21 Jul 2014 AMC - Market went through a volatile Monday as UN discuss to tighten sanctions on Russia

21 Jul 2014 AMC - Market went through a volatile Monday as UN discuss to tighten sanctions on Russia

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: -0.3%

·         Germany's DAX: -1.1%

·         France's CAC: -0.7%

·         Spain's IBEX: -0.4%

·         Portugal's PSI: + 0.1%

·         Italy's MIB Index: -1.5%

·         Irish Ovrl Index: -0.4%

·         Greece ASE General Index: -0.8%

Before Market Opens 

S&P futures vs fair value: -5.00. Nasdaq futures vs fair value: -7.50.
Markets finished mixed across Asia.

-----

·         Japan's Nikkei was closed in observation of Marine Day. 

·         Hong Kong's Hang Seng (-0.3%) slipped off its best levels of 2014. Casino shares led the way with Galaxy Entertainment and Sands China rallying 3.1% and 2.3%, respectively.

·         China's Shanghai Composite (-0.2%) held the 50 and 100 dma as selling took hold ahead of another wave of IPOs. Air carrier China Eastern shed 1.3% after issuing cautious guidance.

The major European averages are lower across the board. Germany's Bundesbank suggested growth is likely to slow.

-----

·         Great Britain's FTSE is lower by 0.3%. Financials are under pressure with Braclays and Lloyds Banking Group down 1.0% and 0.6%, respectively.

·         Germany's DAX holds a loss of 0.9%. Steel names lag as Salzgitter is off 2.6% and ThyssenKrupp is lower by 1.2%.

·         France's CAC sports a modest loss of 0.5%. Financials lead the way lower with Credit Agricole and Societe Generale down 2.2% and 1.6%, respectively.

U.S. Equities

·         Futures point to modest losses at the open

·         Israel and Hamas were unable to reach a ceasefire agreement after fighting intensified over the weekend

·         Reports suggest the U.S. and its European allies are considering more stringent sanctions against Russia 

·         Earnings continue to flow with BBT, HAL, HAS, STI among the notable reports out ahead of the opening bell

o    S&P Futures -5 @ 1967

o    Dow Futures  -39 @ 16,993

o    Nasdaq Futures -4 @ 3926

Asia

·         Markets finished mixed across Asia

·         Japan's Nikkei was closed in observation of Marine Day

·         Hong Kong's Hang Seng (-0.3%) slipped off its best levels of 2014

·         China's Shanghai Composite (-0.2%) held the 50 and 100 dma as selling took hold ahead of another wave of IPOs

·         India's Sensex (+0.3%) posted a fifth straight day of gains

·         Australia's ASX (+0.2%) closed at its best level in more than six years

·         Indonesia's Jakarta Composite (+0.8%) rallied ahead of report Joko Widodo will be declared the winner of the country's presidential election

Market Internals

Market Internals -Technical-
The Dow closed down 48 (-0.28%) at 17052, the S&P 500 closed down 5 (-0.23%) at 1974, and the Nasdaq closed down 7 (-0.17%) at 4425. Action came on below average volume (NYSE 529 mln vs. avg. of 658; NASDAQ 1455 mln vs. avg. of 1669), with decliners outpacing advancers (NYSE 1168/1971, NASDAQ 1032/1668) and new highs outpacing new lows (NYSE 94/29, NASDAQ 51/42).

Relative Strength: 
Volatility-VXX +2.22%, Indonesia-IDX +1.97%, Sugar-SGG +1.78%, Base Metals-DBB +1.43%, Thailand-THD +1.42%, Cocoa-NIB +1.2%, Clean Energy-PBW +1.08%, Latin America 40-ILF +0.79%, Taiwan-EWT +0.75%, Columbia Index-GXG +0.75%.

Relative Weakness: 
Russia-RSX -2.17%, Natural Gas-UNG -2.11%, Egypt-EGPT -2.07%, Eastern Europe-ESR -1.83%, Corn-CORN -1.72%, Greece-GREK -1.7%, Italy-EWI -1.67%, Lithium-LIT -1.28%, Grains-JJG -1.07%, Wind Energy-FAN -0.98%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries

Closing Summary: Subdued Start to the Week
Just like the geopolitical environment, things could have been better today for the stock market and they could have been worse. They were worse in the early going as the major indices backpedaled quickly at the start of trading. The ostensible catalysts for the opening retreat were geopolitical concerns over Israel's ground assault in Gaza and the troublesome diplomatic dealings in the wake of Malaysian Air flight MH17 being shot down over eastern Ukraine last week.

At their lows of the morning, the Dow, Nasdaq, and S&P 500 were down 126, 28, and 12 points, respectively. They would eventually battle back, though, to pare their losses, aided by the following factors: 

·         Technical support holding at 1966 for the S&P 500

·         A small sense of relief that remarks from President Obama today did not include the imposition of any new sanctions against Russia

o    There is some underlying concern that new economic sanctions will lead to deleterious economic developments more broadly and for the European Union in particular

·         Relative strength in the technology and energy sectors

·         The inability to sustain larger losses, which prompted some buy-the-dip activity

Overall, it was a subdued start to the week for the stock market, which was also cognizant that a flood of earnings results will pour in starting on Tuesday. To that end, today's session could be characterized as a period of wait-and-see on both the geopolitical and earnings fronts.

That mentality manifested itself in the low volume at the NYSE where only 530 mln shares traded hands versus a recent average of 658 mln shares.

Notwithstanding today's leading headlines, there wasn't a strong flight-to-safety trade. The 10-yr note ended up two ticks, gold prices rose a modest 0.3%, the health care (-0.4%), utilities (-0.1%), consumer staples (-0.4%), and telecom services (-0.3%) sectors all finished lower, and the CBOE Volatility Index (VIX 12.49, +0.43) was ultimately reined in after an opening burst of buying interest took it up as much as 13%.

At the same time, the Russell 2000, which fell as much as 1.0% early in the day, recouped a good portion of its losses and ended the session down 0.4%.

There wasn't a lot of absolute strength in the stock market today, but pockets of strength in the large-cap universe helped limit today's losses. To that end, the likes of Intel (INTC 34.06, +0.36), Boeing (BA 128.30, +0.66), Microsoft (MSFT 44.84, +0.15), Goldman Sachs (GS 171.72, +0.25), Chevron (CVX 131.29, +0.90), and ExxonMobil (XOM 103.08, +0.35) provided some cover for a beleaguered broader market.

Every sector ended down today with the exception of the energy sector (+0.2%). It followed crude prices higher ($104.89, +$1.75) and benefited from the outperformance of its sector heavyweights in the integrated oil group. Losses for the remaining nine sectors ranged from 0.1% to 0.5%.

There wasn't any economic data today, but that will change on Tuesday with the release of the CPI (Briefing.com consensus +0.3%) and Existing Home Sales (Briefing.com consensus 5.00 mln) reports. That data will be processed alongside a bevy of earnings reports that will include results from six Dow components: Coca-Cola (KO 42.40, -0.03), DuPont (DD 65.54, -0.01), McDonald's (MCD 97.55, -1.44), Travelers (TRV 95.26, -0.08), United Technologies (UTX 112.98, -0.59), and Verizon (VZ 50.70, -0.05). 

·         S&P 500 +6.8% YTD

·         Dow Jones Industrial Average +2.9% YTD

·         Nasdaq Composite +5.9% YTD

·         Russell 2000 -1.5% YTD

Commodities

Closing Commodities: Crude Oil Rises 1.5%, Closes Near $103.50

·         Aug gold rose for a fourth consecutive session as geopolitical tension over Russia and Ukraine continued. The yellow metal pulled back from its session high of $1317.90 per ounce set at pit trade open but stayed above the unchanged line.

·         It brushed a session low of $1310.80 per ounce and settled with a 0.3% gain at $1313.90 per ounce. Sep silver dipped to a session low of $20.92 per ounce after trading as high as $21.15 in early morning floor action. It inched slightly higher heading into the close and settled at $21.01 per ounce, or 0.5% higher. 

·         Aug crude oil traded in positive territory, lifting from a session low of $103.48 per barrel set in early morning action.

·         It continued to trend higher and settled with a 1.5% gain at $104.65 per barrel, just below its session high of $104.72 per barrel. 

·         Aug natural gas, on the other hand, spent the entire pit session in the red. It traded as low as $3.83 per MMBtu, its lowest level since November 2013. Unable to gain momentum, it settled 2.8% lower at $3.84 per MMBtu.

COMEX Metals Closing Prices

Aug gold rose $4.00 to $1313.90/oz 

• Gold rose for a fourth consecutive session as tension over Russia and Ukraine continued. The yellow metal pulled back from a session high of $1317.90 set at pit trade open but stayed in positive territory. It brushed a session low of $1310.80 and settled with a 0.3% gain. 

Sep silver rose $0.11 to $21.01/oz 

• Silver dipped to a session low of $20.92 after trading as high as $21.15 in early morning floor action. It inched slightly higher heading into the close and settled with a 0.5% gain.

Sep copper rose 2 cents to $3.20/lbs

 NYMEX Energy Closing Prices

·         Aug crude oil rose $1.51 to $104.65/barrel 

·         Aug natural gas fell 11 cents to $3.84/MMBtu 

·         Aug heating oil rose 1 cent to $2.86/gallon 

·         Aug RBOB rose 4 cents to $2.89/gallon

 

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Sep corn fell 7 cents to $3.64/bushel 

·         Sep wheat fell 5 cents to $5.30/bushel 

·         Aug soybeans rose 2 cents to $11.77/bushel 

·         Sep ethanol fell 2 cents to $1.98/gallon 

·         Sep sugar (#16 (U.S.)) rose 0.12 of a penny to 24.50 cents/lbs

Treasuries

30y Closes at 3.264%, 13-Month Low: 10-yr: unch..2.471%..USD/JPY: 101.37..EUR/USD: 1.3522

·         Treasuries ended mixed. Click here to see an intraday yields chart.

·         Maturities rallied to their best levels as equities were pressured at the open, but surrendered a good amount of their gains as shares recovered.

·         Buying at the long end dropped the 30y -2.8bps to 3.264%. The yield on the long bond ended the day with its lowest close in 13 months. 

·         The 10y fell -1bp to 2.474%. Action probed 2.450% early in the session before paring its gains. 

·         The 5y lagged, climbing +1.9bps to 1.685%. The yield saw a continued bounce off support that is defended by the 50 and 100 dma. 

·         The yield curve flattened with the 2-10-yr spread tightening to 198.5bps. 

·         Precious metals gained with gold +$5 @ $1314 and silver +$0.12 @ $21.00. 

·         Data: CPI (8:30), FHFA Housing Price Index (9), and existing home sales (10).

On other news.... 

Currencies 

Dollar Drifts Flat: 10-yr: +01/32..2.470%..USD/JPY: 101.36..EUR/USD: 1.3522

·         The Dollar Index drifts little changed near 80.55. Click here to see a daily Dollar Index chart.

·         A quiet session has seen most of the day's action spent in a tight five cent range.

·         EURUSD is flat @ 1.3525 as trade hovers unchanged for a third session. An overnight bid ran the single currency up to the 1.3550 level before early morning selling wiped away those gains. Support in the 1.3500/1.3525 area remains under close watch. 

·         GBPUSD is -15 pips @ 1.7070 as sellers remain in control for a fourth session. Today's weakness has sterling looking at its lowest close of July, and has action nearing 1.6950/1.7000 support. British data includes public sector net borrowing and CBI Industrial Order Expectations. 

·         USDCHF is unchanged @ .8980. Recent action has struggled at the .9000 level as sellers have worked hard to prevent the best close in more than five months. Switzerland's trade balance is due out tomorrow. 

·         USDJPY is +5 pips @ 101.35 as trade ticks higher for a second session. The light bid comes amid a lackluster session as Japanese banks were closed for Marine Day. Support near 101.25 remains critical. 

·         AUDUSD is -15 pips @ .9375. Action over much of the past three weeks has been stuck in a tight range between .9350/.9400. Reserve Bank of Australia Governor Glenn Stevens will speak tonight in Sydney.

·         USDCAD is flat @ 1.0730. An uneventful trade has seen action confined to just 25 pips.

Next Week In View




Economic Commentaries

Economic Summary: No US data today; CPI tomorrow at 8:30

Upcoming Economic Data:

·         June CPI due out Tuesday at 8:30 (Briefing.com consensus of ; May was 0.4%)

·         June Core CPI due out Tuesday at 8:30 (Briefing.com consensus of ; May was 0.3%)

·         May FHFA Housing Price Index due out Tuesday at 9:00 (Briefing.com consensus of ; April was 0.0%)

·         June Existing Home Sales due out Tuesday at 10:00 (Briefing.com consensus of ; May was 4.89 M )

Other International Events of Interest

·         Israel and Hamas were unable to reach a ceasefire agreement after fighting intensified over the weekend

·         Reports suggest the U.S. and its European allies are considering more stringent sanctions against Russia.

Jason's Commentaries

It was really a very volatile session. The market started with a sell off in the market as Dow, S&P500 and Russells heads down at the opening bell. However, strength from the Nasdaq managed to pull the market up. Internals were mixed and by the closing bell, the market managed to regain most of the losses. On the Technical side, the Russells is sitting nicely on the trendline and i'm expecting it to have a bounce today which are likely to lead the market on a bullish trend today. However, with Dow and S&P500 in consolidation, the market might face some drag. With not much major economic news coming out today, i reckon the market is likely to head into a sideways consolidation with Russells ending the day with a gain.








Market Call: FLAT to upside

Date: 22 Jul 2014