25 Nov 2014 AMC -Market ended flat to downside as Oil goes back down to $74 range

25 Nov 2014 AMC -Market ended flat to downside as Oil goes back down to $74 range

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 0.0%

·         Germany's DAX: + 0.8%

·         France's CAC: + 0.3%

·         Spain's IBEX: + 0.4%

·         Portugal's PSI: + 0.1%

·         Italy's MIB Index: + 0.4%

·         Irish Ovrl Index: + 0.4%

·         Greece ASE General Index: -2.8%

Before Market Opens 

S&P futures vs fair value: +3.00. Nasdaq futures vs fair value: +6.20.
The stock market is on track to begin the Tuesday session on a modestly higher note. The S&P 500 futures trade three points above fair value with a portion of the advance coming after the second revision to Q3 GDP showed an increase of 3.9% versus 3.5% that was reported in the preliminary reading. The revision surpassed the Briefing.com consensus, which expected a downward adjustment to 3.2%. 

The news gave a small boost to the Dollar Index (88.25, +0.09) while the 10-yr note slipped from its best level of the morning, leaving the benchmark yield flat at 2.31%. 

On the corporate front, discretionary components will be in focus after DSW (DSW 36.15, +2.50), Signet Jewelers (SIG 126.50, +3.51) and Movado (MOV 27.27, +0.34) reported better than expected results while Tiffany & Co (TIF 109.00, +3.99) missed by a penny. 

The Consumer Confidence report for November (Briefing.com consensus 96.0) will be released at 10:00 ET.

U.S. Equities

·         Futures point to small gains at the open

·         The S&P 500 finished yesterday's session at a record high and is up ~13.7% since October 15

·         The VIX (12.62) is at a two-month low

o    S&P Futures +4 @ 2072

o    Dow Futures +40 @ 17,832

o    Nasdaq Futures +11 @ 4293

Asia

·         Markets ended mixed across Asia

·         Bank of Japan Governor Kuroda hinted the central bank is ready to ease further

·         Reserve Bank of Australia Deputy Governor Lowe suggested the Aussie dollar's exchange rate remains too high

·         Japan's Nikkei (+0.3%) gained as traders returned to work following Labor Thanksgiving Day

·         Hong Kong's Hang Seng (-0.2%) slipped amid a quiet trade

·         China's Shanghai Composite (+1.4%) climbed to fresh 38-month highs

·         India's Sensex (-0.6%) slipped off all-time highs

·         Australia's ASX (-0.5%) halved yesterday's gains as iron ore prices remained under pressure

Market Internals

Market Internals -Technical-
The Nasdaq closed up 3 (+0.07%) at 4758, the Dow closed up 2 (+0.01%) at 17820, and the S&P 500 closed down 2 (-0.10%) at 2067. Action came on mixed volume (NYSE 826 mln vs. avg. of 805; NASDAQ 1525 mln vs. avg. of 1844), with mixed advancers/decliners (NYSE 1702/1437, NASDAQ 1337/1383) and new highs outpacing new lows (NYSE 197/25, NASDAQ 142/46).

Relative Strength: 
Gold Miners-GDX +4.08%, Silver Miners-SIL +3.71%, Natural Gas-UNG +3.3%, Coffee-JO +2.75%, Grains-JJG +1.87%, Brazilian Real-BZF +0.86%, Sweden-EWD +0.83%, Germany-EWG +0.81%, Spain-EWP +0.78%, Canada-EWC +0.68%.

Relative Weakness: 
Greece-GREK -2.78%, Eastern Europe-ESR -2.73%, Russia-RSX -2.61%, Oil-USO -2.47%, Egypt-EGPT -2.37%, Oil Services-OIH -2.23%, Oil and Gas Exploration-XOP -1.65%, Energy-XLE -1.63%, Energy-IYE -1.57%, New Zealand-ENZL -1.5%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries

Closing Market Summary: Stocks End Flat Following Upward Q3 GDP Revision
The stock market ended the Tuesday session on a flat note. The S&P 500 shed 0.1% after spending the day in a ten-point range while the other indices also settled near their unchanged levels.

Despite the flat finish, equity indices rallied at the start after the second revision to Q3 GDP surprised to the upside (3.9%; Briefing.com consensus 3.2%). However, the opening spike marked the session high for the S&P 500, which returned to unchanged by the end of the first hour.

The S&P 500 dipped into the red during morning action with the move taking pace amid weakness in the energy sector (-1.6%). The growth-sensitive group widened its week-to-date loss to 2.3% after a meeting between Russia, Saudi Arabia, Mexico, and Venezuela did not produce an agreement to reduce output. Crude oil also retreated on the news, but saw a short-lived spike on its way down in reaction to reports OPEC members may opt to cut supply at Thursday's meeting in order to stem the recent decline in price. The energy component ended lower by 2.2% at $74.09/bbl.

The energy sector was the lone decliner of note while most of the remaining groups ended with modest gains. The consumer discretionary space (+0.3%) finished in the lead after a few names reported earnings. Brown Shoe (BWS 31.29, +2.81), DSW (DSW 34.39, +0.74), and Signet Jewelers (SIG 131.59, +8.60) beat estimates whileTiffany & Co (TIF 107.62, +2.61) missed by a penny. The sector finished in the lead even though homebuilders lagged with the iShares Dow Jones US Home Construction ETF (ITB 25.93, -0.15) shedding 0.6%.

Elsewhere, the industrial sector (+0.2%) also finished near the lead with help from transport stocks. The Dow Jones Transportation Average extended to a fresh record, ending higher by 0.4%. Airlines benefitted from lower fuel prices with Delta Air Lines (DAL 44.08, +0.57) advancing 1.3%.

Another cyclical sector—technology—led at the start, but narrowed its gain to just 0.1% by the close. Apple's (AAPL 117.61, -1.02) market cap briefly crossed the $700 billion mark in the morning, but the top-weighted sector component retreated into the close. Unlike Apple, the sector was able to avoid turning negative thanks to gains in other large components like Intel (INTC 36.32, +0.07) and Facebook (FB 75.63, +1.62).

Treasuries notched their lows in reaction to the GDP report, but rallied throughout the day. The 10-yr yield ended lower by five basis points at 2.26%.

Participation was ahead of average with more than 830 million shares changed hands at the NYSE floor.

Economic data included Q3 GDP, Case-Shiller 20-city Index, FHFA Housing Price Index, and Consumer Confidence: 

·         Third quarter GDP was revised up to 3.9% in the second estimate from 3.5% while the Briefing.com consensus expected a reading of 3.2% 

o    All of the gain in third quarter GDP resulted from an upward swing in inventories 

o    Real final sales were revised down to 4.1% from 4.2% 

o    The positive surprise was mostly the result of an unexpected upward revision to personal consumption expenditures with goods spending in the third quarter revised up to 4.3% from 3.1% 

·         The Case-Shiller 20-city Index for September rose 4.9%, which was ahead of the Briefing.com consensus (4.6%) 

·         The September FHFA Housing Price Index was unchanged to follow last month's 0.4% uptick 

·         The Consumer Confidence Index dropped to 88.7 in November from a downwardly revised 94.1 (from 94.5) while the Briefing.com consensus expected an increase to 96.0. 

o    The Present Conditions Index declined to 91.3 from 94.4 while the Expectations Index fell to 87.0 from 93.8 

Tomorrow will be busy on the economic front with the MBA Mortgage Index set to cross the wires at 7:00 ET. Weekly Initial Claims, October Durable Orders, and October Personal Income/Spending Data will be released at 8:30 ET while the Chicago PMI for November will cross at 9:45 ET. The final reading of the Michigan Sentiment Survey will be released at 9:55 ET while New and Pending Home Sales will be reported at 10:00 ET. 

·         Nasdaq Composite +13.9% YTD 

·         S&P 500 +11.8% YTD 

·         Dow Jones Industrial Average +7.5% YTD 

·         Russell 2000 +2.1% YTD

Commodities

Closing Commodities: WTI Crude Closes Just Above $74/Barrel Ahead Of OPEC Meeting

·         Crude oil is a big story right now. The energy component was volatile again today as headlines about OPEC hit newswires

·         Crude was recovering some of yesterday's losses before really losing steam in mid-morning activity

·         Jan crude oil ended today's session $1.66/barrel lower at $74.09/barrel. Crude fell as low as $73.78/barrel

·         The big catalyst right now is the OPEC meeting coming up on Thursday

·         Dec gold rose $1.70 today to $1197.30/oz, while Dec silver rose 17 cents to $16.55/oz.

·         Dec copper fell 4 cents to $2.96/lb

Metals price action

·         Gold rose $1.70 to $1197.30/oz

·         Silver rose 17 cents to $16.55/oz

·         Copper fell 4 cents to $2.96/lb

Agricultural price action

·         Corn rose 8 to $3.75/bushel

·         Wheat rose 10 cents to $5.52/bushel

·         Soybeans rose 16 cents to $10.51/bushel

·         Ethanol fell 2 cents to $2.06/gallon

·         Sugar #11 ended unchnaged at 16.00 cents/gallon

Energy price action; WTI crude falls near $74/barrel ahead of Thursday's OPEC meeting

·         Crude oil fell $1.66 to $74.09/barrel

·         Natural gas rose 27 cents to $4.41/MMBtu

·         Heating oil closed unchanged at $2.03/gallon

·         RBOB fell $0.01 to $2.39/gallon

 



Treasuries

Yields Break Support: 10Y: +11/32..2.262%..USD/JPY: 117.92..EUR/USD: 1.2474

·         Treasuries ended on session highs, propelled by the superb 5Y note auction. Click here to see an intraday yields chart.

·         The complex held small gains into the cash open following more warnings of downside risks to the global economy.

·         Maturities slid back to their respective breakeven lines after Q3 GDP - Second Estimate (3.9% actual v. 3.2% expected, 3.5% previous) surprised to the upside. 

·         However, buyers emerged in defense of the flat line as housing prices saw mixed results. 

·         Trade chopped around with slight gains into the $35 bln 5Y note auction. The auction drew 1.595% (WI 1.612%) and a superb 2.91x bid/cover. Indirect (65.0%) bids posted their best showing in 10 years while directs (9.9%) were a bit light. Primary dealers ended up with just 25.1% of the supply. 

·         Aggressive buying developed in response to the strong auction, pushing yields below key support that had been in place over the past month. 

·         Up front, the 2Y ended @ 0.516% after seeing an adjustment following yesterday's auction. 

·         In the belly, the 5Y slid -3.5bps to 1.568%. The yield broke below support in the 1.600% area and closed at its lowest level since October 28. 

·         The 10Y shed -5bps to 2.260%. The benchmark yield ended at its own one-month low as action dipped below 2.300% support. 

·         Outperformance at the long end dropped the 30Y -5.3bps to 2.966%. The yield on the long bond posted its lowest close since October 20. 

·         Aggressive flattening along the yield curve dropped the 2-10-yr spread below 175bps for the first time since May 2013. 

·         Also notable was the 5-30-yr spread narrowing to 140 bps for the first time since January 2009 and the 10-30-yr spread tightening to 70bps for the first time since March 2009. 

·         Precious metals gained as gold added +$2 to $1198 and silver climbed +$0.21 to $16.59. 

·         Data: MBA Mortgage Index (7), initial and continuing claims, durable orders, personal income and spending, PCE Prices - Core (8:30), Chicago PMI (9:45), Michigan Sentiment -Final (9:55), new home sales, and pending home sales (10). 

·         Auction: $29 bln 7Y notes (11:30).

On other news.... 

Currencies 

Dollar Dips Below 88.00: 10Y: +08/32..2.273%..USD/JPY: 117.82..EUR/USD: 1.2481

·         The Dollar Index holds on session lows near 87.85 as sellers remain in control for a second session. Click here to see a daily Dollar Index chart.

·         The recent weakness has many participants turning their attention towards 87.50 support. 

·         EURUSD is +35 pips @ 1.2475 as action continues its climb off 1.2400 support. The single currency pressed to its worst levels of the session following the strong U.S. GDP number, but has seen steady buying over the remainder of the session as home prices and consumer confidence were light. A run through 1.2600 and the 50 dma (1.2630) helps the bull case. 

·         GBPUSD is +10 pips @ 1.5715 as trade contends with a two-week high. Sterling was punished in early trade after the latest Bank of England Inflation Report showed a split Monetary Policy Committee, but has attracted bids amid the broad based dollar weakness. British data scheduled for tomorrow includes Second Estimate GDP, preliminary business investment, and CBI Realized Sales. 

·         USDCHF is -25 pips @ .9640 as trade continues to slide off 16-month highs. An absence of news and data out of Switzerland has kept the pair tightly correlated to the euro.

·         USDJPY is -50 pips @ 117.75 as trade tests the lower end of the 117.50/118.50 range that has been in place for much of the past week. The pair failed to rally following further promises of more easing by Bank of Japan Governor Haruhiko Kuroda. 

·         AUDUSD is -80 pips @ .8530 as action looks likely to close at its lowest level in 52 months. The hard currency has seen selling after comments from Reserve Bank of Australia Deputy Governor Lowe suggested the exchange rate remains too high. Australia's construction work done will cross the wires tonight. 

·         USDCAD is -40 pips @ 1.1235 as action flirts with the 50 dma. Today's selling comes following the mixed core retail sales (0.0% MoM actual v. 0.4% MoM expected) and retail sales (0.8% MoM actual v. 0.6% MoM expected) data.

Next Week In View




Economic Commentaries

Economic Summary: Q3 GDP revised higher to 3.9%; Consumer Confidence misses estimates
Economic Data Summary:

·         Third Quarter GDP Second Estimate 3.9% vs Briefing.com consensus of 3.2%; Q3 Prelim was 3.5%

·         Third Quarter GDP Deflator Second Estimate 1.4% vs Briefing.com consensus of 1.3%; Q3 Prelim was 1.3%

o    The positive surprise was mostly the result of an unexpected upward revision to personal consumption expenditures. While the October retail sales report did not show any significant revisions to the September sales data, goods spending in the third quarter was revised up from 3.1% in the advance release to 4.3% in the second estimate. As a result of the increase in goods spending, consumption contributed 0.3 percentage points more to GDP growth in the second estimate than in the advance release. 

·         September Case Schiller 20 City Index 4.9% vs Briefing.com consensus of 4.6%; August was 5.6%

·         September FHFA Housing Price Index 0.0% vs Briefing.com consensus of ; August was revised to 0.4% from 0.5%

·         November Consumer Confidence 88.7 vs Briefing.com consensus of 96.8; October was revised to 94.1 from 94.5

o    The sharp decline in confidence was very unusual. Typically, confidence levels follow trends in employment, stock prices, and gasoline prices. All of those components moved in a decidedly positive direction in November. In fact, the strength in employment, equities, and gasoline was influential in driving the University of Michigan Consumer Sentiment Index to a seven-year high in the preliminary November reading.

Upcoming Economic Data:

·         Weekly Initial Claims due out Thursday at 8:30 (Briefing.com consensus of 288K; Last Week was 291K)

·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 2.348 M ; Last Week was 2.330 M )

·         October Durable Goods due out Thursday at 8:30 (Briefing.com consensus of -0.6%; September was -1.3%)

·         October Durable Goods Ex-Transportation due out Thursday at 8:30 (Briefing.com consensus of 0.5%; September was -0.2%)

·         October Personal Income due out Thursday at 8:30 (Briefing.com consensus of 0.4%; September was 0.2%)

·         October Personal Spending due out Thursday at 8:30 (Briefing.com consensus of 0.3%; September was -0.2%)

·         October PCE Prices - CORE due out Thursday at 8:30 (Briefing.com consensus of 0.1%; September was 0.1%)

·         November Chicago PMI due out Thursday at 9:45 (Briefing.com consensus of 63.0; Ocotber was 66.2)

·         November Michigan Sentiment - Final due out Thursday at 9:55 (Briefing.com consensus of 90.0; Ocotber was 89.4)

·         October New Home Sales due out Thursday at 10:00 (Briefing.com consensus of 470K; September was 467K )

·         October Pending Home Sales due out Thursday at 10:00 (Briefing.com consensus of 0.5%; September was 0.3%)

Upcoming Fed/Treasury Events:

·          The Treasury is expected to auction off new debt this week.  The results will be issued at 13:00

o    Tuesday: $35 bln in 5 year note

o    Wednesday: $29 bln in 7 year notes

Jason's Commentaries

Market was have quite a flat to bullish day until 1240pm ET where oil started crashing pass the $74.5 support level and cause the energy companies to head down together. It's quite a surprising move as we're having the OPEC meeting on Thursday. Volumes were healthy, but we might be retracing for a while. As for tomorrow, market will be closed in observance of Thanksgiving and Friday, market will be opened till 1pm ET. Main market movements will come back on Monday, where both retailers and energy companies will be the main movers of the market. Have fun shopping!








Market Call: FLAT to upside

Date: 26 Nov 2014