11 April 2014 AMC - Market sunk once again ahead of weekend

11 April 2014 AMC - Market sunk once again ahead of weekend

Market Summary 

 European Markets Closing Prices

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

·         UK's FTSE: -1.2%

·         Germany's DAX: -1.5%

·         France's CAC: -1.1%

·         Spain's IBEX: -1.3%

·         Portugal's PSI: -1.3%

·         Italy's MIB Index: -1.1%

·         Irish Ovrl Index: -1.7%

·         Greece ATHEX Composite: -2.6%

Before Market Opens 

U.S. Equities

·         Equity futures have climbed off their worst levels, but still suggest losses at the open

·         Yesterday's 3.1% slide in the Nasdaq was the biggest loss since November 2011, and now has the tech-heavy index 7% off the March highs

·         The VIX (15.89) settled yesterday's session near a one-month high

·         Financials will be in focus as JPMorgan Chase (JPM) and Wells Fargo (WFC) released their quarterly results

·         PPI (0.5% actual v. 0.1% expected)

·         Core PPI (0.6% actual v. 0.1% expected)

o    S&P Futures -7 @ 1820

o    Dow Futures -64 @ 16,046

o    Nasdaq Futures -20 @ 3460

Asia

·         Markets across Asia saw losses as sellers took control following yesterday's steep slide on Wall Street

·         The latest Bank of Japan minutes were released, indicating the economy continues to gain traction

·         China's CPI climbed to 2.4% YoY (2.5% YoY expected, 2.0% YoY previous) while PPI cooled to -2.3% YoY (-2.2% YoY expected, -2.0% YoY previous)

·         India's trade deficit widened to $10.5 bln ($8.13 bln previous)

·         Japan's Nikkei (-2.4%) tumbled to its lowest levels since October as trade was pressured by the strong yen

·         Hong Kong's Hang Seng (-0.8%) fell for the first time in four days

·         China's Shanghai Composite (-0.2%) slipped for the first time in five sessions

·         India's Sensex (-0.5%) eased off record highs

·         Australia's ASX (-1.0%) fell from six-year highs

S&P futures vs fair value: -6.60. Nasdaq futures vs fair value: -18.00.
The S&P 500 futures trade seven points below fair value.

Asian markets saw losses as sellers took control following yesterday's steep slide on Wall Street. The latest Bank of Japan minutes were released, indicating policymakers believe that price trends are moving in accordance with forecasts, while weakness in exports will be temporary.

In regional data, China's CPI climbed to 2.4% year-over-year (expected 2.5%, prior 2.0%) while PPI cooled to -2.3% year-over-year (expected -2.2%, previous -2.0%). Elsewhere, India's trade deficit widened to $10.50 billion from $8.13 billion. 

·         Japan's Nikkei tumbled 2.4% to its lowest levels since October as trade was pressured by the strong yen. Heavyweight Fast Retailing plunged 7.8% after lowering its profit forecast in response to the recent consumption tax hike. 

·         Hong Kong's Hang Seng lost 0.8%, falling for the first time in four days. Internet gaming giant Tencent Holdings continued seeing volatility with shares shedding 6.8%. Meanwhile, Hong Kong Exchanges outperformed, up 11.5%, following a tier 1 upgrade. 

·         China's Shanghai Composite slipped 0.2% for the first time in five sessions. Anhui Conch Cement lost 3.5% as traders booked profits following yesterday's limit-up move. 

Major European indices hover near their lowest levels of the session with Germany's DAX (-1.9%) showing the largest decline.

Economic data was limited. Germany's CPI ticked up 0.3% month-over-month, while the year-over-year reading increased 1.0%. Both figures met expectations. Separately, Wholesale Price Index was unchanged month-over-month (consensus -0.2%, prior -0.1%). French Current Account deficit narrowed to EUR1.40 billion from EUR3.70 billion. Spain's CPI ticked up 0.2% month-over-month, as expected, while the year-over-year reading slipped 0.1% (consensus -0.2%, prior -0.2%). Lastly, Great Britain's CB Leading Index rose 0.4% month-over-month (previous 0.6%). 

·         Great Britain's FTSE is lower by 1.3% with more than 90 components trading in the red. Financials Ashtead Group and Hargreaves Lansdown lead the retreat with respective losses of 4.9% and 5.8%. WM Morrison Supermarkets outperforms, up 1.7%. 

·         In France, the CAC holds a loss of 1.3%. Financials are also among the weakest performers with BNP Paribas, Credit Agricole, and Societe Generale down between 2.0% and 2.4%. Consumer name Danone is the lone advancer, up 0.5%. 

·         Germany's DAX trades down 1.6%. Heavyweights Commerzbank, Deutsche Lufthansa, and Merck display losses between 2.2% and 3.8%. Utility provider RWE outperforms with a loss of 0.3%.

Market Internals

Market Internals -Technical-
The Nasdaq closed down 54 (-1.34%) at 4000, the S&P 500 closed down 17 (-0.95%) at 1816, and the Dow closed down 142 (-0.88%) at 16028. Action came on slightly above average volume (NYSE 798 mln vs. avg. of 735; NASDAQ 2121 mln vs. avg. of 2032), with decliners outpacing advancers (NYSE 885/2239, NASDAQ 546/2093) and new lows outpacing new highs (NYSE 23/53, NASDAQ 15/91).

Relative Strength: 
Volatility-VXX +3.02%, Russia-RSX +1.03%, MLP Index-AMJ +0.96%, Latin America 40-ILF +0.85%, 20+ Year Treasuries-TLT +0.81%, India-INP +0.79%, Cotton-BAL +0.75%, Turkey-TUR +0.7%, Hong Kong-EWH +0.67%, Livestock-COW +0.48%.

Relative Weakness: 
Biotechnology-XBI -4%, Biotechnology-IBB -2.9%, Junior Gold Miners-GDXJ -2.72%, Coffee-JO -2.46%, Social Media-SOCL -2.34%, Middle East and Africa-GAF -1.51%, China 25 Index-FXI -1.47%, Peru-EPU -1.14%, Netherlands-EWN -1.12%, Switzerland-EWL -1.02%.

Leaders and Laggards

 

Technical Updates

Commentaries 

Closing Market Summary: Stocks End Down Week on Defensive Note
The stock market finished the week on a broadly lower note with the Nasdaq and S&P 500 enduring their worst week since 2012. The Nasdaq Composite fell 1.3%, ending the week with a loss of 3.1%. For its part, the S&P 500 settled lower by 1.0% to end the week down 2.7%.

Equity indices faced selling activity at the open after the overnight session failed to deliver any noteworthy respite following yesterday's drubbing. The lack of a concerted rebound effort today likely fed into concerns that the stock market is in the midst of a larger degree price correction than what participants have grown accustomed to seeing the past few years.

Despite starting in the red, the major averages spent the initial 90 minutes of action in a dash towards their flat lines. The S&P 500 and Nasdaq were able to make a brief appearance in the green with help from biotechnology, while the Dow spent the entire day in the red.

The iShares Nasdaq Biotechnology ETF (IBB 215.45, -6.44) appeared to have found support at its 200-day moving average in the morning, but the modest morning rebound was met with daylong selling that drove the ETF to a fresh session low. The ETF lost 2.9%, while the health care sector fell 1.1%.

Biotech notwithstanding, other momentum names that comprise a portion of the consumer discretionary sector (-1.4%) and a good part of the technology space (-1.2%) were weak once again. Amazon.com (AMZN 311.73, -5.38), Google (GOOG 530.60, -10.35), Netflix (NFLX 326.71, -8.02), and LinkedIn (LNKD 165.78, -4.21) lost between 1.7% and 2.5%, to name a few.

Even though the Nasdaq and S&P 500 made short-lived appearances in the green, the Dow Jones Industrial Average (-0.9%) was unable to do so as JPMorgan Chase (JPM 55.30, -2.10) and top-weighted component, Visa (V 196.63, -4.92), weighed. Visa sank 2.4% while JPMorgan Chase plunged 3.7% after missing earnings estimates on below-consensus revenue. The financial sector (-1.2%), meanwhile, ended among the laggards. The sector was kept from logging additional losses due to a 0.8% gain in Wells Fargo (WFC 48.08, +0.37), which reported above-consensus earnings.

On a separate note, shares of Herbalife (HLF 51.48, -8.36) took a dive in the final hour of action, falling 14.0% after The Financial Times reported that a criminal probe has been launched into the company's business practices.

On the fixed income side, Treasuries were little changed overnight, but began climbing during the early morning hours. The 10-yr note added eight ticks, pressuring its yield to 2.62%.

Participation was a bit above average as nearly 800 million shares changed hands at the NYSE.

Reviewing today's data: 

·         Producer prices jumped 0.5% in March, the largest monthly increase since June, after falling 0.1% in February. The Briefing.com consensus expected the PPI to increase 0.1%. We would not categorize the forecasting miss as a big surprise. The consensus is having difficulty forecasting the PPI following the methodology change. Under the previous PPI methodology, price growth for finished goods was down 0.1%. That was in line with expectations. The entire increase in producer prices was the result of a bounce in prices for final demand for services. After declining 0.3% in February, these prices increased 0.7%, which was the largest monthly gain since January 2010. 

·         The University of Michigan Consumer Sentiment Index increased to 82.6 in the preliminary reading for April from 80.0 in March. That was the strongest sentiment reading since July 2013. The Briefing.com consensus expected the index to increase to 81.0. Consumer sentiment typically follows changes in the equity markets, unemployment, and gasoline prices. The surveys were filled out prior to the recent weakness in the stock market, so equity prices enhanced sentiment in the preliminary reading. If the market does not rebound, we would expect the final reading to be notably lower. The Expectations Index increased to 97.1 in the preliminary reading for April from 70.0 in March. The Present Conditions Index increased to 97.1 from 95.7. 

Commodities

COMEX Metals Closing Prices

  June gold fell $2.20 to $1318.60/oz 

·         Gold retreated into negative territory from its session high of $1323.00 set in early morning pit trade as the dollar index traded higher. It chopped around slightly below the unchanged line for the remainder of the session and settled 0.2% lower, booking a gain of 1.2% for the week. 

  May silver fell $0.16 to $19.94/oz 

·         Silver also traded lower today. It touched a session high of $20.08 moments after floor trade opened and brushed a session low of $19.93 moments before settling with a 0.8% loss. Despite today's weakness, silver gained 0.9% over the week. 

  May copper fell 1 cent to $3.04/lb

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn fell 3 cents to $4.98/bushel 

·         May wheat fell 4 cents to $6.59/bushel 

·         May soybeans fell 17 cents to $14.64/bushel 

·         May ethanol fell 2 cents to $2.38/gallon 

·         July sugar (#16 (U.S.)) fell 0.43 of a penny to 24.20 cents/lbs

NYMEX Energy Closing Prices

  May crude oil rose $0.29 to $103.67/barrel 

·         Crude oil climbed as high as $104.50 today, gaining support from bullish consumer confidence data. The Michigan Sentiment index increased to 82.6 in April from 80.0 in March, making it the strongest sentiment reading since July 2013. The Briefing.com consensus expected the index to increase to 81.0. The energy component lost steam in afternoon action and settled 0.3% higher, booking a 2.5% gain for the week. 

  May natural gas fell 3 cents to $4.62/MMBtu 

·         Natural gas fell from its session high of $4.66 set in early morning action and spent the remainder of the session chopping around in negative territory. It settled just above its session low of $4.61, or 0.6% lower. Despite today's loss, natural gas gained 4.3% over the week. 

  May heating oil fell 1 cent to $2.93/gallon 

  May RBOB settled unchanged at $3.01/gallon

 


Treasuries

Treasuries Run Win Streak to Seven: 10-yr: +09/32..2.619%..USD/JPY: 101.59..EUR/USD: 1.3881
The Week in Review

·         Treasuries saw strong gains this week as equity markets came under significant pressure. Click here to see an intraweek yields chart.

·         Maturities ended the week their streak of seven consecutive gains intact.  

·         A quiet week of economic data saw initial claims drop to 300K (325K expected), the lowest since May 2007. Also notable was the hot 0.5% PPI print (0.1% expecred) and the Michigan Sentiment (82.6 actual v. 81.0 expected) beat.

·         The latest FOMC minutes were released on Wednesday, suggesting inflation risks remain tilted to the downside and the winter weather was to blame for the recent slowdown in economic activity.

·         This week's heavy buying had the biggest impact on the belly of the curve as yields there were lower by as much as -15bps. 

·         The 2y sank -7bps to 0.351% as trade tests the March lows. 

·         Heavy buying the 5y space dropped the yield -13bps to 1.567%. Traders will be focused on 1.550% support over the coming days as both the 50 and 100 dma lurk in the vicinity.

·         The 10y shed -11bps to 2.619% as action closed Friday's session at its lowest level since March 3. The lower end of the 2.600%/2.800% range that has held up since late-January will be in focus over the coming days. 

·         At the long end, the 30y pressed lower by -10bps to 3.477%, marking its lowest close since early July. The yield on the long bond appears to have cleanly broken below the important 3.550% level, setting up a potential move into the 3.150% region.

·         This week's auctions were solid, but not spectacular. 

·         Tuesday's solid $30 bln 3y note auction drew 0.895% and a 3.36x bid/cover. A slightly disappointing indirect bid (27.2%) was more than offset by the strong direct bid (23.9%). Primary dealers ended up with 48.9% of the supply.

·         Wednesday's in-line $21 bln 10y note reopening drew 2.720% (WI 2.707%) and a solid 2.76x bid/cover. Indirect (44.6%) and direct (15.2%) bids both outpaced their 12-auction averages, leaving primary dealers with 40.2% of the supply. 

·         Thursday's solid $13 bln 30y reopening. The reopening drew 3.525% and a solid 2.52x bid/cover (12-auction average 2.38x). Solid takedowns by both indirect (43.3%) and direct (17.9%) bidders left primary dealers with 38.8% of the supply. 

·         A steeper curve persisted as the 5-30-yr spread widened to 191bps. 

The Week Ahead 

·         Monday's data includes retail sales (8:30) and business inventories (10). 

·         Tuesday's data includes CPI, Empire Manufacturing (8:30), Net Long-Term TIC Flows (9), and NAHB Housing Market Index (10). ATL's Lockhart will give opening remarks at the 2014 Financial Markets Conference (8:30) before Fed Chair Janet Yellen addresses the crowd (8:45). Philly's Plosser moderates a discussion on "Adding Fuel to the Engine: Will More Private Liquidity Yield a Safer, More Efficient Financial System?" (15). Boston's Rosengren will give his economic outlook (16) and Minny's Kocherlakota will participate in a Town Hall Forum (20). 

·         Wednesday will see the weekly MBA Mortgage Index (7), housing starts, building permits (8:30), industrial production, capacity utilization (9:15), and the Fed's Beige Book. Fed Chair Janet Yellen will speak at the Economic Club of New York (12:15). ATL's Lockhart will again make remarks at the 2014 Financial Markets Conference (8:20), and will be followed by Fed Governor Stein taking place in a panel on "Greasing the Skids: Was Quantitative Easing Needed to Unstick Markets? Or Has It Merely Sped Us toward the Next Crisis?" (8:30). Dallas' Fisher will give his U.S. and regional economic outlook (13:25). 

·         Data concludes for the week on Thursday with initial and continuing claims (8:30), and Philly Fed (10). 

·         Markets are closed Friday in observance of Good Friday.

On other news.... 

·         JPMorgan Chase (JPM) misses by $0.12, misses on revs; Mortgage originations were $17.0 billion, down 68%

• Wells Fargo (WFC) beats by $0.08, reports revs in-line; mortgage orginations -28% QoQ (in line with guidance); NIM declines 7 bps QOQ

Drybulk shipping rates decline for a 14th consecutive session

·         Drybulk shipping rates continued to get hammered and, as measured by the Baltic Dry Index (BDI), are now down 37.5% since March 24 (over 14 sessions)

·         Overnight, the BDI fell 2.6% (or 27 pts) to 1,002

·         Capesize rates fell 6.1% (or $721) to $11.042/day

·         Panamax rates fell 0.5% (or $34/day) to $6,312/day and Supramax rates fell 0.9% (or $88/day) to $9,696/day.

·         Related drybulk stocks include: DRYS, GNK, PRGN, DSX, FREE, ULTR, EGLE, NM, NMM, SBLK, KEX, SB, SINO, BALT, SHIP, DCIX.

Why is this important?

·         International shipping plays a critical role in global trade.

·         Massive amounts of key materials are shipped every year overseas such as iron ore, coal and grains.

·         In 2012, ~4 bln tons of drybulk cargo was transported by sea, comprising more than one-third of all international seaborne trade.

What do these ships move?
Description of ship type:

·         Capesize ships haul coal, iron ore and other related commodity raw materials across the ocean

·         Panamax ships mainly carry coal, grain and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers

·         Supramax mainly carry dry cargo such as iron ore, cement, fertilizers, coal and food grains

Currencies

Dollar Drifts Little Changed: 10-yr: +10/32..2.613%..USD/JPY: 101.53..EUR/USD: 1.3891

·         The Dollar Index hovers little changed as trade presses the 79.40 level. Click here to see a daily Dollar Index chart.

·         The flat session comes as trade looks to stabilize at the key support level following five days of losses. 

·         EURUSD is +10 pips @ 1.3895 as bulls look to put in a fifth straight day of gains. Eurozone officials have repeatedly tried to talk down the single currency, but it appears the central bank will need to take action rather than make promises as markets simply do not believe the empty threats. Traders will continue to monitor the 1.3935 area as any close above there would mark the best since November 2011. Eurozone data due out Monday is limited to industrial production. 

·         GBPUSD is -35 pips @ 1.6745 as trade presses lower for a second day. Early weakness dropped sterling below 1.6720, but a steady bid that has been in place since late-morning trade has eaten away at the losses. Minor support rests near 1.6750.

·         USDCHF is -15 pips @ .8745 as trade slips for a fifth session. Traders remain on alert for a retest of the March lows near .8725 as a breakdown of the level would drop action to levels last seen in late-2011. 

·         USDJPY is +10 pips @ 101.55 as trade drifts amid an uneventful session. The pair has seen little reaction to the latest Bank of Japan minutes, which suggested the economic recovery remains on track. The 101.50 area remains in focus as support dating back to February is tested.

·         AUDUSD is -15 pips @ .9395 as trade looks to be on track for its first loss in four days. The hard currency has been one of the top performers over the past couple of months, tacking on close to 700 pips (8%) since the beginning of February as rate cut expectations have been pushed back. The .9300 area provides the first level of support.

·         USDCAD is +30 pips @ 1.0960 as buyers remain in control for a second session. Two days of gains have run the pair back above its 100 dma, and have trade testing minor resistance in the area. The 1.1000 level looms large. 

Weekly Analysis
Week 1



Technical Updates

Briefing's Commentaries

On Monday, the Retail Sales report for March will be released at 8:30 ET while February Business Inventories will be announced at 10:00 ET. 

·         S&P 500 -1.8% YTD 

·         Dow Jones Industrial Average -3.3% YTD 

·         Nasdaq Composite -4.2% YTD 

·         Russell 2000 -4.3% YTD 

Week in Review: Selling Begets Selling 

The stock market began the new trading week on the defensive, with the major averages posting losses across the board. The Russell 2000 (-1.5%) and Nasdaq (-1.2%) led the retreat, while the Dow Jones Industrial Average (-1.0%) and S&P 500 (-1.1%) fared a bit better. The major averages started the session in the red with little help from other global indices as markets in Asia and Europe posted losses. Similar to Friday, equity indices spent the session in a steady retreat as momentum names remained volatile. Biotechnology displayed early strength, but the industry group notched a session high during the opening hour before spending the remainder of the day in a battle with its flat line.

On Tuesday, the major averages halted their three-day losing streak with a modest bounce that sent the Nasdaq Composite higher by 0.8%. The S&P 500, meanwhile, added 0.4% with seven sectors posting gains. Equity indices exhibited some volatility during the opening hour before setting off on a climb to new session highs. The Nasdaq, which was the weakest index in recent days, stayed ahead of its peers throughout the day as momentum names recovered some of their recent losses. The Nasdaq was supported by solid gains among the likes of Amazon.com, Google, LinkedIn, and Netflix. Amazon.com and Netflix also gave a boost to the consumer discretionary sector (+1.0%), while Google and LinkedIn contributed to the outperformance of the technology space (+0.9%).

The stock market finished the Wednesday session on a sharply higher note, with the Nasdaq Composite (+1.7%) in the lead. Equity indices held solid gains into the afternoon, with a second push coming after the release of the FOMC Minutes from the March policy meeting. For the most part, the minutes reiterated several points that were already known, but market participants zeroed in on a specific portion that commented on the expected trajectory of the fed funds rate. Specifically, the minutes revealed that policymakers are not necessarily committed to hiking the fed funds rate in the first half of 2015. While that timetable could still come to fruition, it is becoming increasingly clear that the FOMC is unwilling to back itself into a corner by providing calendar-based guidance. That proved to be a relief for the stock and bond markets, while pressuring the dollar. Treasuries cut the bulk of their losses after the release of the minutes, with the benchmark 10-yr yield ending at 2.69% after hovering near 2.72% in the early afternoon. Elsewhere, the Dollar Index (-0.3%) slumped to lows, while gold futures recovered their losses, clawing back to the 1309.00/ozt level.

Thursday saw the return of aggressive selling that placed the Nasdaq (-3.1%) below its 100-day moving average, while the S&P 500 (-2.1%) finished below its 50-day average. The Dow Jones Industrial Average held up a bit better, but the price-weighted index posted a sharp loss (-1.6%) nonetheless. Even though the major averages finished Wednesday on an upbeat note, the sentiment began deteriorating during the overnight session when China reported a surprise trade surplus of $7.71 billion, which was due to disappointing import (-11.3% versus expected 2.4%) and export (-6.6% versus expected 4.0%) figures. This renewed some of the concerns about the strength of the Chinese economy, which have been present since the start of the year. Strikingly, markets in Hong Kong (+1.5%) and China (+1.4%) outperformed, but that was likely due to the announcement that Beijing would allow as much as CNY23.50 billion of cross-border equity trading. By and large, there was some indiscriminate selling taking place as the lack of follow through from the Wednesday rally piqued concerns about a larger scale correction being under way. In turn, the sharp price pullbacks started to raise worries about collateral damage among highly leveraged accounts that could be facing some margin calls. As those worries percolated, participants reduced their risk exposure with a sell-first-ask-questions-later disposition. Health care (-3.2%) spent the duration of the trading day at the bottom of the leaderboard, with continued weakness in biotechnology exacerbating the decline.

Next Week In View





Economic Commentaries

Economic Summary: PPI hotter than expected and Michigan Sentiment tops expectations
Economic Data Summary:

·         March PPI 0.5% vs Briefing.com consensus of 0.1%; February was -0.1%

·         March Core PPI 0.6% vs Briefing.com consensus of 0.1%; February was -0.2%

o     Under the previous PPI methodology, price growth for finished goods was down 0.1%. That was very close to the 0.1% expectation. The entire increase in producer prices was the result of a bounce in prices for final demand for services. After declining 0.3% in February, these prices increased 0.7%, which was the largest monthly gain since January 2010. Final demand for trade services increased 1.4% in March after falling 1.0% in February. This was mostly the result of a 3.3% increase in margins for apparel and jewelry retailing. Prices of final goods demand were flat after increasing 0.4% in February. Energy prices fell 1.2% in March, the first decline since November. 

·         April Michigan Sentiment 82.6 vs Briefing.com consensus of 81.0; March was 80.0

o    The surveys were filled out prior to the drop in the stock market, so equity prices enhanced sentiment in the preliminary reading. If the market does not rebound, we would expect the final reading to be notably lower. Labor conditions, especially the recent trends in the initial claims level, also contributed positively to April sentiment.

Upcoming Economic Data:

·         March Retail Sales due out Monday at 8:30 (Briefing.com consensus of ; February was 0.3%)

·         March Retail Sales Ex-Auto due out Monday at 8:30 (Briefing.com consensus of ; February was 0.3%)

·         February Business Inventories due out Monday at 10:00 (Briefing.com consensus of ; January was 0.4%)

Other International Events of Interest

·         China's CPI fell 0.5% month-over-month, as expected, while the year-over-year reading increased 2.4% (consensus 2.5%, prior 2.0%). Separately, PPI fell 2.3% year-over-year (expected -2.2%, previous -2.0%). 

·         The Bank of Japan released the minutes from its latest meeting, which indicated policymakers believe that price trends are moving in accordance with forecasts, while weakness in exports will be temporary.

Jason's Commentaries

This is getting bearish... Indices decided to crash through the critical support levels. Now Nasdaq is facing a very strong support, and if that breaks... that's it... The market started the trading session on Friday on a bearish note. After the second test on the support, it rallied till approx 11am ET where it hit a high. However, that quickly sold off, erasing the gains from the first half of the day. The biggest laggard is the Consumer Discretionary with a 1.38% loss while the Financials lost 1.21%. Despite beating earnings, Wells Fargo went down as well.JP Morgan, misses on earnings and revenues. This a sign for concern as the banks are not doing very well. To make matters worse, dry bulk shipping index has been down 14 consecutive sessions. All these points to a slowing down of the economy. Maybe the market has found a high already? I reckon the Sell in May this year to be rather nasty. Looking at the current futures movement, we might be set for another DFDM

Market Call: FLAT to downside

Date: 14 April 2014