18 Aug 2014 AMC - Market rally as Nasdaq break into new highs once again
Market Summary
European Markets Closing Prices
European markets are now closed; stock markets across Europe performed as follows:
- UK's FTSE: + 0.8%
- Germany's DAX: + 1.7%
- France's CAC: + 1.4%
- Spain's IBEX: + 1.3%
- Portugal's PSI: + 2.4%
- Italy's MIB Index: + 0.8%
- Irish Ovrl Index: + 0.9%
- Greece ASE General Index: -2.5%
Before Market Opens
S&P futures vs fair value: +10.50. Nasdaq futures vs fair value: +19.20.
The S&P 500 futures trade almost 11 points above fair value.
Markets gained ground across most of Asia.
Asia
S&P futures vs fair value: +10.50. Nasdaq futures vs fair value: +19.20.
The S&P 500 futures trade almost 11 points above fair value.
Markets gained ground across most of Asia.
- Economic data was limited:
- China's House Prices rose 2.5% year-over-year (previous 4.2%), while Foreign Direct Investment tumbled 17.0% year-over-year
- Australia's New Motor Vehicle Sales fell 1.3% month-over-month (last 2.2%)
- Hong Kong's Unemployment Rate ticked up to 3.3% from 3.2% (consensus 3.2%)
- Japan's Nikkei (UNCH) held at its best levels in two weeks. Chugai Pharmaceutical surged 15.4% on word Roche (currently has ~60% stake) was considering buying the remainder of the company.
- Hong Kong's Hang Seng (UNCH) lingered near its best levels since November 2010. China Vanke fell 2.2%, hit by the one-two punch of declining prices on the mainland and a lackluster earnings report.
- China's Shanghai Composite gained 0.6%, finishing at an eight-month high. Financials lagged with Bank of China falling 1.1%.
- Participants received just two data points:
- Eurozone trade surplus narrowed to EUR13.80 billion from EUR15.20 billion (expected surplus of EUR14.90 billion)
- Great Britain's Rightmove House Price Index fell 2.9% month-over-month (previous -0.8%)
- Great Britain's FTSE is higher by 0.7% amid broad strength. Airlines outperform with EasyJet and International Consolidated Airlines Group up between 1.8% and 2.4%. Food retailer Tesco is the weakest performer, down 0.7%.
- In France, the CAC trades up 1.1% with 39 of its 40 components holding gains. Exporter Renault leads with an advance of 3.0%. BNP Paribas and GDF Suez are among the laggards. BNP Paribas is flat and GDF Suez is higher by 0.3%.
- Germany's DAX holds an advance of 1.3%. Health care names outperform with Bayer and Fresenius Medical Care up 1.8% and 2.4%, respectively. On the downside, Muenchener Re is lower by 0.3%.
- Futures suggest strong gains at the open
- The Nasdaq holds within an eyelash of its best close since April 2000
- The S&P 500 rests 1.6% off all-time highs while the DJIA holds 2.8% off its own record peak
- S&P Futures +10 @ 1962
- Dow Futures +84 @ 16715
- Nasdaq Futures +19 @ 4004
- Markets gained ground across most of Asia
- China's foreign direct investment plunged 17% YoY and home prices fell in 64 of 70 cities
- Hong Kong's unemployment rate ticked up to 3.3% (3.2% previous)
- Australia's new motor vehicle sales eased 1.3% MoM
- Thailand's GDP printed an in-line 0.9% QoQ
- Japan's Nikkei (UNCH) held at its best levels in two weeks
- Hong Kong's Hang Seng (UNCH) lingered near its best levels since November 2010
- China Vanke fell 2.2%, hit by the one-two punch of declining prices on the mainland and a lackluster earnings report
- China's Shanghai Composite (+0.6%) finished at an eight-month high
- India's Sensex (+1.1%) rallied into record territory
- Australia's ASX (+0.4%) gained for the fifth time in six days
Market Internals
Market Internals -Technical-
The Dow closed up 176 (+1.06%) at 16839, the Nasdaq closed up 43 (+0.97%) at 4508, and the S&P 500 closed up 17 (+0.85%) at 1972. Action came on slightly below average volume (NYSE 591 mln vs. avg. of 660; NASDAQ 1456 mln vs. avg. of 1677), with advancers outpacing decliners (NYSE 2483/692, NASDAQ 2052/689) and new highs outpacing new lows (NYSE 177/17, NASDAQ 80/39).
Relative Strength:
Poland-EPOL +2.46%, Eastern Europe-ESR +2.37%, Russia-RSX +2.29%, U.S. Home Construction-ITB +2%, BRICs-EEB +1.91%, Homebuilders-XHB +1.83%, Clean Energy-PBW +1.82%, Steel-SLX +1.76%, Regional Banks-KRE +1.69%, Turkey-TUR +1.55%.
Relative Weakness:
Volatility-VXX -3.74%, Sugar-SGG -2.06%, Greece-GREK -1.74%, Israel-EIS -1.62%, Corn-CORN -1.56%, Heating Oil-UHN -1.1%, Egypt-EGPT -1.08%, Oil-USO -1.07%, Swiss Franc-FXF -0.42%, New Zealand-ENZL -0.29%
.
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Closing Market Summary: Cyclical Sectors Rally to Start the Week
The stock market began the new trading week on an upbeat note with small caps leading the charge. The Russell 2000 gained 1.5%, while the S&P 500 advanced 0.9% with eight sectors posting gains.
Equity indices surged out of the gate and spent the entire afternoon in narrow ranges near their highs. Although the Russell 2000 paced the rally, the small-cap index could not climb above its 50-day moving average (1159), which served as resistance.
The opening push took place after the reports that weighed on risk sentiment on Friday were refuted over the course of the weekend. To recap, comments made by Ukrainian officials on Friday suggested that a direct confrontation took place between Russian forces and Ukrainian troops, but those accounts were called into question by several parties, including the White House.
In addition to boosting equities, the news weighed on safe-haven assets. The 10-yr note spent the day in a steady retreat, which pushed its yield up five basis points to 2.39%. Similarly, Germany's 10-yr note retreated, which sent its yield back above the 1.0% mark to 1.01%.
Cyclical sectors displayed broad strength as five of six growth-oriented groups finished ahead of the broader market. The industrial sector (+1.5%) seized the lead in the early going and held on until the close with help from transport stocks. The Dow Jones Transportation Average jumped 1.7% to extend its August gain to 3.2%. Airlines led with United Continental (UAL 47.84, +1.83) climbing 4.0%.
Elsewhere, the top-weighted sector—technology (+1.1%)—also finished ahead of the S&P 500 even as chipmakers were unable to keep pace after Goldman Sachs downgraded the entire semiconductor space. The PHLX Semiconductor Index was limited to a modest gain of 0.5%. However, large cap components picked up the slack with the likes of Apple (AAPL 99.16, +1.18) and Google (GOOGL 592.70, +8.99) ending higher by 1.2% and 1.5%, respectively.
Also of note, the consumer discretionary sector (+0.9%) benefitted from M&A activity as Dollar General (DG 64.14, +6.68) offered to acquire Family Dollar (FDO 79.81, +3.75) for $78.50/share, which represents a 3.2% premium to Friday's closing price.
Despite the broad strength, one cyclical group spun its wheels throughout the session. Specifically, the energy sector (+0.3%) ended near its flat line, while crude oil fell 0.9% to $97.31/bbl.
On the countercyclical side, telecom services (-0.1%) and utilities (-0.2%) registered slim losses, while consumer staples (+0.6%) and health care (+0.8%) finished a bit behind the broader market.
Participation was below average with fewer than 600 million shares changing hands at the NYSE.
Economic data was limited to the NAHB Housing Market Index for August, which rose to 55 from 53, while the Briefing.com consensus expected the reading to hold at 53.
Tomorrow, July CPI (Briefing.com consensus 0.1%), July Housing Starts (consensus 964K), and Building Permits (consensus 1.001 million) will all be reported at 8:30 ET.
The stock market began the new trading week on an upbeat note with small caps leading the charge. The Russell 2000 gained 1.5%, while the S&P 500 advanced 0.9% with eight sectors posting gains.
Equity indices surged out of the gate and spent the entire afternoon in narrow ranges near their highs. Although the Russell 2000 paced the rally, the small-cap index could not climb above its 50-day moving average (1159), which served as resistance.
The opening push took place after the reports that weighed on risk sentiment on Friday were refuted over the course of the weekend. To recap, comments made by Ukrainian officials on Friday suggested that a direct confrontation took place between Russian forces and Ukrainian troops, but those accounts were called into question by several parties, including the White House.
In addition to boosting equities, the news weighed on safe-haven assets. The 10-yr note spent the day in a steady retreat, which pushed its yield up five basis points to 2.39%. Similarly, Germany's 10-yr note retreated, which sent its yield back above the 1.0% mark to 1.01%.
Cyclical sectors displayed broad strength as five of six growth-oriented groups finished ahead of the broader market. The industrial sector (+1.5%) seized the lead in the early going and held on until the close with help from transport stocks. The Dow Jones Transportation Average jumped 1.7% to extend its August gain to 3.2%. Airlines led with United Continental (UAL 47.84, +1.83) climbing 4.0%.
Elsewhere, the top-weighted sector—technology (+1.1%)—also finished ahead of the S&P 500 even as chipmakers were unable to keep pace after Goldman Sachs downgraded the entire semiconductor space. The PHLX Semiconductor Index was limited to a modest gain of 0.5%. However, large cap components picked up the slack with the likes of Apple (AAPL 99.16, +1.18) and Google (GOOGL 592.70, +8.99) ending higher by 1.2% and 1.5%, respectively.
Also of note, the consumer discretionary sector (+0.9%) benefitted from M&A activity as Dollar General (DG 64.14, +6.68) offered to acquire Family Dollar (FDO 79.81, +3.75) for $78.50/share, which represents a 3.2% premium to Friday's closing price.
Despite the broad strength, one cyclical group spun its wheels throughout the session. Specifically, the energy sector (+0.3%) ended near its flat line, while crude oil fell 0.9% to $97.31/bbl.
On the countercyclical side, telecom services (-0.1%) and utilities (-0.2%) registered slim losses, while consumer staples (+0.6%) and health care (+0.8%) finished a bit behind the broader market.
Participation was below average with fewer than 600 million shares changing hands at the NYSE.
Economic data was limited to the NAHB Housing Market Index for August, which rose to 55 from 53, while the Briefing.com consensus expected the reading to hold at 53.
Tomorrow, July CPI (Briefing.com consensus 0.1%), July Housing Starts (consensus 964K), and Building Permits (consensus 1.001 million) will all be reported at 8:30 ET.
- Nasdaq Composite +7.9% YTD
- S&P 500 +6.7% YTD
- Dow Jones Industrial Average +1.6% YTD
- Russell 2000 -0.5% YTD
Commodities
Closing Commodities: Crude oil falls, gold ends below $1300
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
NYMEX Energy Closing Prices
Treasuries
Yields Rally: 10-yr: -13/32..2.386%..USD/JPY: 102.56..EUR/USD: 1.3361
Currencies
Dollar Sees Small Bid: 10-yr: -14/32..2.391%..USD/JPY: 102.56..EUR/USD: 1.3362
Next Week In View
Economic Commentaries
Economic Summary: NAHB Housing Index tops expectations; CPI tomorrow at 8:30; Jackson Hole 2014 begins Thursday with Yellen & Draghi speaking on Friday
Economic Data Summary:
Jason's Commentaries
A massive rally led by Nasdaq that broke into the high changed the mood of the market. A few weeks ago the market was thought to be going very bearish but the bears got a beating from this. Ahead of the FOMC minutes and the Jackson Hole Symposium, the market once again seek to price into the market. And as Nasdaq seek to lead the market once again, I believe the market will continue to rally for the next few weeks. Unless broad economic situation like the Iraq crisis, Ukraine-Russia Crisis or even the Israel problem might change the mood of the market. Right now, it's highly susceptible to volatility due to these macroeconomics situations. As the internals are pointing out, it's very likely to be a price in. Other indices are approaching their resistances and are very likely to break free of that.
Market Call: FLAT to upside
- Crude oil traded in the red all day and fell below the $96 level, falling as low as $95.98/barrel.
- Sept crude oil finished the day $0.88 lower at $97.31/barrel
- Gold slid back below $1300/oz today, while silver climbed higher in afternoon trade
- Dec gold ended $7.40 lower at $1299.20/oz, Sept silver closed $0.12 higher to $19.64/oz
- Sept natural gas rose 2 cents to $3.79/MMBtu
- Corn lost steam and fell as much as 10 cents off its HoD to end at $3.60/bushel, down 6 cents.
- Dec gold fell $7.4 to $1299.20/oz
- Sep silver rose $0.12 to $19.64/oz
- Sep copper rose 1 cent to $3.11/lb
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
- Sep corn fell 6 cents to $3.60/bushel
- Sep wheat fell 9 cents to $5.43/bushel
- Nov soybeans rose 4 cents to $10.56/bushel
- Sep ethanol fell 3 cents to $2.13/gallon
- Nov sugar (#16 (U.S.)) fell $0.13 to 25.75 cents/lb
NYMEX Energy Closing Prices
- Sep crude oil fell $0.88 to $97.31/barrel
- Sep natural gas rose 2 cents to $3.79/MMBtu
- Sep heating oil fell 4 cents to $2.81/gallon
- Sep RBOB fell 4 cents to $2.66/gallon
Treasuries
Yields Rally: 10-yr: -13/32..2.386%..USD/JPY: 102.56..EUR/USD: 1.3361
- Treasuries finished near their lows. Click here to see an intraday yields chart.
- The complex held small losses into the cash open as the geopolitical tensions that developed last week in Eastern Europe subsided.
- Selling continued throughout U.S. trade as the improved NAHB Housing Market Index (55.0 actual v. 53.0 previous) and session-long rally in equities caused money to move out of the complex.
- The 2y added +1.2bps to 0.423%, causing action to climb off the lowest levels since early-June.
- In the belly, the 5y tacked on +2.6bps to 1.567%. Minor resistance near 1.600% will be watched closely as the 200 dma also lurks in the vicinity.
- The 10y climbed +4.2bps to 2.387%. Today's selling ran the benchmark yield off 13-month lows, and puts minor resistance near 2.400% in play.
- The 30y lagged, rallying +5.9bps to 3.194%. The yield on the long bond is now almost +10bps off Friday's 14-month low (3.107%).
- Selling swung the curve steeper as the 2-10-yr spread widened to 196.5bps and the 5-30-y spread expanded to 162.5bps.
- Precious metals ended mixed with gold -$6 @ $1300 and silver +$0.12 @ $19.65.
- Data: CPI, core CPI, housing starts, and building permits (8:30).
On other news....
Currencies
Dollar Sees Small Bid: 10-yr: -14/32..2.391%..USD/JPY: 102.56..EUR/USD: 1.3362
- The Dollar Index drifts near session highs as trade fights to hold the 81.55 level. Click here to see a daily Dollar Index chart.
- Today's action has pressured the key 81.60 area, but remains unable to reclaim the level.
- EURUSD is -35 pips @ 1.3365 as trade has wiped away all of Friday's gains. Support in the 1.3550 area remains very much in focus as it has seen several tests over the past two weeks.
- GBPUSD is +45 pips @ 1.6735 as trade lingers near session highs. Today's bid has the pair has the pair higher for a second day as trade climbs off support in the 1.6700 area that is helped by the 200 dma. The 1.6800 area provides minor resistance. British data includes CPI, PPI Input, and RPI.
- USDCHF is +40 pips @ .9060 as today's bid has erased Friday's losses. Any close above .9095 would be the best in seven months.
- USDJPY is +20 pips @ 102.55 as trade looks likely to put in its fifth advance in six sessions. Traders continue to eye the 102.80 level as a finish above there would be the best since April.
- AUDUSD is +10 pips @ .9325 as buyers remain in control for a fourth straight day. Resistance in the .9340 region is guarded by the 100 dma. The latest Reserve Bank of Australia minutes will cross the wires tonight.
- USDCAD is -5 pips @ 1.0890 as trade presses lower for a sixth session. Traders continue to monitor the 1.0860 area as both the 100 and 200 dma lurk in the vicinity.
Next Week In View
Economic Commentaries
Economic Summary: NAHB Housing Index tops expectations; CPI tomorrow at 8:30; Jackson Hole 2014 begins Thursday with Yellen & Draghi speaking on Friday
Economic Data Summary:
- August NAHB Housing Market Index 55 vs Briefing.com consensus of 53.0; July was 53
- July CPI due out Tuesday at 8:30 (Briefing.com consensus of 0.1%; June was 0.3%)
- July Core CPI due out Tuesday at 8:30 (Briefing.com consensus of 0.1%; June was 0.1%)
- July Housing Starts due out Tuesday at 8:30 (Briefing.com consensus of 964K; June was 893K)
- July Building Permits due out Tuesday at 8:30 (Briefing.com consensus of 1001K ; June was 963K)
- Jackson Hole Fed Conference to be held Thursday August 21st-25th. Fed Chair Janet Yellen to speak Friday August 22nd at 10:00 and ECB President Mario Draghi to speak Friday August 22nd at 14:30
- China's foreign direct investment plunged 17% YoY and home prices fell in 64 of 70 cities
Jason's Commentaries
A massive rally led by Nasdaq that broke into the high changed the mood of the market. A few weeks ago the market was thought to be going very bearish but the bears got a beating from this. Ahead of the FOMC minutes and the Jackson Hole Symposium, the market once again seek to price into the market. And as Nasdaq seek to lead the market once again, I believe the market will continue to rally for the next few weeks. Unless broad economic situation like the Iraq crisis, Ukraine-Russia Crisis or even the Israel problem might change the mood of the market. Right now, it's highly susceptible to volatility due to these macroeconomics situations. As the internals are pointing out, it's very likely to be a price in. Other indices are approaching their resistances and are very likely to break free of that.
Market Call: FLAT to upside
Date: 19 Aug 2014
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