31 Dec 2013 AMC- Market went up on the last trading of the year

31 Dec 2013 AMC- Market went up on the last trading of the year

Market Summary 

Before Market Opens

S&P futures vs fair value: +2.50. Nasdaq futures vs fair value: +6.20.
Equities are expected to begin the final session of 2013 on a modestly higher note as the S&P 500 futures trade almost three points above fair value. Similar to yesterday, a range-bound affair is expected with trading volume remaining well below average. 

Economic data this morning was limited to the October Case-Shiller 20-city Index, which rose 13.6%. With little corporate news of note, investors will have two more economic reports to digest this morning. On that note, the Chicago PMI report for December will be released at 9:45 ET (Briefing.com consensus 60) while December Consumer Confidence (consensus 77.1) will cross the wires at 10:00 ET. 

Treasuries have spent the entire overnight session in the red, where they remain at this juncture. The 10-yr yield is higher by two basis points at 2.99%.

Market Internals

Market Internals -Technical-
The Dow closed up 72 (+0.4%) at 16577, the S&P 500 closed up 7 (+0.4%) at 1848, and the Nasdaq closed up 22 (+0.5%) at 4177. Action came on below average volume (NYSE 588 mln vs. avg. of 692; NASDAQ 1296 mln vs. avg. of 1721), with advancers outpacing decliners (NYSE 2033/1085, NASDAQ 1510/1103) and new highs outpacing new lows (NYSE 299/47, NASDAQ 247/25).

Relative Strength: Jr. Gold Miners-GDXJ +3.2%, Gold Miners-GDX +2.4%, Social Media-SOCL +2.1%, Russia-RSX +1.4%, S. Korea-EWY +1.2%, China Lrg Cap-FXI +1.1%, Oil&Gas Expl& Prod-XOP +1.0%, Internet-FDN +1.0%, Energy-XLE +1.0%, Metals&Mining-XME +0.9%, Vietnam-VNM +0.9%

Relative Weakness: Natural Gas-UNG -4.1%, Coffee-JO -3.7%, Solar-TAN -1.7%, Turkey-TUR -0.8%, Silver-SLV -0.7%

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Finish Banner Year on Upbeat Note
The major averages wrapped up a memorable year with a forgettable final session. The S&P 500 added 0.4%, extending its 2013 price return to 29.6%. Given its banner year, it was appropriate for the index to end 2013 at a fresh all-time high of 1848.35. The Dow Jones Industrial Average soared 26.5% in 2013 and ended at a record high of its own.

Although the Dow (+0.4%) and S&P 500 (+0.4%) saw comparable gains today, the Nasdaq (+0.5%) fared a bit better. That was the theme throughout the year as the tech-heavy index rallied 38.3%.

Similar to earlier sessions of the week, today's affair felt like it was taking place in slow motion until indices roared to fresh highs during the final hour. As a result, paltry intraday NYSE volume turned into a more respectable final tally of 558 million.

Seven of ten sectors registered gains as cyclical groups provided leadership. The energy sector (+0.9%) led from the start with Phillips 66 (PSX 77.13, +2.41) contributing to the strength after Berkshire Hathaway (BRK.B 118.56, +0.52) agreed to acquire Phillips Specialty Products, a flow improver business. Strikingly, the energy sector rallied even as crude oil slipped 0.8% to $98.46/bbl.

Elsewhere, the other commodity-related group—materials (+0.3%)—posted a modest gain as miners displayed strength. The Market Vectors Gold Miners ETF (GDX 21.13, +0.49) gained 2.7% as gold futures ended little changed at $1202.70/ozt. Unlike the S&P 500, the yellow metal will be happy to see the calendar turn to 2014 after seeing its price plunge 28.0% in 2013.

Outside of energy, the technology sector (+0.7%) was the only other noteworthy outperformer. The largest component, Apple (AAPL 561.02, +6.50), broke its four-day losing streak, gaining 1.2%.

With regard to momentum names, Twitter (TWTR 63.65, +3.14) rallied 5.2% after falling nearly 17.5% over the past two sessions while the top S&P 500 component of 2013, Netflix (NFLX 368.17, +1.18), added 0.3%, extending its 2013 gain to 297.3%. Fittingly, the S&P 500's top performer of 2013 resides in the strongest sector of the year, consumer discretionary, which finished with an annual gain of 41.0%.

On the countercyclical side, consumer staples (-0.1%), health care (-0.1%), and telecom services posted modest losses while utilities (+0.2%) finished slightly higher. Treasuries ended on their lows after spending the day in a steady downtrend. The 10-yr yield rose six basis points to 3.04%.

Today's economic data featured three reports: 

·         The October Case-Shiller 20-city Home Price Index rose 13.6% while a 13.8% increase had been expected by the Briefing.com consensus. This follows the previous month's increase of 13.2%. 

·         The Chicago PMI reading for December dropped to 59.1 from 63.0 while the consensus expected a decline to 60.0. The reported decrease was not too concerning given that readings above 60.0 are not sustainable for a long time. Production growth slowed as the related index fell to 57.9 from 64.3. The weakness stemmed from a softening in new orders growth, from 68.8 in November to 60.7 in December. 

·         The December Consumer Confidence Index increased to 78.1 from 72.0 while the consensus expected an increase to 77.1. Although the index posted a solid increase, the jump was a result of consumer attitudes returning to pre-government shutdown levels. In reality, confidence levels have essentially held steady since late summer. 

There is no economic data on tomorrow's schedule as bond and equity markets will be closed for New Year's Day.

On Thursday, weekly initial claims will be released at 8:30 ET while November construction spending and the December ISM Index will both cross the wires at 10:00 ET.

With the year drawing to a close, we at Briefing.com would like to wish all of our readers a happy and healthy start to 2014. 

·         Nasdaq +38.3% YTD 

·         Russell 2000 +37.0% YTD 

·         S&P 500 +29.6% YTD 

·         DJIA +26.5% YTD

Commodities

Closing Commodities: Continuous gold contract ends the year 28% lower, marking its first annual loss in 13 years and the sharpest decline since 1981

·         Feb gold and Mar silver slipped to their respective session lows of $1181.40 per ounce and $18.72 per ounce in early morning pit trade but rallied sharply into positive territory following consumer confidence data

·         Gold touched a session high of $1210.40 per ounce but then trended lower for the remainder of the session and settled 0.1% lower at $1202.70 per ounce

·         Silver brushed a session high of $19.82 per ounce but reversed back into the red and settled with a 1.3% loss at $19.38 per ounce

·         Looking at the year, the gold continuous contract lost 28%, marking its first annual loss in 13 years and the sharpest decline since 1981

·         Silver's continuous contract fell ~ 36% in 2013

·         Feb crude oil spent all of today's pit trade in negative territory as the dollar index traded higher. The energy component brushed a session low of $98.15 per barrel in early morning action and settled with a 0.8% loss at $98.46 per barrel

·         The continuous WTI crude oil contract settled the year 7% higher

·         Feb natural gas trended lower in the red today. It retreated from its session high of $4.36 per MMBtu and settled 4.5% lower at $4.23 per MMBtu, just above its session low of $4.22 per MMBtu

·         The continuous nat gas contract booked a 24.6% gain for the year

 COMEX Metals Closing Prices

  Feb gold fell $1.00 to $1202.70/oz 

·         Gold slipped to a session low of $1181.40 in early morning pit trade but rallied sharply into positive territory and to its session high of 1210.40 shortly after equity markets opened. It then trended lower for the remainder of the session and settled 0.1% lower. The continuous contract lost 28% over the year, marking its first annual loss in 13 years and the sharpest decline since 1981. 

  Mar silver fell $0.25 to $19.38/oz 

·         Silver also popped into positive territory after trading as low as $18.72 earlier in morning floor trade. Despite touching a session high of $19.82, it reversed back into the red and settled with a 1.3% loss. The continuous contract fell 36% in 2013. 

  Mar copper rose 2 cents to $3.40/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Mar corn fell 2 cents to $4.22/bushel 

·         Mar wheat rose 5 cents to $6.05/bushel 

·         Mar soybeans fell 19 cents to $12.90/bushel 

·         Feb ethanol fell 4 cents to $1.79/gallon 

·         Mar sugar (#16 (U.S.)) rose 0.43 of a penny to 20.36 cents/lbs

NYMEX Energy Closing Prices

  Feb crude oil fell $0.82 to $98.46/barrel

·         Crude oil spent all of today's pit trade in negative territory as the dollar index traded higher. The energy component brushed a session low of $98.15 in early morning action and settled slightly above that level, booking a loss of 0.8%. Looking at the year, the continuous contract rose by 7%.

  Feb natural gas fell 20 cents to $4.23/MMBtu 

·         Natural gas trended lower in negative territory today. It retreated from its session high of $4.36 and settled 4.5% lower just above its session low of $4.22. The continuous contract booked a 24.6% gain for the year. 

  Feb heating oil rose 1 cent to $3.07/gallon

  Feb RBOB settled unchanged at $2.79/gallon

Treasuries

Out of 2013 on the Lows (Price) and the Highs (Yields)

·         The Treasury market has seen better years and it has seen better days than today

·         The back end got ambushed in a final round of year-end selling that left longer-dated maturities at their lows for the day and yields on the 10-yr note (3.036%) and 30-yr bond (3.977%) at their highs for the year.

o    Settlement levels for the 10-yr and 30-yr are at their highest since July 2011 

·         Overnight action saw the yield on the 10-yr kiss 3.00%, but it ran into resistance and backed off on renewed buying efforts.  Intraday action saw several restests of the 3-handle, but the resistance finally gave way around 11:00 a.m. ET, opening the door to further selling activity.

·         Yield changes at the front of the curve were small (i.e. a basis point up or down)

·         Yield changes ranged from three to seven basis points from the 5-yr note to the 30-yr bond

o    5-yr at 1.75% (+3 bps)

o    7-yr at 2.46% (+5 bps)

o    10-yr at 3.036% (+6 bps)

o    30-yr at 3.977% (+7 bps)

·         Weakness in the Treasury market coincided with strength in the stock market, suggesting some asset reallocation activity may have been a factor behind today's selling

·         Today's economic data was pretty much in-line with expectations and had limited impact on today's trading since there wasn't much of a surprise factor.  Generally speaking, though, the data still skewed to the encouraging side of things

o    October Case-Shiller Home Price Index +13.6% yr/yr (Briefing.com consensus +13.8%), which was the biggest annualized gain since February 2006

o    December Chicago PMI 59.1 (Briefing.com consensus 60.0), leaving it comfortably above the expansion/contraction threshold of 50.0

o    December Consumer Confidence 78.1 (Briefing.com consensus 77.1), up from 72.0 in November

·         Precious metals had a roller coaster session that saw a retest of summer lows

o    Gold -$1.60 at $1202.20/troy ounce

o    Silver -$0.22 at $19.40/troy ounce

·         Yield changes for the year

o    2-yr at 0.38% (+12 bps)

o    5-yr at 1.75% (+104 bps)

o    7-yr at 2.46% (+132 bps)

o    10-yr at 3.04% (+128 bps)

o    30-yr at 3.98% (+111 bps)

·         Market closed Wednesday in observance of New Year's holiday

·         Thursday data: Initial Claims (08:30), Construction Spending (10:00), ISM Index (10:00)

·         Happy New Year!

Next Day In View 

Economic Commentary

Economic Summary: Chicago PMI misses the mark; Consumer Confidence above expectations; ISM Thursday at 10:00
Economic Data Summary:

·         October Case Schiller 20 City Index 13.6% vs Briefing.com consensus of 13.8%; September was revised to 13.2% from 13.3%

·         December Chicago PMI 59.1 vs Briefing.com consensus of 60.0; November was 63.0

o    The drop in the index is not concerning. A reading above 60 is not sustainable for a long time and the index exceeded that threshold in both October and November. The trends do not point toward a drop below 50 -- the actual expansion/contraction threshold -- any time soon. Production growth slowed as the related index fell to 57.9 in December from 64.3 in November. The weakness stemmed from a softening in new orders growth, from 68.8 in November to 60.7 in December. The employment index fell to 51.6 in December from 60.9 in November. That was the lowest reading since April.

·         December Consumer Confidence 78.1 vs Briefing.com consensus of 77.1; November was revised to 72.0 from 70.4

o    As expected, the move in the headline index level looks strikingly good. However, the jump is simply a result of consumer attitudes returning to where they were prior to the government shutdown. In reality, confidence levels are pretty much unchanged since the late summer. The large swings in confidence over the past few months have mirrored the trend in the University of Michigan Consumer Sentiment level. There were definite economic improvements, though, that led to the increase in confidence. 

Upcoming Economic Data:

·         Weekly Initial Claims due out Thursday at 8:30 (Briefing.com consensus of 333K; Last Week was 338K)

·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 2.875 M ; Last Week was 2.932 K )

·         November Construction Spending due out Thursday at 10:00 (Briefing.com consensus of 0.8%; October was 0.8%)

·         December ISM Index due out Thursday at 10:00 (Briefing.com consensus of 56.9; November was 57.3)

Other International Events of Interest

·         The People's Bank of China pledged to continue providing ‘appropriate' liquidity levels should signs of stress reappear in the banking system. Money market rates were mixed with one-week SHIBOR climbing almost 41 basis points to 5.25%. However, the one-month rate fell nearly 21 basis points to 5.91%.

On other news.... 

Currencies 









Jason's Commentaries


In the last ditch effort to break higher, the market went bullish but failed to break the highs amidst the low volume period. Market was apparently bullish with a outweighing of 3:1 ratio with the rest of the internals supporting the move except the volume. It appeared that the bullish breakout might be a false one with such low volume. The strength of the breakout will be tested when the full volumes come back into the market again. The market actually went through a very volatile session on the NYE, However, the market rallied in the last hour which almost got to a new high again. Currently futures were flat to the downside before the first trading day of 2014. I highly doubt full volume will return this week. We might be facing a possible consolidation this week. 

Happy new year peeps! May 2014 be a prosperous and awesome year for all of us!   

Market Call: FLAT to downside

Date: 2 Jan 2014