15 Mar 2013

15 Feb 2013 AMC

Market Summary 

Defense Contracts

  Lockheed Martin Space Systems Company, Sunnyvale, Calif., (FA8810-13-C-0002) is being awarded a $105,868,182 cost-plus incentive-fee and fixed-price incentive-firm contract for contractor logistics support, legacy sustainment and combined task force support for the Space Based Infrared Systems.  The location of the performance is Colorado Springs, Colo.  Work is expected to be completed by Sept. 30, 2016.  Type of appropriation is fiscal 2013.  The contracting activity is SMC/ISK, Los Angeles Air Force Base, Calif.  

            The Boeing Co., St. Louis, Mo., (FA8681-13-D-0102) is being awarded a $99,900,000 firm-fixed-price, cost-plus-fixed-fee and indefinite- quantity/indefinite-delivery contract for production assets, spares, repairs and sustainment for the joint direct attack munitions system.  The location of the performance is St. Louis, Mo.  Work is expected to be completed by Jan. 31, 2016.  Type of appropriation is foreign military sales funding.  The contracting activity is AFLCMC/EBDK, Eglin Air Force Base, Fla.  Contract involves foreign military sales.

Market Internals

Leaders and Laggards

Technical Updates

Commentaries 

Stock Market Update 16:20 ET Dow -25.03 at 14514.11, Nasdaq -9.86 at 3249.07, S&P -2.53 at 1560.7 :[BRIEFING.COM] The major averages finished the week on a lower note and the S&P 500 shed 0.2%. Elsewhere, the Dow Jones Industrial Average declined 0.2% and snapped its streak of ten consecutive gains.  Equities slipped out of the gate with today's quadruple witching providing additional volume at the start. The lower open was then followed by another slip when the University of Michigan Consumer Sentiment Survey was reported below expectations. For March, the preliminary Survey fell to 71.8 from 77.6. Meanwhile, the Briefing.com consensus expected the reading to remain at 77.6.  After receiving the final economic data point of the day, the S&P 500 reversed and headed back towards yesterday's close.  By midday, the index was able to climb within one point of its flat line. However, the average could not muster additional strength, and instead began a steady slide back towards its lows.  The S&P 500 did see its now-familiar final-hour wave of buying, but that effort was merely able to bring the index back to the middle of today's range.  A handful of items made the session notable. The first noteworthy item was the lack of defined sector leadership. During this year's market rally, most sessions ended with either cyclical or defensively-oriented sectors clustered in the lead. Today, utilities and financials ended atop sector rankings.  The defensively-oriented utilities sector saw a steady morning bid before spending the afternoon near its best level of the day. The SPDR Utilities Select Sector ETF (XLU 38.13, +0.25) ended higher by 0.7%.  Financials were in focus after the Federal Reserve released the second part of its CCAR report. The results of the stress test showed that only Ally Financial and BB&T (BBT 30.98, -0.75) failed to meet requirements. Meanwhile, Goldman Sachs (GS 154.84, +0.82) and JPMorgan Chase (JPM 50.02, -0.98) will need to resubmit capital plans by the end of the third quarter. Shares of Goldman Sachs ended with modest gains while JPMorgan Chase slid 1.9% after bank executives testified before a Senate subcommittee regarding losses stemming from last year's "London Whale" trade.  Another item of note was the mixed performance observed within the technology sector. The SPDR Technology Select Sector ETF (XLK 30.20, -0.12) lost 0.4% while its largest component, Apple (AAPL 443.66, +11.16), found buyers who helped the stock rise 2.6%.  The relative strength of Apple prevented the tech sector from logging wider losses. Major components traded lower as Google (GOOG 814.30, -7.24) and International Business Machines (IBM 214.92, -0.88) saw respective losses of 0.9% and 0.4%. In addition, chipmakers were broadly weaker and the PHLX Semiconductor fell 1.7%.  The selloff in microchip manufacturers may be perceived as a sign of exhaustion after the 30-stock group had risen more than 13.0% since the start of the year. Meanwhile, the entire tech sector has only gained 4.2% so far in 2013.  The final noteworthy item was the lack of a significant move in the CBOE Volatility Index (VIX 11.42, +0.12). With stocks spending the day in negative territory, the short-term volatility measure added just over 1.0%, suggesting downside protection was not being sought out actively. Including today's gain, VIX remains at levels last seen in early 2007.  In addition to the previously mentioned University of Michigan Survey, the market received a heavy dose of economic data today.  A surge in energy costs led to the CPI increasing 0.7% in February after reporting no growth in January. The Briefing.com consensus expected the CPI to increase 0.5%. Gasoline prices increased 9.1% in February, which was the largest monthly gain since increasing 20.5% in June 2009. Meanwhile, food prices rose 0.1% after holding flat in January.  Excluding food and energy, core prices increased 0.2% in February, down from a 0.3% gain in January and exactly in-line with consensus expectations.  Industrial production increased 0.7% in February after reporting no growth in January. The Briefing.com consensus expected an uptick of 0.4%. Capacity utilization rates rose from an upwardly revised 79.2% (from 79.1%) in January to 79.6% in February. The consensus expected utilization rates to increase to 79.4%.  The Empire Manufacturing Survey for March registered a reading of 9.2, which was down from the prior month's reading of 10.0. Economists polled by Briefing.com had expected that the survey would slip to 6.5.  January net long-term TIC flows report indicated a $25.7 billion inflow of foreign capital into U.S. denominated assets. This follows the prior month's $64.2 billion inflow.

Commodities

Treasuries

Weekly Analysis
Week 38



Technical Updates
















Briefing's Commentaries

Week in Review: S&P 500 Hovers Near Record Levels On Monday, equities finished a very quiet session near their highs and the S&P 500 gained 0.3%, bringing the index within 10 points of record closing highs. The major averages began the day with slim losses. The cautious early trade followed downbeat overseas action where investors responded to disappointing industrial production news out of France and a series of below-consensus data points from China. Dick's Sporting Goods (DKS 47.00, -0.52) fell 10.9% after its earnings and revenue fell short of the Capital IQ consensus. Additionally, guidance issued by the company was also below analyst expectations.  The major averages finished Tuesday's session on a mixed note. The Dow registered a slightly higher close while the S&P 500 and Nasdaq ended in the red. The financial sector underperformed amid weakness in major bank names. Morgan Stanley (MS 23.59, +0.79) lost 1.9% while the broader SPDR Financial Select Sector ETF (XLF 18.44, +0.07) slipped 0.5%.  Wednesday ended with slim gains and the S&P 500 settled higher by 0.1%. The industrial sector outperformed as transportation-related stocks saw broad strength. The Dow Jones Transportation Average climbed 1.6% with 19 of 20 components registering gains. Airlines and truckers were among the index leaders as Alaska Air (ALK 59.24, -0.31) and JB Hunt (JBHT 74.00, -0.51) settled with respective gains of 4.3% and 5.6%.  On Thursday, the major averages ended with modest gains. The S&P 500 advanced 0.6%, and settled within three points of a record close. Meanwhile, the Dow Jones Industrial Average registered its 10th consecutive gain. The energy sector saw broad strength and the SPDR Energy Select Sector ETF (XLE 79.60, -0.06) advanced 1.4% to end at its best level since July 2011. ..NYSE Adv/Dec 1408/1611. ..NASDAQ Adv/Dec 1093/1371.

Next Week In View


Jason's Commentaries

Special Edition Weekly Market Analysis:
How high can we go and how long that bullishness can last?

Oh well, I've got something really interesting to share with you guys. The above are 2 charts of 2 different crashes in the 1998 and 2008 crashes. Both exhibited the same pattern. In approximately one year after the market broke into the higher high, the market tends to crash. And judging from the way we are right now, I will remain bullish for the rest of the year. However, do note that China's property bubble is worrying and the bond situation in the States is in a mess right now. If the Fed starts pulling off their exit plans, the market will definitely get very very shaky, it might even trigger a crash. Watch out for China and US for the time being, they might just be the next crashers.

Judging from the sentiment we have right now, I believe that we're likely to hit approx 15000 or 15100 and we're going to stay sideways and volatile. As we're going to enter May soon, we might just going to retrace in a major fashion. So... Join me in shorting the market in May =D





We have a flat to the downside Quadruple Witching Friday, having a total shares traded on the NYSE to be at 1491 million shares. The market sunk right at the start of the trading sessions, found a bottom at 14480 then remained sideways and volatile through the trading day. Only at the final 30 mins, then the market started recovering some of its losses. It may seems that there are nothing to cause the sudden drop in the market, but let's switch our attention to bonds on Friday. Before the start of the trading day, bond rallied since 8am ET. That is likely to be the catalyst that caused the sell off at the start of the trading session. Bonds has been on the decline since Nov 2012, and i'm expecting bonds to come back a little more, which means this coming week is likely to be sideways to the downside. Furthermore, the market has been dragged down by the Consumer Sentiment report from UoM, having dropped a 77.6pts to 71.8pt. The financials were amongst the strongest leaders on Friday as the biggest banks in the US announced their buyback plans which proves their earning strength.

"Bank of America announced a $5 billion stock buyback program, sending shares sharply higher in extended-hours trading. 

Citigroup said it plans a $1.2 billion stock buyback program, sending shares slightly higher in extended-hours trading.

JPMorgan said it will raise its second-quarter dividend to 38 cents a share from 30 cents a share and announced a $6 billion buyback plan.

Goldman Sachs said the Fed did not object to its proposed capital actions, but, it will resubmit its capital plan by the end of the third quarter, "incorporating certain enhancements to its stress test processes."

American Express raised its quarterly dividend by 15 percent to 23 cents a share and announced a $4 billion buyback. 

Bank of New York Mellon said it will repurchase up to $1.35 billion of common stock. Shares edged higher in extended-hours trading.

U.S. Bancorp announced a $2.25 billion stock buyback program and a likely dividend increase. Shares rose in extended-hours trading.

Regions Financial said it plans to raise its quarterly dividend to 3 cents a share from a penny a share. Shares climbed in extended-hours trading.

Morgan Stanley said that received approval for the cash acquisition of the remaining 35% interest in Morgan Stanley Smith Barney Holdings LLC from Citigroup.

Fifth-Third said it had been approved a very detailed capital plan that includes a combination of buybacks, share conversions and a potential increase in its quarterly dividends.

Ally Financial said it continues to disagree with the Fed's "analysis of its capital adequacy in a stressed scenario."
 
Also, we had the utilities leading the sector as well. The heaviest laggard would be the Staple and the Tech, both being dragged down by names like Colgate, P&G, Walmart, Intel, AT&T.
While on the sectors, I'm definitely bullish with the Financials and Industrials right now, having the Defense industry dishing out so much contacts, the banks are buying back so much shares, it's definitely worth noting.

While on the Technicals, the market is showing a sideways trend already, I highly doubt the market will go much higher next week. After the Hangman doji on the weekly chart, the market is likely to take a rest for now. 

Market Call: Flat

Date: 18 Mar 2013 AMC