7 June 2013 AMC

7 June 2013 AMC

Market Summary 

Market Internals

Leaders and Laggards

Technical Updates

Commentaries 

Stock Market Update 16:20 ET Dow +207.50 at 15248.12, Nasdaq +45.16 at 3469.21, S&P +20.82 at 1643.38 : [BRIEFING.COM] Equity indices entered the weekend on an upbeat note as the S&P 500 settled higher by 1.3%, ending just three points below its 20-day moving average. Stocks spent the bulk of today's session near their highs after receiving a pre-market boost from the nonfarm payrolls report.  Nonfarm payrolls increased by 175,000 jobs in May. That was up from a downwardly revised 149,000 (from 165,000) new jobs in April, and ahead of the Briefing.com consensus, which expected nonfarm payrolls to add 159,000 new jobs in May.  Even though payrolls beat expectations, the underlying trends point toward a stable, not upward moving, labor market and a slow-growth economy. Specifically, the increase in jobs was not enough to cause a sizable jump in income levels. That means retail sales growth will likely be soft for a second consecutive month.  Private payrolls added 178,000 jobs in May, up from 157,000 jobs in April, and above the 175,000 expected by the consensus.  The unemployment rate ticked up to 7.6% in May from 7.5% while the consensus expected the unemployment rate to remain at 7.5%.  The increase, however, was the result of improving confidence in economic conditions. The labor force increased by 420,000, topping the 319,000 increase in the number of employed.  While the headline number surprised to the upside, the increase in the unemployment rate suggests the Federal Reserve will maintain its accommodative policy course in the immediate term.  Cyclical sectors ended among the leaders as financials, industrials, and discretionary shares all gained more than 1.7%.  The industrial sector stood out as transportation and defense companies rallied broadly. The Dow Jones Transportation Average settled higher by 2.4% as 11 of 20 Index components added more than 2.0%. Airlines received clearance for take-off with United Continental (UAL 32.94, +2.27) soaring 7.4%. Contributing to United's outperformance was a Goldman Sachs upgrade of the stock to ‘Neutral' from ‘Sell.'  With regards to defense names, the PHLX Defense Index rose 1.9%.  The discretionary sector added 1.8% as retailers provided a measure of support to the growth-oriented space. Gap (GPS 42.09, +1.11) jumped 2.7% after reporting May same store sales growth of 8.0% while the broader SPDR S&P Retail ETF (XRT 78.32, +1.23) rose 1.6%.  Many of today's outperformers included recent laggards. Homebuilders saw early gains, but ended the day in mixed fashion. The iShares US Home Construction ETF (ITB 23.82, +0.06) ended with just a slim gain of 0.3%.  Elsewhere in high-beta land, small cap stocks trailed behind the broader market throughout the session as the Russell 2000 gained 0.8%.  Interestingly, the materials sector rallied despite weakness in metals. Gold fell 2.6% to $1378.40 per ounce while silver dropped 5.2% to $21.52 per ounce. For its part, copper declined 1.6% to $3.267 per pound. Steelmakers also lagged as the Market Vectors Steel ETF (SLX 40.16, -0.14) shed 0.4%.  The CBOE Volatility Index (VIX 15.03, -1.60) fell early, and remained near its lows after spiking to its highest level in more than three months.  Today's nonfarm payrolls report sparked daylong selling across the Treasury complex. As a result, the benchmark 10-yr yield rose nine basis points to 2.175%.  Looking at today's leftover economic data, the average workweek remained at 34.5 in May after a slight upward revision in April (from 34.4). Average hourly earnings growth was flat.  According to the Federal Reserve, consumer credit increased by $11.1 billion in April. This follows the prior month's revised increase of $8.4 billion, and is lower than the $13.2 billion that had been broadly expected among economists polled by Briefing.com.  There is no economic data of note scheduled for a Monday release.

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Weekly Analysis
Week 38



Technical Updates






 Briefing's Commentaries


Week in Review: Stocks Wobble Ahead of Jobs Data 
On Monday, The major averages registered modest gains with the Dow Jones Industrial Average leading the way, adding 0.8%. The Nasdaq eked out a gain of 0.2% while the S&P 500 climbed 0.5%. The Dow outperformed as Merck (MRK 48.19, -0.41) and Intel(INTC 24.59, -0.06) boosted the price-weighted index from the opening bell. Merck rose 3.8% after the company presented the interim results of one of its trials while Intel gained 4.0% following the weekend public debut of its fourth generation processors. 

Tuesday's session ended in negative territory as the S&P 500 shed 0.6%. Equities opened the session on an upbeat note as the Dow Jones Industrial Average appeared poised for its 21st consecutive Tuesday of gains. However, that changed midway through the trading day when the major averages dipped into the red, where they remained until the close. The afternoon weakness left eight of the ten sectors in the red, but was most noticeable among cyclical groups as energy, financials, and industrials lost between 0.6% and 0.9%. 

The S&P ended Wednesday's session with a loss of 1.4% after steady selling persisted throughout the day. All ten sectors ended in the red as declining issues outpaced advancers by a 4.4 to 1 ratio. Cyclical groups were among the main casualties of today's selloff as four of six growth-oriented sectors saw losses in excess of 1.6%. The materials space fell 2.1% amid sector-wide weakness. Only gold miners were able to escape the selling pressure as the Market Vectors Gold Miners ETF (GDX 28.99, -1.31) added 0.3%. 

On Thursday, the S&P 500 settled higher by 0.9% despite having to endure early weakness brought on by volatility in the foreign exchange market. The Dollar Index faced heavy selling pressure into the early afternoon, and was down as much 1.8% before bouncing off its 200-day moving average. Although many currencies were boosted by the dollar selloff, none was greater than the strength of the Japanese yen, which at its best levels was up more than 3.0% against the greenback at 95.89. The significant movements in the foreign exchange market were followed by chatter suggesting a forced liquidation trade may have been the culprit behind the sharp downdraft in the dollar. ..NYSE Adv/Dec 2096/932. ..NASDAQ Adv/Dec 1648/866.

Next Week In View

Jason's Commentaries

May nonfarm payrolls: 175,000 actual, 159,000 Briefing.com consensus, prior revised to 149,000 from 165,000

Nonfarm private payrolls: 178,000 actual, 175,000 Briefing.com consensus, prior revised to 157,000 from 176,000

Unemployment rate: 7.6% actual, 7.5% Briefing.com consensus, 7.5% prior

Hourly earnings: unchanged, +0.2% Briefing.com consensus

Average workweek: 34.5 actual, 34.5 Briefing.com consensus

 Average payrolls was 172k on average, which May's employment numbers came in better than expected. However, unemployment rate went up to 7.6%. Market went up more than 200 points. It's over-reacted... way over reacted... It's not even fantastic results... it's just better than expected and the market rallied a 200 points. Market spiked up right after the NFP results and when market opened, it just flew right to 15250 points. Then we can see some week profit taking. During the last hour, market rallied and got stucked at 15250The biggest gainers are the industrials and Consumer Discretionary. While more of the sectors are performing near a 1% gain as well. However, when you're looking at the sectors' performance in as whole... it seems that they are exhibiting the dead cat bounce isn't it? Volumes were not fantastic... a 666m shares traded on the NYSE when the heavily regarded NFP produced a better than expected result?  Moreover, bulls outpaced the bears by 3:1 which was pretty decent. Options activities remained slightly bearish and VIX closed at 15.14. 

On the technical updates, all indices broke below the 20MA and it seems that the 20MA might provide some resistance to the market. 15250 might provide some resistance to the Dow. On the weekly update, the market seem to have found some support.

Precious metals were down heavily, with silver and gold down more than 2%. Agriculture commodities had a rough ride on Friday. Treasuries were being thrashed down on Friday night. I'm expecting the market to retrace a little. We don't have much data coming out on Monday, we're likely to retrace a little.

Market Call: FLAT to downside

Date: 10 June 2013