13 Aug 2013 AMC

13 Aug 2013 AMC

Market Summary 

Market Internals

Market Internals
The Nasdaq closed up 14 (+0.39%) at 3684, the S&P 500 closed up 5 (+0.28%) at 1694, and the Dow closed up 31 (+0.2%) at 15451. Action came on below average volume (NYSE 618 mln vs. avg. of 748; NASDAQ 1582 mln vs. avg. of 1626), with decliners outpacing advancers (NYSE 1263/1829, NASDAQ 1247/1272) and mixed new highs/lows  (NYSE 137/198, NASDAQ 128/29). 

Relative Strength: 
China 25 Index-FXI +2.05%, India-INP +1.75%, Silver Miners-SIL +1.72%, Thailand-THD +1.59%, Cotton-BAL +1.42%, Italy-EWI +1.40%, Gasoline-UGA +1.33%, South Korea-EWY +1.33%, Broker-Dealers-IAI +1.14%, Semiconductors-SMH +1.07%. 

Relative Weakness: 
Corn-CORN -3.58%, Gold Miners-GDX -2.93%, Coffee-JO -1.98%, U.S. Home Construction-ITB -1.80%, Grains-JJG -1.78%, Greece-GREK -1.52%, Chile-ECH -1.48%, Japanese Yen-FXY -1.36%, Brazilian Real-BZF -1.09%, South Africa-EZA -0.97%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Climb Despite Opening Slip
The S&P 500 settled higher by 0.3% despite enduring some early weakness. 

Stocks slipped out of the gate after this morning's Treasury selloff in reaction to July retail sales suggested the market believes the report strengthened the case for the Fed to start scaling back its asset purchases at the September meeting. 

July retail sales increased 0.2% after increasing an upwardly revised 0.6% in June. The Briefing.com consensus expected sales to increase 0.2%.Excluding motor vehicle sales, which fell 1.0%, spending rose a solid 0.5% in July. That was up from a 0.1% gain in June and above the consensus expectation that called for an increase of 0.3%. 

The sales numbers were a pleasant surprise considering the disappointing July employment report, which showed aggregate wages falling 0.3%. Normally, that would be expected to put substantial downward pressure on sales growth. It seems that the recent gains in the stock market and the improvement in job security, which is implied from the downward trend in initial claims, offset the weakness in wage growth and allowed consumers to dip into savings in July to keep consumption trending higher. 

Treasuries ended on their lows with the benchmark 10-yr yield higher by nine basis points at 2.71%. Elevated yields appeared to weigh on equities in early action, but the market was able to recover swiftly with a little help from Atlanta Fed President Dennis Lockhart who said the Fed will not have enough data to make a tapering decision in September. The S&P climbed to a fresh high following these comments while small caps could not get back into positive territory as indicated by the 0.2% slip in the Russell 2000. 

The rebound in the S&P was aided by the relative strength of most cyclical groups. The tech sector spiked during afternoon action after activist investor Carl Icahn disclosed what he described as a "large" position in Apple (AAPL 489.57, +22.21). The largest tech stock advanced 4.8% while the broader sector added 0.8%. 

Elsewhere, industrials (+0.4%) also outperformed, but the gains took place despite the Dow Jones Transportation Average, which shed 0.7% as airlines weighed after the Department of Justice filed a civil antitrust lawsuit challenging the proposed $11 billion merger between U.S. Airways (LCC 16.36, -2.46) and the parent corporation of American Airlines, AMR (AAMRQ 3.17, -2.64). 

While most cyclical sectors posted solid gains, discretionary shares ended flat. Home builders registered losses across the board and the iShares Dow Jones US Home Construction ETF (ITB 21.27, -0.39) fell 1.8%. 

Below-average volume has persisted through August, and today did not deviate from the recent norm as only 619 million shares changed hands on the floor of the New York Stock Exchange. 

In today's remaining economic news, total business inventories were unchanged in June after falling a downwardly revised 0.1% (from +0.1%) in May. The Briefing.com consensus expected business inventories to increase 0.1%. Manufacturer (0.1%) and merchant wholesaler (-0.2%) inventories were known prior to the release. The only new information was that retailer inventories increased 0.1% in June after increasing 0.5% in May. 

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while July PPI and core PPI will cross the wires at 8:30 ET.

Commodities

Sep crude oil spent morning pit trade in negative territory, trading as low as $105.56 per barrel. Despite the early weakness, the energy component gained steam in afternoon action and rose to a session high of $107.01 per barrel. It settled with a 0.6% gain at $106.77 per barrel.

  Sep natural gas briefly rose into positive territory after trading as low as $3.26 per MMBtu in morning floor trade. It touched a session high of $3.33 per MMBtu but slipped back into the red and settled 0.6% lower at $3.29 per MMBtu.

  Dec gold fell for the first time in five sessions as better-than-expected consumer spending data and a stronger dollar index put pressure on prices. The yellow metal retreated back into negative territory after brushing a session high of $1335.40 per ounce. It touched a session low of $1317.80 per ounce and settled with a 1.0% loss at $1320.60 per ounce.

  Sep silver brushed a session low of $21.26 per ounce after trading as high as $21.62 per ounce in early morning floor trade. It eventually settled the session unchanged at $21.34 per ounce.

NYMEX Energy Closing Prices

·         Sep crude oil rose $0.66 to $106.77/barrel 

o    Crude oil spent morning pit trade in negative territory, trading as low as $105.56. However, the energy component gained steam in afternoon action and rose to a session high of $107.01. It settled slightly below that level, booking a gain of 0.6%. 

·         Sep natural gas fell 2 cents to $3.29/MMBtu 

o    Natural gas dipped to a session low of $3.26 in early morning floor trade and later rose into positive territory and touched a session high of $3.33. However, it slipped back into the red and settled with a 0.6% loss. 

·         Sep heating oil rose 2 cents to $3.04/gallon 

·         Sep RBOB gasoline rose 3 cents to $2.94/gallon

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn fell 17 cents to $4.48/bushel 

·         Sep wheat fell 8 cents to $6.28/bushel 

·         Nov soybeans rose 2 cents to $12.27/bushel 

·         Sep ethanol fell 1 cent to $2.14/gallon 

·         Nov sugar (#16 (U.S.)) rose 0.10 of a penny to 20.40 cents/lb

Treasuries

Treasuries Hit Hard for Second Day: 10-yr: -25/32..2.713%..USD/JPY: 98.11..EUR/USD: 1.3265
Treasuries fell for a second day as sellers emerged just ahead of this morning's data and never relinquished control. An in-line retail sales print of +0.2% (retail sales ex auto +0.5% actual v. 0.3% expected) was enough to stoke further fears of Fed tapering as the complex pushed to fresh lows following the data. Of course, today's Fed speak from ATL's Lockhart pushed back against that thought process as he joined STL's Bullard in suggesting there is not enough data to say whether or not Fed tapering should begin in September. Heavy selling across the complex ran yields up as much as 11 bps, with the biggest impact being seen on the belly of the curve. The 10-yr yield jumped to 2.715%, where it closed just 1 bp below its 2-yr high. Meanwhile, the 30-yr yield saw slight outperformance as selling at the long end produced a rise of 9 bps and made for a settlement of 3.756%, 2 bps off its own two-year high. Aggressive steepening developed along the yield curve as the 2-10-yr spread widened to 238.5 bps. Elsewhere, precious metals saw a mixed day with gold falling $12 to $1322 and silver climbing $0.05 to near $21.40.

Next Day In View 

On other news.... 

Currencies 

The Dollar Index holds on the highs near 81.80 as action has seen a tight range throughout the U.S. session. The greenback jumped to its best levels following this morning's retail sales data, and has seen very little action over the remainder of the day. Today's advance has run the Index back above 81.60 resistance that is helped by the 200-day moving average. Click here to see a daily Dollar Index chart.

·         EURUSD is -40 pips at 1.3260 as trade pushes lower for a third day despite the better than expected Eurozone and German ZEW Economic Sentiment surveys. Today's weakness has dropped the pair onto minor support; however, traders will be paying closer attention to the 1.3200 area. Eurozone data includes Flash GDP, French and German preliminary GDP, and French nonfarm payrolls. 

·         GBPUSD is -15 pips at 1.5445 as trade slips further from the 200-day moving average. Near-term support in the 1.5400 area will be tracked closely as both the 50- and 100-day moving averages provide support just below. British data is heavy as claimant count change, the unemployment rate, Average Earnings Index, and Bank of England votes are scheduled for tomorrow. 

·         USDCHF is +75 pips at .9335 as trade looks to retake resistance in the .9350 area. That task will prove difficult as both the 50- and 200-day moving averages lurk in the vicinity. Switzerland's ZEW Economic Expectations will be released tomorrow morning. 

·         USDJPY is +125 pips at 98.35 as trade sees heavy buying on reports Shinzo Abe is considering cutting the corporate tax rate in an effort to offset any increase in the sales tax rate. Today's advance has run the pair through resistance in the 98.00 area, but bulls must now conquer resistance from the 50- and 100-day moving averages as well as the trendline resistance off the May highs. 

·         AUDUSD is -40 pips at .9095 as sellers remain in control for a second session. The .8900/.9000 support area will be watched closely over the coming days. Australia's Westpac Consumer Sentiment and Wage Price Index will cross the wires tomorrow. 

·         USDCAD is +40 pips at 1.0345 as action holds just off the highs. If resistance in the 1.0350 area is broken, look for a retest of the recent highs near 1.0425.

Jason's Commentaries


I was expecting the market to be more bullish than it is today... But being able to shrug off the initial bearish bias is already a bullish sign. Market started with a bearish bias and started reversing at 11am ET all the way till 1pm ET and started to move sideways till closing bell. All sectors except utilities were gaining last on Tuesday session while the Tech sector remained the strongest sector, led by Apple as the Iphone maker is announcing its Iphone5S and Iphone 5c. Moreover, at the closing bell, Ichan announced a large purchase in Apple which drove Apple up high during the after-market hours. While Apple is the main leader in the Tech sector, HP managed to gain a 2.05% which was offset by the drop in Microsoft of 1.95%. While we have a few gainers in Financials, like Citi and Goldman Sachs with 1.71% and 1.25% gain as well. Volumes were still below average at 618.5m shares traded on the NYSE and the internals were showing a more mixed picture. As the market held above its support level of 15,400, it will take more than that to break that support level. With the strong trend in the Tech, i'm expecting the market to turn up on Wednesday.

Market Call: FLAT to upside

Date: 14 Aug 2013