14 April 2014 AMC - Market covered after massive sell down in previous week

14 April 2014 AMC - Market covered after massive sell down in previous week

Market Summary 

European Markets Closing Prices

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

·       UK's FTSE: + 0.3%

·       Germany's DAX: + 0.3%

·       France's CAC: + 0.4%

·       Spain's IBEX: -0.2%

·       Portugal's PSI: -0.3%

·       Italy's MIB Index: + 0.6%

·       Irish Ovrl Index: -0.9%

·       Greece ATHEX Composite: -3.4%

Before Market Opens

S&P futures vs fair value: +12.10. Nasdaq futures vs fair value: +26.00.
The S&P 500 futures trade 12 points above fair value.

Asian markets finished the first session of the week on a mixed note. Singapore reported GDP growth of 5.1% year-over-year, matching expectations. Elsewhere, South Korea's trade surplus narrowed to $4.17 billion from $4.19 billion. 

·       Japan's Nikkei shed 0.4%, sliding to its lowest level in six months. Heavyweight Fast Retailing gave up another 3.0% following Friday's 7.8% plunge that was a result of the company lowering its guidance due to the consumption tax hike. 

·       Hong Kong's Hang Seng eked out a gain of 0.2%. Hong Kong Exchanges saw continued strength, finishing up 2.6%, as shares remained bid following last week's announcement of cross-border equity trading. 

·       China's Shanghai Composite added 0.1%, holding near two-month highs. Brokerage firms saw some profit-taking with Industrial Securities off 0.6%. 

Major European indices trade in mixed fashion after climbing off their lows. Participants are watching the situation in Ukraine, where, over the weekend, the country's army exchanged gunfire with pro-Russian separatists attempting to seize government buildings in the Southeastern region.

Economic data was limited. Eurozone Industrial Production ticked up 0.2% month-over-month, as expected, while the year-over-year reading increased 1.7% (consensus 1.5%, prior 1.6%). Elsewhere, Italian CPI ticked up 0.1% month-over-month, while the year-over-year reading rose 0.4%. Both figures met expectations.

Among news of note, European Central Bank President Mario Draghi commented over the weekend, reminding investors that the central bank is ready to act if needed and that continued euro strength will likely be met with stimulus measures. 

·       France's CAC trades higher by 0.1% with consumer names in the lead. Danone, L'Oreal, and Pernod Ricard hold gains between 2.0% and 3.1%. On the downside, exporter Renault holds a loss of 3.1%. 

·       Great Britain's FTSE trades up 0.1%. Staple stocks outperform with Diageo and Sainsbury both up near 3.0%. 

·       Germany's DAX is flat. Drug makers Bayer and Merck hold gains close to 1.4% apiece, while Allianz and Commerzbank lag. The two hold respective losses of 0.9% and 2.4%.

U.S. Equities

·       Equity futures point to solid gains at the open as trade has rallied sharply off the overnight lows

·       Friday's selling dropped the major averages to their lowest levels in two months

·       The VIX (17.03) finished Friday's session at a one-month high

·       Financials will remain in focus following the Citigroup (C) beat

·       Retail Sales (1.1% actual v. 1.0% expected)

·       Retail Sales ex-auto (0.7% actual v. 0.5% expected)

o   S&P Futures +11 @ 1823

o   Dow Futures +76 @ 16,057

o   Nasdaq Futures +22 @ 3466

Asia

·       Markets across Asia finished mixed 

·       Singapore's GDP saw an in-line 5.1% YoY

·       Japan's Nikkei (-0.4%) slid to its lowest level in six months

·       Hong Kong's Hang Seng (+0.2%) eked out a gain

·       China's Shanghai Composite (+0.1%) held near two-month highs

·       India's Sensex was closed for Dr. Baba Saheb Ambedkar Jayanti

·       Australia's ASX (-1.3%) saw a second day of heavy selling

Market Internals

Market Internals -Technical-
The Dow closed up 146 (+0.91%) at 16173, the S&P 500 closed up 15 (+0.82%) at 1831, and the Nasdaq closed up 23 (+0.57%) at 4023. Action came on below average volume (NYSE 675 mln vs. avg. of 729; NASDAQ 1767 mln vs. avg. of 2025), with advancers outpacing decliners (NYSE 2025/1066, NASDAQ 1397/1259) and mixed new highs/lows (NYSE 58/48, NASDAQ 24/82). 

Relative Strength: 
Coffee-JO +2.25%, Oil and Gas Exploration-XOP +2.13%, Indonesia-IDX +2.04%, Oil Services-OIH +1.96%, Grains-JJG +1.8%, Silver Miners-SIL +1.56%, Japan-EWJ +1.39%, Israel-EIS +1.12%, Peru-EPU +1.03%, Hong Kong-EWH +0.9%.

Relative Weakness: 
Greece-GREK -3.31%, Russia-RSX -3.23%, Eastern Europe-ESR -2.13%, Biotechnology-XBI -1.71%, Natural Gas-UNG -1.4%, Poland-EPOL -1.39%, Austria-EWO -1.06%, Sugar-SGG -0.95%, Smart Grid Infrastructure-GRID -0.95%, Volatility-VXX -0.83%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Climb But Momentum Names Remain Volatile
The major averages finished the Monday session on a modestly higher note, but they ended below their best levels of the day after volatility during the last two hours of action forced the indices to test their flat lines. The S&P 500 rose 0.8%, while the Nasdaq added 0.6% after being up as much as 1.3%.

The stock market began the session on an upbeat note, casting aside renewed concerns about the situation in Ukraine, where the country's army was called in over the weekend to deal with pro-Russian separatists in several cities in the Southeast.

Instead, the market rallied in the morning after Citigroup's (C 47.67, +1.99) above-consensus quarterly results, combined with a better-than-expected March Retail Sales report, invited buyers into the mix. In all likelihood, the early advance was assisted by some short-covering as many areas that displayed weakness in recent sessions, showed relative strength this morning.

Biotechnology was among the early leaders and the iShares Nasdaq Biotechnology ETF (IBB 215.37, -0.08) made a run at its 200-day moving average. The ETF made a brief appearance above that noteworthy level before spending the afternoon in a steady retreat that placed the group back in the red. The health care sector, meanwhile, added 0.5%.

Other momentum names traded in similar fashion to biotech with the likes of Google (GOOG 532.52, +1.92), Facebook (FB 58.89, +0.36), LinkedIn (LNKD 165.78, 0.00), and Yelp (YELP 61.94, +0.22) showing early strength before retreating from their highs during afternoon action. The technology sector (+1.1%), meanwhile, held up relatively well, but it too ended below its session high.

Elsewhere among cyclical groups, energy (+1.3%) outperformed throughout the session with support from Dow components Chevron (CVX 118.70, +1.67) and ExxonMobil (XOM 97.86, +1.14), both of which posted gains close to 1.3% apiece. The sector ended in the lead while crude oil rose 0.4% to $104.05/bbl.

The other commodity-related sector, materials, ended in line with the broader market. Miners and steelmakers displayed strength, with Market Vectors Gold Miners ETF (GDX 24.52, +0.30) and Market Vectors Steel ETF (SLX 47.41, +0.56) both gaining 1.2%. For its part, gold futures advanced 0.7% to $1327.70/ozt.

Treasuries posted slim losses, sending the benchmark 10-yr yield higher by one basis point to 2.64%.

Participation was below average as less than 680 million shares changed hands at the New York Stock Exchange.

Reviewing today's data: 

·       Retail sales increased 1.1% in March after increasing an upwardly revised 0.7% (from 0.3%) in February. The Briefing.com consensus expected retail sales to increase 1.0%. As expected from the motor vehicle sales data, auto sales contributed significantly to overall sales growth. Sales at motor vehicle and parts dealers increased 3.1% in March after increasing 2.5% in February. Excluding autos, retail sales still increased a solid 0.7% in March, up from a 0.3% gain in February. The consensus expected these sales to increase 0.5%. Sales were strong all around, but there wasn't much to suggest that the acceleration in spending was the result of pent-up demand from delayed winter spending. The March employment report showed a 0.7% increase in aggregate wages, which exactly matched spending after stripping out autos. 

·       Business inventories increased 0.4% for a second consecutive month in February. The Briefing.com consensus expected inventories to increase 0.6%. Total inventories consist of manufacturers, merchant wholesalers, and retailers. Both manufacturers (0.7%) and wholesalers (0.5%) inventories were announced prior to the release. Only retailer inventories, which were flat in February after increasing 0.3% in January, were unknown. 

Tomorrow, March CPI (Briefing.com consensus 0.1%) and the Empire Manufacturing Survey (consensus 7.5) for April will be released at 8:30 ET, while the February Net Long-Term TIC Flows report will cross the wires at 9:00 ET. The day's data will be topped off with the NAHB Housing Market Index (consensus 50) for April, which will be released at 10:00 ET. 

·       S&P 500 -1.0% YTD 

·       Dow Jones Industrial Average -2.4% YTD 

·       Nasdaq Composite -3.7% YTD 

·       Russell 2000 -4.0% YTD

Commodities

Closing Commodities: Crude Oil Gains 0.4% To $104.05/Barrel

·       Precious metals traded higher today despite a stronger dollar index. The move came on continued tension in Ukraine, specifically news over the weekend that the country's army exchanged gunfire with pro-Russian separatists in several cities.

·       June gold brushed a session low of $1318.70 per ounce moments after floor trade opened and climbed as high as $1331.40 per ounce by late morning action. It eventually settled with a 0.4% gain at $1327.70 per ounce.

·       May silver lifted off its session low of $19.72 per ounce set in early morning action and broke into positive territory. It touched a session high of $20.08 per ounce and settled with a 0.4% gain at $20.01 per ounce.

·       May crude oil rose above $104.00 per barrel on the Ukrainian conflict. The energy component came off its session low of $103.34 per barrel and recovered into positive territory in morning pit trade. It brushed a session high of $104.19 per barrel and settled at $104.05 per barrel, or 0.4% higher.

·       May natural gas, on the other hand, traded in negative territory in a tight range between $4.54 and $4.58 per MMBtu. Unable to find buyer support, it settled with a 1.3% loss at $4.56 per MMBtu.

COMEX Metals Closing Prices

  June gold rose $9.10 to $1327.70/oz 

·       Gold traded higher today despite a stronger dollar index. The move came on continued tension in Ukraine, specifically news over the weekend that the country's army exchanged gunfire with pro-Russian separatists in several cities. The yellow metal brushed a session low of $1318.70 moments after floor trade opened and climbed as high as $1331.40 by late morning action. It eventually settled with a 0.7% gain. 

  May silver rose $0.07 to $20.01/oz 

·       Silver lifted off its session low of $19.72 set in early morning action and broke into positive territory. It touched a session high of $20.08 and settled with a 0.4% gain. 

  May copper rose 1 cent to $3.05/lb

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·       May corn rose 5 cents to $5.03/bushel 

·       May wheat rose 19 cents to $6.78/bushel 

·       May soybeans rose 12 cents to $14.76/bushel 

·       May ethanol fell 4 cents to $2.34/gallon 

·       July sugar (#16 (U.S.)) rose 0.14 of a penny to 24.34 cents/lbs

NYMEX Energy Closing Prices

  May crude oil rose $0.38 to $104.05/barrel 

·       Crude oil rose above $104.00 on news that Ukraine's army exchanged gunfire with pro-Russian separatists in several cities over the weekend. The energy component came off its session low of $103.34 and recovered into positive territory in morning pit trade. It brushed a session high of $104.19 and settled with a 0.4% gain. 

  May natural gas fell 6 cents to $4.56/MMBtu 

·       Natural gas, on the other hand, traded in negative territory in a tight range between $4.54 and $4.58. Unable to find buyer support, it settled with a 1.3% loss. 

  May heating oil rose 5 cents to $2.98/gallon 

  May RBOB rose 3 cents to $3.04/gallon

Treasuries

Treasuries See First Loss in Eight Days: 10-yr: -06/32..2.639%..USD/JPY: 101.76..EUR/USD: 1.3820

·       Treasuries fell for the first time in eight days. Click here to see an intraday yields chart.

·       The complex saw its overnight bid dissipate in early U.S. trade as retail sales (1.1% actual v. 1.0% expected) beat and business inventories (0.4% actual v. 0.6% expected) posted a smaller than anticipated build. 

·       Selling had the biggest impact on the belly as the 5y added +3.3bps to finish @ 1.600%. Today's weakness ran the yield above both its 50 and 100 dma, and has action +5bps off Friday's lows. 

·       The 10y closed +2bps @ 2.639% as action attempts to work its way off the lower end of the 2.600%/2.800% range that has held up since late-January.

·       Outperformance at the long end saw the 30y tack on +0.7bps to 3.484%. The light selling caused the yield to tick off nine-month lows, and gives Treasury bears small hope of running action back above the key 3.550% level. 

·       A flatter curve developed as the 5-30-yr spread narrowed to 188.5bps. 

·       Precious metals ended firm with gold +$7 @ $1326 and silver +$0.02 @ $19.97. 

·       Data: CPI, Empire Manufacturing (8:30), Net Long-Term TIC Flows (9), and NAHB Housing Market Index (10). 

·       Fed Speak: 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).

Next Day In View 

Economic Commentary

Economic Summary: Retail Sales top expectations; Business Inventories miss estimates; CPI tomorrow at 8:30; Yellen to speak tomorrow at 8:45
Economic Data Summary:

·       March Retail Sales 1.1% vs Briefing.com consensus of 1.0%; February was revised to 0.7% from 0.3%

·       March Retail Sales Ex-Auto 0.7% vs Briefing.com consensus of 0.5%; February was 0.3%

o   Sales at motor vehicle and parts dealers increased 3.1% in March after increasing 2.5% in February. Excluding autos, retail sales still increased a solid 0.7% in March, up from a 0.3% gain in February. The consensus expected these sales to increase 0.5%. Sales were strong all around, but there wasn't much to suggest that the acceleration in spending was the result of pent-up demand from delayed winter spending. 

·       February Business Inventories 0.4% vs Briefing.com consensus of 0.6%; January was 0.4%

o    Both manufacturers (0.7%) and wholesalers (0.5%) inventories were announced prior to the release. Only retailers inventories, which were flat in February after increasing 0.3% in January, were unknown. Declines in clothing and accessories stores (-0.7%) and motor vehicles and parts dealers (-0.3%) offset a large increase in furniture inventories. 

Upcoming Economic Data:

·       March CPI due out Tuesday at 8:30 (Briefing.com consensus of 0.1%; February was 0.1%)

·       March Core CPI due out Tuesday at 8:30 (Briefing.com consensus of 0.1%; February was 0.1%)

·       April Empire Manufacturing due out Tuesday at 8:30 (Briefing.com consensus of 7.5; March was 5.6)

·       February Net Long Term TIC Flows due out Tuesday at 9:00 (Briefing.com consensus of ; January was $7.3 bln)

·       April NAHB Housing Market Index due out Tuesday at 10:00 (Briefing.com consensus of 50; March was 47)

Upcoming Fed/Treasury Events:

·       Atlanta Fed President Dennis Lockhart (not a voting FOMC member, moderate) to speak tomorrow at 8:30

·       Fed Chair Janet Yellen to speak at Financial Markets Conference at 8:45

·       Philadelphia Fed President Charles Plosser (2014 voter, hawkish) to speak tomorrow at 15:00

·       Boston Fed President Eric Rosengren (not a voting FOMC member, dovish) to speak tomorrow at 16:00

·       Minneapolis Fed President Kocherlakota (voting FOMC member, dovish) to speak tomorrow at 20:00

Other International Events of Interest

·       Eurozone industrial production (0.2% actual v. 0.3% expected) fell short of estimates 

On other news.... 

Currencies 

Dollar Gains Amid Lackluster Trade: 10-yr: -06/32..2.641%..USD/JPY: 101.73..EUR/USD: 1.3818

·       The Dollar Index hovers near 79.70 as an uneventful trade drifts into the close. Click here to see a daily Dollar Index chart.

·       Aside from a post-data spike to 79.80 nearly the entire U.S. session has seen action locked between 79.70/79.75. 

·       EURUSD is -60 pips @ 1.3825 as sellers remain in control for a second session. The single currency has been under pressure following the industrial production miss and weekend comments by ECB head Mario Draghi indicating a stronger euro would cause the central bank to take action in the form of looser monetary policy. The 1.3800 level provides near-term support. Eurozone data includes ZEW Economic Sentiment and German ZEW Economic Sentiment. 

·       GBPUSD is -10 pips @ 1.6720 amid a mostly uneventful trade. Early weakness caused sterling to probe 1.6700 support, but that area has been able to hold amid today's flight into risk. Britain's BRC Retail Sales Monitor will cross the wires tonight while CPI, PPI Input, and RPI are due out tomorrow morning. 

·       USDCHF is +30 pips @ .8795 as buyers emerge for the first time in six days. Traders have taken note of the April price action, which has produced a higher low than the .8720ish from March. Resistance in the .8950 area remains key. Swiss data is limited to PPI.

·       USDJPY is +15 pips @ 101.75 amid a lackluster trade. Action during the U.S. session has been confined to a 30 pip range as trade continues to test the key support level. 

·       AUDUSD is +20 pips @ .9415 as trade lingers near five-month highs. Many traders have the .9450 resistance level on their radars as that area coincides with the measuring objective of the flag pattern that developed in late-March trade. The latest Reserve Bank of Australia minutes are set for release this evening. 

·       USDCAD is -20 pips @ 1.0960 as trade has reversed into the red. Early strength provided a test of 1.1000 resistance, setting up what looked like a third day of gains; however, that streak now appears to be in jeopardy. Canadian data is limited to manufacturing sales.

Jason's Commentaries

What a short cover on Monday. After the massive sell down last week. The market recovered on Monday with a relatively low volume. Volumes were at 691m shares on Monday. The market started last night with a lot of bullish intent and held up till 1pm before the market decided to take its profit. After which, the market went higher again before market closed. Energy and Tech was the strongest leader of 1.37% and 0.9% gains each. I reckon it's gonna be a volatile session as it's the earnings season right now. I highly doubt that the market will head down so soon. It's gonna be a volatile 2 weeks before May comes. I reckon that the market will do the one day up one day down thing again. Since when we do not have much economics data coming up this week. We'll be likely dependent on the technical side of the market. The market managed to bounce off the support levels and I guess it's likely to go up for a while. 

Market Call: FLAT to upside

Date: 3 Jan 2014