%) was pressured by exporters. Honda Motor and Suzuki Motor lost 4.5% and 3.5%, respectively. Yahoo Japan also lagged, falling 6.2%. 

·       Hong Kong's Hang Seng (-0.4%) retreated amid weakness in property names. China Overseas Land and Hang Lung Properties both lost near 3.0%. Energy names displayed strength, with CNOOC and PetroChina climbing 1.1% and 1.7%, respectively. 

·       China's Shanghai Composite (-1.6%) retreated throughout the session. Health care names lagged, with Wuhan Jianmin and Zhejiang Huahai both down the limit, 10.0%. 

Major European indices hold gains across the board following the release of just two data points. Germany's Import Price Index fell 0.6% month-over-month (expected -0.2%, prior -0.1%) and Italy's Consumer Confidence jumped to 105.4 from 101.9 (consensus 101.5).

Among news of note, reports out of Ukraine indicate the pro-Russian mayor of Kharkiv, Gennady Kernes, is undergoing an operation after being shot. 

·       Great Britain's FTSE is higher by 0.1%. AstraZeneca leads with a gain of 16.0% after Pfizer confirmed its interest in the company. Miners Glencore Xstrata and Rio Tinto lag, down 1.2% and 2.0%, respectively. 

·       In France, the CAC trades up 0.1% with drug maker Sanofi in the lead. The stock trades higher by 2.3%. Utilities Electricite de France and GDF Suez underperform with respective losses of 1.5% and 0.5%. 

·       Germany's DAX sports an advance of 0.2%. Health care names Bayer and Merck outperform with gains of 4.6% and 0.7%, respectively. Siemens is the weakest component, down 1.9%.

U.S. Equities

·       Equity futures are off their best levels of the session, but remain firm on this Merger Monday. 

·       Takeovers by Energy Transfer Partners (ETP) and Forest Laboratories (FRX) are aiding the early bid with talks between Pfizer (PFE) and AstraZeneca (AZN) also providing support. 

·       The early gains have the major averages looking to retrace Friday's selling as the S&P 500 sees a bounce off its 50 dma. 

o   S&P Futures +4 @ 1864

o   Dow Futures +43 @ 16,367

o   Nasdaq Futures +5 @ 3535

Asia

·       Markets across Asia finished mostly lower

·       Japan's Nikkei (-1.0%) slumped to a two-week low despite the 11.0% YoY surge in retail sales (10.9% YoY expected) as the strong number was associated with citizens rushing to make big-ticket purchases ahead of the consumption tax increase 

·       On the Mainland, China's Shanghai Composite (-1.6%) saw further weakness related to the large number of IPOs coming to market in the days ahead 

·       Hong Kong's Hang Seng (-0.4%) closed near a one-month low

·       Australia's ASX (+0.1%) edged up to its best level in six years

Market Internals

Market Internals -Technical-
The Dow closed up 87 (+0.53%) at 16449, the S&P 500 closed up 6 (+0.32%) at 1869, and the Nasdaq closed down 1 (-0.03%) at 4074. Action came on above average volume (NYSE 804 mln vs. avg. of 724; NASDAQ 2196 mln vs. avg. of 2027), with mixed advancers/decliners (NYSE 1621/1497, NASDAQ 984/1646) and mixed new highs/lows (NYSE 97/53, NASDAQ 24/109).

Relative Strength:
Russia-RSX +3.96%, Natural Gas-UNG +2.44%, Turkey-TUR +2.01%, Eastern Europe-ESR +1.88%, Taiwan-EWT +1.87%, Pharmaceuticals-PPH +1.70%, Consumer Staples-XLP +1.14%, Realty Majors-ICF +1.07%, Retail-XRT +0.97%, Peru-EPU +0.77%.

Relative Weakness:
Clean Energy-PBW -3.69%, Junior Gold Miners-GDXJ -3.45%, Social Media-SOCL -2.86%, Indonesia-IDX -2.13%, Volatility-VXX -2.10%, Internet Composite-FDN -1.92%, Greece-GREK 1.72%, Egypt-EGPT 1.50%, New Zealand-ENZL 0.87%, Vietnam-VNM 0.54%.    

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks End Mixed as Momentum Names Weigh
The stock market began the new week on a mixed note despite showing early strength. Weakness among small-cap names resulted in the underperformance of the Russell 2000 (-0.6%) and the Nasdaq Composite (-0.03%), while the S&P 500 settled higher by 0.3%.

Equity indices climbed out of the gate, emboldened by M&A activity in the heavily-weighted health care sector (+0.6%). The third-largest group served as an early leader with help from Pfizer (PFE 32.04, +1.29), which jumped 4.2% after confirming its interest in AstraZeneca (AZN 77.01, +8.35). Also of note, Forest Laboratories (FRX 89.50, -0.34) agreed to acquire Furiex Pharmaceuticals (FURX 103.05, +22.90) for $1.1 billion.

Even though the health care sector rallied at the open, the broader market was unable to build on the strength as weakness in momentum names—including biotechnology—outweighed the early optimism. The iShares Nasdaq Biotechnology ETF (IBB 223.06, -0.90) spent the entire session between its 20- and 200-day moving averages before settling just above the 200-day average.

Elsewhere, other momentum names that have been volatile throughout April, remained unable to stage a rebound, which suggests the retreat in early April may not have fully run its course. For example, Amazon.com (AMZN 296.58, -7.25), Facebook (FB 56.14, -1.57), LinkedIn (LNKD 148.06, -10.11), and Yelp(YELP 55.55, -2.08) all lost between 2.4% and 6.4%. Interestingly, the losses in high-beta tech names did not scare investors away from large caps. Apple (AAPL 594.09, +22.15), IBM (IBM 193.14, +3.51), and Microsoft (MSFT 40.87, +0.96) advanced between 1.9% and 3.9%.

The relative strength of large cap issues was on display within the Dow Jones Industrial Average (+0.5%), which outperformed throughout the session as 22 of 30 components posted gains.

However, not all large caps displayed comparable strength as the financial sector (-0.6%) lagged throughout the session. Bank of America (BAC 14.95, -1.00) fell 6.3% after announcing an adjustment to its estimated regulatory capital ratios, which will require the bank to submit a new capital plan to the Fed. The stock ended near its session low, while the financial sector was able to reclaim the bulk of its losses during the afternoon as equity indices rallied off their lows.

Treasuries spent the entire session in the red, ending near their lows. The 10-yr note lost ten ticks, pushing its yield up to 2.70%.

Participation was above average as 804 million shares changed hands at the NYSE floor.

Economic data was limited to the Pending Home Sales report for March, which increased 3.4% while the Briefing.com consensus expected an increase of 1.0%. Today's reading followed last month's revised decrease of 0.5% (from -0.8%).

Tomorrow, the Case-Shiller 20-city Index (Briefing.com consensus +13.0%) will be released at 9:00 ET, while the Consumer Confidence survey for April (consensus 83.6) will be reported at 10:00 ET. 

·       S&P 500 +1.1% YTD 

·       Dow Jones Industrial Average -0.8% YTD 

·       Nasdaq Composite -2.5% YTD 

·       Russell 2000 -3.8% YTD

Commodities

Closing Commodities: Gold Closes Just Under $1300/Oz, Ending 0.1% Lower; Natural Gas Futures Rally 2.8%

·       June gold pulled back into negative territory from its session high of $1303.90 per ounce set in early morning pit trade. It touched a session low of $1292.10 per ounce after economic data showed that Pending Home Sales in March increased 3.4% while the Briefing.com consensus expected an increase of 1.0%. The yellow metal managed to inch slightly higher as the session progressed and cut losses to 0.1% as it closed at $1299.00 per ounce.

·       May silver retreated into the red after touching a session high of $19.72 per ounce in morning action. It traded as low as $19.47 per ounce and settled at $19.59 per ounce, or 0.5% lower.

·       June crude pulled back from its session high of $101.36 per barrel set at pit trade open and chopped around the unchanged level for most of the session. It brushed a session low of $100.23 per barrel and eventually settled with a 0.3% gain at $100.85 per barrel.

·       June natural gas climbed as high as $4.81 per MMBtu after lifting from a session low of $4.74 per MMBtu in morning floor action. It settled at $4.79 per MMBtu, or 2.8% higher.

COMEX Metals Closing Prices

  June gold fell $1.60 to $1299.00/oz 

·       Gold pulled back into negative territory from its session high of $1303.90 set in early morning pit trade. It touched a session low of $1292.10 after economic data showed that Pending Home Sales in March increased 3.4% while the Briefing.com consensus expected an increase of 1.0%. The yellow metal managed to inch slightly higher as the session progressed and cut losses to 0.1%. 

  May silver fell $0.10 to $19.59/oz 

·       Silver retreated into the red after touching a session high of $19.72 in morning action. It traded as low as $19.47 and settled with a 0.5% loss. 

  June copper settled unchanged at $3.09/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·       July corn rose 1 cent to $5.14/bushel 

·       July wheat rose 1 cent to $7.09/bushel 

·       July soybeans rose 4 cents to $14.98/bushel 

·       May ethanol rose 1 cent to $2.27/gallon 

·       July sugar (#16 (U.S.)) fell 0.19 of a penny to 24.51 cents/lbs

NYMEX Energy Closing Prices

·       June crude oil rose $0.27 to $100.85/barrel 

o   Crude oil pulled back from its session high of $101.36 set at pit trade open and chopped around near the unchanged level for most of the session. It touched a session low of $100.23 and eventually settled with a 0.3% gain. 

·       June natural gas rose 13 cents to $4.79/MMBtu 

o   Natural gas climbed as high as $4.81 after lifting from its session low of $4.74 set in early morning action. It settled with a 2.8% gain. 

·       June heating oil fell 4 cents to $2.94/gallon 

·       June RBOB fell 3 cents to $2.99/gallon

Treasuries

Treasuries Finish Mixed: 10-yr: -09/32..2.695%..USD/JPY: 102.55..EUR/USD: 1.3850

·       Treasuries clawed back their early losses to finish the day mixed. Click here to see an intraday yields chart.

·       Overnight selling persisted into the cash open with maturities slipping to session lows following the strong pending home sales (3.4% actual v. 1.0% expected).

·       The post-data selling would put in session lows as money moved back into the complex as equity markets surrendered their early gains. 

·       The long bond lagged the entire session, closing +2bps @ 3.459%. 

·       A +1.1bp advance saw the 10y finish @ 2.677%. Action saw an early test of 2.700% resistance that is helped by both the 50 and 200 dma before slipping back below the 2.680% pivot. 

·       The 5y outperformed, slipping -0.3bps to 1.725%. Early selling had the yield on track to close at its highest level in more than three weeks, but today's reversal has shifted attention back towards 1.700% support. 

·       Selling swung the yield curve steeper with the 5-30-yr spread widening to 173.5bps. 

·       Precious metals lost ground with gold sliding $4 to $1297 and silver easing $0.10 to $19.58.

·       Data: Case-Shiller 20-city Index (9) and consumer confidence (10).

Next Day In View 

Economic Commentary

Economic Summary: Pending Home sales easily beat expectations; Fed decision Wednesday at 14:00 ($10 bln of tapering expected)
Economic Data Summary:

·       March Pending Home Sales 3.4% vs Briefing.com consensus of 1.0%; February was revised to -0.5% from -0.8%

Upcoming Economic Data:

·       February Case Schiller 20 City Index due out Tuesday at 9:00 (Briefing.com consensus of 13.0%; January was 13.2%)

·       April Consumer Confidence due out Tuesday at 10:00 (Briefing.com consensus of 83.6; March was 82.3)

Upcoming Fed/Treasury Events:

·       The Fed will begin at two day meeting tomorrow.  The decision will be announced Wednesday at 14:00.

Other International Events of Interest

·       Japan's Nikkei (-1.0%) slumped to a two-week low despite the 11.0% YoY surge in retail sales (10.9% YoY expected) as the strong number was associated with citizens rushing to make big-ticket purchases ahead of the consumption tax increase 

On other news.... 

Currencies 

Dollar Trims Early Losses: 10-yr: -05/32..2.682%..USD/JPY: 102.38..EUR/USD: 1.3852

·       The Dollar Index has trimmed its early losses and now holds just below the 79.75 flat line. Click here to see a daily Dollar Index chart.

·       EURUSD is +20 pips @ 1.3850 as trade looks towards its fifth straight gain. The single currency briefly dipped into negative territory, but recaptured the flat line after comments from ECB head Mario Draghi indicated a QE-type program by the central bank is not imminent. Today's comments are interesting as they are the polar opposite of recent efforts recent made by the central bank to talk down the currency. The 1.3800 area remains key. Eurozone data is heavy as M3 money supply, private loans, German CPI, GfK German Consumer Climate, and Spanish unemployment rate are released. 

·       GBPUSD is +15 pips @ 1.6810 as action has slipped off its best levels. The recent weakness mean sterling is no longer on trck to post its best close since November 2009, and has many traders monitoring minor help in the 1.6775 region. British data out tomorrow is limited to preliminary GDP.

·       USDCHF is -10 pips @ .8800 as sellers remain in control for a fifth day. A quiet day for news and data out of Switzerland means action is once again held hostage by the euro.

·       USDJPY is +15 pips @ 102.35 as trade looks likely to snap the four-day skid. Today's bid has the pair looking to retake both the 50 dma and the 102.50 pivot. Japanese banks are closed tomorrow in observance of Showa Day. 

·       AUDUSD is -35 pips @ .9245 as action presses session lows. Today's weakness has the hard currency on track for its lowest close in more than three weeks as trade tests minor support in the area. A breakdown puts .9150 support that is defended by both the 50 and 200 dma in play. 

·       USDCAD is -10 pips @ 1.31030 amid another lackluster session. The pair has spent much of the past two weeks trapped at the resistance level. Bank of Canada Governor Stephen Poloz will speak tomorrow afternoon in Ottawa.

Jason's Commentaries

It came as a surprise that Apple and Pfizer led the market up higher today. There was a widespread bearishness in Financials as Bank of America weighs. However, the Tech sector was broadly up last night, however, Nasdaq ended flat. S&P500 and Dow was being pulled up by exceptional performance Apple, IBM, HP and Pfizer. Pfizer gained as they are back in the M&A game, proposing a 96b acquisition of Australian company. Volumes were exceptionally higher at 821m shares traded on the NYSE. Last night was a very volatile session as the market went through a roller coaster ride. It seems that the market might be at the top, waiting for Sell In May to happen. I believe the market is likely to continue its bullish run ahead of the FOMC Statements and employment report. However, I believe the employment report or the FOMC statements might be the game changer.  

Market Call: FLAT to the upside 

Date: 29 April 2014