Friday 22 August 2014

21 Aug 2014 AMC - S&P500 broke new high in rally


21 Aug 2014 AMC - S&P500 broke new high in rally
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: + 0.9%
  • France's CAC: + 1.2%
  • Spain's IBEX: + 1.3%
  • Portugal's PSI: + 0.7%
  • Italy's MIB Index: + 2.1%
  • Irish Ovrl Index: + 0.6%
  • Greece ASE General Index: + 2.1%


Before Market Opens 


S&P futures vs fair value: +2.30. Nasdaq futures vs fair value: +3.70.
The S&P 500 futures trade two points above fair value.

Asian markets ended the Thursday session on a mixed note.
  • In economic data: 
    • China's HSBC Manufacturing PMI fell to 50.3 from 51.7 (expected 51.5) 
    • Japan's Manufacturing PMI jumped to 52.4 from 50.5 (consensus 51.7) 
    • Hong Kong's CPI climbed to 4.0% year-over-year from 3.6% (consensus 3.5%) 
    • Australia's CB Leading Index rose 0.4% month-over-month (prior 0.2%) 
    • New Zealand's Visitor Arrivals fell 0.5% month-over-month (prior -0.3%), while Credit Card Spending increased 4.5% year-over-year (last 6.0%) 
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  • Japan's Nikkei rose 0.9%, gaining for a ninth straight session to finish near one-month highs. Exporters gained on the back of the weaker yen with Sony tacking on 1.9%. 
  • Hong Kong's Hang Seng lost 0.7%, sliding from its best levels in more than six years. Coal names were pressured as China Shenhua Energy and Yanzhou Coal Mining gave up 0.4% and 0.9%, respectively. 
  • China's Shanghai Composite shed 0.4%, slipping off eight-month highs. Energy plays weighed as PetroChina lost 0.6% and Sinopec fell 1.3%. 
Major European indices trade higher across the board with Italy's MIB (+1.6%) pacing the rally.
  • Participants received several data points: 
    • Eurozone Manufacturing PMI fell to 50.8 from 51.8 (expected 51.3), while Services PMI slipped to 53.5 from 54.2, as expected 
    • Germany's Manufacturing PMI ticked down to 52.0 from 52.4 (consensus 51.8), while Services PMI slipped to 56.4 from 56.7 (expected 55.7) 
    • French Manufacturing PMI fell to 46.5 from 47.8 (forecast 47.8), while Services PMI improved to 51.1 from 50.4 (expected 50.0) 
    • Great Britain's Retail Sales ticked up 0.1% month-over-month (expected 0.4%; prior 0.2%), while the year-over-year reading rose 2.6% (expected 3.0; prior 3.4%). Core Retail sales increased 0.5% month-over-month (expected 0.4%; last -0.1%), while the year-over-year reading rose 3.4% (consensus 3.4%; prior 3.8%) 
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  • Great Britain's FTSE is higher by 0.2% with financials among the leaders. Hargreaves Lansdown, Old Mutual, and Schroders are up between 0.8% and 2.5%. Miners lag with Antofagasta, Fresnillo, and Rio Tinto down between 0.5% and 3.1%. 
  • Germany's DAX trades up 0.5% with 25 of 30 components showing gains. Heavyweights Deutsche Bank and Siemens lead with respective gains of 0.9% and 1.5%. On the downside, steelmaker ThyssenKrupp is lower by 0.9%. 
  • In France, the CAC holds an advance of 0.8%. Countercyclical names are mixed as Veolia Environnement leads with an increase of 2.6%, while Pernod Ricard is the weakest performer, down 0.9%. 
  • Italy's MIB outperforms with a gain of 1.6%. Banca di Milano Scarl, Intesa Sanpaolo, and UBI Banca are up between 3.0% and 5.5%.

U.S. Equities
  • Equity futures suggest little change at the open
  • The S&P 500 and DJIA remain within striking distance of record highs while the Nasdaq holds near its best level since April 2000
  • The VIX (11.78) is at a one-month low 
    • S&P Futures +3 @ 1986
    • Dow Futures +32 @ 16,982
    • Nasdaq Futures +4 @ 4044
Asia
  • Markets finished mixed across Asia
  • China's HSBC Flash Manufacturing PMI (50.3 actual v. 51.5 expected, 51.7 previous) missed estimates
  • Australia's CB Leading Index improved to 0.4% (0.2% previous)
  • Japan's Nikkei (+0.9%) gained for a ninth straight session to finish near one-month highs
  • Hong Kong's Hang Seng (-0.7%) slid off its best levels in more than six years
  • China's Shanghai Composite (-0.4%) slipped off eight-month highs
  • India's Sensex (+0.2%) finished near record highs
  • Australia's ASX (+0.1%) gained for the eighth time in nine days and finished at a six-year high

Market Internals



Market Internals -Technical-
The Dow closed up 61 (+0.36%) at 17040, the S&P 500 closed up 6 (+0.29%) at 1992, and the Nasdaq closed up 6 (+0.12%) at 4532. Action came on below average volume (NYSE 554 mln vs. avg. of 660; NASDAQ 1309 mln vs. avg. of 1660), with advancers outpacing decliners (NYSE 1863/1248, NASDAQ 1499/1216) and new highs outpacing new lows (NYSE 183/17, NASDAQ 75/45).

Relative Strength:
Italy-EWI +1.94%, Sugar-SGG +1.8%, Eastern Europe-ESR +1.54%, Natural Gas-UNG +1.47%, Banks-KBE +1.31%, Financial Services-IYG +1.25%, Russia-RSX +1.23%, Regional Banks-KRE +1.22%, France-EWQ +1.11%, Sweden-EWD +1.06%.

Relative Weakness:
Gold Miners-GDX -2.21%, Biotechnology-XBI -1.87%, Silver Miners-SIL -1.67%, Cocoa-NIB -1.46%, South Korea-EWY -1.33%, Hong Kong-EWH -1.32%, China 25 Index-FXI -1.31%, Gold-GLD -1.08%, Asia-AAXJ -0.74%, Taiwan-EWT -0.74%
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Leaders and Laggards









Technical Updates








Briefing's Commentaries

Closing Market Summary: Blue Chips Send S&P 500 to New Record High
The stock market ended the Thursday session on an upbeat note with blue chips showing relative strength for the second consecutive day. The Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.3%) settled ahead of the Russell 2000 (+0.2%) and the Nasdaq Composite (+0.1%). It is worth mentioning the benchmark index posted its fourth consecutive gain, registering a new record closing high at 1992.38.

Equity indices climbed out of the gate thanks to early strength among the four countercyclical sectors. Despite the early outperformance, the defensively-oriented sectors ended below their opening highs, while the six cyclical groups were mixed. Financials (+1.1%) and technology (+0.5%) contributed to the modest advance, while other heavily-weighted groups like consumer discretionary (-0.1%), industrials (unch), and energy (unch) kept the market from going on a bigger run.

The health care sector (+0.1%) was an early leader, but finished near its low amid weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 264.45, -2.40) ended lower by 0.9% after spending the session in a steady retreat. The ETF succumbed to profit taking after soaring 6.0% since last Tuesday.

In addition to pressuring the health care sector, biotechnology weighed on the Nasdaq, but the relative strength of the tech sector helped the index finish in the green. Intel (INTC 35.15, +0.65) and IBM (IBM 191.23, +1.13) posted respective gains of 1.9% and 0.6%, while Hewlett-Packard (HPQ 37.00, +1.88) jumped 5.4% after reporting in--line earnings.

Elsewhere, the financial sector spent the session in a steady climb. Bank of America (BAC 16.16, +0.64) was a notable standout, surging 4.1% after confirming its settlement with the Department of Justice, which is expected to negatively impact Q3 earnings by about $0.43 per share. The magnitude of today's advance on heavy volume suggests participants believe a big overhang is now gone and the bank can realize its full potential by focusing on its core business rather than being preoccupied with litigation.

The remaining cyclical sectors lagged throughout the day with the consumer discretionary space spending the session near its flat line. Retailers struggled following disappointing earnings from Sears Holdings (SHLD 33.38, -2.57), Kirklands (KIRK17.30, -1.68), Buckle (BKE 48.78, +1.70), Bon-Ton Stores (BONT 10.21, +1.16), andDollar Tree (DLTR 54.28, -0.72). The broader SPDR S&P Retail ETF (XRT 87.49, -0.19) shed 0.2%. On the upside, L Brands (LB 63.72, +0.74) gained 1.2% after reporting a one-cent beat.

Despite the gains in equities, Treasuries maintained a bullish bias throughout the session. The 10-yr note added seven ticks with its yield slipping two basis points to 2.41%.

Participation remained below average with just over 550 million shares changing hands at the NYSE.

Economic data included Initial Claims, Existing Home Sales, Philadelphia Fed Survey, and Leading Indicators:
  • The initial claims level fell to 298,000 from an upwardly revised 312,000, while the Briefing.com consensus expected a decline to 308,000 
    • The Department of Labor reiterated that there were no special factors that influenced the initial claims level, suggesting the reading resulted from an improvement in labor market conditions 
  • Existing home sales increased 2.4% to 5.15 million SAAR in July from a slightly downwardly revised 5.03 million SAAR (from 5.04 million) in June, while the Briefing.com consensus expected a decline to 5.00 million SAAR 
    • This was the fourth consecutive monthly gain and contrasted with the downward move in both the Pending Home Sales Index and MBA Mortgage Purchase Index 
    • Sales are down 4.3% from a year ago 
  • The Philadelphia Fed's Business Outlook Survey increased to 28.0 in August from 23.9 in July, while the Briefing.com consensus expected a drop to 15.5 
    • The strength in the headline result is confusing and masks an oddly weaker subset of data 
      • Outside of the headline result, the only gains came from the average workweek index (13.3 from 12.5) and inventories (8.3 from 4.8) 
  • The Conference Board's Index of Leading Indicators increased 0.9% in July after increasing an upwardly revised 0.6% (from 0.3%) in June, while the Briefing.com consensus expected an increase of 0.6% 
There is no economic data on tomorrow's schedule.
  • Nasdaq Composite +8.5% YTD 
  • S&P 500 +7.8% YTD 
  • Dow Jones Industrial Average +2.8% YTD 
  • Russell 2000 -0.3% YTD


Commodities

Closing Commodities: Nat gas rises 1.8% following inventory data
  • Dec gold declined for a fifth consecutive session as economic data this morning showed that the initial claims level fell to 298K from an upwardly revised 312K. The Briefing.com consensus expected a decline to 308K. The yellow metal fell as low as $1273.40 per ounce, its lowest level since June. Unable to gain buying support, it settled with a 1.5% loss at $1275.20 per ounce.
  • Sep silver also chopped around in negative territory and touched a session low of $19.32 per ounce in early morning action. It eventually settled at $19.41 per ounce, or 0.5% lower.
  • Sep crude oil lifted from its session low of $92.98 per barrel in early morning action and broke into positive territory. It trended higher to a session high of $94.45 per barrel and settled with a 0.6% gain at $93.97 per barrel.
  • Sep natural gas fell from its session high of $3.91 per MMBtu following inventory data that showed a build of 88 bcf when a build of 82-83 bcf was anticipated. It brushed a session low of $3.79 per MMBtu but managed to recover back into positive territory in afternoon action. Natural gas eventually settled 1.8% higher at $3.89 per MMBtu.
COMEX Metals Closing Prices
  • Dec gold fell $19.80 to $1275.20/oz 
    • Gold declined for a fifth consecutive session as economic data this morning showed that the initial claims level fell to 298K from an upwardly revised 312K. The Briefing.com consensus expected a decline to 308K. The yellow metal fell as low as $1273.40, its lowest level since June. Unable to gain buying support, it settled with a 1.5% loss. 
  • Sep silver fell $0.09 to $19.41/oz 
    • Silver also chopped around in negative territory and touched a session low of $19.32 in early morning action. It eventually settled with a 0.5% loss. 
  • Sep copper settled unchanged at $3.18/lb


  • CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
    • Sep corn rose 2 cents to $3.62/bushel 
    • Sep wheat rose 7 cents to $5.47/bushel 
    • Nov soybeans rose 2 cents to $10.39/bushel 
    • Sep ethanol rose 2 cents to $2.15/gallon 
    • Nov sugar (#16 (U.S.)) rose 0.47 of a penny to 25.60 cents/lb

    NYMEX Energy Closing Prices
  • Oct crude oil rose $0.57 to $93.97/barrel 
    • Crude oil lifted from its session low of $92.98 in early morning action and broke into positive territory. It trended higher to a session high of $94.45 and settled with a 0.6% gain.
  • Sep natural gas rose 7 cents to $3.89/MMBtu 
    • Natural gas fell from its session high of $3.91 following inventory data that showed a build of 88 bcf when a build of 82-83 bcf was anticipated. It brushed a session low of $3.79 but managed to recover back into positive territory in afternoon action. Natural gas eventually settled 1.8% higher. 
  • Sep heating oil rose 2 cent to $2.84/gallon 
  • Sep RBOB rose 4 cents to $2.75/gallon



  • Treasuries
    Good Day for US Economy (and Treasuries): 10-yr +7/32.. 2.405%.. USD/JPY 103.81.. EUR/USD 1.3282
    • It was a good day from the front of the curve to the back of the curve for the US Treasury market
      • Yields across the curve dropped by one to three basis points
      • 10-yr note settled near its high for the day (+7/32)
    • Today's economic data provided an ample basis to sell Treasuries, but that didn't happen
      • Weekly Initial Claims were 298K vs Briefing.com consensus of 308K; last week was revised to 312K from 311K. Weekly Continuing Claims 2.500 M vs Briefing.com consensus of 2.530 M; last week was revised to 2.549 M from 2.544 M
      • July Existing Home Sales were 5.15 mln vs Briefing.com consensus of 5.00 mln; June was revised to 5.03 mln from 5.04 mln
      • August Philadelphia Fed 28.0 vs Briefing.com consensus of 15.5; July was 23.9
      • July Leading Indicators 0.9% vs Briefing.com consensus of 0.7%; June was revised to 0.6% from 0.3%
    • Interest rate differentials presumably contributed to the Treasury market's relative strength. To that end, the yields on the German bund, the French OAT, and Japanese government bond crossed at 0.99%, 1.38%, and 0.52%, respectively
    • US Dollar Index (-0.1%) was slightly weaker, yet precious metals were on the defensive
      • Gold -$18.40 to $1276.80/troy ounce
      • Silver -$0.06 to $19.51/troy ounce
      • Platinum -$8.60 to $1420.00/troy ounce
    • The $16 bln 4-yr -8-mo TIPS auction drew a high yield of -0.281%
      • Treasuries extended their gains for the day following the auction
    • Some flattening in the 2-10yr spread, which started the day at 196 bps and ended the day at 194 bps
    • No data on Friday. 
    • All eyes and ears will be tuned to Jackson Hole Symposium on Friday
      • Fed Chair Yellen speaks at 10:00 a.m. ET about the labor market
      • ECB President Draghi to speak at 2:30 p.m. ET


    On other news.... 




    Currencies 



    Next Week In View




    Economic Commentaries

    Economic Summary: Existing Home Sales Leading Indicators, & Philly Fed all top top expectations; Jackson Hole 2014 begins, Yellen & Draghi to speak tomorrow
    Economic Data Summary:
    • Weekly Initial Claims 298K vs Briefing.com consensus of 308K; Last Week was revised to 312K from 311K
    • Weekly Continuing Claims 2.500 M vs Briefing.com consensus of 2.530 M ; Last Week was revised to 2.549 M from 2.544 M
      • The Department of Labor reiterated that there were no special factors that influenced the initial claims level. In its view, the sub-300,000 claim levels over the past several weeks are the result of improvements in labor market conditions. The motor vehicle industry, however, did not reduce production for retooling like it normally does during the summer months. That has artificially boosted employment levels and has likely contributed toward seasonal biases in the claims data. 
    • July Existing Home Sales 5.15 M vs Briefing.com consensus of 5.00 M ; June was revised to 5.03 M from 5.04 M
      • The expansion in supply, however, did not help soften price gains. Distressed property sales, which have declined in recent months, accounted for 9% of total sales. That was the first time since the data started being tracked in October 2008 that distressed properties accounted for less than 10% of sales. These homes sell at a substantial discount, and less distressed sales mean higher median existing home prices.
    • August Philadelphia Fed 28.0 vs Briefing.com consensus of 15.5; July was 23.9
      • The strength in the headline result is confusing and masks an oddly weaker subset of data. Nearly all of the components of the survey declined significantly in August. The only gains - outside of the headline result - came from the average workweek index which increased to 13.3 in August from 12.5 in July and inventories, which rose to 8.3 in August from 4.8 in July. 
    • July Leading Indicators 0.9% vs Briefing.com consensus of 0.7%; June was revised to 0.6% from 0.3%
      • Since 8 of the 10 components of the index are known prior to the release, the difference between the actual and the consensus is generally small. In this case, stronger-than-expected building permit data were released after the consensus made their projections and contributed to the upward surprise. 
    Upcoming Economic Data:
    • August New Home Sales due out Monday at 10:00 (Briefing.com consensus of ; July was 406K )
    Upcoming Fed/Treasury Events:
    • Kansas City Fed President Esther George (hawkish, non-voter) to speak tonight at 20:00.
    • 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
    Other International Events of Interest
    • China's HSBC Flash Manufacturing PMI (50.3 actual v. 51.5 expected, 51.7 previous) missed estimates


    Jason's Commentaries


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    Market Call: FLAT to upside
    Date: 22 Aug 2014

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