21 Oct 2013 AMC- Oil breaks below $100, Netflix reports blowout earnings

21 Oct 2013 AMC- Oil breaks below $100, Netflix reports blowout earnings

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: + 0.5%

·         Germany's DAX: 0.0%

·         France's CAC: -0.2%

·         Spain's IBEX: + 0.4%

·         Portugal's PSI: + 0.9%

·         Italy's MIB Index: -0.0%

·         Irish Ovrl Index: + 0.3%

·         Greece ATHEX Composite: + 2.6%

Before Market Opens

S&P futures vs fair value: -1.00. Nasdaq futures vs fair value: +5.20.
The S&P 500 futures hover just below fair value.

Markets across Asia were mostly higher as many of the major averages closed at 52-week highs. Australia's ASX (+0.6%) ended at its best level in nearly five years while India's Sensex closed at its own three-year high. The overnight gains were paced by the Shanghai Composite (+1.6%), which rallied on the back of comments from Premier Xi Jingping, indicating China's growth targets will be met. Elsewhere, Japan's Nikkei (+0.9%) advanced after Bank of Japan Governor Kuroda reiterated the central bank would continue easing until its inflation target of 2.0% was met. Data out overnight was limited to Japan's trade deficit widening to a record JPY1.09 trillion (JPY1.06 trillion expected, JPY0.82 trillion previous) and Hong Kong's inflation rate ticking up to 4.6% year-over-year (4.5% previous). 

·         In Japan, the Nikkei closed higher by 0.9% as trade ticked up to its best level in three weeks. Heavyweight Softbank was among the leaders, adding 2.8%. Elsewhere, Tokyo Electric Power Co shed 1.3% as the company continues to deal with the fallout from the leak at its Fukushima Daiichi power plant. 

·         Hong Kong's Hang Seng added 0.4% as trade holds just off eight-month highs. Casino stocks outperformed as Galaxy Entertainment climbed 4.6% and Sands China added 2.9%. Energy names lagged as PetroChina and Cnooc shed 0.6% and 0.5%, respectively. 

·         In China, the Shanghai Composite gained 1.6% as action managed to hold the 200-day moving average. Many technology shares, including China National Software and Beijing Shiji Information, ended limit up, 10%, on hopes economic reforms would benefit the sector. 

Major European indices trade in mixed fashion as the quiet start to the week continues. On Saturday, Italy's appeals court banned PDL leader Silvio Berlusconi from public office for two years. Economic data was limited as Germany's PPI rose 0.3% month-over-month (0.1% forecast, -0.1% prior) while the year-over-year reading fell 0.5% (-0.7% expected, -0.5% previous). Elsewhere, Great Britain's Rightmove House Price Index rose 2.8% month-over-month (-1.5% prior). Italy's industrial new orders rose 2.0% month-over-month (-0.3% expected, -0.5% prior) while the year-over-year reading reflected a decline of 6.8% (-2.2% previous). Also of note, industrial sales rose 1.0% month-over-month (-0.8% last). 

·         In France, the CAC is lower by 0.3% as financials lag. BNP Paribas and Societe Generale are lower by 1.1% and 2.1%, respectively. Industrial heavyweight Alstom leads with a gain of 3.9%. 

·         Germany's DAX is off 0.1% as utilities weigh. E.ON and RWE hold respective losses of 1.0% and 0.5%. SAP leads with a gain of 5.3% after reporting better-than-feared results and reaffirming its full-year forecast. 

·         Great Britain's FTSE holds a modest gain of 0.2%. Consumer stock G4S outperforms with a gain of 3.7% amid reports the company's cash-solution business has been generating outside interest. Meanwhile, financials lag with Barclays down 1.1% and Royal Bank of Scotland holding a loss of 4.6%.

Market Internals

Market Internals -Technical-
The Nasdaq closed up 6 (+0.15%) at 3920, the S&P 500 closed flat at 1745, and the Dow closed down 7 (-0.05%) at 15392. Action came on mixed volume (NYSE 678 mln vs. avg. of 703; NASDAQ 1695 mln vs. avg. of 1612), with decliners outpacing advancers (NYSE 1480/1584, NASDAQ 1230/1322) andnew highs outpacing new lows (NYSE 351/12, NASDAQ 367/16). 

Relative Strength: 
Junior Gold Miners-GDXJ +3.96%, Poland-EPOL +2.57%, Egypt-EGPT +2.24%, Wind Energy-FAN +1.42%, Silver-SLV +1.42%, Nuclear Energy-NLR +1.35%, Copper Miners-COPX +1.23%, Sweden-EWD +0.72%, Netherlands-EWN +0.59%, Peru-EPU +0.46%.

Relative Weakness: 
Thailand-THD -3.09%, Natural Gas-UNG -2.54%, Biotechnology-XBI -2.35%, Coffee-JO -1.76%, Biotechnology-IBB -1.59%, U.S. Home Construction-ITB -1.47%, Mexico-EWW -1.45%, Indonesia-IDX -1.19%, Taiwan-EWT -0.75%, Singapore-EWS -0.72%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks End Little Changed
The major averages finished today's uneventful session near their flat lines as the S&P 500 ended flat while the Nasdaq added 0.2%.

The outperformance of the Nasdaq resulted from the relative strength of the technology sector (+0.5%), which was the leading cyclical group of the session. Top component, Apple (AAPL 521.36, +12.47), advanced 2.5% in anticipation of tomorrow's press event where the company is expected to unveil a new line of tablets. The largest tech stock also drew strength from comments made by Gartner after the research firm said it expects tablet demand to remain strong into the holiday season.

Apple accounted for much of the tech sector's gain while other large components were mixed. Microsoft (MSFT 34.99, +0.03) added 0.1% while IBM (IBM 172.86, -0.92) remained under pressure following its earnings miss last Thursday.

Elsewhere, the industrial sector (+0.4%) outperformed with its top member, General Electric (GE 26.14, +0.59), making a significant contribution. General Electric rallied 2.3% after UBS raised its target for the stock to $29 and Citigroup added the stock to its US Focus List. Transports also displayed relative strength as the Dow Jones Transportation Average added 0.4%.

The discretionary sector was the last cyclical group to climb into positive territory after several components reported earnings. Hasbro (HAS 49.72, +2.48) and V.F Corp (VFC 211.23, +6.93) settled with respective gains of 5.3% and 3.4% after both delivered bottom-line beats. Toymaker Hasbro also surpassed its revenue expectations while V.F. Corp missed top-line estimates, but raised its quarterly dividend 21% to $1.05 and announced that a 4:1 stock split will take place on December 20.

Also of note, McDonald's (MCD 94.59, -0.61) lost 0.6% after the company's cautious-sounding guidance overshadowed its earnings beat. The fast food giant said it expects October comparable store sales to be flat, which is a reflection of the challenging operating environment.

Even though three influential sectors posted gains, the broader market was pressured by the underperformance of energy (-0.4%) and financials (-0.2%). In addition, three countercyclical sectors—consumer staples (-0.3%), health care (-0.6%), and utilities (-0.2%)—also weighed while telecom services (+1.2%) outperformed. AT&T (T 35.22, +0.61) climbed 1.8% after the company agreed to sell 9,700 towers to Crown Castle International (CCI 74.66, -1.30) for $4.85 billion.

Treasuries settled near their lows with the 10-yr yield up two basis points at 2.61%.

Trading volume was on the light side as 678 million shares changed hands on the floor of the NYSE.

September existing home sales hit an annualized rate of 5.29 million units, which was a bit weaker than the rate of 5.30 million units that had been generally expected by the Briefing.com consensus. The pace for September was down from the prior month's revised rate of 5.39 million units.

Tomorrow, the September nonfarm payrolls report, which was delayed by the partial government shutdown, will be released at 8:30 ET while August net long-term TIC flows will be reported at 9:00 ET. Separately, the August Construction Spending report will cross the wires at 10:00 ET. Among earnings of note, Delta Air Lines (DAL 24.69, -0.32), United Technologies (UTX 107.62, -0.12), and Wipro (WIT 11.56, 0.00) will report their quarterly results before the opening bell. 

·         DJIA +17.5% YTD 

·         S&P 500 +22.3% YTD 

·         Nasdaq +29.8% YTD 

·         Russell 2000 +31.0% YTD

Commodities

Closing Commodities: Crude Falls Below $100/Barrel For the First Time Since July

·         Nov crude oil fell below the $100 per barrel level for the first time since July as weak inventory data pressured prices. The Dept of Energy reported that crude oil inventories for the week ending Oct 11 had a build of 4.0 mln barrels when a smaller build of 2.2-3.0 mln barrels was anticipated

·         The energy component pulled back from its session high of $100.70 per barrel set in morning pit trade and brushed a session low of $99.41 per barrel. It eventually settled with a 1.4% loss at $99.72 per barrel

·         Nov natural gas also fell today. It brushed a session high of $3.77 per MMBtu in morning floor action but quickly retreated into negative territory. It settled 2.4% lower at $3.67 per MMBtu, just above its session low of $3.66 per MMBtu

·         Precious metals, on the other hand, registered gains

·         Dec gold traded slightly higher in a tight range near the $1316.00 per ounce level. It brushed a session high of $1319.70 per ounce in morning pit trade and settled 0.1% higher at $1315.80 per ounce

·         Dec silver climbed to a session high of $22.33 per ounce and settled at $22.28 per ounce, booking a gain of 1.6%.

COMEX Metals Closing Prices

  Dec gold rose $1.60 to $1315.80/ounce 

·         Gold traded slightly higher today in a tight range near the $1316.00 level. It brushed a session high of $1319.70 in morning pit trade and eventually settled with a 0.1% gain. 

  Dec silver rose $0.36 to $22.28/ounce 

·         Silver also traded in positive territory. It climbed to a session high of $22.33 and settled slightly below that level, booking a 1.6% gain. 

  Dec copper settled unchanged at $3.30/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn rose 3 cents to $4.44/bushel 

·         Dec wheat fell 6 cents to $6.99/bushel 

·         Nov soybeans rose 11 cents to $13.02/bushel 

·         Nov ethanol rose 2 cents to $1.83/gallon 

·         Jan sugar (#16 (U.S.)) fell 0.28 of a penny to 22.00 cents/lbs

NYMEX Energy Closing Prices

  Nov crude oil fell $1.40 to $99.72/barrel 

·         Crude oil fell below the $100 level for the first time since July following weaker-than-anticipated inventory data. The Dept of Energy reported that crude oil inventories for the week ending Oct 11 had a build of 4.0 mln barrels when a smaller build of 2.2-3.0 mln barrels was expected. The energy component pulled back from its session high of $100.70 set in morning floor action and traded as low as $99.41. It eventually settled with a 1.4% loss. 

  Nov natural gas fell 9 cents to $3.67/MMBtu 

·         Natural gas brushed a session high of $3.77 in early morning pit trade but quickly retreated back into negative territory. It touched a session low of $3.66 moments before settling with a 2.4% loss. 

  Nov heating oil fell 3 cents to $3.01/gallon 

  Nov RBOB gasoline fell 2 cents to $2.65/gallon

Treasuries

Treasuries Slip Amid Quiet Trade: 10-yr: -04/32..2.608%..USD/JPY: 98.19..EUR/USD: 1.3676

·         Treasuries leaked lower throughout the session as a lack of news and data once again benefited the bears. 

·         Action hugged the flat line for much of the overnight session before slipping to fresh lows ahead of the downtick in existing home sales (5.29 mln actual v. 5.48 mln previous).

·         Some light selling would develop ahead of the cash close, pressuring maturities to their worst levels of the session. 

·         Yields across the curve climbed close to 2bps apiece, running the 10y to nearly 2.610%. Click here to see an intraday yields chart.

·         A steeper curve developed as the 2-10-yr spread widened to 219bps. 

·         Precious metals ended mixed with gold flat at $1315 and silver +$0.35 at $22.25. 

·         Data: Nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, average workweek (8:30), and construction spending (10).

Next Day In View 

Economic Commentary

Economic summary: Sept Existing Home Sales in-line; Sept Jobs data out tomorrow morning
Economic Data Summary:

·         September Existing Home Sales 5.29 mln vs Briefing.com consensus of 5.30 mln; August was revised to 5.39 mln from 5.48 mln

o    The drop in home sales came after a large increase in mortgage rates. Buyers rushed into the market in August on the expectation that mortgage costs were going to continue to increase. That led to fewer buyers in September and resulted in a downward turn in sales. Sales growth may not pick up much in the coming months. 

o    The median home price increased 11.7% year-over-year to $199,200 in September. That was the 10th consecutive double-digit yearly price gain.

Upcoming Economic Data:

·         September Nonfarm Payrolls Tuesday at 8:30 (Briefing.com consensus of 183K; was 169K)

·         September Nonfarm Private Payrolls due out Tuesday at 8:30 (Briefing.com consensus of 183K; was 152K)

·         September Unemployment Rate Tuesday at 8:30 (Briefing.com consensus of 7.3%; was 7.3%)

·         September Hourly Earnings Tuesday at 8:30 (Briefing.com consensus of 0.2%; was 0.2%)

·         September Avg. Workweek at (Briefing.com consensus of 34.5; was 34.5)

On other news.... 

Northrop Grumman awarded $414.5 mln Air Force contract (100.20 -1.39)
Northrop Grumman Systems Corp., Northrop Grumman Aerospace Systems, Melbourne, Fla., was awarded a $414,500,000 firm-fixed-price, fixed-price-incentive-firm, and cost-plus-fixed-fee type indefinite-delivery/indefinite-quantity contract for the Joint STARS System Improvement Program III. The JSSIP III contract will support the current Joint STARS program office and Air Combat Command projections of improvements to increase E-8C performance, capability, reliability and maintainability. Work is expected to be complete by Oct. 20, 2020.

Summary of Weekly Petroleum Data for the Week Ending Oct 11, 2013
Production: U.S. crude oil refinery inputs averaged about 14.9 mln barrels per day (bpd) during the week ending October 11, 2013, 37 thousand bpd lower than the previous week's average. Refineries operated at 86.2% of their operable capacity last week. Gasoline production rose from the previous week, averaging 9.3 mln bpd. Distillate fuel production increased last week to about 4.8 mln bpd.

Imports: U.S. crude oil imports averaged about 8.0 mln bpd last week, down by 39 thousand bpd from the previous week. Over the last four weeks, crude oil imports averaged 8.1 mln bpd, 0.2% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 584 thousand bpd. Distillate fuel imports averaged 67 thousand bpd last week.

Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.0 mln barrels from the previous week. At 374.5 mln barrels, U.S. crude oil inventories are above the upper range for this time of year. Total motor gasoline inventories decreased by 2.6 mln barrels last week, but are near the top of the average range. Finished gasoline inventories and gasoline blending component inventories both decreased. Distillate fuel inventories decreased by 1.8 mln barrels last week and remain near the lower limit of the average range for this time of year.

Demand: Total products supplied over the last four-week period averaged 19.0 mln bpd, up by 0.9% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 8.8 mln bpd, up by 1.7% from the same period last year. Distillate fuel product supplied averaged 3.7 mln bpd over the last four weeks, down by 3.4% from the same period last year.

Existing Home Sales Fall, Future Demand Looks Uncertain
Existing home sales fell 1.9% in September to 5.29 mln. That follows a large downward revision (from 5.48 mln to 5.39 mln) to the August data. The Briefing.com consensus expected existing home sales to fall to 5.30 mln. The drop in home sales came after a large increase in mortgage rates. Buyers rushed into the market in August on the expectation that mortgage costs were going to continue to increase. That led to fewer buyers in September and resulted in a downward turn in sales. Sales growth may not pick up much in the coming months. The National Association of Realtors stated that home affordability levels have fallen to five-year lows as home price gains have largely outpaced income growth. This could dent what was a bright spot in the economy. Furthermore, the government shutdown prevented many banks from verifying income levels on mortgage applications. Buyers who wished to buy a home in October could not obtain the necessary funding until the IRS returned to work. The bottleneck could extend into November and cause weak sales from noneconomic issues to last a couple of months. Altogether, the sales trends through December are looking weak. Distressed sales accounted for 14% of September sales. That was up from 12% in August, which was the lowest level since the data started being collected in October 2008, but well below the 24% share in September 2012. Inventory levels increased to a 5.0 months' supply in September from 4.9 months in August. The increase in inventories does not alleviate the constraints posed on buyers from low inventories. During normal sales periods, inventories average roughly 6.0 months of supply. Inventories would need to increase by 19.7% from current levels to reach a 6.0 months' supply. The median home price increased 11.7% year-over-year to $199,200 in September. That was the 10th consecutive double-digit yearly price gain.


Currencies 

Dollar Holds Steady: 10-yr: -07/32..2.620%..USD/JPY: 98.17..EUR/USD: 1.3682
The Dollar Index has skipped back to the flat line near 79.65 amid a rather uneventful session. Action has been limited to a 15 cent range as the absence of tradable news and data has made for lackluster action. Click here to see a daily Dollar Index chart.

·         EURUSD is flat at 1.3680 as trade holds just below the 2013 highs. The last three months have been rather kind to the single currency as action has managed to climb roughly 900 pips; however, this is somewhat troubling to policymakers who continue to look for ways to combat the region's debt crisis. Any close above the 1.3700 level marks the best in almost two years. 

·         GBPUSD is -25 pips at 1.6150 as trade lingers near the early October highs. Traders continue to monitor developments as the 1.6300 level represents corresponds with the best close since the summer of 2011. Britain's public sector net borrowing is due out tomorrow. 

·         USDCHF is flat at .9015 as action hovers just above the key .9000 area. The pair has been unable to get any sort of momentum going as trade has not closed above the .9150 mark in over a month. 

·         USDJPY is +45 pips at 98.15 following the record Japanese trade deficit (JPY1.09 trln actual v. JPY1.06 trln expected, JPY0.82 trln previous). The 97.00/99.00 areas remain key over the near-term as trade has been locked in that range for the past month. 

·         AUDUSD is -20 pips at .9655 as action slips for just the second time in the past nine sessions. Bulls continue to have their sights set on .9755 as the 200 dma aids resistance at the level. 

·         USDCAD is +15 pips at 1.0300 as action looks likely to end its three-day skid. The 1.0250 area remains critical as trendline support off the September 2011 lows helps the 200 dma. Canadian data is limited to retail sales.

Jason's Commentaries


What a flat Monday to be expected ahead of the Employment report set to be released at 830am ET. Though market ended flat, there are slightly more bearish interest in the market than bullish interest. Probably due to some profit taking that is happening ahead of the employment report. Tech remained as the top leader as Apple rose a 2.45% yesterday than gave a boost to the net sector. To add more bullishness in the market in the after hours, Netflix reported some good earnings and now it is up more than 10%. Industrials are not looking as good as Lockheed Martin, Raytheon and Northrup went down more than 1% last night. General Electric, managed to gain a 2.31% last nigh as well. 

On the Technical perspective, we have S&P500 to be at the top of my trendline and Dow trapped at the 15400 resistance level. If the NFP comes out bad... we know what to do... 
Oil dips below $100 finally... And Coffee Price dipped 1.76% on ETF, JO. 

Today is likely to be a make or break day... If NFP comes out good, we are likely to see another new high on the S&P and Nasdaq... But if it comes out bad... we're going for a correction.. 

Market Call: DOWN(if bad report)/ UP( if good report)

Date: 22 Oct 2013