2 April 2014 AMC- S&P500 sets new high again, ADP missed expectation slightly.

2 April 2014 AMC- S&P500 sets new high again, ADP missed expectation slightly.

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: + 0.2%

·         France's CAC: + 0.1%

·         Spain's IBEX: -0.3%

·         Portugal's PSI: -0.7%

·         Italy's MIB Index: -1.0%

·         Irish Ovrl Index: + 0.1%

·         Greece ATHEX Composite: + 0.8%

Before Market Opens

S&P futures vs fair value: flat. Nasdaq futures vs fair value: +3.50.
The S&P 500 futures trade in line with fair value.

Most Asian markets rallied with action piggybacking the gains on Wall Street. Reports in Shanghai Securities News indicated Beijing may ease property curbs in some cities in order to prevent a downturn in the property sector.

In regional data of note, Australia's building approvals (-5.0% month-over-month versus expected -1.7%) fell well short of estimates. 

·         Japan's Nikkei rose 1.0%, gaining for the fifth time in six sessions. Renseas Electronics was the big winner, up 6.0%, following reports Apple may be looking to take a stake in the company. 

·         Hong Kong's Hang Seng climbed 0.3% to its best level in more than three weeks. Property shares saw robust gains as China Land Resources surged 4.7% and Sun Hung Kai Properties gained 4.1%. 

·         China's Shanghai Composite rose 0.6%, reclaiming its 50-day moving average. Infrastructure-related plays were among the leaders as Baoshan Iron & Steel and Huaxin Cement added 1.3% and 3.8%, respectively. 

Core European indices trade little changed while peripheral markets lag with Italy's MIB trading lower by 0.6%. Participants received several data points. Eurozone GDP was revised down to 0.2% quarter-over-quarter from 0.3% (consensus 0.3%) while the year-over-year reading held steady at 0.5%, as expected. Separately, PPI fell 0.2% month-over-month (expected -0.1%, prior -0.3%) while the year-over-year reading indicated a 1.7% decline (consensus -1.6%, last -1.4%). Great Britain's Construction PMI ticked down to 62.5 from 62.6 (expected 63.0) while Nationwide HPI rose 0.4% month-over-month (consensus 0.8%, prior 0.7%). Elsewhere, Spain's unemployment claims declined 16,600 (consensus -5,300, prior -1,900).

Among news of note, European finance ministers are continuing their meeting in Athens today while the European Central Bank will release its latest policy statement tomorrow at 7:45 ET with Mario Draghi's press conference set to follow at 8:30 ET. 

·         Germany's DAX is higher by 0.2% with financials showing strength. Commerzbank and Deutsche Bank trade higher by 1.2% and 0.5%, respectively. On the downside, health care names Bayer, Henkel, and Merck display losses between 0.3% and 1.2%. 

·         Great Britain's FTSE trades up 0.1% as miners outperform. Antofagasta and Fresnillo lead with respective gains of 3.4% and 2.7%. Consumer names lag with WM Morrison Supermarkets and Diageo down 2.2% and 1.4%, respectively. 

·         In France, the CAC is flat. ArcelorMittal and Cie de St-Gobain are both down near 1.5% while financials outperform. AXA and Societe Generale hold respective gains of 1.2% and 0.3%. 

·         Italy's MIB is lower by 0.6% with financials under pressure. Banco Popolare, Mediobanca, and UniCredit hold losses between 1.6% and 3.1%.

U.S. Equities

·         Equity futures suggest little change at the open

·         The S&P 500 finished yesterday's session at an all-time high while the DJIA is ~0.3% off its own record peak

·         Yesterday's VIX (13.10) smack down dropped the volatility measure to its lowest level in more than two months

·         MBA Mortgage Index (-1.2% actual)

·         ADP Employment Change (191K actual v. 215K expected)

o    S&P Futures  unch @ 1878

o    Dow Futures +10 @ 16,459

o    Nasdaq Futures +4 @ 3654

Asia

·         Markets rallied across most of Asia as action piggybacked the gains on Wall Street

·         Reports out of China suggest Beijing may ease property curbs in some cities

·         Australia's building approvals (-5.0% MoM actual v. -1.7% MoM expected) fell well short of estimates

·         Japan's Nikkei (+1.0%) gained for the fifth time in six sessions

·         Hong Kong's Hang Seng (+0.3%) climbed to its best level in more than three weeks

·         China's Shanghai Composite (+0.6%) reclaimed its 50 dma

·         India's Sensex (+0.5%) posted its eighth straight record-high close

·         Australia's ASX (+0.3%) advanced for the sixth time in nine sessions 

Market Internals

Market Internals -Technical-
The S&P 500 closed up 5 (+0.29%) at 1891, the Dow closed up 40 (+0.24%) at 16573, and the Nasdaq closed up 8 (+0.20%) at 4276. Action came on mixed volume (NYSE 640 mln vs. avg. of 730; NASDAQ 2044 mln vs. avg. of 2021), with advancers outpacing decliners (NYSE 1790/1323, NASDAQ 1493/1170) and new highs outpacing new lows(NYSE 189/1, NASDAQ 125/18).

Relative Strength: 
Junior Gold Miners-GDXJ +5.47%, Copper Miners-COPX +2.20%, Natural Gas-UNG +1.97%, Wind Energy-FAN +1.95%, Vietnam-VNM +1.92%, Silver Miners-SIL +1.88%, Latin America 40-ILF +1.82%, Greece-GREK +1.21%, Hong Kong-EWH +1.14%, Columbia Index-GXG +1.01%. 

Relative Weakness: 
Grains-JJG -2.41%, Coffee-JO -2.37%, Corn-CORN -2.25%, Italy-EWI -1.45%, New Zealand-ENZL -1.40%, Agriculture-DBA -1.28%, Eastern Europe-ESR -1.10%, Sugar-SGG -1.08%, Egypt-EGPT -1.06%, South Africa-EZA -0.82%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: S&P 500 Notches Fresh Record High
The stock market meandered inside a narrow range on Wednesday after posting solid gains on Monday and Tuesday. The S&P 500 added 0.3% and notched a fresh record closing high at 1890.90 while the Nasdaq (+0.2%) struggled to stay in the green throughout the session.

Equity indices began the day near their flat lines and maintained narrow ranges into the afternoon before breaking out to fresh highs during the final 30 minutes of action. That thrust placed the Dow Jones Industrial Average above its 2013 closing high of 16576.66 for the first time this year, but the index returned below that level by the close.

Meanwhile, the Nasdaq and S&P 500 extended their respective 2014 gains to 2.4% and 2.3%, but the Nasdaq had a tough time keeping pace with the benchmark index today as large cap tech names and biotechnology lagged.

The technology sector (-0.02%) spent the bulk of the trading day at the bottom of the leaderboard before clawing its way back to the flat line the close. Chipmakers lagged throughout the session with Intel (INTC 25.89, -0.10) falling 0.4% while the PHLX Semiconductor Index lost 0.2%.

For its part, biotechnology displayed strength at the open, but was unable to revisit its morning high as the day wore on. The iShares Nasdaq Biotechnology ETF (IBB 241.60, -0.05) ended little changed while the broader health care sector (+0.4%) finished a bit ahead of the S&P 500.

Elsewhere among influential sectors, financials (+0.1%) lagged while the discretionary sector (+0.7%) finished among the leaders. Homebuilders posted gains with the iShares Dow Jones US Home Construction ETF (ITB 24.71, +0.10) climbing 0.4% while retailers also displayed strength. The SPDR S&P Retail ETF (XRT 86.74, +1.24) jumped 1.5%.

Also of note, the smallest cyclical sector, materials (+0.6%), outperformed amid strength in miners. The Market Vectors Gold Miners ETF (GDX 24.32, +0.63) rose 2.7% while gold futures rose 0.9% to $1290.80/ozt.

Treasuries finished just above their lows after spending the entire morning in a steady retreat. The benchmark 10-yr yield added five basis points to 2.80%.

Participation was well below average with only 640 million shares changing hands at the NYSE.

Today's economic data included just two reports: 

·         According to the ADP National Employment Report for March, employment in the nonfarm private business sector rose by 191K, which was below the increase of 215K expected by the Briefing.com consensus. The February reading was revised up to 178,000 from 139,000. 

·         Factory orders increased 1.6% in February after falling a downwardly revised 1.0% (from -0.7%) in January. The Briefing.com consensus expected an increase of 1.1%. The upside surprise in factory orders was a result of stronger-than-expected nondurable goods orders. Nondurable goods orders increased 1.0% in February, which more than offset the 0.7% decline in January. Durable goods orders were unrevised from the advance report, up 2.2% in February after falling 1.4% in January. Excluding transportation, durable goods orders increased 0.1% in February, down from an originally reported 0.2% gain in the advance report. 

Tomorrow, the Challenger Job Cuts report for March will be released at 7:30 ET while weekly initial claims (Briefing.com consensus 320K) and the February Trade Balance (consensus -$39.30 billion) will cross the wires at 8:30 ET. The final report of the day—ISM Services (consensus 53.5)—will be released at 10:00 ET. 

·         Russell 2000 +2.6% YTD 

·         Nasdaq Composite +2.4% YTD 

·         S&P 500 +2.3% YTD 

·         Dow Jones Industrial Average -0.02% YTD

Commodities

Closing Commodities: WTI Crude Oil Closes 0.1% Lower Following Inventory Data, Silver Rises 1.9%, Ends Above $20/Oz

·         Precious metals traded higher today despite a stronger dollar index.

·         June gold touched a session low of $1288.10 per ounce as pit trade opened and chopped around in a consolidative pattern just above the $1290 per ounce level for the remainder of the session. It eventually settled with a 0.9% gain at $1290.80 per ounce.

·         May silver traded near the $20 per ounce level and settled with a 1.9% gain at $20.06 per ounce.

·         May crude oil traded in negative territory and fell to a session low of $98.86 per barrel despite bullish inventory data.

·         The EIA reported that for the week ending Mar 28, crude oil inventories had a draw of 2.4 mln barrels while consensus called for a build of 1.1-2.5 mln barrels.

·         The energy component managed to erase most of the loss as it gained momentum heading into the close. It settled 0.1% lower at $99.63 per barrel, slightly below its session high of $99.74 per barrel.

·         May natural gas trended higher, rising as high as $4.39 per MMBtu after it lifted from a session low of $4.31 per MMBtu set in early morning pit trade. It settled at $4.36 per MMBtu, booking a 2.1% gain.

COMEX Metals Closing Prices

  June gold rose $10.90 to $1290.80/oz 

·         Gold traded higher today despite a stronger dollar index. The precious metal touched a session low of $1288.10 as pit trade opened and chopped around in a consolidative pattern just above the $1290.00 level for the remainder of the session. It eventually settled with a 0.9% gain. 

  May silver rose $0.37 to $20.06/oz 

·         Silver also spent the session in positive territory. It traded near the $20.00 level and settled with a 1.9% gain. 

  May copper rose 1 cent to $3.05/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn fell 11 cents to $4.96/bushel 

·         May wheat fell 17 cents to $6.68/bushel 

·         May soybeans fell 21 cents to $14.62/bushel 

·         May ethanol fell 29 cents to $2.50/gallon 

·         May sugar (#16 (U.S.)) rose 0.15 of a penny to 22.53 cents/lbs

NYMEX Energy Closing Prices

  May crude oil fell $0.06 to $99.63/barrel 

·         Crude oil traded in negative territory despite bullish inventory data. The EIA reported that for the week ending Mar 28, crude oil inventories had a draw of 2.4 mln barrels while consensus called for a build of 1.1-2.5 mln barrels. The energy component dipped to a session low of $98.86 but managed to erase most of the loss as it gained momentum heading into the close. It settled slightly below its session high of $99.74, booking a loss of 0.1%. 

  May natural gas rose 9 cents to $4.36/MMBtu 

·         Natural gas, on the other hand, trended higher today. It rose as high as $4.39 after lifting from a session low of $4.31 and settled with a 2.1% gain. 

  May heating oil fell 2 cents to $2.87/gallon 

  May RBOB settled unchanged at $2.87/gallon

Treasuries

Treasuries Fall for Fourth Day: 10-yr: -15/32..2.808%..USD/JPY: 103.83..EUR/USD: 1.3761

·         Treasuries closed near their lows as steady selling over the course of the morning weighed. Click here to see an intraday yields chart.

·         Maturities held small losses into the U.S. open and slipped to their lows despite ADP Employment Change (191K actual v. 215K expected) printing below expectations. 

·         The selling appeared to be technical, and would continue throughout much of the morning before bottoming into the lunchtime hour and drifting aimlessly in afternoon trade. 

·         The 5y climbed +5.4bps to 1.794%, where it finished at a seven-month high. Today's selling ran the yield above trendline resistance off the September peak that rests in the 1.725% area, but that mark is likely to remain in focus into Friday's nonfarm payroll report. 

·         The 10y tacked on +4.4bps to end @ 2.803%, its highest level late-January. The benchmark yield closed on the upper end of the 2.600%/2.800% range that has been in place over the past 10 weeks, breaking the downtrend off the March highs. 

·         At the long end, the 30y added +4.5bps to finish @ 3.649%. Today's action saw the yield on the long bond settle on trendline resistance off the March highs that is defended the 50 dma. 

·         A flatter curve developed as the 5-30-yr spread narrowed to 189bps. 

·         Precious metals ended firm with gold +$10 @ $1290 and silver +$0.26 @ $19.95. 

·         Data: Challenger Job Cuts (7:30), initial and continuing claims, trade balance (8:30), and ISM Services (10).

Next Day In View 

Economic Commentary

Economic Summary: ADP misses expectations; Factory orders beat expectations
Economic Data Summary:

·         Weekly MBA Mortgage Applications -1.2% vs Briefing.com consensus of ; Last Week was -3.5%

·         March ADP Employment Change 191K vs Briefing.com consensus of 215K; February was 139K

o    Goods-producing 28,000 

o    Service-providing 164,000 

·         Februrary Factory Orders 1.6% vs Briefing.com consensus of 1.1%; January was revised to -1.0% from -0.7%

Fed/Treasury Events Summary:

·         Saint Louis Fed President James Bullard (not a voting FOMC member. dovish) spoke today. He said inflation has surprised to the low side. He said  that he expects first rate rise in Q1 of 2015.  He said asset prices could be a concern

Upcoming Economic Data:

·         March Challenger Job Cuts due out Thursday at 7:30 (Briefing.com consensus of 195K; February was 175K)

·         Weekly Initial Claims due out Thursday at 8:30 (Briefing.com consensus of 205K; Last Week was 162K)

·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 6.6%; Last Week was 6.7%)

·         February Trade Balance due out Thursday at 8:30 (Briefing.com consensus of 0.2%; January was 0.4%)

·         March ISM Services due out Thursday at 10:00 (Briefing.com consensus of 34.4; February was 34.2)

Upcoming Fed/Treasury Events:

·         Saint Louis Fed President James Bullard (not a voting FOMC member, typically dovish) to speak today at 16:00 & 17:00

Other International Events of Interest

·         Eurozone GDP was revised down to 0.2% quarter-over-quarter from 0.3% (consensus 0.3%) while the year-over-year reading held steady at 0.5%, as expected. Separately, PPI fell 0.2% month-over-month (expected -0.1%, prior -0.3%) while the year-over-year reading indicated a 1.7% decline (consensus -1.6%, last -1.4%). 

On other news.... 

Currencies 

Dollar Ticks Higher: 10-yr: -14/32..2.802%..USD/JPY: 103.76..EUR/USD: 1.3758

·         The Dollar Index holds small gains near 80.20 as buyers retake control after two days of light selling. Click here to see a daily Dollar Index chart.

·         Today's bid has the Index nearing key resistance in the 80.50 area that is defended by both the 50 and 100 dma. 

·         EURUSD is -30 pips @ 1.3760 as some light selling takes hold ahead of tomorrow's European Central Bank rate decision. Recent chatter has suggested there are hints of deflation in the eurozone, but most believe it will not cause the ECB to act at tomorrow's meeting. Support in the 1.3700/1.3750 area remains in focus ahead of the decision and accompanying Mario Draghi press conference. Eurozone retail sales accompany Services PMI data from across the region. 

·         GBPUSD is +5 pips @ 1.6635 as action holds just off the lows. Sterling is looking to get back on the winning track after yesterday's decline halted its streak of six straight gains. Resistance in the 1.6600/1.6650 area is likely to remain intact ahead of tomorrow's ECB decision. Britain's Services PMI and the Bank of England's Credit Conditions survey are set for release tomorrow. 

·         USDCHF is +35 pips @ .8870 as trade test resistance in the area aided by the 50 dma. Overnight weakness had the pair looking at a third straight day of losses, but action reversed into the green as the euro gave up its early gains. A breakout above .8900 puts more meaningful resistance in the .9000 area on the radar.

·         USDJPY is +10 pips @ 103.75 as trade looks likely to finish with a fifth straight advance and close at its best level in almost two and a half months. The 104.00 resistance level is now in the crosshairs.

·         AUDUSD is flat @ .9240 amid a mostly uneventful session despite the big building approvals miss. A breakdown of minor support in the .9215 area is likely to provoke a slide towards support in the .9135 area that is helped by the 200 dma. Australia's retail sales and trade balance will cross the wires tonight. Reserve Bank of Australia Governor Glenn Stevens will speak in Brisbane. China's Non-Manufacturing PMI is scheduled for release.

·         USDCAD is unchanged @ 1.1025. Early selling provided a test of 1.1000, but that level was able to hold and action managed to retake trendline support off the mid-February lows. Canadian data is limited to the trade balance.

Jason's Commentaries


This is definitely not an April Fool Joke... The market has been consolidating and it's breaking out in April. It seems that we are likely to go bullish for this month. Whether or not the market is able to sustain such a bull run depends whether Nasdaq and Russells is able to lead the market higher. The market was rather flat last night for Dow, Nasdaq and Russells as they are approaching their resistance. The only exception was S&P500. The market started last night with a mixed intent. Only after lunch, the market started rallying till the close. Volumes as expected is at 652.9m shares traded on the NYSE. There is a slight biasness towards the bulls. Materials and Industrials were the main leaders last night with 0.74% and 0.7% gain respectively. With stocks like Caterpillar rallying, it's apparent to see the main indices moving. As the employment report is coming, i'm expecting thursday to take a slight pause before deciding to break higher or lower in the market.   

Market Call: FLAT

Date: 3 April 2014