Tuesday, February 25, 2014

22 Feb AMC - Nasdaq & S&P500 registers new high

Market Summary

The stock market kicked off the new trading week on an upbeat note, sending the S&P 500 (+0.6%) to a fresh nominal intraday record high of 1858.71. Despite the rally, selling during the final hour kept the benchmark index from finishing the session above its 2013 closing high of 1848.36. 

Although the catalyst for today's buying rush could be debated, some attributed the bullish tone to the resilience of the S&P 500 futures in the face of some disappointing economic data and market performance in China. To clarify, a bearish catalyst was there for the taking, but it wasn't taken. Once the U.S. stock market started with a bullish bias, a fear of missing out on further upside helped fuel some renewed buying interest following Friday's lackluster session. 

Seven of ten sectors posted gains with energy (+1.5%) ending in the lead. The sector seized the lead at the open and maintained its outperformance throughout the session. Top sector members factored into the strength as Dow components Chevron (CVX 114.15, +1.47) and ExxonMobil (XOM 96.44, +1.41) both gained near 1.4% while crude oil rose 0.6% to $102.81/bbl. 

Staying on the commodity theme, precious metals extended their recent gains while copper sold off. Gold futures climbed 1.1% to $1337.90/ozt while silver futures advanced 1.2% to $22.04/ozt. Today's rally extended gold's monthly gain to 7.5% while silver ended the session with a February increase of 15.1%. For its part, copper slid 0.8% to $3.264/lb amid reports of Chinese banks cutting credit to property developers. On a related note, the materials sector shed 0.5%. 

Outside of energy and materials, the remaining four cyclical sectors were mixed with respect to the broader market. Financials (+0.8%) and industrials (+0.8%) outperformed while consumer discretionary (+0.6%) and technology (+0.5%) lagged. 

Notably, the tech sector was unable to keep up with the S&P 500 as several large components like Cisco Systems (CSCO 22.12, -0.01), Qualcomm (QCOM 75.43, -0.18), and Microsoft (MSFT 37.69, -0.29) lagged. The sector did see some M&A activity as TriQuint Semiconductor (TQNT 11.64, +2.41) announced a merger with RF Micro Devices (RFMD 7.03, +1.22). 

On the countercyclical side, health care (+0.8%) outperformed while consumer staples (+0.4%), telecom services (-1.1%), and utilities (-0.3%) lagged. 

Treasuries posted modest gains with the benchmark 10-yr yield slipping one basis point to 2.74%. 

Today's participation was above average as just over 830 million shares changed hands on the floor of the NYSE. 

Tomorrow, the Case-Shiller 20-city Index and the FHFA Housing Price Index for December will both be released at 9:00 ET while the February Consumer Confidence report will cross the wires at 10:00 ET. 
  • Nasdaq Composite +2.8% YTD 
  • Russell 2000 +1.0% YTD 
  • S&P 500 UNCH YTD 
  • Dow Jones Industrial Average -2.2% YTD

Market Internals 

Leaders & Laggards

Next Day in view:

Alvin's commentaries :

The S&P500 and Nasdaq made new highs! The market started with a bullish bias and by lunch time the market reversed and slowly declined but still ended positive. 706.2m shares were traded on the NYSE.

I am not convince that the bullishness can sustain for this week. Cyclical wise this week is the weakest week in Feb before the change in trend towards bull in Mar to Apr.

Market Call: DOWN
Date: 25 Feb 2014

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