27 Aug 2014 AMC - Market ended flat and poised for a reversal

27 Aug 2014 AMC - Market ended flat and poised for a reversal

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: -0.2%

·         France's CAC: + 0.0%

·         Spain's IBEX: + 0.1%

·         Portugal's PSI: + 2.0%

·         Italy's MIB Index: + 0.6%

·         Irish Ovrl Index: + 0.7%

·         Greece ASE General Index: + 0.0%

Before Market Opens 

S&P futures vs fair value: +0.70. Nasdaq futures vs fair value: +0.50.
The S&P 500 futures trade within a point of fair value.

It was a sea of green across Asia as all of the major bourses, aside from Hong Kong's Hang Seng, finished in positive territory. 

·         Economic data was limited: 

o    Australia's Construction Work Done fell 1.2% quarter-over-quarter (expected -0.3%; prior -0.4%) 

o    New Zealand's FPI slipped 0.7% month-over-month (prior 1.4%) 

o    South Korea's Consumer Confidence rose to 107 from 105 (expected 104) 

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·         Japan's Nikkei inched higher by 0.1% amid a muted trade. Exporters saw profit-taking as the yen firmed with Toyota Motor slipping 0.3%. 

·         Hong Kong's Hang Seng lost 0.6% to continue its retreat from six-year highs. Casino shares were pressured after a tier 1 firm cut its outlook on the space. Galaxy Entertainment and MGM China both fell 1.5%. 

·         China's Shanghai Composite ticked up 0.1%, gaining for the first time in three days. Automakers provided support with BYD rallying 2.0% following reports Beijing was considering funding to build electric car infrastructure. 

Major European indices trade near their flat lines with Spain's IBEX (+0.2%) showing relative strength. Ukraine's President Petro Poroshenko said he will work on an urgent ceasefire plan following yesterday's meeting with Russian President Vladimir Putin in Minsk. 

·         In economic data: 

o    Germany's GfK Consumer Climate slipped to 8.6 from 8.9 (expected 9.0), while Import Price Index ticked down 0.4% month-over-month (consensus -0.1%; prior 0.2%) 

o    French Business Survey slipped to 96 from 97, as expected 

o    Italy's Consumer Confidence fell to 101.9 from 104.4 (consensus 104.0) 

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·         In France, the CAC is lower by 0.1% with consumer names on the defensive. L'Oreal holds a loss of 1.3% and Danone trades down 0.5%. On the upside, financials BNP Paribas and Credit Agricole are higher by 1.0% and 1.3%, respectively. 

·         In Germany, the DAX holds a loss of 0.1%. Exporters are among the laggards with BMW, Daimler, and Volkswagen down between 0.4% and 1.0%. Commerzbank and Deutsche Bank outperform with respective gains of 2.3% and 1.9%. 

·         Great Britain's FTSE holds a slim gain of 0.1%. Petrofac leads with an increase of 3.6% after its latest earnings report showed a record order backlog. 

·         Spain's IBEX outperforms with a gain of 0.2% amid strength in financials. Bankinter, Banco Popular, and Banco Sabadell are up between 0.9% and 1.7%.

U.S. Equities

·         Equity futures point to little change at the open

·         The S&P 500 finished above 2000 for the first time ever while the Nasdaq closed at its best level in more than 14 years

·         The VIX (11.63) remains near one-month lows

·         MBA Mortgage Index (2.8%)

o    S&P Futures unch @ 1998

o    Dow Futures +4 @ 17,101

o    Nasdaq Futures unch @ 4072

Asia

·         It was a sea of green across Asia as all of the major bourses, aside from Hong Kong's Hang Seng, finished in positive territory

·         Australia's construction work done (-1.2% QoQ actual v. -0.4% QoQ expected) missed estimates

·         Japan's Nikkei (+0.1%) inched higher amid a muted trade

·         Hong Kong's Hang Seng (-0.6%) slid further off six-year highs

·         China's Shanghai Composite (+0.1%) gained for the first time in three days

·         India's Sensex (+0.4%) closed at a record high

·         Australia's ASX (+0.2%) finished at its best level in six years

Market Internals

Market Internals -Technical-
The Dow closed up 15 (+0.09%) at 17122, the S&P 500 closed flat at 2000, and the Nasdaq closed down 1 (-0.02%) at 4570. Action came on below average volume (NYSE 487 mln vs. avg. of 652; NASDAQ 1281 mln vs. avg. of 1630), with mixed advancers/decliners (NYSE 1770/1349, NASDAQ 1188/1497) and new highs outpacing new lows (NYSE 165/6, NASDAQ 88/16).

Relative Strength: 
Latin America 40-ILF +1.69%, New Zealand-ENZL +1.41%, Brazilian Real-BZF +1.29%, Israel-EIS +1.26%, Columbia Index-GXG +1.14%, Natural Gas-UNG +1.11%, Utilities-XLU +1.09%, Coffee-JO +0.99%, 20+ Year Treasuries-TLT +0.85%, Volatility-VXX +0.8%.

Relative Weakness: 
Sugar-SGG -1.39%, Broker-Dealers-IAI -0.86%, Social Media-SOCL -0.83%, Cotton-BAL -0.77%, Hong Kong-EWH -0.71%, China 25 Index-FXI -0.7%, Internet Composite-FDN -0.7%, Russia-RSX -0.51%, Japan-EWJ -0.42%, Peru-EPU -0.33%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries

Closing Market Summary: Stocks End Flat Amid Measly Volume
The major averages ended the midweek session on a flat note after spending the day inside narrow ranges. The S&P 500 hovered near the 2,000 mark for the majority of the trading day, but slumped to new lows during the last hour of action. The index then returned to its flat line, where it settled for the day. For the third day in a row, participation left a lot to be desired with just 487 million shares changing hands at the NYSE.

Equity indices opened with slim gains, but were quick to return to their flat lines as most sectors traded little changed. Two countercyclical groups—telecom services (+0.5%) and utilities (+1.0%)—held gains throughout the day, but neither had much say over the direction of the broader market.

Meanwhile, influential sectors like consumer discretionary (+0.1%), financials (-0.2%), health care (unch), and technology (-0.1%) ended mixed with respect to the S&P 500.

Retailers contributed to the relative strength of the discretionary sector following better than expected quarterly results from Brown Shoe (BWS 29.90, -1.47), Express (EXPR 16.45, +1.86), and Tiffany & Co (TIF 101.75, +0.98). For its part, the SPDR S&P Retail ETF (XRT 89.47, +0.30) advanced 0.3%.

Elsewhere, the health care space displayed intraday strength, but finished in line with the market. Biotechnology contributed to the early outperformance, but the iShares Nasdaq Biotechnology ETF (IBB 275.06, -0.65) settled lower by 0.2% after soaring 9.6% over the past two weeks.

Similar to health care, the top-weighted sector—technology—also showed intraday strength prior to an afternoon retreat. Even though the sector ended in the red, its largest component—Apple (AAPL 102.13, +1.24)—climbed 1.2% amid speculation the company will reveal a wearable device at an event scheduled for September 9.

While equities ended little changed, there was some activity in the foreign exchange market. This morning, the euro/dollar pair jumped from 1.3170 to 1.3210 in reaction to reports suggesting the European Central Bank is unlikely to take action at next week's policy meeting. The comments were attributed to ECB sources and followed earlier speculation that ECB President Mario Draghi may announce a quantitative easing program at the upcoming meeting. The single currency traded near the 1.3195 level at the end of the New York session.

Treasuries settled near their highs with the 10-yr yield down four basis points at 2.36%. More notably, the 30-yr bond rallied to send its yield lower by six basis points to 3.11%, representing the lowest close since May of last year.

Economic data was limited to the weekly MBA Mortgage Index, which rose 2.8% to follow last week's uptick of 1.4%.

Tomorrow, weekly Initial Claims (Briefing.com consensus 302,000) and the second estimate of Q2 GDP (expected 4.0%) will be released at 8:30 ET, while the Pending Home Sales report for July (consensus 0.5%) will cross the wires at 10:00 ET. 

·         Nasdaq Composite +9.4% YTD 

·         S&P 500 +8.2% YTD 

·         Dow Jones Industrial Average +3.3% YTD 

·         Russell 2000 +0.7% YTD

Commodities

COMEX Metals Closing Prices

·         Dec gold fell $1.90 to $1283.50/oz

·         Sep silver rose $0.02 to $19.41/oz

·         Sep copper fell 1 cent to $3.18/lb

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Sep corn rose 1 cent to $3.56/bushel

·         Sep wheat rose 6 cents to $5.47/bushel

·         Nov soybeans fell 5 cents to $10.23/bushel

·         Sep ethanol rose 3 cents to $2.16/gallon

·         Nov sugar (#16 (U.S.)) fell 0.37 of a penny (or 1.4%) to 25.63 cents/lb

·          NYMEX Energy Closing Prices

·         Oct crude oil rose $0.04 to $93.89/barrel

·         Sep natural gas rose 5 cents to $4.00/MMBtu

·         Oct heating oil rose 1 cent to $2.86/gallon

·         Oct RBOB fell 2 cents at $2.58/gallon

Treasuries

30Y Closes at 3.109%, Lowest Since May 2013: 10-yr: +09/32..2.361%..USD/JPY: 103.86..EUR/USD: 1.3196

·         A late-day rally lifted Treasuries to session highs into the cash close. Click here to see an intraday yields chart.

·         Today's bid was supported by the large decline in European yields, which caused investors to seek the higher yielding U.S. paper. 

·         The complex drifted in a tight 3bp range for most of the session with some initial selling taking hold following the slightly better than average $35 bln 5Y note auction. 

·         The auction drew 1.646% and a solid 2.81x bid/cover. A strong indirect bid (52.7%) provided support as the direct bid (10.8%) was light. Primary dealers ended up with 36.5% of the supply. 

·         Buyers would emerge near the lowest levels of U.S. trade and run action to the highs ahead of the close.

·         Up front, the 2Y rallied +2bps to 0.516% and is within a couple bps of its highest close since May 2011. 

·         In the belly, the 5Y eased -1.8bps to 1.638%. The yield remained near resistance in the area that is defended by both the 50 and 100 dma. 

·         The 10Y fell -3bps to 2.361%.The benchmark yield finished within 2bps of its lowest close in more than 13 months. 

·         At the long end, the 30Y sank -4.3bps to 3.109%. The yield on the long bond settled at its lowest level since May 2013. 

·         A flatter curve persisted with the 2-10-yr spread narrowing to 184.5bps.

·         Precious metals ended mixed with gold -$2 @ $1283 and silver +$0.01 @ $19.40. 

·         Data: Initial and continuing claims, GDP - Second Estimate (8:30), and pending home sales (10). 

·         Auction: $29 bln 7y notes.

On other news.... 

Currencies 

Dollar Slides Off One-Year Highs: 10Y: +09/32..2.367%..USD/JPY: 103.92..EUR/USD: 1.3195

·         The Dollar Index presses session lows near 82.40 as trade slides off its best levels in a year. Click here to see a daily Dollar Index chart.

·         Today's weakness has the greenback lower for just the second time in eight days.

·         EURUSD is +30 pips @ 1.3200 as trade attempts to stabilize at the level. The single currency tested the 1.3150 level in early trade, but saw some intraday buying after German Finance Minister Wolfgang Schaeuble suggested markets had overreacted to Mario Draghi's Jackson Hole speech. A sustained bounce will see 1.3250 act as the first level of resistance. Eurozone data is heavy tomorrow as M3 money supply, private loans, and Spanish Flash CPI accompany Preliminary CPI and unemployment change readings from Germany. 

·         GBPUSD is +40 pips @ 1.6580 as trade attempts to put in its first meaningful gain in over a week. Sterling saw an early test of 1.6600, but was once again unable to reclaim the level. British data scheduled for tomorrow is limited to CBI Realized Sales. 

·         USDCHF is -30 pips @ .9145 as trade slides off eight-month highs in response to the strength in the euro. Minor support in the .9140 area will be watched into tomorrow's employment level report. 

·         USDJPY is -20 pips @ 103.90 as selling takes hold for just the second time in 13 sessions. Action has struggled to take the 104.00 level over the past couple of sessions, and will likely test 103.00 on a breakdown of 103.60. 

·         AUDUSD is +25 pips @ .9335 as trade contends with its best close in a month. The hard currency has found a bid despite the construction work done miss, and is now testing resistance near .9340 that is defended by the 100 dma. Australia's private capital expenditure is due out tonight. 

·         USDCAD is -100 pips @ 1.0855 as trade breaks down to a one-month low. The weakness that began yesterday is being attributed to the Burger King/Tim Horton's deal. Canada's current account balance will be released tomorrow.

Next Week In View




Economic Commentaries

Jason's Commentaries

DMA is back!!!

Last night ended on a flat note, having volatile periods. The market started the day with a bearish tone and managed to recover with a V shape however sold off after lunch. From the market movements, the bigger players are moving out of the market or shorting the market already. The internals showed weaker participation with mixed sentiments. On the technical perspective, the market has broke the highs. The only index lagging is the Dow, now trapped at the high. After such a rally, the market is likely to retrace and Dow's resistance is likely to work. As the Nasdaq led the rally, i believe we're likely to have some upside to go in the short term. The Financials were the biggest laggard of -0.21% while Utilities gained 1.09%. It seems that the market might be positioning for a profit taking. it seems that the market is likely to end the day with a down note as the futures are already down with 0.03%.








Market Call:DOWN

Date: 28 Aug 2014