12 Nov 2013 AMC - Market went through a volatile intra-day

12 Nov 2013 AMC - Market went through a volatile intra-day

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: 0.0%

·         Germany's DAX: -0.3%

·         France's CAC: -0.6%

·         Spain's IBEX: -0.8%

·         Portugal's PSI: -0.1%

·         Italy's MIB Index: -0.5%

·         Irish Ovrl Index: + 0.4%

·         Greece ATHEX Composite: -3.1%

Before Market Opens

S&P futures vs fair value: -4.80. Nasdaq futures vs fair value: -13.50.
The S&P 500 futures trade lower by 0.3%.

Markets ended mixed across Asia as Japan's Nikkei (+2.2%) led and India's Sensex (-1.0%) lagged. The Nikkei's gains came as the yen weakened to a two-month low of 99.80 against the dollar following the the hot M2 money stock (4.1% year-over-year actual versus 3.9% expected) and disappointing Tertiary Industry Activity (-0.2% month-over-month versus 0.2% expected). Meanwhile, the weaker rupee (-1.0%) was a key contributor to the underperformance of India's Sensex, which fell for a sixth straight session. Bank Indonesia surprised markets by hiking its key rate 25 basis points to 7.50% (7.25% previous) in an effort to contain inflation. Data from the rest of the region was limited to Australia's disappointing NAB Business Confidence reading (5 actual versus 12 previous). 

·         In Japan, the Nikkei closed higher by 2.2% as shares saw their biggest gain in two months. Exporters benefitted from the weaker yen as Sony and Advantest added 3.6% and 3.2%, respectively. 

·         Hong Kong's Hang Seng finished lower by 0.7% amid widespread selling. Insurer AIA Group shed 1.9% and energy giant Cnooc gave up 1.6%. 

·         In China, the Shanghai Composite added 0.8% as shares rallied despite the thin trade. Shipbuilders outperformed on reports government subsidies would be offered to help upgrade aging fleets. CSSC Jiangnan Heavy Industry was a leader, tacking on 3.7%. 

Major European indices hover in the red, but their losses have been limited. Among news of note, the European Union has ironed out a budget for next year, agreeing to cut spending by 6.0%. Today's economic data focused on inflation as Germany's CPI slipped 0.2% month-over-month while the year-over-year reading increased 1.2%. Both figures met expectations. Separately, WPI decreased 1.0% month-over-month (-0.3% expected, 0.7% prior). Elsewhere, Great Britain's CPI ticked up 0.1% month-over-month (0.3% forecast, 0.4% last) while the year-over-year reading rose 2.2% (2.5% forecast, 2.7% prior). Also of note, core CPI rose 1.7% year-over-year (2.0% expected, 2.2% last) and input PPI slipped 0.6% month-over-month (-0.7% expected, -1.0% prior). Lastly, Italy's CPI slipped 0.2% month-over-month (-0.3% forecast, -0.3% last) while the year-over-year reading reflected an increase of 0.8% (0.7% expected, 0.7% prior). 

·         Great Britain's FTSE trades lower by 0.3% as financials lag. Aberdeen Asset Management, Royal Bank of Scotland, and Standard Chartered are all down between 1.7% and 4.1%. Materials producer CRH outperforms with a gain of 3.3%. 

·         In Germany, the DAX holds a loss of 0.3% as cyclical names lag. K+S and Lanxess trade lower by 1.1% and 3.0%, respectively. Continental outperforms with a gain of 1.2%. 

·         France's CAC trades down 0.4% as 33 of 40 components register losses. Steelmakers ArcelorMittal and Vallourec hold respective losses of 1.4% and 0.9%. Exporter Renault outperforms with a gain of 1.5%.

Market Internals

Market Internals -Technical-
The S&P 500 closed down 4 (-0.24%) at 1768, the Dow closed down 32 (-0.21%) at 15751, and the Nasdaq closed flat at 3920. Action came on below average volume (NYSE 653 mln vs. avg. of 729; NASDAQ 1717 mln vs. avg. of 1766), with decliners outpacing advancers (NYSE 1123/1954, NASDAQ 1141/1399) and new highs outpacing new lows(NYSE 102/46, NASDAQ 113/42). 

Relative Strength: 
Coffee-JO +2.35%, Natural Gas-UNG +1.92%, Japan-EWJ +1.28%, Cocoa-NIB +0.91%, Cotton-BAL +0.88%, U.S. Home Construction-ITB +0.83%, Middle East and Africa-GAF +0.69%, South Korea-EWY +0.4%, Pacific Index-VPL +0.36%, Swiss Franc-FXF +0.19%.

Relative Weakness: 
Greece-GREK -3.72%, Silver-SLV -2.91%, Indonesia-IDX -2.51%, Columbia Index-GXG -2.49%, India-INP -2.37%, Junior Gold Miners-GDXJ -2.29%, Clean Energy-PBW -2.09%, Sweden-EWD -1.94%, Oil-USO -1.81%, Metals and Mining-XME -1.81%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Post Modest Losses
The S&P 500 shed 0.2% after spending the entire session in negative territory. The index sold off steadily through the first four hours of action, but managed to regain most of its losses by the close. Meanwhile, the Nasdaq ended flat as the relative strength of technology (+0.3%) underpinned the index.

The tech sector was one of just two advancers among cyclical groups as top components like Cisco Systems (CSCO 23.73, +0.29), Oracle (ORCL 34.70, +0.33), and Qualcomm (QCOM 68.51, +0.89) provided leadership. Chipmakers also rallied with the PHLX Semiconductor Index adding 0.6%.

Elsewhere, the industrial sector settled just above its flat line with transports contributing to the outperformance. The Dow Jones Transportation Average rose 0.7% as airlines registered broad gains after AMR (AAMRQ 12.00, +2.48) and US Airways (LCC 23.52, +0.25) confirmed their settlement with the Department of Justice. JetBlue(JBLU 8.16, +0.47) was the leader among transports, climbing 6.1%.

Although the S&P climbed off its lows during the final 90 minutes, the index was unable to return into positive territory as energy (-0.9%) and financials (-0.9%) weighed.

The energy sector was pressured by persistent weakness in crude oil. The energy component settled lower by 2.1% at $93.12 per barrel.

Meanwhile, other commodities did not fare much better as copper (-1.2% at $3.22/lb), gold (-1.1% at $1267.50/ozt), and silver (-2.6% at $20.72/ozt) ended on their lows.

Countercyclical sectors settled on a mixed note as consumer staples (+0.1%), health care (-0.1%), and telecom services (+0.3%) outperformed while utilities (-0.9%) lagged throughout the session.

Treasuries ended modestly lower with the 10-yr yield up two basis points at 2.78%.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while October export prices ex-agriculture and import prices ex-oil will be reported at 8:30 ET. The day's data will be topped off with the 14:00 ET release of the October Treasury budget.

·         Nasdaq +29.8% YTD

·         Russell 2000 +29.7% YTD

·         S&P 500 +23.9% YTD

·         DJIA +20.2% YTD

Commodities

Closing Commodities: Crude Oil, Gold And Silver Slide Lower

·         Dec crude oil fell for the first time in three sessions, dipping below the $93.00 per barrel level in late afternoon pit trade. The energy component trended lower after brushing a session high of $95.22 per barrel and eventually settled with a 2.1% loss at $93.12 per barrel.

·         Dec natural gas, on the other hand, traded higher today, rising to a session high of $3.66 per MMbtu. It pulled back heading into the close and settled at $3.62 per MMBtu, or 1.1% higher.

·         Dec gold extended losses for a fourth consecutive session. It touched a session high of $1283.60 per ounce at pit trade open but retreated into negative territory later in the session. It settled with a 0.8% loss at $1271.20 per ounce, just above its session low of $1270.70 per ounce. 

·         Dec silver spent all of today's pit trade in the red. It pulled back from its session high of $21.25 per ounce and settled at its session low of $20.77 per ounce, booking a 2.4% loss.

NYMEX Energy Closing Prices

  Dec crude oil fell $2.02 to $93.12/barrel 

·         Crude oil fell for the first time in three sessions, dipping below the $93.00 level in late afternoon pit trade. The energy component trended lower after brushing its session high of $95.22 and eventually settled with a 2.1% loss. 

  Dec natural gas rose 4 cents to $3.62/MMBtu 

·         Natural gas, on the other hand, traded higher today. It advanced to a session high of $3.66 but pulled back as it headed into the close and settled with a 1.1% gain. 

  Dec heating oil fell 4 cents to $2.85/gallon 

  Dec RBOB gasoline fell 1 cent to $2.59/gallon

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn fell 3 cents to $4.32/bushel 

·         Dec wheat fell 2 cents to $6.45/bushel 

·         Jan soybeans rose 14 cents to $13.14/bushel 

·         Dec ethanol rose 3 cents to $1.74/gallon 

·         Jan sugar (#16 (U.S.)) fell 0.10 of a penny to 20.90 cents/lbs

COMEX Metals Closing Prices

  Dec gold fell $10.00 to $1271.20/ounce 

·         Gold touched a session high of $1283.60 at pit trade open but retreated into negative territory later in the session. It settled just above its session low of $1270.70, booking a loss of 0.8%. 

  Dec silver fell $0.51 to $20.77/ounce 

·         Silver spent all of today's pit trade in negative territory. It pulled back from its session high of $21.25 and settled 2.4% lower at its session low. 

  Dec copper fell 3 cents to $3.23/lbs

Treasuries

Treasuries Slide in Uneventful Trade: 10-yr: -02/32..2.777%..USD/JPY: 99.70..EUR/USD: 1.3424

·         Treasuries finished with modest losses amid a rather uneventful session as a lack of tradable news and data produced a choppy session. 

·         Modest weakness persisted throughout the session as selling had the biggest impact on the belly of the curve. 

·         The 5y added +3.5bps, ending at a near two-month high of 1.450%. That level will be watched closely over the coming days as resistance is helped the 50 and 100 dma. Click here to see an intraday yields chart. 

·         The 10y ticked up +1.7bps to 2.768%, causing action to settle at its highest level since September 17. 

·         Slight outperformance from the long bond saw the 30y edge up +0.7bps to 3.855%, where it closed near its own two-month high.  

·         Tomorrow's Data: MBA Mortgage Index (7), import/export prices (8:30), and the Treasury budget (14). 

·         Tomorrow's Auction: $24 bln 10y notes. 

·         Fed Speak: Cleveland's Pianalto will travel to Philadelphia, PA to share her economic outlook (13:30) and Minny's Kocherlakota will be on his home turf, speaking on "Too Big to Fail: the Need for Metrics" (19:45).

Next Day In View 

Economic Commentary

Economic Summary: No data today; Fisher says Fed will have to taper soon; Kocherlakota to speak later today at 13:00
Fed/Treasury Events Summary:

·         Dallas Fed President Richard Fisher (2014 voter, hawkish) gave an interview to CNBC where he indicated the Fed will have to taper soon.

Upcoming Economic Data:

·         Weekly MBA Mortgage Index due out Wednesday at 7:00 (Last Week was -7.0%)

·         October Export Prices Ex-Ag due out Wednesday at 8:30 (September was 0.3%)

·         October Import Prices Ex-Oil due out Wednesday at 8:30 (September was 0.1%)

·         October Treasury Budget due out Wednesday at 14:00 (September was -$120.0 bln)

Upcoming Fed/Treasury Events:

·         Minneapolis Fed President Narayana Kocherlakota (2014 voter, typically dovish) to speak today at 13:00

·         Atlanta Fed President Dennis Lockhart (not a voting FOMC member, typically moderate) to speak today at 13:50 & tomorrow at 18:00

·         Fed Chairman Ben Bernanke to speak to teachers tomorrow at 19:00

·         The Treasury is scheduled to auction off $70 bln in new debt this week. Results for each auction will be announced at 13:00

o    Tuesday: $30 bln in 3 year notes

o    Wednesday: $24 bln in 10 year notes

o    Thursday: $16 bln in 30 years bonds

Other International Events of Interest

·         Germany's CPI slipped 0.2% month-over-month while the year-over-year reading increased 1.2%. Both figures met expectations. Separately, WPI decreased 1.0% month-over-month (-0.3% expected, 0.7% prior). 

On other news.... 

Currencies 

Dollar Holds Little Changed: 10-yr: -01/32..2.771%..USD/JPY: 99.56..EUR/USD: 1.3430
The Dollar Index hovers little changed near 81.15 as action has spent the majority of U.S. trade hovering the flat line. The Index saw an overnight gain provide a test of the 81.50 level, but most of the early gains were unable to hold as sellers stepped in to defend the 100 dma. Click here to see a daily Dollar Index chart.

·         EURUSD is +30 pips at 1.3435 as trade advances for a second session. The single currency saw support at the 100 dma (1.3350) with action now closing in on a test of newly formed resistance in the 1.3475 area. Eurozone data is limited to industrial production. 

·         GBPUSD is -80 pips at 1.5905 as trade presses lower for a third day. Today's selling comes following the cooler than anticipated CPI data, which has action testing key support in the 1.5900/1.5950 area. A breakdown of that level sets up a test of the 100 dma (1.5675). British data is heavy as claimant count change, the unemployment rate, and Average Earnings Index accompany the Bank of England Inflation Report. 

·         USDCHF is -15 pips at .9175 as trade slips for a second session. The pair continues to struggle near .9200 resistance as sellers flex their muscles at the level in defense of the 100 dma (.9237). A victory for the bulls would be a retaking of the 200 dma. 

·         USDJPY is +45 pips at 99.60 as trade breaks out to its best level in two months. The 101.00 area is now under careful scrutiny as a move back above there will provoke a retest of five-year highs near 103.00. Japan's core machinery orders are due out. 

·         AUDUSD is -65 pips at .9295 as trade slumps for a fourth straight session. Today's selling has the hard currency testing its 100 dma, a level it has not closed below in roughly three months. Australia's Westpac Consumer Sentiment and Wage Price Index will cross the wires tonight. 

·         USDCAD is +20 pips at 1.0495 as action holds at a two-month high. The 1.0600 region will be tracked closely over the coming days.

Jason's Commentaries

Market went through a very volatile period last night, Dow dropped as much as a 100 points at the height of the drop. However after lunch time, market decided to recover most of its losses. The drop is likely due to the comment from Fed member Lochart that the Fed is likely to consider to taper in December. As Ben Bernanke is set to speak at 7pm ET while Janet Yellen is going to testify tomorrow, the market might be looking at the speech that Janet Yellen tomorrow. Volumes were much lower than average, at around 650m shares traded on the NYSE. The internals were mostly divergent. On the technical side, we're heading into a consolidation phase in the market, which might last at least one week. Next wee we're going to have the FOMC minutes coming out on Wednesday. On the side note, Crude Oil dropped massively last night to less than $93. Silver plummet as well. We might be in time for accumulate some silver ETFs.

Market Call: FLAT

Date: 13 Nov 2013