12 Aug 2014 AMC -Market held sideways as resistance holds.

12 Aug 2014 AMC -Market held sideways as resistance holds.

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: -1.2%

·         France's CAC: -0.8%

·         Spain's IBEX: + 0.7%

·         Portugal's PSI: -0.3%

·         Italy's MIB Index: -0.2%

·         Irish Ovrl Index: + 0.2%

·         Greece ASE General Index: + 2.4%

Before Market Opens 

S&P futures vs fair value: +1.40. Nasdaq futures vs fair value: flat.
The S&P 500 futures trade one point above fair value.

Markets in Asia ended on a higher note, but indices in China (-0.1%) and Japan (+0.2%) were little changed with participants gearing up for noteworthy economic data expected later in the week. Japan's advance Q2 GDP report is scheduled to be released this evening with the market calling for a 7.1% year-over-year contraction due to the effects of the April sales tax hike taking hold 

·         In economic data: 

o    Japan's Corporate Goods Price Index rose 0.3% month-over-month (expected 0.4%; previous 0.2%), while Industrial Production fell 3.4% month-over-month (consensus -3.3%; prior -3.3%). Also of note, capacity utilization declined 3.3% month-over-month (previous -0.7%) 

o    Australia's House Price Index rose 1.8% quarter-over-quarter (expected 1.1%; previous 1.5%), while NAB Business Confidence rose to 11 from 8 and NAB Business Survey jumped to 8 from 2 

o    Singapore's GDP ticked up 0.1% quarter-over-quarter (expected -0.1%, previous -0.8%), while the year-over-year reading increased 2.4%, as expected 

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·         Japan's Nikkei added 0.2%, ending at a one-week high. Shippers were among the top performers as Mitsui OSK and Nippon Yusen both added 1.1%. 

·         Hong Kong's Hang Seng rose 0.2%, but just missed its best close of 2014. Heavyweight Tencent Holdings tacked on 0.8% ahead of tomorrow's earnings report. 

·         China's Shanghai Composite shed 0.1%, holding at eight-month highs. Property stocks saw modest selling pressure with China Vanke easing 0.5%. 

Major European indices trade in mixed fashion with Germany's DAX (-0.6%) showing the largest loss. Disappointing economic data has weighed on the markets with Eurozone ZEW Economic Sentiment plunging to 23.7 from 48.1 (expected 41.3) and Germany's ZEW Economic Sentiment tumbling to 8.6 from 27.1 (consensus 18.2). On a separate note, the confusion surrounding Russian humanitarian aid being sent into Ukraine has continued with recent reports indicating Ukraine will delay the convoy until determining where the aid should be sent. 

·         In other economic data: 

o    French Current Account deficit widened to EUR7.40 billion from EUR3.30 billion (expected deficit of EUR3.20 billion) 

o    Great Britain's BRC Retail Sales Monitor slipped 0.3% year-over-year (expected 0.6%; previous -0.8%) 

o    Italy's CPI slipped 0.1% month-over-month, while the year-over-year reading ticked up 0.1%. Both figures matched expectations 

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·         Great Britain's FTSE is lower by 0.1% with staple stocks on the defensive. Tesco and WM Morrison Supermarkets are both down near 1.2%. Insurers outperform with Prudential and RSA Insurance Group higher by 1.8% and 0.6%, respectively. 

·         In France, the CAC holds a loss of 0.6%. Energy company Total is the weakest performer, down 1.9%. Financials have held up relatively well with BNP Paribas and Credit Agricole up 0.2% and 0.6%, respectively. 

·         Germany's DAX holds a loss of 0.6%. Henkel underperforms with a loss of 6.2% after reporting disappointing earnings and warning about the impact of the Ukraine crisis on its company. Commerzbank outperforms with a gain of 2.8%. 

·         Italy's MIB is higher by 0.8% thanks to strength in bank shares. BMPS, Mediobanca, and UBI Banca are up between 1.6% and 4.4%.

U.S. Equities

·         Futures suggest a flat open

·         The VIX (14.23) holds at a one and a half-week low

o    S&P Futures +2 @ 1935

o    Dow Futures +7 @ 16,522

o    Nasdaq Futures +4 @ 3910

Asia

·         Markets gained across much of Asia

·         Australia's Home Price Index (1.8% QoQ actual v. 1.1% QoQ expected) beat and NAB Business Confidence (11 actual v. 8 previous) improved

·         Singapore's Q2 GDP-Final was in-line at 2.4% YoY

·         Japan's Nikkei (+0.2%) ended at a one-week high

·         Hong Kong's Hang Seng (+0.2%) just missed its best close of 2014

·         China's Shanghai Composite (-0.1%) held at eight-month highs

·         India's Sensex (+1.4%) climbed to its best level in a week

·         Australia's ASX (+1.3%) saw a second day of gains after six straight losses 

Market Internals

Market Internals -Technical-
The Nasdaq closed down 12 (-0.27%) at 4389, the S&P 500 closed down 3 (-0.16%) at 1934, and the Dow closed down 10 (-0.06%) at 16560. Action came on below average volume (NYSE 531 mln vs. avg. of 662; NASDAQ 1438 mln vs. avg. of 1684), with decliners outpacing advancers (NYSE 1281/1832, NASDAQ 864/1838) and new highs outpacing new lows(NYSE 50/29, NASDAQ 42/50).

Relative Strength: 
Greece-GREK +2.45%, Egypt-EGPT +2.11%, Gold Miners-GDX +1.71%, Wind Energy-FAN +0.89%, Australia-EWA +0.85%, Spain-EWP +0.72%, Japan-EPP +0.48%, Cocoa-NIB +0.33%, Junior Gold Miners-GDXJ +0.31%, Bank and Brokerage-RKH +0.29%.

Relative Weakness: 
Livestock-COW -2.76%, Coffee-JO -2.59%, Oil and Gas Exploration-XOP -1.87%, Cotton-BAL -1.85%, Clean Energy-PBW -1.54%, Middle East and Africa-GAF -1.15%, Germany-EWG -1.02%, Israel-EIS -1%, BRICs-EEB -0.67%, Nordic 30-GXF -0.54%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries

Closing Market Summary: Stocks and Treasuries Register Modest Losses
The major averages stumbled on Tuesday with the Russell 2000 pacing the slide. The small-cap index lost 0.7%, while the S&P 500 (-0.2%) gave back most of its advance from yesterday. For its part, the Dow Jones Industrial Average (-0.1%) ended with a slim loss.

Equity indices spent the first hour of action near their flat lines after index futures slumped from their overnight highs shortly ahead of the cash open. The early weakness took place as markets in Europe retreated in reaction to disappointing survey data. Specifically, Eurozone ZEW Economic Sentiment plunged to 23.7 from 48.1 (expected 41.3), while Germany's ZEW Economic Sentiment dropped to 8.6 from 27.1 (consensus 18.2).

The news from overseas contributed to the shaky start and so did the underperformance of some closely-watched groups. Most notably, the top-weighted sector—technology (-0.2%)—spent the majority of the trading day in the red amid broad weakness. Chipmakers lagged early, but the PHLX Semiconductor Index was able to narrow its loss to 0.1% by the close. Meanwhile, most large cap tech components underperformed, while Apple (AAPL 95.97, -0.02), IBM (IBM 187.34, -0.13), and Microsoft (MSFT 43.52, +0.32) bucked the trend.

Similar to technology, the energy sector (-0.7%) also kept the market from staging a sustained rebound. The growth-sensitive sector finished near its session low, while crude oil fell 0.7% to $97.35/bbl.

Elsewhere, another influential sector—health care—was able to end just ahead of the broader market even as biotechnology weighed. The iShares Nasdaq Biotechnology ETF (IBB 251.66, -1.55) lost 0.6% and surrendered yesterday's gain.

Like health care, other countercyclical sectors finished near their flat lines. Consumer staples (-0.1%) and utilities (-0.1%) logged modest losses, while the weakest sector of the month—telecom services—added 0.5% to narrow its August decline to 2.5%.

Even though equities endured a sloppy session, participants did not rush in search of volatility protection. In fact, the CBOE Volatility Index (VIX 14.14, -0.09) finished in the red. The modest losses did not translate into higher demand for Treasuries either as the 10-yr note settled on its low with the benchmark yield up two basis points at 2.45%.

Participation was below average with 531 million shares changing hands at the NYSE floor.

Economic data was limited to the Job Opening and Labor Turnover Survey for June and the Treasury Budget for July: 

·         The Job Openings and Labor Turnover Survey for June indicated job opening increased to 4.671 million from 4.577 million 

·         The Treasury Budget for July showed a deficit of $94.60 billion, which followed the prior deficit of $97.60 billion, while the Briefing.com consensus expected the deficit to hit $96.00 billion 

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while the Retail Sales report for July (Briefing.com consensus 0.3%) will cross the wires at 8:30 ET. Separately, the Business Inventories report for June (consensus 0.4%) will be released at 10:00 ET. 

·         Nasdaq Composite +5.1% YTD 

·         S&P 500 +4.6% YTD 

·         Dow Jones Industrial Average -0.1% YTD 

·         Russell 2000 -2.6% YTD

Commodities

Closing Commodities: Crude oil falls 0.7%, gold rises 10 cents

·         Dec gold rose to a session high of $1319.30 per ounce in mid-morning floor trade on further Ukraine/Russia tension. The European and German ZEW surveys both came in well below expectations as the Ukrainian conflict continues to weigh on sentiment while sanctions cripple businesses.

·         However, the yellow metal reversed towards the unchanged line in afternoon action and settled the session just 10 cents higher at $1310.70 per ounce.

·         Sep silver slipped into negative territory after retreating from a session high of $20.16 per ounce set in early morning action. It touched a session low of $19.88 per ounce moments before settling with a 0.8% loss at $19.91 per ounce.

·         Sep crude oil traded lower today as the IEA lowered its estimates for global demand growth by 180K barrels a day to 1 mln barrels a day in 2014 and said that supplies were abundant despite geopolitical tensions. The energy component fell as low as $96.79 per barrel and eventually settled with a 0.7% loss at $97.35 per barrel.

·         Sep natural gas touched a session high of $4.01 per MMBtu in morning action but pulled back towards the unchanged line heading into the close. Unable to regain momentum, it settled flat at $3.97 per MMBtu.

COMEX Metals Closing Prices

  Dec gold rose $0.10 to $1310.70/oz 

·         Gold rose to a session high of $1319.30 in mid-morning floor trade on the Ukraine/Russia conflict. The European and German ZEW surveys both came in well below expectations as the Ukrainian conflict continues to weigh on sentiment while sanctions cripple businesses. However, the yellow metal reversed towards the unchanged line in afternoon action and settled the session just 10 cents higher. 

  Sep silver fell $0.17 to $19.91/oz 

·         Silver slipped into negative territory after retreating from a session high of $20.16 set in early morning action. It touched a session low of $19.88 moments before settling with a 0.8% loss. 

  Sep copper fell 2 cents to $3.15/lbs

 CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Sep corn rose 1 cent to $3.58/bushel 

·         Sep wheat fell 8 cents to $5.38/bushel 

·         Nov soybeans fell 13 cents to $10.60/bushel 

·         Sep ethanol settled unchanged at $2.07/gallon 

·         Nov sugar (#16 (U.S.)) rose 0.58 of a penny to 25.98 cents/lbs

NYMEX Energy Closing Prices

  Sep crude oil fell $0.73 to $97.35/barrel 

·         Crude oil traded lower today as the IEA lowered its estimates for global demand growth by 180K barrels a day to 1 mln barrels a day in 2014 and said that supplies were abundant despite geopolitical tensions. The energy component fell as low as $96.79 and eventually settled with a 0.7% loss. 

  Sep natural gas settled unchanged at $3.97/MMBtu 

·         Natural gas touched a session high of $4.01 in morning action but pulled back towards the unchanged line as it headed into the close. Unable to regain momentum, it settled the session flat.

  Sep heating oil fell 4 cents to $2.84/gallon 

  Sep RBOB fell 2 cents to $2.73/gallon
Treasuries

Treasuries See Second Day of Selling: 10-yr: -03/32..2.447%..USD/JPY: 102.24..EUR/USD: 1.3367

·         Treasuries closed on their lows as steady selling persisted throughout the session. Click here to see an intraday yields chart.

·         The complex held small losses into the cash open and slipped to its worst levels of the morning after the JOLTs - Job Openings (4.671M) crossed the wires. 

·         Maturities would make an attempt retaking their respective flat lines as equities spilled into the red, but the bid stalled at the breakeven line. 

·         Late-morning weakness had action on the lows into the average $27 bln 3y note auction. 

·         The auction drew 0.924% and a tepid 3.03x bid/cover. Indirect bids (36.2%) slightly outpaced their 12-auction averages and direct bids (19.0%) were in-line, leaving primary dealers with 44.8% of the supply. 

·         Action would hover near the worst levels of the day for the remainder of the afternoon. 

·         Up front, the 2y slipped -0.8bps to 0.436%. The yield finished the day near its lowest levels since June. 

·         In the belly, the 5y inched up +0.1bps to 1.613%. Action tested resistance near 1.620% for a third straight day, but was once again unable to take the level. 

·         The 10y added +2.2bps to 2.442%. The benchmark yield finished at a one-week high, and is nearing 2.460% resistance. 

·         Selling at the long end ran the 30y up +3.4bps to 3.266%. The yield is now more than +7bps off Friday's lows. 

·         A steeper curve developed as the 2-10-yr spread widened to 200.5bps. 

·         Precious metals ended mixed with gold +$1 @ 1311 and silver -$0.15 @ $19.95. 

·         Data: MBA Mortgage Index (7), retail sales (8:30), and business inventories (10).

·         Auction: $24 bln 10y notes. 

·         Fed Speak: NY's Dudley and Boston's Rosengren will speak at a NY Fed workshop on "The Risks of Wholesale Funding" (9:05 and 9:20).

On other news.... 

Currencies 

Dollar Gives Up Gains: 10-yr: -02/32..2.441%..USD/JPY: 102.21..EUR/USD: 1.3367

·         The Dollar Index has given up its early gains and is now little changed near 81.50. Click here to see an intraday Dollar Index chart.

·         An early bid had action threatening the 81.70 level, but it appears trade will be unable to put in its best close in 11 months. 

·         EURUSD is -20 pips @ 1.3365 as trade flirts with its lowest close since September. The single currency saw early selling pressure after the eurozone and German ZEW surveys fell well short of estimates; however, action has been able to trim those losses over the course of the session. Eurozone data set for tomorrow is limited to industrial production.

·         GBPUSD is +25 pips @ 1.6810 as a light bid develops for a second session. Early selling had sterling at its lowest levels in two months, but action is now pressing session highs as buyers stepped in to defend the support level. Britain's jobs report will be released tomorrow. 

·         USDCHF is +10 pips @ .9075 as trade has surrendered a large portion of its early gains. The pair crossed the .9100 mark amid an early bid, but now looks unlikely to finish at its best levels of 2014. Switzerland's ZEW Economic Expectations are scheduled to cross the wires tomorrow. 

·         USDJPY is flat @ 102.20. An uninspiring session has seen the pair trapped in a right 25 pip range between the 100 and 200 dma. Japan's preliminary GDP accompanies the latest Bank of Japan policy minutes. 

·         AUDUSD is +10 pips @ .9275 as action lingers near two-month lows. Australian data scheduled for tonight includes Westpac Consumer Sentiment and the Wage Price Index. China's industrial production and fixed asset investment are set to cross the wires this evening. 

·         USDCAD is +5 pips @ 1.0930 as trade holds support in the area. The 100 and 200 dma provide additional help just below the 1.0900 level.

Next Week In View




Economic Commentaries

Economic Summary: JOLTS come in at 4.671 mln versus 4.635 mln in May; Retail sales out tomorrow at 8:30; Dudley & Rosengren will also speak tomorrow
Economic Data Summary:

·         June JOLTS - Job Openings 4.671 mln (May was 4.635 M).

Upcoming Economic Data:

·         July Treasury Budget due out Tuesday at 14:00 (Briefing.com consensus of -$96.0 bn; June was -$97.6 bln)

·         Weekly MBA Mortgage Applications due out Wednesday at 7:00 (Last Week was 1.6%)

·         July Retail Sales due out Wednesday at 8:30 (Briefing.com consensus of 0.3%; June was 0.2%)

·         July Retail Sales Ex-Auto due out Wednesday at 8:30 (Briefing.com consensus of 0.3%; June was 0.4%)

·         June Business Inventories due out Wednesday at 10:00 (Briefing.com consensus of 0.4%; May was 0.5%)

Upcoming Fed/Treasury Events:

·         NY Fed President Bill Dudley (voting FOMC member, dovish) to speak tomorrow at 9:00

·         Boston Fed President Eric Rosengren (not a voting FOMC member, dovish) to speak tomorrow at 9:20

Other International Events of Interest

·         Eurozone ZEW Economic Sentiment (23.7 actual v. 41.3 expected, 48.1 previous) and German ZEW Economic Sentiment (8.6 actual v. 18.2 expected, 27.1 previous) posted their lowest readings since late 2012/early 2013 with weakness being pinned on geopolitical tensions

Jason's Commentaries

It was a very flat and volatile day last night was the market started in a bearish tone, which recovered most of its losses by the last hour. Internals were showing flat signals however, VIX went down lower. While the sectors were moving sideways with Energy sector falling 0.73%, being offset by Materials and Financials. On the technicals side, we're stuck at the resistance right now. I'm expecting the resistance to hold and probably make another sharp down turn.








Market Call: FLAT to Downside

Date: 13 Aug 2014