Friday, January 31, 2014

30 Jan 2014 AMC - Market bounce with Nasdaq leading

Market Summary

The major averages finished the Thursday session near their highs as the volatile week continued. The Nasdaq surged 1.8% while the S&P 500 gained 1.1% as all ten sectors ended in the green. As a result of the advance, the S&P 500 will enter Friday's session with a slim week-to-date gain of 0.2% while the Nasdaq remains lower by 0.1% for the week. 

Stocks jumped out of the gate and continued climbing steadily into the early afternoon. The S&P 500 notched a session high of 1798.77 just before 13:00 ET, and spent the rest of the trading day near that level. The upbeat start to the session was aided by overnight gains in index futures which rallied while the Japanese yen weakened. The futures market received an additional boost an hour before the cash open when it was reported that fourth quarter GDP rose 3.2%, per the advance estimate. 

The Nasdaq Composite spent the entire session in the lead with the likes of (AMZN 403.01, +18.81), Google (GOOG 1135.39, +28.47), Facebook (FB 61.08, +7.55), and Qualcomm (QCOM 73.26, +2.14) providing support. and Google rallied ahead of their earnings while Facebook and Qualcomm posted respective gains of 14.1% and 3.0% after reporting better-than-expected results. 

Biotechnology also factored into the outperformance of the Nasdaq as the iShares Nasdaq Biotechnology ETF (IBB 249.96, +7.16) rose 3.0%. In turn, this underpinned the health care space (+1.8%), which ended in the lead. 

Similar to health care, other heavily-weighted sectors like consumer discretionary (+1.7%), financials (+1.3%), and technology (+1.5%) ended ahead of the broader market. 

Elsewhere, the energy sector (+0.2%) finished behind the remaining groups as Dow component ExxonMobil (XOM 93.99, -1.12) lagged after missing on earnings. 

Speaking of the Dow (+0.7%), the price-weighted index was unable to keep pace with the broader market as 3M (MMM 128.05, -2.20) and Boeing (BA 126.53, -3.25) weighed. 3M lost 1.7% after reporting in-line earnings on below-consensus revenue while Boeing fell 2.5% after cautious guidance overshadowed its earnings beat. 

Treasuries ended near the middle of their range with the 10-yr yield up two basis points at 2.70%. 

Trading volume was below average as 641 million shares changed hands at the NYSE. 

Today's economic data included initial claims, fourth quarter GDP, and the pending home sales report for December. 
  • Most notably, GDP increased 3.2% in the fourth quarter, according to the advance estimate. That was down from a 4.1% gain in the third quarter but slightly above the consensus estimate of a 3.0% increase. Despite the above-consensus reading, the report was actually a disappointment. Real final sales, which our model was tracking to be near a 4.0% gain, only increased 2.8%. That was the largest increase since a 3.4% gain in Q1 2012, but it was within the same trends that we have been seeing for the past couple of years. Contrary to the headline numbers, there has been no real acceleration in growth over the last few quarters. 
  • Weekly initial claims unexpectedly spiked to 348,000 from an upwardly revised 329,000 (from 326,000) while the consensus expected the claims level to fall to 325,000. 
  • Pending home sales for December tumbled 8.7%, which was worse than the 0.2% decrease forecast by the consensus. The reading followed last month's revised decrease of 0.3% (from +0.2%). 
Tomorrow, December Personal Income, Personal Spending, Core PCE Prices, and the fourth quarter Employment Cost Index will all be released at 8:30 ET while the final reading of the University of Michigan Consumer Survey for January will be reported at 9:55 ET. 
  • Nasdaq Composite -1.3% YTD 
  • Russell 2000 -2.0% YTD 
  • S&P 500 -2.9% YTD 
  • Dow Jones Industrial Average -4.4% YTD

Market Internals

Leaders & Laggards

Technical Updates

Next Day In View

Alvin's Commentaries

Happy Chinese New Year! 

The bull are out and the bears are taking a break. Market started with a bullish bias and rallied all the way to 1pm. Dow slides and went sideways while Nasdaq & S&P500 continued sideways to end Dow +109.82 at 15848.67, Nasdaq +71.69 at 4123.12, S&P+19.99 at 1794.19.

The main leaders were Healthcare (+1.82%), Consumer Discretionaries (+1.68%) & Utilities (+1.54%). On Nasdaq, (AMZN 403.01, +18.81), Google (GOOG 1135.39, +28.47), Facebook (FB 61.08, +7.55), and Qualcomm (QCOM 73.26, +2.14) provided the momentum for Nasdaq to end +1.77%.

Market internals shows lots of divergence. VIX remain on the high side closing at 17.29. Volumes we are 654m only. On the technical side, down bounced off the 15,700 support and is attempting to break the 15,900. S&P bounced off the 1,770.

January Barometer is showing brearish note for first week and closing 30 Jan with only 1 more session to go. I do not believe it is enough to end Jan on a positive note. 

Note : My wife flashed the S&P future to me while I am writing this. It is down 1.1% as of 8.45am EST. This has affect my call for the day. 

Market Call: Down
Date: 31 Jan 2014

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