30 June 2014 AMC - Market ended June with no sell off

30 June 2014 AMC - Market ended June with no sell off

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: + 0.2%

·         France's CAC: -0.3%

·         Spain's IBEX: -0.3%

·         Portugal's PSI: -0.8%

·         Italy's MIB Index: -0.2%

·         Irish Ovrl Index: - 0.6%

·         Greece ATHEX Composite: +0.4%

Before Market Opens 

S&P futures vs fair value: -1.60. Nasdaq futures vs fair value: -2.00.
The S&P 500 futures trade less than two points below fair value.

Asian markets ended mostly higher with quarter-end window dressing taking hold. 

·         In economic data: 

o    Japan's preliminary industrial production (0.5% month-over-month versus expected 0.9%) missed estimates. Separately, Housing Starts fell 15.0% year-over-year (expected -10.6%, previous -3.3%) 

o    Australia's HIA New Home Sales (-4.3% month-over-month) posted its biggest drop since August 

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·         Japan's Nikkei added 0.4%, bouncing off the psychologically important 15,000 level. Exporters gained despite the strength in the yen as Toyota Motor added 0.6% and Panasonic gained 0.7%. 

·         Hong Kong's Hang Seng shed 0.1%, remaining near its best levels of 2014. Casino stocks gained in response to some positive ‘tier 1' commentary on the space with Galaxy Entertainment climbing 3.6%. 

·         China's Shanghai Composite rose 0.6%, posting its best close in nearly two weeks. Financials saw solid gains with Industrial Bank and Ping An Bank both adding 0.9%. 

Major European indices trade mostly lower, while Germany's DAX (+0.3%) outperforms. In news, Bank of England Governor Mark Carney said the recent strength in the British pound is reflective of the strength of the economy. Currently, the pound (1.7050) trades right near its year-to-date high against the dollar. 

·         Participants received several data points: 

o    Eurozone M3 Money Supply rose 1.0% year-over-year (expected 0.8%, previous 0.7%), but Private Loans fell 2.0% year-over-year (consensus -1.6%, prior -1.8%). Separately, CPI rose 0.5% year-over-year, as expected, while Core CPI increased 0.8% (expected 0.7%, previous 0.7%) 

o    Germany's Retail Sales slipped 0.6% month-over-month (expected 0.7%, previous -1.5%), while the year-over-year reading increased 1.9% (consensus 2.1%, prior 3.2%)

o    Great Britain's BoE Consumer Credit rose GBP740 million (expected GBP700 million, prior GBP650 million), while Net Lending to Individuals increased GBP2.70 billion (expected GBP2.50 billion, previous GBP2.40 billion) 

o    Italy's CPI increased 0.1% month-over-month, while the year-over-year reading ticked up 0.3% 

o    Spain's Business Confidence improved to -7 from -8, as expected 

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·         Germany's DAX trades higher by 0.3% with heavyweights Bayer and Siemens contributing to the advance. Both names are up near 0.5% apiece. Financials lag with Commerzbank and Deutsche Bank down 2.0% and 1.3%, respectively. 

·         Great Britain's FTSE holds a loss of 0.2% with airlines on the defensive. EasyJet and International Consolidated Airlines are down 5.7% and 2.5% after EasyJet was downgraded at Bank of America. 

·         In France, the CAC holds a loss of 0.2%. Credit Agricole is the weakest performer, down 2.6%. Chemical producer Solvay outperforms with a gain of 3.0%. 

·         Spain's IBEX trades down 0.4% amid broad weakness. Banco Popular and Bankinter hold respective losses of 1.5% and 2.0%.

U.S. Equities

·         Futures point to little change at the open as the major averages look to close the quarter with a modest two-day advance

·         Both the DJIA and S&P 500 remain within striking distance of all-time highs while the Nasdaq trades at its best levels in more than 14 years

·         The VIX (11.26) holds near levels last seen in February 2007

o    S&P Futures -1 @ 1951

o    Dow Futures -6 @ 16,751

o    Nasdaq Futures +2 @ 3834

Asia

·         Markets gained across most of Asia as quarter-end window dressing took hold

·         Japan's preliminary industrial production (0.5% MoM actual v. 0.9% MoM expected) missed estimates

·         Australia's HIA New Home Sales (-4.3% MoM) posted its biggest drop since August

·         Japan's Nikkei (+0.4%) bounced off the psychologically important 15,000 level

·         Hong Kong's Hang Seng (-0.1%) remained near its best levels of 2014

·         China's Shanghai Composite (+0.6%) posted its best close in nearly two weeks

·         India's Sensex (+1.3%) ended just shy of record highs

·         Australia's ASX (-0.9%) slid back below the 100 dma.

Market Internals

Market Internals -Technical-
The Nasdaq closed up 10 (0.23%) at 4408, the S&P 500 closed down 1 (-0.04%) at 1960, and the Dow closed down 26 (-0.15%) at 16826. Action came on above average volume (NYSE 775 mln vs. avg. of 678; NASDAQ 1696 mln vs. avg. of 1738), with advancers outpacing decliners (NYSE 1870/1254, NASDAQ 1516/1185) and new highs outpacing new lows (NYSE 272/9, NASDAQ 107/21).

Relative Strength: 
Junior Gold Miners-GDXJ +4.24%, Egypt-EGPT +3.14%, Indonesia-IDX +1.94%, Copper-JJC +1.24%, Coffee-JO +1.2%, Silver Miners-SIL +1.14%, Nuclear Energy-NLR +1.09%, India-INP +0.91%, Netherlands-EWN +0.79%, Emerging Markets Small Cap-EWX +0.58%.

Relative Weakness: 
Grains-JJG -5.09%, Corn-CORN -4.94%, Cotton-BAL -1.76%, Russia-RSX -1.61%, Sugar-SGG -1.42%, Agriculture-DBA -1.36%, Australia-EWA -1.14%, Japan-EPP -0.97%, Eastern Europe-ESR -0.83%, Brazilian Real-BZF -0.77%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries

Closing Market Summary: Stocks End Upbeat Quarter on Unassuming Note
The stock market finished the second quarter on a subdued note with the major averages ending near their flat lines. The Nasdaq Composite (+0.2%) outperformed throughout the session, while the S&P 500 (-0.04%) surrendered its slim gain into the close. For the quarter, the S&P 500 jumped 4.7%, while the Nasdaq advanced 5.0%.

Equity indices displayed losses at the start, but the Nasdaq and S&P 500 returned into the green after a better than expected Pending Home Sales report for June (6.1% versus 1.5% Briefing.com consensus) crossed the wires. Despite the early rebound, the S&P 500 ran into resistance in the 1964 area, which served as the high point for the day. Unlike the Nasdaq and S&P 500, the Dow Jones Industrial Average (-0.2%) could not make a sustained move into the green.

Five of ten sectors posted gains with this year's leader—utilities—setting the pace. The countercyclical sector advanced 0.8%, extending its year-to-date gain to 16.4%. Unlike utilities, the remaining defensively-oriented groups ended in the red with consumer staples, health care, and telecom services down 0.04%, 0.4%, and 0.4%, respectively.

Meanwhile, the six cyclical groups also ended on a mixed note. Consumer discretionary (-0.1%), energy (unch), financials (unch), and industrials (-0.4%) lagged, while technology (+0.2%) and materials (+0.5%) held gains throughout the day.

Notably, the technology sector fueled the outperformance of the Nasdaq Composite with chipmakers ending on their highs. Micron (MU 32.95, +1.44) surged 4.6% after being added to the Focus List at Credit Suisse, while the broader PHLX Semiconductor Index rose 1.1% to secure a quarterly advance of 8.4%. In addition, the top-weighted tech component—Apple (AAPL 92.93, +0.95)—also did some grunt work, rallying 1.0%.

Elsewhere, the materials sector was underpinned by miners and steelmakers. The Market Vectors Steel ETF (SLX 47.72, +0.28) added 0.6%, while Market Vectors Gold Miners ETF (GDX 26.45, +0.47) spiked 1.8%.

On the downside, industrials could not climb into the green amid weakness in defense contractors (PHLX Defense Index -0.5%). Transports, however, displayed relative strength. The Dow Jones Transportation Average tacked on 0.3% to secure a quarterly advance of 8.3%.

Treasuries retreated in the morning, but the brief slip was retraced in its entirety over the course of the session. The 10-yr note added five ticks with its yield slipping two basis points to 2.52%.

Despite the narrow ranges, participation was solidly above average with nearly 800 million shares changing hands at the NYSE.

Economic data was limited to Chicago PMI for June and May Pending Home Sales: 

·         Manufacturing activity decelerated in the Chicago region as the Chicago PMI fell to 62.6 in June from 65.5 in May. The Briefing.com consensus expected the index to fall to 61.0

o    The Chicago PMI has exceeded 60.0 for three consecutive months 

o    Production strengthened in June as the related index increased to 70.1 from 64.4 on strong levels of backlogs 

o    New orders growth faded in June as the related index fell to 65.1 from 70.2 

o    Backlog levels dropped to 55.4 from 61.4 

o    The Employment Index increased to 58.4 from 54.6 

·         Pending home sales for May rose 6.1%, which was better than the 1.5% increase forecast by the Briefing.com consensus 

o    The reading followed last month's revised increase of 0.5% (from 0.4%) 

Tomorrow, the ISM Index for June (Briefing.com consensus 55.8) and May Construction Spending (consensus 0.4%) will be reported at 10:00 ET, while auto and truck makers will be reporting their June sales throughout the day. 

·         S&P 500 +6.1% YTD 

·         Nasdaq Composite +5.5% YTD 

·         Dow Jones Industrial Average +1.5% YTD 

·         Russell 2000 +2.6% YTD

Commodities

Closing Commodities: Grains End Sharply Lower On USDA Reports

·         Grains including corn, soybeans and wheat sold off today following the USDA annual acreage report and quarterly grain stocks report results

·         July corn fell 25 cents (or -5.7%) to $4.17/bushel, July wheat fell 17 cents (or -2.9%) to $5.76/bushel, July soybeans fell 49 cents (or -3.6%) to $13.28/bushel

·         Crude oil futures extended losses last week, closing $0.43 today to $105.37/barrel

·         Gold and silver slowly climbed higher off of morning lows.

·         Aug gold ended the session $2.30 higher at $1322.30/oz. July silver fell $0.11 at $21.03/oz, but erased most losses

·         Natural gas rallied this morning and finished 3 cents higher at $4.47/MMBtu

·         Copper rallied this morning during pit trading, rising as high as $3.21/lb. Copper ended at $3.20, up $0.03.

Metal Closing Prices

·         Aug gold rose $2.30 to $1322.30/oz

·         July silver fell $0.11 to $21.03/oz

·         July copper rose $0.03 to $3.20/lb

NYMEX Energy Closing Prices

·         Aug crude oil fell $0.43 to $105.37/barrel

·         Aug natural gas rose 3 cents to $4.47/MMBtu

·         Aug heating oil fell 4 cents to $2.98/gallon

·         Aug RBOB fell 1 cent to $3.05/gallon

Treasuries

Yields Close at Lowest Levels of June: 10-yr: +05/32..2.521%..USD/JPY: 101.32..EUR/USD: 1.3691 -Technical-

·         Treasuries closed on session highs. Click here to see an intraday yields chart.

·         The complex held modest gains into the cash open before retreating to the flat line in response to the better than expected Chicago PMI (62.6 actual v. 61.0 expected, 65.5 previous) and pending home sales (6.1% actual v. 1.5% expected) data. 

·         Buyers emerged in defense of the breakeven line, and managed to run action back to the highs into the lunchtime hour.

·         Maturities drifted near their best levels for the remainder of the session until a bid in the final minutes produced minor new highs.

·         Buying was paced at the long end with the 30y sliding -2.7bps to 3.338%. The yield closed at its lowest level of June and is just a handful of bps of the May low (3.267%). 

·         The 10y fell -1.6bps to 2.516%. Today's bid has the benchmark yield flirting with minor support in the 2.500% area with a breakdown putting the 2.400% level in play. 

·         In the belly, the 5y slipped -1.3bps to 1.625% to finish on support helped by the 100 dma. A breach of support at current levels puts the 200 dma (1.550%) in the crosshairs. 

·         A flatter curve persisted as the 2-10-yr spread narrowed to 206bps. 

·         Precious metals went off on their highs with gold +$8 @ $1328 and silver +$0.07 @ $21.15. 

·         Data: ISM Index, construction spending (10), and auto/truck sales (14).

On other news.... 

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices- grains end notably lower following USDA grain stock and acreage reports

·         July corn fell 25 cents (or -5.7%) to $4.17/bushel

·         July wheat fell 17 cents (or -2.9%) to $5.76/bushel

·         July soybeans fell 49 cents (or -3.6%) to $13.28/bushel

·         July ethanol fell 2 cents to $1.98/gallon

·         Sep sugar (#16 (U.S.)) rose 0.05 of a penny to 26.13 cents/lbs

Currencies

Broad-Based Selling Drops Dollar Index onto 79.80 Support: 10-yr: +05/32..2.520%..USD/JPY: 101.28..EUR/USD: 1.3692

·         The Dollar Index holds on session lows as trade tests the key 79.80 level amid broad-based dollar selling. Click here to see a daily Dollar Index chart.

·         The greenback fell to its worst levels of the session following the better than expected Chicago PMI and pending home sales data, and has been testing support at the level from late-morning trade on.

·         EURUSD is +45 pips @ 1.3695 as trade looks likely to put in its best close in five weeks. Today's bid has run the single currency above the 200 dma, and has mitigated the remaining post-European Central Bank rate decision losses. Resistance in the 1.3700 area will be watched closely. Eurozone data is heavy as the unemployment rate and German unemployment change join Spanish and Italian Manufacturing PMI. 

·         GBPUSD is +70 pips @ 1.7105 trade looks almost certain to post its best close since October 2008. Today's bid comes following the better than expected net lending to individuals data, but the underlying strength that has been in place over the past year continues to be driven by expectations the Bank of England will be the first major Western central bank to hike rates and emerge from the financial crisis. British data is limited to Manufacturing PMI. 

·         USDCHF is -35 pips @ .8870 as trade flushes to a one and a half-month low. Today's weakness has dropped the pair below its 50 dma, and has action testing support helped by the 100 dma. Switzerland's SVME PMI is due out tomorrow. 

·         USDJPY is -10 pips @ 101.25 as trade presses lower for a fourth straight day. The pair looks likely to close at a five-month low as trade moves towards a test of the important 101.00 area. Japan's Tankan Manufacturing Index and Tankan Non-Manufacturing Index will be released ahead of average cash earnings. 

·         AUDUSD is +5 pips @ .9430 as action has seen a sharp reversal off the lows. The hard currency probed the .9400 level in early U.S. trade, but steady buying throughout the session has action flirting with its best close since November ahead of tonight's Reserve Bank of Australia rate decision. Markets are expecting no change from the current 2.50%. Chinese data includes Manufacturing PMI and HSBC Final Manufacturing PMI. 

·         USDCAD is flat @ 1.0665. The pair saw an early spike to session highs near 1.0700 after Canada's GDP (0.1% MoM actual v. 0.2% MoM expected) missed estimates, but broad-based dollar selling has dropped action back onto the flat line. Support at current levels will be tracked closely in the days ahead. Canadian banks are closed tomorrow for Canada Day.

Next Week In View




Economic Commentaries

Economic Summary: Chicago PMI and Pending Home Sales top expectations
Economic Data Summary:

·         June Chicago PMI 62.6 vs Briefing.com consensus of 61.0; May was 65.5

o     The Chicago PMI has exceeded 60.0 for three consecutive months. Production strengthened in June as the related index increased to 70.1 from 64.4 in May. 

·         May Pending Home Sales 6.1% vs Briefing.com consensus of 1.5%; April was 0.4%

Upcoming Economic Data:

·         June ISM Index due out Tuesday at 10:00 (Briefing.com consensus of 55.8; May was 55.4)

·         May Construction Spending due out Tuesday at 10:00 (Briefing.com consensus of 0.4%; April was 0.2%)

Other International Events of Interest

·         Germany's Retail Sales slipped 0.6% month-over-month (expected 0.7%, previous -1.5%), while the year-over-year reading increased 1.9% (consensus 2.1%, prior 3.2%) 

Jason's Commentaries

Market ended the month with no sell off at all... like 2007, the market did not sell of in May... Now it's a scary factor that we have to consider. VIX has been at a low, May did not sell off... Yield curve threatened to flatten... sounds like a similar scenario like 2007 once again.

Last night was a very volatile trading session where the Nasdaq and Small Caps led the market. The Dow and S&P500 were the lagging ones with 659.2m shares traded on the NYSE. Microsoft surpisingly was the biggest laggard of the session with 1.3% loss that was offset by the massive gain in Yahoo. All in all, the Utilities was leading the session while industrials continued to lag. Coming ahead to a short week, towards Yellen's speech and the employment data, I believe the market will likely to price in once again. I'm bullish today..








Market Call: UP

Date: 1 July 2014