6 Dec 2012 AMC

6 Dec 2012

Market Summary 

Market Internals

.

Leaders and Laggards

Technical Updates

Commentaries 

Stock Market Update 16:20 ET Dow +39.55 at 13074.04, Nasdaq +15.57 at 2989.27, S&P +4.66 at 1413.94 :[BRIEFING.COM] Today's session opened with initial uncertainty before the major averages staged a climb to their respective highs. Overseas, Standard & Poor's lowered Greece's long term credit rating to ‘Select Default' from ‘CCC.' Meanwhile, Germany's DAX closed at its highest level in nearly five years. Domestically, trade was confined to a narrow range, but late-day buying lifted the S&P 500 to a slim gain of 0.3%.  The technology sector was the top performer, and the SPDR Technology Select Sector ETF (XLK 28.91, +0.16) advanced 0.6%. Apple (AAPL 547.24, +8.45) was down as much as 3.0% in early trade, but after marking its session low at $518.63, the stock reversed and finished higher by 1.6%.  Elsewhere, Akamai Technologies (AKAM 39.06, +3.56) surged 10.0% after the company announced a global strategic alliance with AT&T (T 33.65, -0.26). The newly forged partnership will allow Akamai to deploy CDN servers on the AT&T network in order to improve content routing and its delivery.  Remaining in the sector, major hard drive makers enjoyed their third strong session in a row. Seagate (STX 28.53, +0.93) and Western Digital (WDC 37.10, +1.07) both added near 3.0%.  Financials registered slim gains and the SPDR Financial Select Sector ETF (XLF 15.90, +0.05) tacked on 0.3%. Citigroup (C 37.02, +0.56) was the top performer among the majors. The stock settled higher by 0.9% to extend yesterday's 6.3% rally sparked by the announcement of plans to dismiss more than 11,000 employees.  Looking at European financials, Deutsche Bank (DB 45.49, -0.58) slid 1.3% after reports from Reuters indicated the bank may have hid up to $12 billion in losses in order to avoid having to accept a government bailout.  Also of note, HSBC Holdings (HBC 51.75, -0.12) shed 0.2% after Reuters reported the company may be facing a $1.8 billion money-laundering fine. The industrial sector was the weakest performer and manufacturers of building products weighed. Lennox International (LII 51.07, -0.49) and Masco (MAS 15.78, -0.43) fell 1.0% and 2.7%, respectively.  Elsewhere, UTi Worldwide (UTIW 12.88, -1.15) slid 8.2% after reporting disappointing earnings. During the third quarter, the supply chain manager earned $0.16, which was $0.09 worse than the Capital IQ consensus estimate. Meanwhile, its revenue of $1.13 billion also missed expectations. When commenting on its past performance and the future outlook, company management said, "Macroeconomic and freight conditions remained weak throughout our fiscal 2013 third quarter, and we see no real catalysts to drive increases in the foreseeable future."  The Dow Jones Transportation Average underperformed and shed 0.1%. Most transportation stocks were on the decline and CH Robinson (CHRW 60.64, -1.27) was the biggest laggard. The freight carrier finished lower by 2.1% and other truckers registered losses as well.  With crude oil settling lower by 1.7%, airlines outperformed. Delta Air Lines (DAL 10.02, +0.31) gained 3.2% and was the best performing carrier. Earlier, the company has finalized its agreement with Bombardier Aerospace, which will allow Delta to continue renovating its domestic fleet by replacing its least efficient jets.  The latest weekly initial jobless claims count totaled 370,000, which is lower than the 382,000 that had been expected by the Briefing.com consensus. The tally is below the revised prior week count of 395,000. As for continuing claims, they fell to 3.205 million from 3.305 million.  November Challenger Job Cuts rose by 34.4% year-over-year after the prior month's reading pointed to an 11.6% increase.  In tomorrow's economic data, November nonfarm payrolls, nonfarm private payrolls, unemployment rate, hourly earnings, and average workweek will all be released at 8:30 ET. In addition, December Michigan Sentiment and October consumer credit will be reported at 9:55 ET and 15:00 ET, respectively. ..NYSE Adv/Dec 1586/1434. ..NASDAQ Adv/Dec 1223/1234.

After Hours

18:22 ET SWHC +3.0%, ESL +1.7%, CMTL -12.5%, ALOG -7.0% following earnings/guidance :

Today's session opened with initial uncertainty before the major averages staged a climb to their respective highs. Overseas, Standard & Poor's lowered Greece's long term credit rating to ‘Select Default' from ‘CCC.' Meanwhile, Germany's DAX closed at its highest level in nearly five years. Domestically, trade was confined to a narrow range, but late-day buying lifted the S&P 500 to a slim gain of 0.3%.

Today after the close the following companies are scheduled to report earnings: ALOG, FIZZ, CMTL, COO, ESL, FLOW, HWD, PANW, SWHC

Futures are higher after lower hours: S&P 500 futures are +0.20 from fair value of 1413.00 and Nasdaq100 futures are +0.40 from fair value of 2654.85.

Tomorrow morning before the open four economic reports are scheduled to be released: 1) Nonfarm Payrolls (Consensus 90k) and Nonfarm Private Payrolls (Consensus 120k), 2) Unemployment Rate (Consensus 8.0%), 3) Hourly Earnings (Consensus 0.1%) and 4) Average Workweek (Consensus 34.4).

Tomorrow before the open the following companies are scheduled to report earnings: KMG, BNS

Commodities

Treasuries

Moving the Market

Initial Claims 370K Actual, vs 382k Consensus, 395k Prior
Continuing Claims Falls to 3.205M from 3.305M.  

Defense Contracts 

Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, is being awarded a not-to-exceed $386,694,924 modification to the previously awarded F-35 Lightning II Program Air System Low Rate Initial Production Lot 6 Advance Acquisition Contract (N00019-11-C-0083) to provide sustainment support for delivered air systems.  This effort includes but is not limited to: ground maintenance activities; action request resolution; depot activation activities; Automatic Logistics Information System operations and maintenance; reliability, maintainability and health management implementation and support; supply chain management;  activities to provide and support pilot and maintainer initial training; and procurement of replenishment spares and depot level repairs in support of flight operations.  Work will be performed in Eglin Air Force Base, Orlando, Fla. (35 percent); Ft. Worth, Texas (25 percent); El Segundo, Calif. (8 percent); Warton, United Kingdom (5 percent); and various locations throughout the United States (27 percent); and is expected to be completed in October 2013.  Contract funds in the amount of $193,340,487 will be obligated at time of award, $58,378,517 of which will expire at the end of the current fiscal year.  The Naval Air Systems Command, Patuxent River, Md., is the contracting activity. 

 Lockheed Martin Aeronautics Co., Fort Worth, Texas, (FA8604-13-D-7951) is being awarded a $29,446,000 requirements contract for Engineering and Technical services for the F-16 and F-22 aircraft.  The location of the performance is Bahrain, Chile, Egypt, Jordan, Morocco, Oman, Pakistan, Poland, Taiwan and Turkey.  Work is expected to be completed by Dec. 31, 2014.  The contracting activity is AFLCMC/PZIEB, Wright-Patterson Air Force Base, Ohio.  Contract involves Foreign Military Sales. 

Lockheed Martin Aeronautics Co., Fort Worth, Texas, (FA8604-13-D-7950) is being awarded an $11,415,000 requirements contract for engineering and technical services for the F-16 and F-22 aircraft.  The location of the performance is Air Combat Command; Air Force Material Command; National Guard Bureau and Pacific Air Force bases.  Work is expected to be completed by Dec. 31, 2014.  The contracting activity is AFLCMC/PZIEB, Wright-Patterson Air Force Base, Ohio. 







Market was relatively flat to the upside yesterday, despite having such a sharp rebound on 5 Dec, I was expecting more profit taking ahead of the NFP. However, the sentiment was changed by the Jobless Claims results. As seen from the internals, the bulls managed to outpace the bears slightly through the night.

Both Consumer Discretionary and Tech led the night with some mild gains. Financials were led higher by Citi on 5 Dec, having to cut 11000 jobs on their restructuring effort to save $1B. The other financials went up as a result in sympathy. On 6 Dec, profit taking happened on the other financials which lowered the financials gains.

On the Technical note, the main indices have crossed the 200MA and it's signifying a bullish sentiment in the market and I reckon the Santa Claus rally will likely to happen. However, a strong focus will be on the Congress's meeting on the Fiscal Cliff. Furthermore, we are likely to experience a third candle reversal if the NFP suck.

Timothy Geithner spoke to the press 2 days ago that the Congress is prepared to go over the 'cliff' and stated that it will not affect the US economy in the near term as the Taxes will only kick in at the end of the year. However, I believe the market will likely to react to the Congress's decision.

While on the Treasuries, not much changed has been observed.

The focus of Friday's market will be heavily centered on the NFP and Draghi's talk happening at 830am ET and 5am ET respectively. This will be a tough call but since the ADP results came in lousy and I'd be expecting a lower employment to come.

So far on the Asia market, the Nikkei, Hang Seng closed flat to the downside, having a lack of market movers from yesterday.

Market Call: DOWN

Date: 7 Dec 2012