21 April 2014 AMC- Market register Up Monday, Up Thursday!

21 April 2014 AMC- Market register Up Monday, Up Thursday!

Market Summary 

Before Market Opens

S&P futures vs fair value: +3.30. Nasdaq futures vs fair value: +8.30.
U.S equity futures show a slightly positive bias coming off last week's striking turnaround rally.  Trading activity was fairly subdued in Asia and major European bourses remain closed following the Easter holiday.

Reviewing overnight developments:

·         Asian markets ended mixed.  Japan's Nikkei -0.03%, China's Shanghai Composite -1.5%, and South Korea's Kospi -0.3%.  Hong Kong's Hang Seng CLOSED.

o    Economic data was limited:

§  Japan's trade balance -JPY1446 billion (prior deficit of JPY800 billion) as exports rose 1.8% (last 9.8%) while imports increased 18.1% (prior 9.0%).

o    In news:

§  Bloomberg.com reports regulators will start reviewing IPO plans this week, triggering concerns about new supply that weighed on the Shanghai Composite

§  CNBC, citing Japan's Nikkei, notes Japan's ruling party is considering raising the ceiling on interest rates charged to borrowers

·         Major European indices are closed for Easter Monday.

o    There was no economic data reported

o    Among news of note: 

§  Armed conflict reported in Eastern Ukraine between pro-Russian separatists and Ukrainian nationalists

In U.S. corporate news:

·         AstraZeneca (AZN 68.00, +4.50): Trading 7% higher on CNBC report that Pfizer (PFE 30.72, +0.47) mulling $100 bln offer for company

·         AMD (AMD 3.94, +0.25): Trading nearly 7% higher after beating by two cents and guiding Q2 revenues above the Capital IQ consensus estimate

·         Halliburton (HAL 61.33, +0.43): Up modestly after beating Capital IQ consensus EPS estimate by a penny and guiding Q2 in line

·         Hasbro (HAS 54.61): Topped first quarter consensus EPS estimate by four cents

·         Kimberly-Clark (KMB 112.54): Beat Capital IQ consensus estimate by a penny, reaffirmed FY14 guidance, and said it expects the spin off of its healthcare business to be completed by Q3/Q4 

The Leading Indicators report for March will be released at 10:00 ET

U.S. Equities

·         Equity futures suggest little change at the open as traders return to work following the holiday weekend

·         The major averages have seen gains in four straight sessions with the S&P 500 +2.7% over that time

o    S&P Futures unch @ 1858

o    Dow Futures +7 @ 16,350

o    Nasdaq Futures +8 @ 3531

Asia

·         The major Asian bourses finished mostly lower amid a quiet trade

·         Japan posted a record March trade deficit of JPY1.71 trln (JPY1.27 trln expected, JPY1.18 trln previous) on a 1.8% rise in exports and 18.1% jump in imports

·         Japan's Nikkei (UNCH) finished flat as trade was unable to retake the 200 dma

·         Hong Kong's Hang Seng was closed for Easter

·         China's Shanghai Composite (-1.5%) slipped back below the 50 dma as trade closed at a two-week low

·         India's Sensex (+0.6%) rallied to all-time highs

·         Australia's ASX was closed in observance of Easter

Market Internals

Market Internals -Technical-
The Nasdaq closed up 26 (+0.64%) at 4122, the S&P 500 closed up 7 (+0.38%) at 1872, and the Dow closed up 41 (+0.25%) at 16449. Action came on below average volume (NYSE 591 mln vs. avg. of 722; NASDAQ 1447 mln vs. avg. of 2004), with advancers outpacing decliners (NYSE 1919/1200, NASDAQ 1601/1041) and new highs outpacing new lows (NYSE 101/14, NASDAQ 60/32).

Relative Strength: 
Biotechnology-XBI +2.46%, Biotechnology-IBB +2.33%, Clean Energy-PBW +2.25%, Pharmaceuticals-PPH +1.9%, Sugar-SGG +1.23%, Brazilian Real-BZF +0.69%, United Kingdom-EWU +0.48%, Italy-EWI +0.39%, Malaysia-EWM +0.25%, Switzerland-EWL +0.25%.

Relative Weakness: 
Russia-RSX -3.83%, Vietnam-VNM -3.04%, Volatility-VXX -1.85%, Grains-JJG -1.7%, Coffee-JO -1.68%, Corn-CORN -1.52%, Eastern Europe-ESR -1.42%, Agriculture-DBA -1.35%, Mexico-EWW -1.16%, Turkey-TUR -0.91%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Summary: Five in a Row for S&P 500
The trading action in the stock market today left a lot to be desired, yet that didn't stop the market from finishing the day higher. Led by the health care (+1.2%), energy (+0.7%), and technology (+0.4%) sectors, the S&P 500 jumped 0.4% and closed the session with its fifth consecutive gain -- a first in 2014.

The US market reopened after the three-day Easter weekend, but for all intents and purposes, it continued to operate in holiday mode. Trading conditions were thin, no doubt kept that way by the lack of activity out of Europe where markets remained closed for the Easter holiday. NYSE volume totaled just 591 mln mln shares, which was well below a recent average of 725 mln shares.

There were only a handful of earnings reports today, yet the earnings news and the trading volume should pick up as the week progresses with roughly 150 S&P 500 companies reporting results for the March quarter.

Today's trading featured a report that Pfizer (PFE 30.86, +0.61) may be considering a $100 bln acquisition of AstraZeneca (AZN 69.11, +5.62). That speculation underpinned the health care sector all day. Additionally, the sector drew added support from the biotech stocks, which continued to rebound from their recent drubbing. The iShares Nasdaq Biotechnology ETF (IBB 227.34, +5.18) jumped 2.3% and contributed handsomely to the Nasdaq's outperformance.

Overall, there wasn't a lot of significant sector strength. Gains were modest in size, evidenced by the fact that the health care sector was the only sector to gain at least 1.0%. Similarly, there weren't any big losers from a sector standpoint either. The utilities sector (-0.2%) was the biggest laggard, but it was the financial sector (-0.04%) that was the most influential laggard despite a better than expected earnings report from SunTrust Banks (STI 38.52, +0.57). The sector's weakness can be blamed mostly on the money-center banks, which dipped modestly in today's action.

Other companies topping earnings expectations, like Halliburton (HAL 62.92, +2.02) and Hasbro (HAS 55.66, +1.05), fared well. Kimberly-Clark (KMB 110.94, -1.60), on the other hand, did not even though it surpassed the Capital IQ consensus EPS estimate for its March quarter by a penny.

Ford (F 15.97, -0.03) was another company that drew some added attention after reports indicated the company will be announcing CEO Alan Mulally's departure date on May 1. After Mr. Mulally's departure, COO Mark Fields will take over the CEO post.

Separately, IBM (IBM 192.27, +2.26) rebounded from its post-earnings lashing on Thursday to lead the Dow Jones Industrial Average. It was the only component, however, to gain at least a point.

On the economic front, the Leading Indicators report for March met expectations, showing a 0.8% increase that marked the third consecutive monthly increase. That was up from 0.5% in February and could be construed as an encouraging indication for future growth. That point notwithstanding, the Treasury market held firm today.

Tuesday's economic calendar will feature the Existing Home Sales report for March. The Briefing.com consensus estimate calls for existing home sales to be flat versus February at 4.60 mln units. 

·         S&P 500 YTD: +1.3% 

·         Dow Jones Industrial Average YTD: -0.7%

·         Nasdaq Composite YTD: -1.3%

·         Russell 2000 YTD: -2.0%

Commodities

COMEX Metals Closing Prices

  June gold fell $6.00 to $1288.20/oz 

·         Gold extended Thursday's losses as the dollar index traded higher. The yellow metal brushed a session high of $1293.90 in morning action but retreated back below the $1290 level. It eventually settled with a 0.5% loss. 

  May silver fell $0.26 to $19.34/oz 

·         Silver also spent today's floor trade in negative territory. It touched a session high of $19.47 in early morning action and settled with a 1.3% loss. 

  May copper settled unchanged at $3.04/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn fell 6 cents to $4.89/bushel 

·         May wheat fell 23 cents to $6.68/bushel 

·         May soybeans fell 16 cents to $15.00/bushel 

·         May ethanol rose 2 cents to $2.21/gallon 

·         July sugar (#16 (U.S.)) fell 0.13 of a penny to 24.50 cents/lbs

NYMEX Energy Closing Prices

  May crude oil rose $0.04 to $104.35/barrel 

·         Crude oil touched a session low of $103.99 in late afternoon action after pulling back from a session high of $104.77 set in morning action. The energy component managed to recover back into positive territory and settled 4 cents above the unchanged line. 

  May natural gas fell 5 cents to $4.69/MMBtu 

·         Natural gas fell into negative territory after retreating from a session high of $4.78. Unable to regain momentum, it settled at its session low, booking a 1.1% loss. 

  May heating oil settled unchanged at $3.01/gallon 

  May RBOB rose 4 cents to $3.09/gallon

Treasuries

Treasuries Finish Flat: 10-yr: +02/32..2.716%..USD/JPY: 102.60..EUR/USD: 1.3793

·         Treasuries finished flat amid a subdued session. Click here to see an intraday yields chart.

·         The complex opened with small gains, ticking to its best levels following the in-line leading indicators (0.8%).

·         However, maturities would give up those gains as equities saw a steady climb over the course of the session. 

·         Light buying dropped the 5y -0.8bps to 1.723%. The bid pushed the yield lower for the first time in five sessions, but trade was able to hold 1.700% support. 

·         The 10y ended unchanged @ 2.721%. The benchmark yield held near two-week highs after a morning bid was unable to press action below the 2.680% pivot. 

·         The 30y lagged slightly, edging up +0.8bps to 3.525%. Many traders continue to look for a test of the 3.550% level, where previous support is now resistance. 

·         A slightly steeper curve developed as the 5-30-yr spread widened to 180bps. 

·         Precious metals lost ground as gold fell -$5 to $1289 and silver shed -$0.22 to $19.37. 

·         Data: FHFA Housing Price Index (9) and existing home sales (10). 

·         Auction: $32 bln 2y notes.

Next Day In View 

Economic Commentary

Economic Summary: March leading indicators slightly surpass expectations; Japan posts record trade deficit
Economic Data Summary:

·         March Leading Indicators +0.8% vs Briefing.com consensus of 0.8%; February was 0.5%

o    The Conference Board noted that labor market indicators (avg. workweek +0.26% and initial claims +0.16%) and the interest rate spread (+0.29%) were largely responsible for the March increase, offsetting a negative contribution from building permits (-0.07%).  It was also noted that the consumer outlook was much less negative (-0.02% vs. -0.05% in February) than it has been in recent months.

Upcoming Economic Data:

·         February FHFA Housing Price Index due out Tuesday at 9:00 (January was +0.5%)

·         March Existing Home Sales due out Tuesday at 10:00 (Briefing.com consensus of 4.60 M ; February was 4.60 M)

Upcoming Fed/Treasury Events:

·         The Treasury is scheduled to auction off new debt this week. The results for each auction will be announced at 13:00

o    Tuesday: $32 bln in 2 year notes

o    Wednesday: $35 bln in 5 year notes

o    Thursday: $29 bln in 7 year notes

Other International Events of Interest

·         Japan posted a record March trade deficit of JPY1.71 trln (JPY1.27 trln expected, JPY1.18 trln previous) on a 1.8% rise in exports and 18.1% jump in imports

On other news.... 

Currencies 

Dollar Fights to Retake 80.00: 10-yr: +02/32..2.713%..USD/JPY: 102.59..EUR/USD: 1.3791

·         The Dollar Index clings to small gains as trade threatens to retake the 80.00 level. Click here to see a daily Dollar Index chart.

·         Today's action has been lackluster as banks across Europe were shuttered for the Easter holiday. 

·         EURUSD is -15 pips @ 1.3790 as action presses session lows. Today's losses have the single currency lower for the sixth time in seven sessions and testing key support in the area that is defended by the 50 dma. 

·         GBPUSD is +10 pips @ 1.6800 as trade lingers near its best levels since November 2009. A sleepy session has seen action limited to a 40 pip range with that shrinking to just 20 pips during the U.S. session. 

·         USDCHF is +20 pips @ .8850 as buyers remain in control for a sixth session. Today's bid has run the pair back above its 50 dma, but trade will have to retake .8800/.8840 resistance before the bulls can breathe a bit easier. 

·         USDJPY is +15 pips @ 102.60 as trade gains for a seventh day. The pair found a bid after Japan posted its largest March trade deficit (JPY1.71 trln) on record, which was a result of a 1.8% rise in exports and 18.1% jump in imports. The disappointing data has some pricing in the potential for the Bank of Japan to up its QE program as the Japanese economy continues to flash signs of a slowdown. 

·         AUDUSD is +5 pips @ .9335 amid an uneventful trade. The recent highs near .9400/.9425 remain under close scrutiny. Australia's CB Leading Index is due out tonight. 

·         USDCAD is -5 pips @ 1.1015 as trade struggles near the April highs. Many traders have the 1.1050 level on their radars as a breakout through resistance helped by the 50 dma puts the March highs near 1.1250 back in play. Canadian data is limited to wholesale sales.

Jason's Commentaries


The market is finally gaining some bullish strength back by displaying a UFUM on a weaker volume on the NYSE of 603m shares. The market started with a very volatile first hour after selling off at 10am till 1030am. The cover took place after 1030 and the market regained its losses by the first hour. The majority of the market held flat while sectors like Energy and Healthcare led the market to display such move. Healthcare gained 1.2% while the Energy gained 0.68%. On the Technicals, Nasdaq has broken back into the channel and Russells is facing a little resistance. S&P500 is going back to its high once again. I believe the market is likely to make its move to the bullish side and we're likely to end April with a gain.

Market Call: FLAT

Date: 22 April 2014