11 Aug 2014 AMC - Market ended flat, with signs of a dead cat bounce

11 Aug 2014 AMC - Market ended flat, with signs of a dead cat bounce

Market Summary 

 European Markets Closing Prices

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

·         UK's FTSE: + 1.0%

·         Germany's DAX: + 1.9%

·         France's CAC: + 1.2%

·         Spain's IBEX: + 0.9%

·         Portugal's PSI: -0.9%

·         Italy's MIB Index: + 1.4%

·         Irish Ovrl Index: + 1.3%

·         Greece ASE General Index: + 1.7%

Before Market Opens 

S&P futures vs fair value: +6.30. Nasdaq futures vs fair value: +10.50.
The S&P 500 futures trade six points above fair value.

Asian markets began the week on an upbeat note following no new negative developments on the geopolitical front. According to Nikkei, Japan's Government Pension Investment Fund temporarily lifted its limit on equity holdings in order to increase purchases of domestic stocks. 

·         In economic data: 

o    China's CPI rose 0.1% month-over-month, while the year-over-year reading increased 2.3%. Separately, PPI fell 0.9% year-over-year. All three figures matched expectations 

o    Japan's Tertiary Activity Index slipped 0.1% month-over-month (expected 0.2%, previous 0.9%), while Household Confidence ticked up to 41.5 from 41.1 (expected 42.3)

o    New Zealand's Electronic Card Retail Sales were unchanged month-over-month (expected 0.5%, previous 0.0%) 

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·         Japan's Nikkei rose 2.4%, climbing off two-month lows. Exporters gained on the weaker yen with Sharp up 3.0% and Hitachi higher by 1.9%. 

·         Hong Kong's Hang Seng advanced 1.3%, ending just off its best levels of the year. Henderson Land surged 4.8% after data showed property prices ended June at a record high. 

·         China's Shanghai Composite added 1.4% to end at an eight-month high. Financials provided a boost with ICBC adding 1.4% and Citic Securities tacking on 2.3%. 

Major European indices trade higher across the board. In Turkey, Recep Tayyip Erdogan won the first presidential election with 52.0% of the vote. Mr. Erdogan previously served as Prime Minister. 

·         Economic data was limited: 

o    Great Britain's CB Leading Index rose 0.6% month-over-month (expected 0.5%) 

o    Swiss Retail Sales rose 3.4% year-over-year (expected 0.3%, previous -0.5%) 

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·         Great Britain's FTSE is higher by 0.9% with financials and miners showing strength. Anglo American, Rio Tinto, and Schroders display gains between 2.4% and 2.9%. WM Morrison Supermarkets is the weakest performer, down 2.1%. 

·         In France, the CAC trades up 0.9%. Growth-sensitive names outperform with Cie de St-Gobain, Valeo, and Vinci up between 2.4% and 3.0%. On the downside, Electricite de France holds a loss of 0.8%. 

·         Germany's DAX outperforms with an increase of 1.6%. Deutsche Lufthansa and BMW are among the leaders with respective gains of 2.7% and 1.8%, while Deutsche Bank underperforms. The stock is down 1.1%.

U.S. Equities

·         Futures suggest solid gains at the open as buyers look to remain in control following Friday's rally

·         A coup has taken place in Iraq and Egypt has brokered a cease-fire between Israel and Hamas

o    S&P Futures +11 @ 1935

o    Dow Futures +83 @ 16,562

o    Nasdaq Futures +24 @ 3898

Asia

·         Markets rallied across Asia as trade piggybacked Friday's gains on Wall Street

·         China's CPI posted an in-line 2.3% YoY while PPI slightly outpaced estimates at -0.9% YoY (-1.0% YoY expected)

·         Japan's Nikkei (+2.4%) climbed off two-month lows

·         Hong Kong's Hang Seng (+1.3%) ended just off its best levels of the year

·         China's Shanghai Composite (+1.4%) ended at an eight-month high

·         India's Sensex (+0.8%) regained the 50 dma

·         Australia's ASX (+0.4%) gained for the first time in seven days 

Market Internals

Market Internals -Technical-

The Nasdaq closed up 30 (+0.70%) at 4401, the S&P 500 closed up 5 (+0.28%) at 1937, and the Dow closed up 16 (+0.10%) at 16570. Action came on below average volume (NYSE 583 mln vs. avg. of 662; NASDAQ 1429 mln vs. avg. of 1685), with advancers outpacing decliners (NYSE 2314/834, NASDAQ 1983/744) and new highs outpacing new lows (NYSE 83/21, NASDAQ 65/37). 

Relative Strength: 
Coffee-JO +4.9%, MLP Index-AMJ +3.59%, Social Media-SOCL +3.07%, Middle East and Africa-GAF +2.93%, Indonesia-IDX +2.43%, South Africa-EZA +2.24%, Smart Grid Infrastructure-GRID +2.22%, Silver Miners-SIL +2.12%, Latin America 40-ILF +2.1%, BRICs-EEB +1.91%. 

Relative Weakness: 
Volatility-VXX -4.1%, Turkey-TUR -3.23%, New Zealand-ENZL -0.62%, Spain-EWP -0.58%, Vietnam-VNM -0.42%, Utilities-XLU -0.36%, Platinum-PPLT -0.3%, Italy-EWI -0.26%, U.S. Health Care-IHF -0.21%, Gold-GLD -0.18%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries

Closing Market Summary: Small Caps Rally to Start the Week
The major averages began the new week on a modestly higher note. The S&P 500 settled higher by 0.3% with seven sectors registering gains, while the Russell 2000 (+1.0%) and Nasdaq Composite (+0.7%) outperformed. For its part, the Dow Jones Industrial Average (+0.1%) was limited to a slim gain as blue chip listings had a tough time keeping pace.

Equity indices climbed from the opening bell with the early advance supported by upbeat action overseas. Furthermore, a slight improvement on the geopolitical scene was also cited for the improved sentiment. Specifically, a ceasefire was agreed upon in Gaza on Sunday, while pro-Russian separatists in east Ukraine also asked for a pause in fighting.

The crisis in Ukraine was in the headlines during the day as conflicting reports about a potential humanitarian mission swirled about. The early reports suggested Ukraine's government agreed to allow a Red Cross-led operation with participation from Russia, Germany, and the United States, but subsequent headlines indicated Kiev never gave permission for Russian involvement.

Despite the advance, today's session lacked clear sector leadership as the consumer staples sector (+0.8%) ended in the lead, while other countercyclical groups underperformed. Meanwhile on the cyclical side, consumer discretionary (+0.4%) and technology (+0.6%) outperformed, while energy (-0.2%) and financials (+0.2%) lagged throughout the session.

Today's leading sector—consumer staples—drew strength from the shares of Sysco (SYY 37.44, +1.17), which rallied 3.2% in reaction to in-line earnings. Peer Dean Foods (DF 15.20, -0.61) was not as fortunate, falling 3.9% in reaction to a bottom-line miss and cautious guidance for the third quarter. In addition, the company withdrew its full-year guidance due to a volatile dairy commodity environment.

Elsewhere among countercyclical sectors, the utilities space (-0.4%) widened its third-quarter loss to 7.0%, while health care (unch) lagged throughout the session.

The health care sector ended on its session low, while the high-beta biotech group ended a bit below its early high. The iShares Nasdaq Biotechnology ETF (IBB 253.21, +1.72) gained 0.7% after being up 1.3% during the first two hours of action. Despite the afternoon slip, the biotech group still ended ahead of the S&P 500 and contributed to the outperformance of the Nasdaq.

The tech-heavy index also received noteworthy support from its top component—Apple (AAPL 95.99, +1.25)—and chipmakers. Apple added 1.3%, while the PHLX Semiconductor Index rose 1.0% with all but two components posting gains. Micron (MU 30.74, +0.70) led the way, climbing 2.3%.

Treasuries alternated between gains and losses before ending little changed. The benchmark 10-yr yield remained at 2.42%.

Participation was well below average with fewer than 585 million shares changing hands at the NYSE.

Tomorrow, the June Job Openings and Labor Turnover Survey will be released at 10:00 ET, while the Treasury Budget for July will cross the wires at 14:00 ET (Briefing.com consensus -$96.00 billion). 

·         S&P 500 +4.8% YTD 

·         Nasdaq Composite +5.4% YTD 

·         Dow Jones Industrial Average UNCH YTD 

·         Russell 2000 -1.8% YTD

Commodities

Closing Commodities: Crude Oil Rises, Ends Above $98/Barrel, Gold Falls 40 Cents

·         Dec gold traded lower today as geopolitical tensions eased over the weekend. Reports indicated that pro-Russian separatists in east Ukraine asked for a pause in fighting. In addition, a ceasefire was agreed upon in Gaza on Sunday.

·         Despite dipping to a session low of $1306.90 per ounce in morning action, the yellow metal inched higher as it headed into the close. It erased most of its earlier losses and settled at $1310.60 per ounce, just 40 cents below the unchanged line.

·         Sep silver chopped around slightly above the break-even level for most of today's floor trade. It touched a session low of $19.93 per ounce in early morning action but pushed higher in the last half hour of the session. It settled 0.7% higher at $20.08 per ounce, just below its session high of $20.11 per ounce.

·         Sep crude oil traded in positive territory after coming off its session low of $97.46 per barrel in early morning action. It brushed a session high of $98.58 per barrel and eventually settled with a 0.5% gain at $98.08 per barrel.

·         Sep natural gas pulled back from its session high of $4.00 per MMBtu and dipped as low as $3.92 per MMBtu in morning floor trade. It managed to recover back above the unchanged line in afternoon action and settled with a 0.3% gain at $3.97 per MMBtu.

 COMEX Metals Closing Prices

  Dec gold fell $0.40 to $1310.60/oz 

·         Gold traded lower today as geopolitical tensions eased over the weekend. Reports indicated that pro-Russian separatists in east Ukraine asked for a pause in fighting. In addition, a ceasefire was agreed upon in Gaza on Sunday. Despite dipping to a session low of $1306.90 in morning action, the yellow metal inched higher as it headed into the close. It erased most of its earlier losses and settled just 40 cents below the unchanged line. 

  Sep silver rose $0.14 to $20.08/oz 

·         Silver chopped around slightly above the break-even level for most of today's floor trade. It touched a session low of $19.93 in early morning action but pushed higher in the last half hour of the session. It settled just below its session high of $20.11, booking a gain of 0.7%. 

  Sep copper settled unchanged at $3.17/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Sep corn rose 4 cents to $3.57/bushel 

·         Sep wheat fell 2 cents to $5.46/bushel 

·         Nov soybeans fell 11 cents to $10.73/bushel 

·         Sep ethanol rose 4 cents to $2.07/gallon 

·         Nov sugar (#16 (U.S.)) fell 0.48 of a penny to 25.40 cents/lbs

 NYMEX Energy Closing Prices

  Sep crude oil rose $0.47 to $98.08/barrel 

·         Crude oil traded in positive territory after coming off its session low of $97.46 in early morning action. It brushed a session high of $98.58 and eventually settled with a 0.5% gain.

  Sep natural gas rose 1 cent to $3.97/MMBtu 

·         Natural gas pulled back from its session high of $4.00 and dipped as low as $3.92 in morning floor trade. It managed to recofer back above the unchanged line in afternoon action and settled with a 0.3% gain. 

  Sep heating oil settled unchanged at $2.88/gallon 

  Sep RBOB settled unchanged at $2.75/gallon


Treasuries

Treasuries Finish Flat: 10-yr: unch..2.427%..USD/JPY: 102.20..EUR/USD: 1.3383

·         Treasuries finished flat amid a sleepy session that had data absent from the calendar. Click here to see an intraday yields chart.

·         Yields across the curve were locked in a tight 3bp range for the entire session. 

·         Up front, the 2y slipped -0.8bps to 0.440%. Action closed near two-week lows.

·         In the belly, the 5y inched up +0.2bps to 1.612%. The yield tested resistance in the 1.620%/1.640% area before easing off the level. 

·         The 10y added +0.5bps to 2.420%. Today's light selling caused the benchmark yield to edge up off 13-month lows. 

·         At the long end, the 30y finished +0.6bps @ 3.232%. Action settled just more than +1bp above its lowest close since May 2013. 

·         A slightly steeper curve developed as the 2-10-yr spread widened to 198bps. 

·         Precious metals ended mixed with gold -$2 @ $1309 and silver +$0.12 @ $20.06.

·         Data: Treasury budget (14). 

·         Auction: $27 bln 3y notes.

On other news.... 

Currencies 

Dollar Hovers Little Changed: 10-yr: +04/32..2.412%..USD/JPY: 102.15..EUR/USD: 1.3385

·         The Dollar Index drifts little changed near 81.50 as a lackluster trade nears the finish line. Click here to see a daily Dollar Index chart.

·         Action has been confined to a tight range amid a lack of data. 

·         EURUSD is -25 pips @ 1.3385 as trade holds just off session lows. A quiet session has seen the single currency limited to a 25 pip range. Eurozone data scheduled for tomorrow includes ZEW Economic Sentiment and German ZEW Economic Sentiment.

·         GBPUSD is +15 pips @ 1.6785 as trade ticks off its lowest levels in two months. Today's advance has sterling higher for just the fourth time in the past 19 sessions as buyers emerge in defense of support. Britain's BRC Retail Sales Monitor is due out tonight.

·         USDCHF is +5 pips @ .9060 as action climbs off its lowest levels in two weeks. The pair saw little reaction to this morning's strong Swiss retail sales figure as action remains at the mercy of the euro. 

·         USDJPY is +15 pips @ 102.15 as some buying develops at the key level. Many participants remain fixated on the 101.80/102.00 region as the 50, 100, and 200 dma aid support in the area. 

·         AUDUSD is -10 pips @ .9260 as action flirts with a two-month low. The .9220 area will be watched closely in the days ahead as support there has held up since the end of May. Australia's NAB Business Confidence and Home Price Index will cross the wires tonight. 

·         USDCAD is -40 pips @ 1.0930 as today's weakness has erased most of Friday's gains. A larger than expected Canadian housing starts (200K actual v. 194K expected) figure has been behind today's action. Support near 1.0900 remains in focus with both the 100 and 200 dma providing additional help below.

Next Week In View




Economic Commentaries

Jason's Commentaries

It was definitely a shooting star last night and we're likely to have a dead cat bouce. With the market heading up at the start of the session, and the internals pointing towards a mixed note, technicals quickly took over. Facing resistance for most indices, a down day is imminient.








Market Call: Down

Date: 12 Aug 2014