26 Nov 2013 AMC- Market sold off in the last half an hour after breaking the high

26 Nov 2013 AMC- Market sold off in the last half an hour after breaking the high

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: -0.9%

·         Germany's DAX: -0.1%

·         France's CAC: -0.6%

·         Spain's IBEX: + 0.3%

·         Portugal's PSI: -0.1%

·         Italy's MIB Index: -0.1%

·         Irish Ovrl Index: -0.1%

·         Greece ATHEX Composite: -3.9%

Before Market Opens

S&P futures vs fair value: +1.00. Nasdaq futures vs fair value: +3.50.
The S&P 500 futures have returned to their flat line.

Markets across Asia ended mixed as a relatively quiet session in terms of data and news flow sleepwalked to the close. Japan's Nikkei (-0.7%) finished among the laggards after the latest Bank of Japan minutes showed two members dissented as they believed not enough attention was being paid to downside risks to the economy. A flat session developed in Hong Kong's Hang Seng (UNCH) and China's Shanghai Composite (-0.1%) despite comments from a PBOC official who indicated the Middle Kingdom's economy should have no trouble growing at 8.0% in the coming years. Australia's ASX (+0.1%) eked out a gain following remarks from RBA Deputy Governor Philip Lowe indicated that while intervention cannot be ruled out, the threshold for any such action would be high. 

·         In Japan, the Nikkei lost 0.7% as action pulled back from a six-month high. Exporters weighed as a result of the stronger yen with Fanuc and Honda Motor both giving up 1.9%.

·         Hong Kong's Hang Seng finished flat as shares lingered near 10-month highs. Energy stocks lagged as Sinopec shed another 2.6% following the pipeline explosion that occurred over the weekend. Meanwhile, property stocks outperformed with Hang lung Properties adding 1.2%. 

·         In China, the Shanghai Composite shed 0.1% amid a choppy trade. Companies based in Ningbo saw a lift on expectations the city would be approved as a free-trade zone. Ningbo Port surged 9.8% while Ningbo Marine climbed the daily limit, 10.0%. 

Major European indices are mixed as Spain's IBEX (+0.4%) leads while Great Britain's FTSE (-0.4%) lags. Among headlines of note, ECB Governing Council member Christian Noyer said interest rates will remain low for an extended period of time as the recovery remains weak and fragile. Economic data was limited to just one data point as Italian consumer confidence rose to 98.3 from 97.3 (97.3 expected). 

·         Great Britain's FTSE trades lower by 0.4% as miners lag. Anglo American, Fresnillo, and Glencore Xstrata are all down between 1.5% and 2.2%. On the upside, retailer Wolseley outperforms with a gain of 2.9%. 

·         In France, the CAC holds a loss of 0.1% as consumer staples weigh. Danone and Pernod Ricard display respective losses of 1.5% and 2.9%. Defense contractor Safran outperforms with a gain of 1.3%. 

·         Germany's DAX is higher by 0.1% as 22 of 30 components trade in positive territory. Exporters are among the leaders as BMW and Daimler trade higher by 0.2% and 0.6%, respectively. 

·         In Spain, the IBEX trades with a gain of 0.4% with industrials in the lead. Acciona is higher by 1.0% and Sacyr trades up 5.5%. 

In domestic economic news, the September Case-Shiller 20-city Home Price Index rose 13.3% while a 13.0% increase had been expected by the Briefing.com consensus. This follows the previous month's increase of 12.8%.

Separately, the September Housing Price Index from the FHFA increased 0.3%, which followed an uptick of 0.4% observed during the prior month.

Market Internals

Market Internals
The Nasdaq closed up 23 (+0.58%) at 4018, the S&P 500 closed flat at 1803, and the Dow closed down flat at 16073. Action came on above to near average volume (NYSE 828 mln vs. avg. of 734; NASDAQ 1797 mln vs. avg. of 1797), with advancers outpacing decliners (NYSE 1728/1338, NASDAQ 1639/910) and new highs outpacing new lows (NYSE 190/67, NASDAQ 247/33). 

Relative Strength: 
U.S. Home Construction-ITB +3.32%, Homebuilders-XHB +2.07%, Social Media-SOCL +1.7%, Thailand-THD +1.53%, Taiwan-EWT +1.37%, Lithium-LIT +1.28%, Biotechnology-XBI +1.19%, South Korea-EWY +0.97%, Spain-EWP +0.87%, Hong Kong-EWH +0.78%. 

Relative Weakness: 
Greece-GREK -2.61%, Gold Miners-GDX -2.43%, Egypt-EGPT -2.24%, Silver Miners-SIL -2.02%, Middle East and Africa-GAF -1.96%, Copper Miners-COPX -1.31%, Corn-CORN -1.24%, Eastern Europe-ESR -1.23%, Steel-SLX -1.17%, Columbia Index-GXG -0.95%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Nasdaq Gains While S&P 500 Ends Flat
The S&P 500 added less than a point while the Nasdaq outperformed with a gain of 0.6%.

Stocks saw a brief dip during the opening hour, but the relative strength of the tech-heavy Nasdaq was enough to encourage the S&P 500's deliberate, day-long climb. Similar to yesterday, a final-hour sell off knocked the indices off their highs, but unlike yesterday, the S&P managed to stay out of the red.

The discretionary sector (+0.5%) led from opening bell as all-around strength underpinned the growth-sensitive group. Luxury retailers took a cue from Tiffany (TIF 88.05, +7.06), which soared 8.7% after beating on earnings and revenue. Meanwhile, apparel retailers rallied after Men's Wearhouse (MW 50.60, +3.53) offered to acquireJos. A. Bank (JOSB 56.29, +5.69) for $55 per share.

Homebuilders also provided a measure of support to the discretionary space following a set of better-than-expected housing data. The iShares Dow Jones US Home Construction ETF (ITB 23.33, +0.75) jumped 3.3%.

Elsewhere, momentum names played a part in today's advance. While several of these listings fall under the discretionary umbrella, the entire group contributed to the outperformance of the Nasdaq. Facebook (FB 45.89, +1.07), LinkedIn (LNKD 222.93, +6.31), and Priceline.com (PCLN 1177.98, +18.81) gained between 1.6% and 2.9% while the top index component, Apple (AAPL 533.40, +9.66), rallied 1.8%. In turn, the technology sector (+0.4%) ended among the leaders.

Outside of consumer discretionary and technology, the industrial sector (+0.6%) was the only other outperformer among cyclical groups. The sector received significant support from two of its top components as Boeing (BA 134.78, +1.78) and General Electric (GE 26.78, +0.05) posted respective gains of 1.3% and 0.2% following yesterday's underperformance.

Countercyclical groups trailed throughout the session, but only utilities (-1.0%) settled with a noteworthy loss. Consumer staples, health care, and telecom services ended with losses between 0.1% and 0.4%.

Treasuries settled near their highs as the 10-yr yield ticked down two basis points to 2.71%. More notably, the 5-yr yield shed four basis points to close at 1.30%, its lowest level in nearly a month.

Intraday participation was on the light side, but volume surged during the final hour as MSCI global quarterly review contributed to the increase in activity. When the dust settled, just under 830 million shares changed hands on the floor of the NYSE.

In today's economic data, building permit issuances increased in both September and October. Permits rose from 926,000 in August to 974,000 in September and 1.034 million in October. The Briefing.com consensus expected 932,000 building permit issuances for both September and October.

The jump in October brought permits to their highest level since June 2008. Delays from the government shutdown continue to plague the residential construction data. Reports on housing starts were not submitted on time, and the Census Bureau decided to push back the starts release until December 18. At that time, September, October, and November starts will all be released.

Also of note, the September Case-Shiller 20-city Home Price Index rose 13.3% while a 13.0% increase had been expected by the Briefing.com consensus. This follows the previous month's revised increase of 12.8%.

The September Housing Price Index from the FHFA increased 0.3%, which followed an uptick of 0.4% observed during the prior month.

Separately, the November Consumer Confidence Index fell to 70.4 from an upwardly revised 72.4 (from 71.2) in October. The Briefing.com consensus pegged the index at 72.4.

Confidence in October plummeted as concerns about the economy following the government shutdown weighed heavily on the minds of consumers. With the shutdown ending, it was expected that confidence would begin to improve. Even though normal indicators of confidence -- equity prices, gasoline costs, and labor conditions -- all generally strengthened in November, doubts about economic growth, likely stemming from the poor rollout of the Affordable Care Act, lowered consumer expectations.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while weekly initial claims and October durable goods will be released at 8:30 ET. The Chicago PMI for November will cross the wires at 9:45 ET while the final reading of the Michigan Consumer Sentiment Survey will be reported at 9:55 ET. The busy day will be topped off with the 10:00 ET release of October leading indicators. 

·         Russell 2000 +33.6% YTD 

·         Nasdaq +33.1% YTD 

·         S&P 500 +26.4% YTD 

·         DJIA +22.7% YTD

Briefing Bullet Points: 25 minutes ahead of the open S&P futures are +1 vs. fair value and DJ futures are +12

·         US Equities

o    Equity futures suggest a flat open after yesterday's late-day slide ended ended the S&P 500's modest three-day win streak. The benchmark average now looks to hold the 1800 mark after yesterday's session was the first to see an entire range above the level. 

o    The Nasdaq remains in search of its first close above the 4000 level after yesterday's early bid produced the first print above the mark in over 13 years.

o    Data so far has seen building permits (1034K actual v. 932K expected) and the Case-Shiller 20-city Index (13.3% actual v. 13.0% expected) top estimates. The FHFA Home Price Index matched last month's advance with an uptick of 0.3%.

·         Asia

o    Markets across Asia ended mixed as a relatively quiet session in terms of data and news flow sleepwalked to the close. 

o    Japan's Nikkei (-0.7%) finished among the laggards after the latest Bank of Japan minutes showed two members dissented parts of the Statement as they believed not enough attention was being paid to downside risks to the economy. 

o    A flat session developed in Hong Kong's Hang Seng (UNCH) and China's Shanghai Composite (-0.1%) despite comments from a PBOC official which indicated the Middle Kingdom's economy should have no trouble growing at 8% in the coming years. 

o    Australia's ASX (+0.1%) eked out a gain following remarks from RBA Deputy Governor Philip Lowe indicated that while intervention cannot be ruled out, the threshold for any such action would be high.

·         Europe

o    Stocks are mixed across Europe with the periphery outperforming (Spain's IBEX +0.5%, Italy's MIB +0.2%)

o    Britain's FTSE (-0.4%) lags following today's Inflation Hearings that saw Bank of England Governor Mark Carney tell Members of Parliament wage pressure continues to be weak and that exports are likely to suffer as eurozone demand remains tepid. 

o    An uptick in Italian consumer confidence (98.3 actual v. 97.3 expected, 97.3 previous) coupled with a solid 2y zero coupon (1.163%, 1.68x bid/cover) has Italian yields moderately lower. The 2y is -8bps @ 1.120% while a more modest decline of -4bps has the 10y @ 4.050%. Italy will be in focus tomorrow as the fate the political career of former Prime Minister Silvio Berlusconni will be up for vote. 

·         Rest of World

o    South Africa's Q3 GDP rose an annualized 0.7%, its slowest pace in more than four years. The slowdown was a result of the continued labor unrest in the country as strikes at the country's mines hampered growth. USDZAR is +25 pips @ 10.11.

·         Treasuries

o    Treasuries have slipped off their best levels of the session following the strong building permits data.

o    A modest bid has the 10y -2.5bps @ 2.716%. 

·         Fx

o    The Dollar Index is pressing its best levels of U.S. trade as action tests the 80.80 area. 

o    Dollar strength is notable versus the Australian dollar (AUDUSD -45 pips @ .9115), which is lower for a fifth session.

o    The greenback is holding a loss of 0.2% against the Canadian dollar (USDCAD -20 pips @ 1.0520), euro (EURUSD +25 pips @ 1.3540), Japanese yen (-20 pips @ 101.45), and Swiss franc (-25 pips @ .9090). 

·         Commodities

o    Precious metals have given up the majority of their gains, but remain firm. Gold is +$5 @ $1246 and silver is +$0.11 @ $20.00. 

o    Crude oil is pressing session lows with action +$0.20 @ $94.29.

Commodities

Closing Commodities: Crude Oil Falls for Third Consecutive Session Despite Weaker Dollar Index
Dec gold and Dec silver erased overnight gains and chopped around near the unchanged level despite weakness in the dollar index. Gold touched a pit session high of $1247.50 per ounce in morning action and eventually settled with a 20 cent gain at $1241.20 per ounce. Silver brushed a session low of $19.81 per ounce and settled at $19.85 per ounce, booking a 0.1% loss. 

Jan crude oil fell for a third consecutive session despite the weaker dollar index. The energy component brushed a session high of $94.33 per barrel in morning pit trade but spent the remainder of the session in negative territory. It touched a session low of $93.55 per barrel and eventually settled with a 0.4% loss at $93.65 per barrel. 

Jan natural gas, on the other hand, regained momentum after dipping to a session low of $3.79 per MMBtu in early afternoon floor trade. It pushed to a session high of $3.87 per MMBtu moments before settling with a 0.4% gain at $3.86 per MMBtu.

COMEX Metals Closing Prices

  Dec gold fell $0.20 to $1241.20/ounce 

·         Gold traded near the unchanged level today after retreating from its overnight highs despite a weaker dollar index. The yellow metal touched a pit session high of $1247.50 in morning action and eventually settled with a 20 cent gain. 

  Dec silver fell $0.02 to $19.85/ounce 

·         Silver also erased its overnight gains and chopped around near the breakeven line. It brushed a session low of $19.81 and settled slighlty above that level, booking a loss of 0.1%.

  Dec copper fell 2 cents to $3.21/lb

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn fell 7 cents to $4.18/bushel 

·         Dec wheat fell 6 cents to $6.46/bushel 

·         Jan soybeans rose 1 cent to $13.29/bushel 

·         Dec ethanol fell 4 cents to $1.92/gallon 

·         Jan sugar (#16 (U.S.)) fell 0.03 of a penny to 20.17 cents/lbs

NYMEX Energy Closing Prices

  Jan crude oil fell $0.38 to $93.65/barrel 

·         Crude oil fell for a third consecutive session despite weakness in the dollar index. The energy component brushed a session high of $94.33 in morning pit trade but spent most of the session in negative territory. It touched a session low of $93.55 and eventually settled with a 0.4% loss. 

  Jan natural gas rose 2 cents to $3.86/MMBtu 

·         Natural gas retreated into negative territory in morning floor action and brushed a session low of $3.79. However, it gained momentum in the last hour of pit trade and pushed to a session high of $3.87 moments before settling with a 0.4% gain. 

  Jan heating oil rose 1 cent to $3.04/gallon 

  Jan RBOB gasoline rose 1 cent to $2.68/gallon

Treasuries

Treasuries Gain for Fourth Day: 10-yr: +04/32..2.709%..USD/JPY: 101.29..EUR/USD: 1.3568

·         Treasuries closed on their highs as buyers were remained in control for a fourth session. 

·         The complex saw a small overnight bid evaporate following this morning's strong building permits data (1034K actual v. 932K expected), but sellers were unable to push action into the red as the consumer confidence miss (70.4 actual v. 72.4 expected) ignited a strong bid. 

·         Maturities rallied to their best levels of the day ahead of the solid $35 bln 5y note auction before drifting on the highs for the remainder of the session. 

·         The auction drew 1.340% (1.340% when issued) and an in-line 2.61x bid/cover as a strong showing from indirect bidders (50%) helped offset a disappointing direct bid (10.8%). Primary dealers ended up with just 39.2% of the supply. 

·         Longer durations outperformed with a -5.1bp decline dropping the 30y to 3.785%, its lowest level in a week. Click here to see an intraday yields chart.

·         The 10y shed -4.5bps to finish @ 2.696%. Many participants will be watching the 2.650/2.700% area over the coming days as support there is helped by the 50 and 100 dma. 

·         The 5y erased -4bps to end @ 1.302%, its lowest level in nearly a month. Pay attention to the 1.250% area as a breakdown means a likely test of the 200 dma (1.172%) is forthcoming. 

·         Bull flattening took hold along the yield curve as the 2-10-yr spread tightened to 240.5bps. 

·         Precious metals were mixed with gold +$1 @ $1242 and silver -$0.07 @ $19.80. 

·         Tomorrow's Data: MBA Mortgage Index (7), initial and continuing claims, durable orders, durable orders ex-transportation (8:30), Chicago PMI (9:45), Michigan Sentiment - Final (9:55), and leading indicators (10). 

·         Tomorrow's Auction: $29 bln 7y notes.

Next Day In View 

Economic Commentary

Economic Summary: Building permits top expectations; Durable Goods, Chicago PMI, and Michigan Sentiment all due out tomorrow
Economic Data Summary:

·         September Building Permits 974K vs Briefing.com consensus of 932K; August revised to 926K was 918K

·         October Building Permits 1.034 M vs Briefing.com consensus of 932K; September was 974K

o    The jump in October brought permits to their highest level since June 2008. Delays from the government shutdown continue to plague the residential construction data. Reports on housing starts were not submitted on time, and the Census Bureau decided to push back the starts release until December 18. At that time, September, October, and November starts will all be released. The delays also prevented information the number of homes currently construction from being released. That data is used in GDP forecasts, making early estimates of fourth quarter GDP growth more unreliable than unusual. 

·         September Case Schiller 20 City Index 13.3% vs Briefing.com consensus of 13.0%; August was 12.8%

Upcoming Economic Data:

·         Weekly MBA Mortgage Applications due out Wednesday at 7:00 (Briefing.com consensus of ; Last Week was -2.3%)

·         Weekly Initial Claims due out Wednesday at 8:30 (Briefing.com consensus of 330K; Last Week was 323K)

·         Weekly Continuing Claims due out Wednesday at 8:30 (Briefing.com consensus of 2.875 M ; Last Week was 2.876 M )

·         October Durable Orders due out Wednesday at 8:30 (Briefing.com consensus of -2.2%; September was 3.8%)

·         October Durable Orders Ex-Transportation due out Wednesday at 8:30 (Briefing.com consensus of 0.2%; September was -0.2%)

·         November Chicago PMI due out Wednesday at 9:45 (Briefing.com consensus of 58.0; October was 65.9)

·         November Michigan Sentiment due out Wednesday at 9:55 (Briefing.com consensus of 73.0; October was 72.0)

·         October Leading Indicators due out Wednesday at 10:00 (Briefing.com consensus of -0.15; September was 0.7%)

Upcoming Fed/Treasury Events:

·          The Treasury is scheduled to auction off $96 bln in new debt next week. Results for each auction will be announced at 13:00

o    Tuesday: $35 bln in 5 years notes

o    Wednesday $29 bln 7 year notes

Other International Events of Interest

·         Japan's CSPI ticked up 0.8% year-over-year (0.9% forecast, 0.7% prior). 

On other news.... 

Currencies 

Dollar Presses the Lows: 10-yr: +04/32..2.703%..USD/JPY: 101.25..EUR/USD: 1.3564
The Dollar Index has spent the entire session in the red with trade now pressing session lows near 80.65. The Index made a couple of attempts at retaking the flat line, but fell short of the level as sellers piled on after the consumer confidence miss. Today's weakness has erased all of yesterday's advance, and has action probing key support in the 80.60 area. Click here to see a daily Dollar Index chart.

·         EURUSD is +45 pips @ 1.3560 as trade probes the 50 dma. The single currency has been supported by headlines out near the start of U.S. trade that suggested while QE and negative rates have been discussed, there is no consensus for action at the December meeting. Eurozone data is limited to GfK German Consumer Climate. 

·         GBPUSD is +35 pips @ 1.6190 as trade tests session highs. Sterling saw buyers emerge at 1.6150 as Bank of England Governor Mark Carney began his testimony in front of Members of Parliament, and has lifted over the course of the day. The 1.6250/1.6300 area remains critical. British data is heavy with second estimate GDP, preliminary business investment, and CBI Realized Sales due out tomorrow. 

·         USDCHF is -45 pips @ .9070 as action slides back below the 50 dma. Support at current levels is of extreme interest because it is all that stands in the way of a retest of the October lows near .8900. 

·         USDJPY is -35 pips @ 101.30 as action has given up most of its early gains. Today's reversal has taken place during U.S. hours, and comes after a couple of BOJ members expressed dissent in today's minutes. The members voiced concern that not enough attention was being paid to downside risks to the economy. 

·         AUDUSD is -30 pips @ .9125 as trade remains on track to post a fifth day of losses. Today's weakness in the hard currency comes after RBA Deputy Governor Philip Lowe voiced his concern over the trajectory of the Australian economy while also noting intervention cannot be ruled out, though the threshold for any such action would be high. Australia's construction work done will cross the wires tonight. 

·         USDCAD is +5 pips @ 1.0545 as action fights to hold the flat line. Action has spent most of the U.S. session trapped in a 25 pip range. The 1.0600 area will remain in focus over the coming days.

Jason's Commentaries


Another volatile night. Nasdaq was leading the market last night to break into the high once again as Apple, Google, Amazon, Facebook and Baidu led. That caused an upward drag on other indices. The broader market was relatively flat but the market continued to break the highs. Internals were showing a lot of divergence then the sell off came half an hour before the closing bell where all indices lost most of their gains. That formed a downside cruxifice on both Dow and S&P500. While ahead of the Thanksgiving holiday, we might see some huge correction. Volumes spike last night to 818m shares traded on the NYSE. 

Treasuries were up 4th day in a row and it's looking too bullish as well. Crude has been staying the $93-95 price range. Silver and Gold continued to move downtrend. 

Market Call: DOWN

Date: 27 Nov 2013