23 April 2014 AMC - Market ended winning streak as Nasdaq lags

23 April 2014 AMC - Market ended winning streak as Nasdaq lags

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: -0.6%

·         France's CAC: -0.7%

·         Spain's IBEX: -0.1%

·         Portugal's PSI: -1.2%

·         Italy's MIB Index: -1.2%

·         Irish Ovrl Index: -0.7%

·         Greece ATHEX Composite: -2.4%

Before Market Opens

S&P futures vs fair value: -0.50. Nasdaq futures vs fair value: flat.
The S&P 500 futures trade less than a point below fair value.

Asian markets ended on a mixed note after the release of China's HSBC Manufacturing PMI, which ticked up to 48.3 from 48.0 (expected 48.4). Even though the reading improved, it remained in contraction (below 50) for the fourth month in a row.

In other regional data, Australia's CPI rose 0.6% quarter-over-quarter (expected 0.8%, previous 0.8%), while the year-over-year reading increased 2.9% (consensus 3.2%, prior 2.7%). Also of note, Trimmed Mean CPI rose 0.5% quarter-over-quarter (consensus 0.7%, previous 0.9%). New Zealand's Visitor Arrivals fell 3.0% month-over-month (prior 1.8%), while Credit Card Spending jumped 8.1% year-over-year (last 6.0%). Singapore's CPI rose 1.2% year-over-year (consensus 1.1%, previous 0.4%). 

·         Japan's Nikkei gained 1.1%, closing on its high with support from exporters. Fujitsu, NEC, and Mazda Motor gained between 3.4% and 4.0%. 

·         Hong Kong's Hang Seng lost 1.0% after being pressured by consumer and telecom names. Belle International, China Unicom Hong Kong, and China Mobile lost between 2.0% and 4.9%. Casino names finished among the leaders with Galaxy Entertainment and Sands China up 1.5% and 2.5%, respectively. 

·         China's Shanghai Composite shed 0.3%, trimming its losses into the close. Growth sensitive names outperformed with Fushun Special Steel and China Vanke up 6.2% and 0.8%, respectively. 

Major European indices trade modestly lower after registering three consecutive gains. The Bank of England released the minutes from its latest meeting, which indicated unanimous support for continuing asset purchases at GBP375 billion.

Participants received several data points. Eurozone Manufacturing PMI rose to 53.3 from 53.0 (expected 53.0), while Services PMI improved to 53.1 from 52.2 (consensus 52.4). Germany's Manufacturing PMI increased to 54.2 from 53.7 (expected 54.0), while Services PMI jumped to 55.0 from 53.0 (consensus 53.4). French Manufacturing PMI fell to 50.9 from 52.1 (expected 51.9), while Services PMI decreased to 50.3 from 51.5 (expected 51.4). Great Britain's CBI Industrial Trends Orders fell to -1 from 6 (consensus 7), while Public Sector Net Borrowing came in at GBP4.86 billion (expected GBP9.10 billion, previous GBP7.00 billion). 

·         Great Britain's FTSE is lower by 0.1%. ARM Holdings weighs, trading lower by 3.3% after missing bottom-line estimates. On the upside, Associated British Foods is higher by 8.9%. 

·         Germany's DAX holds a loss of 0.1%. Infineon Technologies is the weakest performer, down 1.2%. Insurer Allianz outperforms with a gain of 0.7%. 

·         In France, the CAC trades down 0.3% with defense contractor Safran leading the retreat with a 3.4% loss.

U.S. Equities

·         Equity futures point to little change at the open as the major averages look to run their win streak to seven

·         The rally that began on April 14 has tacked on ~3.6%, and has the S&P 500 within 12 points of a record-high close

·         The Dow rests just 60 points off its record peak

·         The VIX (13.19) remains near three-month lows

·         MBA Mortgage Index (-3.3% actual)

o    S&P Futures -2 @ 1872

o    Dow Futures +2 @ 16,460

o    Nasdaq Futures -5 @ 3580

Asia

·         Markets finished mostly lower across Asia

·         China's HSBC Flash Manufacturing PMI (48.3 actual v. 48.4 expected, 48.0 previous) remained in contraction for a fourth straight month, and weighed on both the Shanghai Composite (-1.0%) and Hong Kong's Hang Seng (-0.3%)

·         Japan's Nikkei (+1.1%) led the region higher as traders gobbled up shares ahead of earnings season

·         Cooler than expected CPI (0.6% QoQ actual v. 0.8% QoQ expected) and Trimmed Mean CPI (0.5% actual v. 0.7% expected) readings propelled Australia's ASX (+0.5%) 

·         India's Sensex (+0.7%) climbed to a fresh record-high 

Market Internals

Market Internals -Technical-
The Nasdaq closed down 34 (-0.83%) at 4127, the S&P 500 closed down 4 (-0.22%) at 1875, and the Dow closed down 13 (-0.08%) at 16502. Action came on slightly below average volume (NYSE 648 mln vs. avg. of 721; NASDAQ 1620 mln vs. avg. of 1999), with decliners outpacing advancers (NYSE 1507/1607, NASDAQ 828/1786) and new highs outpacing new lows (NYSE 139/6, NASDAQ 40/18).

Relative Strength: 
Junior Gold Miners-GDXJ +3.10%, Livestock-COW +1.84%, Sugar-SGG +1.71%, Corn-CORN +1.58%, Silver Miners-SIL +1.36%, Middle East and Africa-GAF +1.19%, Brazilian Real-BZF +0.86%, Peru-EPU +0.75%, New Zealand-ENZL +0.71%, Japan-EWJ +0.27%.

Relative Weakness: 
Biotechnology-XBI -2.77%, Social Media-SOCL -2.15%, Greece-GREK -1.88%, Cloud Computing-SKYY -1.84%, Internet Composite-FDN -1.77%, Biotechnology-IBB -1.59%, Indonesia-IDX -1.38%, China 25 Index-FXI -1.36%, India-INP -1.08%, Turkey-TUR -1.04%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Snap Six-Day Win Streak as Technology Lags
The stock market finished the Wednesday session on a modestly lower note, but it is worth mentioning today's retreat took place after six consecutive gains. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) settled not far below their flat lines, while the Nasdaq Composite (-0.8%) lagged throughout the session.

Equity indices started the day in the red, with the Nasdaq showing early weakness as large cap tech names and biotechnology weighed. The technology sector (-0.9%) slumped amid profit-taking in listings like Apple (AAPL 524.75, -6.95), Google (GOOG 526.94, -7.87), Microsoft (MSFT 39.69, -0.30), and Intel (INTC 26.75, -0.09), while biotech names retreated following quarterly reports from three major industry players.

Amgen (AMGN 113.32, -5.98) and Biogen (BIIB 306.75, +0.55) reported below-consensus results, while Gilead Sciences (GILD 73.86, +1.00) handily beat estimates. For its part, the iShares Nasdaq Biotechnology ETF (IBB 230.99, -3.73), which includes the three components among its top five holdings, lost 1.6% and settled just above its 20-day moving average. The broader health care sector (-0.5%), meanwhile, ended among the laggards.

Similar to health care, other heavily-weighted groups like consumer discretionary (-0.5%) and technology (-0.9%) weighed on the broader market, while financials (+0.2%) outperformed modestly.

The discretionary space suffered from sector-wide losses that included a 5.2% drop in the shares of Netflix (NFLX 353.50, -19.40) that took place after Amazon.com (AMZN 324.58, -4.74) announced it has secured a partnership agreement with HBO. Homebuilders also weighed on the sector after the New Home Sales report for March missed estimates. The iShares Dow Jones US Home Construction ETF (ITB 23.33, -0.37) lost 1.6%.

On the upside, energy (+0.5%) and industrials (+0.4%) spent the entire session in the green. Energy rallied even as crude oil slipped 0.2% to $101.47/bbl, while the industrial sector was underpinned by above-consensus results reported by Boeing (BA 130.63, +3.08). Transports also outperformed, but the Dow Jones Transportation Average (+0.1%) retreated from its best level of the session into the close. Delta Air Lines (DAL 37.09, +2.14) was a notable standout, soaring 6.1% after beating bottom-line estimates.

With stocks ending in the red, the CBOE Volatility Index (VIX 13.32, +0.13) inched higher, but remained near the lowest levels of the year.

Treasuries posted modest gains as the 10-yr note added six ticks, sending its yield lower by three basis points to 2.69%.

Trading volume was on the light side once again with less than 650 million shares changing hands at the NYSE.

Today's economic data focused on housing: 

·         The weekly MBA Mortgage Index fell 3.3% to follow last week's increase of 4.3%. 

·         New home sales declined 14.5% in March from an upwardly revised 449,000 (from 440,000) in February to 384,000. The Briefing.com consensus expected home sales to increase to 455,000. March sales were the lowest since 373,000 new homes were sold in July 2013. Winter weather conditions, which were unduly blamed for softness across the economy, again showed little effect in the new home sector. The return to more normal temperatures, which should have boosted sales from pent up demand, resulted in the weakest demand since the middle of last year. 

Tomorrow, weekly initial claims and March Durable Orders will be reported at 8:30 ET. 

·         S&P 500 +1.5% YTD 

·         Dow Jones Industrial Average -0.5% YTD 

·         Nasdaq Composite -1.2% YTD 

·         Russell 2000 -1.3% YTD

Commodities

Closing Commodties: Crude Oil Ends 0.2% Lower Following Inventory Data

·         June gold rose for the first time in four sessions as economic data showed that new home sales declined 14.5% in March from an upwardly revised 449K (from 440K) in Feb to 384K. The Briefing.com consensus expected home sales to increase to 455K. The yellow metal brushed a session high of $1287.70 per ounce in early morning action and settled with a 0.3% gain at $1284.80 per ounce.

·         May silver also traded in positive territory today, climbing as high as $19.49 per ounce. It traded near the $19.42 per ounce level in afternoon action and settled with a 0.4% gain at $19.44 per ounce.

·         June crude oil dipped to a session low of $101.28 per barrel following inventory data that showed a build of 3.5 mln barrels for the week ending Apr 18 when consensus called for a smaller build of 2.3-3.0 mln barrels. It then oscillated between positive and negative territory and eventually settled at $101.47 per barrel, or 0.2% lower.

·         May natural gas chopped around in positive territory for most of the session, rising as high as $4.78 per MMBtu in morning action. It sold off into the red as it headed into the close and settled 0.2% lower at $4.73 per MMBtu.

COMEX Metals Closing Prices

  June gold rose $3.70 to $1284.80/oz 

·         Gold rose for the first time in four sessions as economic data showed that new home sales declined 14.5% in March from an upwardly revised 449K (from 440K) in Feb to 384K. The Briefing.com consensus expected home sales to increase to 455K. The yellow metal brushed a session high of $1287.70 in early morning action and settled with a 0.3% gain. 

  May silver rose $0.08 to $19.44/oz 

·         Silver also traded in positive territory today, climbing as high as $19.49. It traded near the $19.42 level in afternoon action and settled with a 0.4% gain. 

  May copper rose 1 cent to $3.06/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn rose 8 cents to $5.04/bushel

·         May wheat rose 4 cents to $6.76/bushel

·         May soybeans fell 12 cents to $14.69/bushel

·         May ethanol rose 2 cents to $2.27/gallon

·         July sugar (#16 (U.S.)) rose 0.23 of a penny to 24.68 cents/lbs

NYMEX Energy Closing Prices

  June crude oil fell $0.20 to $101.47/barrel 

·         Crude oil oscillated between positive and negative territory today. It dipped to a session low of $101.28 following inventory data that showed a build of 3.524 mln barrels for the week ending Apr 18 while consensus called for a smaller build of 2.3-3.0 mln barrels. It eventually settled with a 0.2% loss. 

  May natural gas fell 1 cent to $4.73/MMBtu 

·         Natural gas chopped around in positive territory for most of the session, rising as high as $4.78 in morning action. However, it sold off into the red as it headed into the close and settled 0.2% lower. 

  June heating oil fell 2 cents to $2.97/gallon 

  June RBOB settled unchanged at $3.04/gallon

Treasuries

Treasuries Book Solid Gains: 10-yr: +06/32..2.683%..USD/JPY: 102.43..EUR/USD: 102.43

·         Treasuries booked solid gains as buyers managed to regain control. Click here to see an intraday yields chart.

·         The complex held small overnight gains into cash open, and climbed to its best levels of the day after new home sales (384K actual v. 455K expected) missed estimates by a large margin. 

·         Trade drifted near the highs into the solid $35 bln 5y note auction, and held at those levels for the remainder of the session. 

·         The 5y auction drew 1.732% and a 2.79x bid/cover. An in-line indirect takedown (44.9%) was supported by a strong direct bid (18.0%). Primary dealers were left with 37.1% of the supply. 

·         The 5y sank -3.5bps to 1.711%. Action probed 1.700% support in late-morning trade, but was unable to break below the level. 

·         The 10y shed -4bps to 2.686%. Traders will continue to monitor the 2.680% pivot in the days ahead.

·         At the long end, the 30y fell -3.4bps to 3.469%. The yield narrowly avoided its lowest close in 10 months, which would have occurred on a close below 3.450%. 

·         Little change along the yield curve saw the 5-30-yr spread hold near 175.5bps. 

·         Precious metals ended firm with gold +$4 @ $1285 and silver +$0.08 @ $19.44. 

·         Data: Initial and continuing claims and durable orders (8:30). 

·         Auction: $29 bln 7y notes.

Next Day In View 

Economic Commentary

Economic Summary: New Home Sales have missed expectations
Economic Data Summary:

·         Weekly MBA Mortgage Applications 7:00 vs Briefing.com consensus of ; Last Week was 4.3%

·         March New Home Sales 384K vs Briefing.com consensus of 455K; February was 440K

o    . Winter weather conditions, which were unduly blamed for softness across the economy, again showed little effect in the new home sector. The return to more normal temperatures, which should have boosted sales from pent up demand, resulted in the weakest demand since the middle of last year. The reality in the housing market is that affordability conditions have weakened considerably over the past several months. Mortgage rates have bounced off their lows and have made financing more difficult. At the same time, home prices have surged and income levels have stagnated. 

Upcoming Economic Data:

·         Weekly Initial Claims due out Weekly at 8:30 (Briefing.com consensus of 312K; Last Week was 304K)

·         Weekly Continuing Claims due out Weekly at 8:30 (Briefing.com consensus of 2.750 M ; Last Week was 2.739 M )

·         March Durable Orders due out Thursday at 8:30 (Briefing.com consensus of 2.0%; February was 2.2%)

·         March Durable Goods - Ex transportation due out Thursday at 8:30 (Briefing.com consensus of 0.5%; February was 0.1%)

Upcoming Fed/Treasury Events Summary:

·         Treasury will issue an auction for $29 bln in 7 year notes at 13:00 today

Other International Events of Interest

·         China's HSBC Flash Manufacturing PMI (48.3 actual v. 48.4 expected, 48.0 previous) remained in contraction for a fourth straight month, and weighed on both the Shanghai Composite (-1.0%) and Hong Kong's Hang Seng (-0.3%)

On other news.... 

Currencies 

Dollar Holds Little Changed: 10-yr: +04/32..2.690%..USD/JPY: 102.30..EUR/USD: 1.3813

·         The Dollar Index holds little changed as action nears the 79.90 flat line. Click here to see a daily Dollar Index chart.

·         Overnight selling dropped action onto the 79.70 level, but steady buying over the course of the session has erased the overnight losses. 

·         EURUSD is +10 pips @ 1.3815 after giving up the majority of its early gains. The single currency probed the 1.3850 level as buyers emerged following the mostly better than expected PMI figures, but action struggled at the level as has steadily slipped back towards the flat line. Support in the 1.3800 area remains under close watch. Eurozone data out tomorrow is limited to German Ifo Business Climate. ECB head Mario Draghi will speak in Amsterdam. 

·         GBPUSD is -60 pips @ 1.6765 as trade slides off its best levels since November 2009 and presses to a one-week low. Sterling has been offered for most of the session as some conflicting BOE member opinions over slack in the UK economy and the inflation outlook weigh. The 1.6700/1.6750 area provides the first level of support. Britain's CBI Realized Sales will be released tomorrow.

·         USDCHF is -20 pips @ .8830 as trade attempts to recover its early losses. The pair pressed to nearly .8800 amid the early weakness, but is now attempting to retake the 50 dma (.8834). Action remains closely tied to the euro due to the Swiss National Bank's EURCHF1.20 floor. 

·         USDJPY is -30 pips @ 102.30 as trade dips back below the 50 dma. Traders continue to watch the 102.50 pivot area, which has been of interest since the beginning of February.

·         AUDUSD is -85 pips @ .9280 as trade pulls back to its lowest level in two weeks. The hard currency has been under pressure in today's session after Australian CPI posted a cooler than anticipated reading. Trendline support off the January lows lurks in the .9250 region and will be of interest in the days ahead. Traders should take note of the early evening Reserve Bank of New Zealand rate decision as it has the potential to provide some volatility. 

·         USDCAD is flat @ 1.1030 amid a mostly uneventful session. Today's choppy trade follows the in-line Canadian core retail sales (0.6% MoM) data.

Jason's Commentaries


Market finally ended their winning streak as the Tech lagged last night with AT&T as the biggest laggard. Not to mention, Google, Verizon, Apple, Oracle, Mastercard are amongst the laggards as well. However the downwards drag was being offset by the industrials as Lockheed Martin, General Dynamics and Boeing rallied above 2%. Volumes last night was normal at 661.6m shares traded on the NYSE. On the technical side i believe the market is going to consolidate for a few more session. Possibly a little more profit taking. So the market is likely to go down a little more. Nonetheless, Apple, beats its earnings and announced a stock split. If the market cheers on this, Apple might lead Nasdaq up higher today. Gonna be a tough call again.   

Market Call: FLAT and volatile

Date: 24 April 2014