21 Mar 2013 AMC

21 Mar 2013

Market Summary

 

Market Internals

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Stock Market Update 16:15 ET Dow -90.24 at 14421.49, Nasdaq -31.59 at 3222.60, S&P -12.91 at 1545.8 :[BRIEFING.COM] Equities finished today's session near their lows, and the S&P 500 lost 0.8%.  The major averages began the day in the red with tech stocks driving the early decline. The technology sector underperformed notably after disappointing earnings and cautious revenue guidance from Oracle (ORCL 32.30, -3.47) contributed to selling in several other large cap names. Cisco Systems (CSCO 20.84, -0.83), International Business Machines (IBM 212.26, -2.80), and SAP (SAP 80.72, -2.47) all lost between 1.3% and 3.8%.  In addition to major sector components, chipmakers underperformed as well. The 30-stock PHLX Semiconductor Index fell 1.6%.  Although the sector finished among the day's worst performers, the relative strength of its largest component, Apple (AAPL 452.73, +0.65), prevented the space from logging further losses.  While tech shares pressured the broader market from the opening bell, producers of basic materials declined steadily after France and Germany surprised the market with contractionary manufacturing and services PMI reports. The growth concerns regarding core eurozone economies weighed on the economically-sensitive sector and the SPDR Materials Select Sector ETF (XLB 39.02, -0.68) lost 1.7%.  Notably, today's biggest laggards are also the weakest performing sectors year-to-date. So far this year, the technology space has gained 3.2% while materials are up 3.8%. Meanwhile, the S&P 500 has added nearly 8.5% in 2013.  The Dow Jones Transportation Average was another group which kept the broader market firmly in the red. All 20 components of the bellwether complex settled in the red, andFedEx (FDX 96.50, -2.63) fell 2.7%. Including today's loss, the logistics company is down nearly 10.0% since it reported disappointing earnings ahead of Wednesday's open.  The market attempted an early afternoon rally, but that effort failed as news out of Cyprus provided further headwinds. At the end of the day, the situation remains fluid, but several reports have suggested the country's parliament has taken measures to merge two of its largest banks and impose capital controls in an attempt to stem significant outflows.  The continued uncertainty surrounding Cyprus, and its future in the eurozone, took a toll on financials. Goldman Sachs (GS 145.38, -4.75) was the weakest performer among the majors and the SPDR Financial Select Sector ETF (XLF 18.07, -0.22) dropped 1.2%.  Trading volume was the lowest of the week as just over 650 million shares were traded on the floor of the New York Stock Exchange.  Reviewing today's final sector performance, materials (-1.6%), technology (-1.3%), financials (-1.1%), and industrials (-0.9%) saw the biggest losses while telecom (UNCH), consumer staples (+0.3%), and utilities (-0.5%) withstood the bulk of the selling pressure.  The market received a healthy dose of economic data today. The initial claims level increased by a modest 2,000 from an upwardly revised 334,000 (from 332,000) for the week ending March 9 to 336,000 for the week ending March 16. The Briefing.com consensus expected the initial claims level to increase to 345,000.  Clearly, labor conditions have improved over the last month. For the past four weeks, the initial claims level has held firmly below 350,000. That comes after almost a year where claims had been tightly bounded between 350,000 and 400,000.  The Conference Board's Index of Leading Indicators increased 0.5% in February after increasing an upwardly revised 0.5% (from 0.2%) in January. The Briefing.com consensus expected the index to increase 0.5%.  After two months of negative readings, the Philadelphia Fed's Business Outlook turned positive in March. The index increased from -12.5 in February to 2.0 in March. The Briefing.com consensus expected the index to remain negative and increase to -3.0.  New orders rebounded after contracting in February. The orders index increased to 0.5 in March from -7.8. Unfilled orders, however, remained in a contraction. That index increased from -11.2 to -7.5.  Existing home sales increased 0.8% in February to 4.98 million from an upwardly revised 4.94 million (from 4.92 million) in January. The Briefing.com consensus expected the number of existing home sales to increase to 5.00 million.  There is no economic news scheduled to be released tomorrow. ..NYSE Adv/Dec 1053/1960. ..NASDAQ Adv/Dec 785/1649.

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Jason's Commentaries


Oh well, I'm wrong again. It seems that the market is going through that 'one day up one day down' phenomenon again. Sideways consolidation with heavy gyration. Dow lost more than 90 points last night, having all the sectors ended up in RED. Volumes continue to stay at 650 million shares traded, lower than the average of 700 million shares. Seems that the market is sidelined for some reason. We await for the market's participation. The Bear obviously outpaced the bulls despite good Philly Fed and Unemployment Claims result. It seems that the Technology stocks are showing weakness continuous for months already. Having dragged down by Tech giant Apple. Treasuries showed some strength last night with the 2,5,10 and 30 year bonds dropping by 1 basis points. Seems that the Treasuries uptrend is continuing. While we're in this volatile period today... it's likely to be up!

Just moments ago, it was announced that Cyprus is going back empty handed with no deals with the Russians. The ECB is giving the Cyprus officials up to Monday to raise the cash they need for the bailout. It seems that the ECB is forcing Cyprus to tax their main clients, the Russians. Stay tune.. And I'm already thinking of getting out of the market already.

Market Call: UP

Date: 22 Mar 2013

20 Mar 2013 AMC

20 Mar 2013

Market Summary 

Market Internals

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Stock Market Update 16:15 ET Dow +55.91 at 14511.73, Nasdaq +25.09 at 3254.18, S&P +10.37 at 1558.71 : [BRIEFING.COM] The S&P 500 settled higher by 0.7% after spending the entire session in positive territory.  Equities opened firmly higher amid continued speculation over the future of Cyprus as well as the impact of the parliamentary decision to reject eurozone bailout conditions.  Quiet trade continued into the afternoon as the S&P 500 spent the bulk of the day in a three point range. The benchmark index then climbed to fresh highs before sliding back into the day's range.  The afternoon spike occurred after the Federal Open Market Committee announced its decision to maintain the Fed Funds rate at 0.25% and continue its asset purchase program.  Today's statement from the Federal Reserve was largely in-line with expectations. Regarding economic conditions, the Committee observed a return to "Moderate economic growth following a pause late last year."  The Committee did not show increased concern for inflation levels, and said "Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable."  Coinciding with the move to fresh highs was a report out of Nikkei News, which suggested the incoming Bank of Japan Governor Haruhiko Kuroda will call for "bold easing." Although the central bank's dovish stance has been widely-known, this report comes as Mr. Kuroda is expected to formally assume his new role on Thursday. The reports were met with yen weakness as the USD/JPY pair jumped to session highs near 96.00.  Although stocks maintained firm gains throughout the day, sector leadership was mixed. Growth-oriented consumer discretionary shares paced the advance, but defensively-minded consumer staples and health care rounded out the top of the leaderboard.  Discretionary shares outperformed amid strength in homebuilders. Lennar (LEN 43.43, +2.01) and Toll Brothers (TOL 36.55, +2.04) both gained over 4.5% while the broaderSPDR S&P Homebuilders ETF (XHB 30.52, +0.72) settled higher by 2.4%.  Elsewhere, the technology space received some support from chipmakers and software companies. The PHLX Semiconductor Index gained 1.2% while software stocks benefitted from the relative strength of Adobe Systems (ADBE 42.46, +1.71). The software publisher gained 4.2% after beating on earnings and revenue. However, the company's second quarter earnings and revenue guidance was on the low end of expectations. In addition, Adobe said its Chief Technology Officer Kevin Lynch is leaving the company to join Apple (AAPL 452.08, -2.41), which shed 0.5%.  On the downside, the industrial sector lagged amid weakness in major sector components. Industrial equipment manufacturers underperformed in the wake of a disappointing global sales report from Caterpillar (CAT 86.94, -1.33) as well as a Wells Fargo downgrade of Deere (DE 87.74, -2.83).  Industrial component FedEx (FDX 99.13, -7.33) endured a rough session and fell 6.9% after missing on the bottom line. The company also guided fourth quarter earnings below consensus due to a slowdown in global revenues. Peer United Parcel Service (UPS 84.03, -1.05) lost 1.2% in sympathy, and the Dow Jones Transportation Average shed 0.4%. Note that both FedEx and UPS are part of the bellwether complex.  Trading volume was below average and largely in-line with Monday's total as 673 million shares changed hands on the floor of the New York Stock Exchange.  Taking a look at the final sector placement, consumer discretionary (+1.2%), consumer staples (+1.0%), and health care (+0.9%) sectors led the broader market while telecom (-0.1%), industrial (+0.1%), and energy (+0.6%) stocks brought up the rear.  Today's economic data was limited to weekly MBA Mortgage Applications, which declined 7.1% to follow last week's decrease of 4.7%.  In tomorrow's economic news, weekly initial and continuing claims will be reported at 8:30 ET. January FHFA Housing Price Index will be announced at 9:00 ET while February existing home sales, leading indicators, and March Philadelphia Fed Survey will all be released at 10:00 ET. ..NYSE Adv/Dec 2263/755. ..NASDAQ Adv/Dec 1731/722.

FOMC Press Release

Information received since the Federal Open Market Committee met in January suggests a return to moderate economic growth following a pause late last year.  Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated.  Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive.  Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices.  Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.  The Committee continues to see downside risks to the economic outlook.  The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.  The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.  Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months.  The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability.  In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens.  In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.  In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments.  When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen.  Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

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Market was up last night by 50 points. The market like the fact that the depository tax was being rejected, and further enhanced by the fact that the FOMC is not intending to stop QE anytime soon.  


Before we start on the DMA, I would like to point towards the situation in Cyprus. Cyprus is long considered to be a money laundering location by the Russians due to it's dubious banking regulations. Now that the debt crisis hit, there are more political implication that it seems. ECB is proposing to loan $10b to Cyprus on the terms to raise another $5 Billion Euros by taxing its depositors. ECB has a few motivation to do that. Firstly, they wanted to test this strategy out on Cyprus. Cyprus has a very small population, hence even if the strategy go wrong, it's minimal impact. Secondly, they are targeting the Russians' money. On these speculations, Cyprus is unlikely to take up the ECB's offer as they will definitely offend their biggest client, the Russians, and they will be going to a debt of $10b Euros. There are some writers saying that the Cyprus situation will be the Lehman Moments. This looks very similar to the Lehman Brother's Crash during the Financial Crisis. All the Treasury could have done then, is to loan a few billion dollars to Lehman to keep them afloat. That might have prevented such a chain reaction from happening. It's much cheaper to let the whole financial system going down together with Lehman Brothers. Now, we have Cyprus, small, but big serious implications. Either way, it's not a good thing. Now that Cyprus is looking to have some Natural Gas deals with the Russians to see if they are able to come up with the cash to tide over this crisis. We gotta keep a close watch on the situation and see how the market reacts over this issue. 

Now back to the DMA, the Consumer Discretionary was the biggest gainers of the day, having more than 1% of gain.  The homebuilders made a good run last night, being sparked by Lennar's excellent earnings, dragging up other Homebuilders like Toll Brother's, Ryland etc.  Volumes were around 670 million shares traded, as market was thinly traded before the FOMC release. Hence I would say the volumes were healthy. On top of that, the bulls definitely outpaced the bears significantly. It seems that the Dow definitely reacted to the 14450 support level which likely to cause the bounce last night as well. While the Treasuries on a rally for the past 2 days, it seems that the Treasuries found a resistance and I'll be expecting some lackluster movement from Treasuries soon. We'll be having a few major reports like the Philly Fed, Unemployment Claims and Existing Home Sales coming up. Gonna have a wild ride again tonight.   

Market Call: Flat to upside

Date: 20 Mar 2013

19 Mar 2013 AMC

19 Mar 2013

Market Summary 

Market Internals

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Stock Market Update 16:15 ET Dow +3.76 at 14455.82, Nasdaq -8.50 at 3229.09, S&P -3.76 at 1548.34 :[BRIEFING.COM] The major averages ended today's session on a mixed note. The Dow registered a slim gain of 3.76 points while S&P 500 shed 0.2%.  Stocks began the day with slim gains, but the early strength lacked conviction as uncertainty continued to surround Cyprus and the terms of its proposed bailout. As the morning progressed, the S&P 500 slid to its lows amid multiple reports suggesting the country's parliament is likely to vote down the controversial "stability levy."  The late morning selloff was notable as it coincided with strength in the U.S. dollar, the Treasury market, and German bunds. In addition, the CBOE Volatility Index (VIX 14.36, +1.00) ended at its highest level since March 4.  Elsewhere, the Dollar Index climbed to its best level since August of last year, and ended just below the key 83.00 area. Meanwhile, a safe haven bid across the Treasury complex pushed the 10-yr yield down five basis points to 1.91%. Overseas, the German 10-yr yield declined seven basis points, and ended at 1.35%.  The expectation of a failed vote was confirmed during the afternoon when the Cypriot parliament voted down the deposit tax with 36 ‘No' votes and 19 abstentions. At this point, it is unknown what the next step for Cyprus will be after its unprecedented rejection of bailout conditions.  Following the vote, the European Central Bank said it will provide liquidity to Cyprus within the existing rules.  As the Cypriot uncertainty weighed on the market, cyclical sectors underperformed while defensive groups ended in the lead.  The energy sector was the biggest laggard with a decline in the price of crude contributing to the weakness. The energy component slid 1.8% to $92.46. Meanwhile, the SPDR Energy Select Sector ETF (XLE 78.09, -0.87) settled lower by 1.1%.  In addition to energy stocks, the financial space trailed behind the broader market. Major financials finished lower as banks tend to show most sensitivity when uncertainty strikes. However, Bank of America (BAC 12.71, +0.15) outperformed its peers after Meredith Whitney shared her bullish outlook on the bank.  Also of note, the consumer discretionary group ended in the red amid weakness in retail stocks. The SPDR S&P Retail ETF (XRT 69.35, -0.70) fell 1.0%.  Although the discretionary sector endured broad weakness, homebuilders resisted the pressure and finished with modest gains after February housing starts were reported ahead of expectations.  In February, housing starts increased 0.8% in February to 917,000 after falling 7.3% to 910,000 in January. The Briefing.com consensus expected housing starts to increase to 911,000.  The recent volatility in housing starts is the result of normal fluctuations in the multi-family sector. Single-family construction, which tends to grow on a very stable path, increased slightly from 615,000 in January to 618,000 in February. Over the last three months, single-family starts have averaged 617,000. Multi-family starts increased from 295,000 in January to 299,000 in February.  Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET. In addition, the Federal Open Market Committee will conclude its two day meeting with its interest rate decision and policy statement scheduled for a 14:00 ET release. The Fed's economic projections will also be released at 14:00 ET and Chairman Ben Bernanke will hold a press conference at 14:30 ET. ..NYSE Adv/Dec 1270/1726. ..NASDAQ Adv/Dec 1036/1421.

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Was on the call yesterday, the bulls did not came back for a few reasons, firstly, Cyprus was going through the vote last night for the depositor tax, secondly we're having a FOMC meeting these 2 days and the Fed Fund rate is going to gyrate the market like no one business. The market last night opened with a bullish bias but the bulls did not hold the highs. Last most of their gains by noon and we ended up flat. VIX went up higher again, hitting a 14.41 last night. However, that lackluster performance did not affect the Asia market much today. The Nikkei and Hang Seng closed higher by 5.21am ET today. Bonds were being pushed down last night, while 731 million shares were traded last night on the NYSE. The bears outpaced the bulls at approx 2:1. It was more of a down day than a up day. However, we can see some slight retracement at the end of the trading day, which can suggest profit taking ahead of the FOMC. Nonetheless, the Dow is on the 14450 support level. If the FOMC don't suck today, we're likely to see a up day. This is going to be a tough call.... Market will likely start with a bullish bias and then stay flat till the FOMC release at 2pm ET. The index futures were currently up at 33 points on the Dow futures at 5.25am ET. 

Market Call: FLAT

Date: 20 Mar 2013

18 Mar 2012 AMC

18 Mar 2013

Market Summary 

Market Internals

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Stock Market Update 16:15 ET Dow -62.05 at 14452.06, Nasdaq -11.48 at 3237.59, S&P -8.60 at 1552.1 :[BRIEFING.COM] The major averages settled firmly lower with the S&P 500 down 0.6%. Equities began the session amid broad losses after the conditions of a Cypriot bailout put the package in jeopardy of being voted down in the country's parliament. Per the original agreement, Eurozone rescue funds would provide Cyprus with EUR10 billion in recapitalization with a ‘stability levy' imposed on all bank accounts expected to raise an additional EUR5.8 billion. The deposit tax is the main cause for the delay as residents push back against the measure. In addition, global investors viewed this is as a possible precursor to a similar tax being levied on bank accounts elsewhere, should other troubled sovereigns ask for help. The developments weighed on European markets where peripheral indices trailed behind their core counterparts. In addition, a modest safety bid sent the German 10-yr yield lower by five basis points to 1.41%. After opening sharply lower, U.S. equities climbed steadily into the afternoon. However, stocks slipped off their best levels of the day when reports indicated the parliamentary vote scheduled for tomorrow has been postponed indefinitely. The financial sector bore the brunt of today's selling as bank stocks tend to show increased sensitivity in the face of political or economic uncertainty. Morgan Stanley(MS 22.99, -0.60) was the weakest performer among the majors, and the SPDR Financial Select Sector ETF (XLF 18.27, -0.18) lost 1.0%. Notably, European financials saw wider losses than their U.S. counterparts. Barclays(BCS 18.44, -0.79) and Deutsche Bank (DB 43.02, -1.61) settled lower by 4.1% and 3.6%, respectively. In addition to financials, other cyclical sectors trailed behind the broader market. However, the technology space was an exception. The growth-oriented sector finished among session leaders with Apple (AAPL 455.72, +12.06) contributing to the relative strength. The largest tech stock advanced 2.7% amid continued speculation the company may hike its quarterly dividend in the near future. Although a handful of large cap components registered gains, chipmakers ended broadly lower. The PHLX Semiconductor Index, which tracks 30 microchip manufacturers, settled lower by 1.3%. On the upside, the defensively-oriented telecom space spent the bulk of the day in positive territory. Verizon Communications (VZ 48.75, +0.73) added 1.5% after Citigroup upgraded shares of Verizon to ‘Buy' from ‘Neutral.' The CBOE Volatility Index(VIX 13.60, +2.30) spiked over 20.0%. The near-term volatility measure has returned to levels last seen at the beginning of the month after sliding to multi-year lows in recent days. Interestingly, trading volume finished below average as just over 675 million shares changed hands on the floor of the New York Stock Exchange. In the metals market, gold futures climbed 0.7% to $1603.90 while silver ended little changed at $28.86. Also of note, copper fell 3.0% to its lowest level since November of last year. The weakness was a result of a technical breakdown combined with fears of tighter policy in China after February home sales rose at their fastest pace since December 2011. Today's economic data was limited to the March NAHB Housing Market Index, which registered a reading of 44. This was lower from the prior month's reading of 46, and also short of the Briefing.com consensus which called for a reading of 48. Tomorrow's economic news will focus on housing with February housing starts and building permits scheduled to be reported at 8:30 ET. ..NYSE Adv/Dec 1170/1868. ..NASDAQ Adv/Dec 865/1617.

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Stupid Cyprus causing this knee jerk reaction... To have such a small country having to tax their depositors, which might lead to bank run, causing this irrational knee jerk reaction which caused a 100 over points drop at the start of the market. Market subsequently recovered most of the losses, and closed at a 62 points loss. However, Nasdaq Composite managed to close with a gain. VIX spiked to a 13% gain. VIX initial dropped at the headstart but spike up towards the end of the trading session. Financials were the biggest loser of most sectors, being affected by Cyprus. Speculations that Cyprus banks' fear of bank run might spill over to US banks caused this unexpected loss. Volumes were not impressive, having a 670 million shares traded. Bears mostly ruled the first trading session of the week. However, on the technical note, the Dow found a support on the 14450 level, and I'm expecting the market to be up today. The widely feared bank run on Cyprus did not happen, and I believe that the market will likely to resume its bullish momentum. 

Market Call: UP

Date: 19 Mar 2013