6 Nov 2013 AMC- Dow Jones broke into all time high while Nasdaq lagged

6 Nov 2013 AMC- Dow Jones broke into all time high while Nasdaq lagged

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: -0.1%

·         Germany's DAX: + 0.4%

·         France's CAC: + 0.8%

·         Spain's IBEX: + 0.4%

·         Portugal's PSI: + 1.4%

·         Italy's MIB Index: + 0.9%

·         Irish Ovrl Index: + 0.6%

·         Greece ATHEX Composite: + 1.6%

Before Market Opens

S&P futures vs fair value: +6.30. Nasdaq futures vs fair value: +8.50.
The S&P 500 futures (+0.4%) continue to hover near their best pre-market levels.

Markets across Asia ended mixed as Japan's Nikkei (+0.8%) led and China's Shanghai Composite (-0.8%) lagged. The bid in the Nikkei came after the Bank of Japan released the minutes from its latest policy meeting. The minutes suggested that while the economy is improving, and inflation is moving towards the central bank's 2.0% target, there are some concerns of a lack of growth in wages. Meanwhile, China's Shanghai Composite saw early gains evaporate as late-day selling dropped the index more than 1% in the final hour of trade. The selling did not make its way to Hong Kong as the Hang Seng ended flat. Data from the region showed Australia's trade deficit narrow to $284 million from $693 million ($450 million expected) and Indonesia's economy expand at 5.6% year-over-year, as expected. 

·         In Japan, the Nikkei gained 0.8% as trade snapped its three-day skid. Toyota Motor added 0.5% following its solid earnings report, lifting shares of other automakers. Heavyweight Softbank was a laggard, shedding 2.1%. 

·         Hong Kong's Hang Seng finished flat amid a choppy trade. Real estate shares were under pressure as Sino Land and Henderson Land Development both gave up 0.9%. Hong Kong Exchange was among the leaders, posting a 0.6% gain, after its quarterly beat. 

·         In China, the Shanghai Composite settled lower by 0.8% as some late-day selling weighed. Financials were weak as Shanghai Pudong Development Bank and Ping An Bank lost 1.7% and 3.7%, respectively. On the upside, energy names were strong as Sinopec gained 2.2% and PetroChina added 4.1%. 

Most major European indices hover in positive territory with France's CAC (+0.9%) leading. Among news of note, the European Commission is expected to begin probing Spanish budget data reporting procedures. Regional economic data was plentiful. Eurozone retail sales slipped 0.6% month-over-month (-0.4% expected, 0.5% prior) while the year-over-year reading increased 0.3% (0.7% consensus, -0.2% last). Separately, Services PMI rose to 51.6 from 50.9 (50.9 forecast). German factory orders rose 3.3% month-over-month (0.5% forecast, -0.3% prior) while the Services PMI increased to 52.9 from 52.3 (52.3 expected). Great Britain's industrial production rose 0.9% month-over-month (0.5% expected, -1.1% prior) while the year-over-year reading increased 2.2% (1.8% forecast, -1.5% prior). Separately, manufacturing production rose 1.2% month-over-month (1.1% expected, -1.2% last) while the year-over-year reading ticked up 0.8% (0.7% forecast, -0.2% previous). Also of note, the Halifax House Price Index increased 6.9% (7.0% expected, 6.2% last). French Services PMI rose to 50.9 from 50.2 (50.2 expected). Italian Services PMI fell to 50.5 from 52.7 (51.2 consensus). In Spain, Services PMI rose to 49.6 from 49.0 (49.0 forecast). 

·         Great Britain's FTSE is flat. Airlines are among the advancers with easyJet and International Consolidated Airlines Group holding respective gains of 2.5% and 1.7%. On the downside, miners lag with Antofagasta lower by 1.0% and Vedanta Resources off 0.6%. 

·         In Germany, the DAX sports an advance of 0.4% as financials contribute to the gain. Commerzbank and Deutsche Bank are higher by 0.8% and 1.5%, respectively. K+S is the weakest index component, down 3.5% after Moody's cut the company's credit rating to junk. 

·         In France, the CAC trades up 0.9% as Alstom leads with a gain of 4.8%. Steelmakers lag with ArcelorMittal and Vallourec both down near 0.4%.

Market Internals

Market Internals -Technical-
The Dow closed up 129 (+0.82%) at 15747, the S&P 500 closed up 8 (+0.43%) at 1770, and the Nasdaq closed down 8 (-0.2%) at 3932. Action came on mixed volume (NYSE 704 mln vs. avg. of 724; NASDAQ 1968 mln vs. avg. of 1726), with mixed advancers/decliners (NYSE 1636/1428, NASDAQ 1221/1319) and new highs outpacing new lows (NYSE 175/25, NASDAQ 146/54).

Relative Strength: 
Lithium-LIT +3.35%, Wind Energy-FAN +3.04%, Thailand-THD +2.12%, Nordic 30-GXF +1.79%, Sweden-EWD +1.78%, Poland-EPOL +1.64%, Greece-GREK +1.61%, Oil-USO +1.54%, Cotton-BAL +1.53%, Junior Gold Miners-GDXJ +1.45%.

Relative Weakness: 
Biotechnology-XBI -3.72%, Biotechnology-IBB -2.92%, Oil and Gas Exploration-XOP -2.18%, Coffee-JO -1.82%, Volatility-VXX -1.64%, Columbia Index-GXG -0.97%, India-INP -0.76%, Indian Rupee-ICN -0.67%, Eastern Europe-ESR -0.66%, Japanese Yen-FXY -0.13%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks End Mixed as Momentum Names Lag
The major averages registered broad gains at the open, but only the Dow Jones Industrial Average (+0.8%) and S&P 500 (+0.4%) were able to end in positive territory while the Nasdaq (-0.2%) and Russell 2000 (-0.4%) posted modest losses.

The Dow finished at a fresh record high of 15,746.63 as 27 of 30 components registered gains. Of those 27, twelve added at least 1.0%. Microsoft (MSFT 38.18, +1.54) was the top index performer, climbing 4.2% amid reports Ford (F 16.91, -0.18) Chief Executive Officer Alan Mullaly remains on the list of candidates hoping to replace outgoing CEO Steve Ballmer.

While Microsoft's gain had a limited impact on the price-weighted Dow, the stock provided support to the technology sector (+0.8%), which ended ahead of the remaining cyclical groups. Although the tech sector has a tendency to trade in-line with the Nasdaq, that was not the case today. The Nasdaq ended modestly lower as biotechnology and momentum names lagged.

Companies specializing in biotechnology registered broad losses as the iShares Nasdaq Biotechnology ETF (IBB 201.07, -6.04) tumbled 2.9%, widening its fourth quarter loss to 4.1%. Meanwhile, momentum names like Facebook (FB 49.12, -0.98), Priceline.com (PCLN 1058.04, -24.19), and Yelp(YELP 66.61, -4.52) took a cue from Tesla's (TSLA 151.16, -25.65) weakness. The electric car maker plunged 14.5% in reaction to its cautious guidance and Q3 deliveries that were essentially in-line with Street expectations. Despite today's loss, Tesla remains higher by 346% this year.

Elsewhere, the discretionary sector (-0.2%) spent the bulk of the session in the red as apparel retailers weighed after Abercrombie & Fitch (ANF 33.13, -5.18) issued below-consensus revenue guidance.

Also of note, the financial sector (+0.3%) continued its recent underperformance. Despite today's modest advance, the sector is unchanged this week versus a 0.5% gain in the S&P. In addition, the sector's recent weakness has trimmed its quarter-to-date gain to 3.4%, which puts the group behind the remaining nine sectors in Q4 standings.

Three of four countercyclical groups (consumer staples, telecom services, and utilities) posted solid gains between 1.0% and 1.3% while health care shed 0.3% as biotech pressured the sector.

Treasuries settled near their highs, erasing a portion of yesterday's loss. The benchmark 10-yr yield slipped three basis points to 2.65%.

Participation was on the light side as only 704 million shares changed hands on the floor of the New York Stock Exchange.

In today's economic data, the Conference Board's Index of Leading Indicators increased 0.7% for a second consecutive month in September. The Briefing.com consensus expected the index to increase 0.6%. The index will likely suffer a sizable pullback in October. Initial claims, which added 0.26 percentage points to the increase in the leading indicators, will contribute negatively in October as glitches from California and biases from the government shutdown drove claims to their highest level in several months.

The weekly MBA Mortgage Index fell 7.0% to follow last week's increase of 6.4%.

Separately, October Challenger Job Cuts decreased 4.2% after increasing 19.1% in September.

Tomorrow, weekly initial claims and the advance Q3 GDP reading will be reported at 8:30 ET while the September Consumer Credit report will be released at 15:00 ET. 

·         Nasdaq +30.2% YTD 

·         Russell 2000 +29.4% YTD 

·         S&P 500 +24.1% YTD 

·         DJIA +20.2% YTD

Commodities

NYMEX Energy Closing Prices

  Dec crude oil rose $1.34 to $94.74/barrel 

·         Crude oil rose today on better-than-anticipated inventory data and on support from a weaker dollar index. The energy component lifted from a session low of $93.68 set at pit trade open and advanced as high as $95.40. It pulled back slightly heading into the close and settled with a 1.4% gain. 

  Dec natural gas rose 3 cents to $3.50/MMBtu 

·         Natural gas also spent today's pit trade in positive territory. It advanced to a session high of $3.55 but pulled back in afternoon pit trade. It eventually settled with a 0.9% gain. 

  Dec heating oil rose 1 cent to $2.87/gallon 

  Dec RBOB gasoline rose 3 cents to $2.55/gallon

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn fell 5 cents to $4.21/bushel 

·         Dec wheat fell 3 cents to $6.54/bushel 3

·         Jan soybeans rose 5 cents to $12.56/bushel 

·         Dec ethanol fell 1 cent to $1.61/gallon 

·         Jan sugar (#16 (U.S.)) fell 0.20 of a penny to 21.38 cents/lbs

COMEX Metals Closing Prices

  Dec gold rose $9.30 to $1317.40/ounce 

·         Gold traded higher today as it gained support from a weaker dollar index. The yellow metal brushed a session high of $1320.50 in early morning pit trade and chopped around slightly below that level for the remainder of the session. It eventually settled with a 0.7% gain. 

  Dec silver rose $0.12 to $21.76/ounce 

·         Silver also traded in positive territory but inched lower after brushing a session high of $21.93. It settled just above its session low of $21.75, shaving gains to 0.6%. 

  Dec copper fell 2 cents to $3.24/lbs

Treasuries

Closing Commodities: Crude Oil Rallies Above $95, Ends 0.7% Higher

·         Precious metals traded higher today, gaining support from a weaker dollar index

·         Dec gold brushed a session high of $1320.50 per ounce in early morning pit trade and chopped around slightly below that level for the remainder of the session. It eventually settled with a 0.7% gain at $1317.40 per ounce

·         Dec silver rose to a session high of $21.93 per ounce but then inched lower. It settled with a 0.6% gain at $21.76 per ounce, just above its session low of $21.75 per ounce

·         Dec crude oil also rose on the weaker dollar index. Adding to today's strength was better-than-anticipated inventory data that showed a build of 1.577 mln barrels when a build of 1.6-2.1 mln barrels was expected. The energy component lifted from a session low of $93.68 per barrel set at pit trade open and advanced as high as $95.40 per barrel. It pulled back slightly heading into the close and settled with a 1.4% higher at $94.74 per barrel

·         Dec natural gas also traded in positive territory, advancing to a session high of $3.55 per MMBtu. It pulled back in afternoon pit trade and settled with a 0.9% gain at $3.50 per MMBtu

Treasuries Gain in Quiet Trade: 10-yr: +08/32..2.641%..USD/JPY: 98.68..EUR/USD: 1.3522

·         Most maturities booked modest gains amid a lackluster trade that saw yields hold in a tight 3bp range. 

·         Action saw little reaction to the slight leading indicators beat (0.7% actual v. 0.6% expected) with an upside bias persisting throughout the session. 

·         Buyers were concentrated on the belly of the curve with a moderate bid pushing the 5y down -4.5bps to 1.335%. Traders will be watching support in the 1.250-1.300% region over the coming days as a breakdown sets up the lowest print in five months. Click here to see an intraday yields chart.

·         A more modest bid in 10s dropped the benchmark yield -2.2bps to 2.640%, causing action to slip back below the 100 dma. Look for Treasury bulls to defend 2.700% resistance.

·         30s continued to lag as light selling produced a +1.1bp advance to 3.769%. Today's weakness marked an eighth straight day of losses for the long bond, and has the 30y testing trendline resistance off the August high yield. 

·         A flatter curve took hold as the 2-10-yr spread tightened to 234bps. 

·         Precious metals were firm with gold +$10 @ $1318 and silver +$0.17 @ $21.80. 

·         Data: Challenger Job Cuts (7:30), initial and continuing claims, GDP-Adv. (8:30), and consumer credit (15). 

·         Fed Speak: Fed Chairman Ben Bernanke will participate in an IMF forum on "Policy Responses to Crises" (15:30). Fed Governor Stein and Chicago's Evans will participate in the 16th Annual International Banking Conference at the Chicago Fed (12:45 and 18:45).

Next Day In View 

Economic Commentary

Economic Summary: Leading Indicators slightly surpass expectations; Q3 GDP due out Thursday at 8:30; Bernanke to speak Friday at 15:30
Economic Data Summary:

·         Weekly MBA Mortgage Applications -7.0% vs Briefing.com consensus of ; Last Week was 6.4%

·         September Leading Indicators +0.7% vs Briefing.com consensus of 0.6%; August was 0.7%

o    Due to delays in the underlying data and in the Leading Indicators Index itself, nine of the 10 were known prior to this release. The only component missing was the change in building permits, which the Conference Board expects to increase more than the consensus forecast. The index will likely suffer a sizable pullback in October. Initial claims, which added 0.26 percentage points to the increase in the leading indicators, will contribute negatively in October as glitches from California and biases from the government shutdown drove claims to their highest level in several months.

Upcoming Economic Data:

·         Weekly Initial Claims due out Thursday at 8:30 (Briefing.com consensus of 335K; Last Week was 340K)

·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 2.863 M ; Last Week was 2.881 M )

·         Third Quarter GDP- Advance due out Thursday at 8:30 (Briefing.com consensus of 1.9%; Q2- Final was 2.5%)

·         Third Quarter Chain Deflator- Advance due out Thursday at 8:30 (Briefing.com consensus of 1.4%; Q2- Final was 0.6%)

·         September Consumer Credit due out Thursday at 15:00 (Briefing.com consensus of $11.0 bln; August was $13.6 bln)

Upcoming Fed/Treasury Events:

·         Fed Governor Jeremy Stein (voting FOMC member, typically dovish) to speak tomorrow at 12:45

·         Chicago Fed President Charlie Evans (voting FOMC member, typically dovish) to speak tomorrow at 19:45

·         Atlanta Fed President Dennis Lockhart to speak Friday at 12:00

·         Fed Chairman Ben Bernanke to speak Friday at 15:30

·         San Francisco Fed President John Williams (not a voting FOMC member, typically moderate) to speak at 16:00

Other International Events of Interest

·         Eurozone retail sales slipped 0.6% month-over-month (-0.4% expected, 0.5% prior) while the year-over-year reading increased 0.3% (0.7% consensus, -0.2% last). Separately, Services PMI rose to 51.6 from 50.9 (50.9 forecast). 

On other news.... 

Summary of Weekly Petroleum Data for the Week Ending Nov 1, 2013
Production: U.S. crude oil refinery inputs averaged about 15.1 mln barrels per day (bpd) during the week ending November 1, 2013, 16 thousand bpd above the previous week's average. Refineries operated at 86.8% of their operable capacity last week. Gasoline production decreased last week, averaging about 8.4 mln bpd. Distillate fuel production increased slightly last week, averaging over 4.9 mln bpd.

Imports: U.S. crude oil imports averaged over 7.2 mln bpd last week, down by 235 thousand bpd from the previous week. Over the last four weeks, crude oil imports averaged 7.6 mln bpd, 690 thousand bpd below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 472 thousand bpd. Distillate fuel imports averaged 226 thousand bpd last week.

Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.6 mln barrels from the previous week. At 385.4 mln barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 3.8 mln barrels last week and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 4.9 mln barrels last week and are at the lower limit of the average range for this time of year.

Demand: Total products supplied over the last four-week period averaged 19.4 mln bpd, up by 3.0% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.1 mln bpd, up by 5.4% from the same period last year. Distillate fuel product supplied averaged over 3.9 mln bpd over the last four weeks, up by 8.2% from the same period last year.




Currencies 

Dollar Slips Amid Lackluster Trade: 10-yr: +07/32..2.646%..USD/JPY: 98.68..EUR/USD: 1.3518
The Dollar Index holds in the middle of the day's range as action probes the 80.50 area. A choppy session has seen trade limited to a 20 cent range as traders remain cautious ahead of tomorrow's policy meetings. Click here to see a daily Dollar Index chart.

·         EURUSD is +45 pips at 1.3520 amid a mostly uneventful trade. The single currency saw an early boost following this morning's mixed data, and jumped to its best of the session after unnamed sources commented a rate cut is unlikely a tomorrow's ECB meeting. As always traders will be tracking the words of ECB head Mario Draghi at the accompanying press conference. Eurozone data is limited to German industrial production. 

·         GBPUSD is +40 pips at 1.6080 as trade looks as though it will post a third straight advance. Early buying lifted sterling above the 1.6100 level, but sellers held their ground in defense of 1.6140 resistance. The Bank of England meets tomorrow. 

·         USDCHF is -20 pips at .9115 as trade continues to struggle near the 50 dma (.9130). Action remains just below the October highs as resistance in the .9165/.9200 area has proven difficult to conquer. Swiss currency reserves will be released tomorrow. 

·         USDJPY is +20 pips at 98.70 as trade has managed to retake the 50 and 100 dma. However, many participants are looking elsewhere for opportunity as the 97.00/99.00 range that has been in place since late-September remains in play. 

·         AUDUSD is +15 pips at .9520 amid a rather lackluster session. The hard currency saw an early boost from the better than expected Australian trade data, but has given up a good portion of its gains as U.S. trade has progressed. Australia's employment change and unemployment rate will cross the wires tomorrow. 

·         USDCAD is -35 pips at 1.0420 as sellers took control following the strong Ivey PMI report (62.8 actual v. 54.7 expected, 51.9 previous). Today's selling has the pair testing minor support in the region which is seeing additional help from the 50 and 100 dma. A breakdown of that level produces a likely test of the 200 dma (1.0287) that tracks closely with trendline support off the September 2012 lows.

Jason's Commentaries


The Dow Jones led the market to a higher ground last night, while Nasdaq lagged the market. On the Dow, Microsoft rallied 4.2% last night in rumour that current CEO, Steve Ballmer is likely to be replaced. Apart from Dow, the rest of the Dow components fared pretty well as well. Names like Chevron, United Health, General Electric, Merck all gained more than 1%. However, the Nasdaq failed to be lifted up by the bullish market sentiment as the biotech industry lagged big.. Celgene lost 4..15% which dragged down most of its industry peers, despite Microsoft and Ebay having outstanding results. 

The market started with a bullish bias but started reversing at 10am ET. After a correction until 11am ET, the market started going up all the way till closing bell. Nasdaq on the other hand, stayed flat from 11am onwards till closing bell. Volumes were decent at 704m share traded, internals were pointing towards a bullish side, VIX went down as well. Seems that my call got right as well. On the technical note, Dow broke into high, S&P500 is facing resistance from its previous highs, Nasdaq has been consolidating for a while already. It seems that If the employment report is bad, we might see some serious correction happening before breaking up higher for the holiday season. Looking ahead, we're having the Unemployment claims coming up today. But the market will be focusing on the Non-farm payrolls set to be released at 830am ET. Today there should be some minor profit taking from yesterday's gains ahead of employment reports. 

Market Call: FLAT to upside( Advance GDP 2.8% vs 2.0 expected, ECB lowers interest rates)

Date: 7 Nov 2013