Well, I would say we cannot ignore the fact that this week is Thanksgiving and it tends to be bullish. Market ended the day with a gain with the buying at the last hour but was more to the downside before noon due to the disappointment in economic data.
Consumer spending has not meet expectation although it has increased. And it has an effect on the coming Black Friday and Cyber Monday results. Together with the consumer sentiment, it doesn't seem like it is going to be great one...
Crude oil price is rather flat prior to the OPEC meeting on Thursday. Depending on the agreement to cut down on the supply or not, we are definitely going to see a movement from there.
Market Summary
Industry Watch
Strong: Health Care, Technology, Telecom Services, Utilities
Weak: Consumer Discretionary, Energy, Industrials, Materials
Other Market Moving Factor:
- Initial Claims, Durable Orders ex-transportation, Personal Income, Personal Spending, Chicago PMI, Michigan Sentiment, Pending Home Sales, and New Home Sales miss expectations while only headline durable orders beat
[BRIEFING.COM] The major averages ended the session near their best levels of the day with the Nasdaq Composite (+0.6%) finishing in the lead. The S&P 500 rose 0.3% to another record high while the Dow Jones Industrial Average (+0.1%) hovered near its flat line throughout the session.
Meanwhile, the benchmark index spent the day in a slow and steady advance despite a heavy batch of disappointing economic data that was reported this morning. The index did show some signs of defensive posturing as all four countercyclical sectors ended ahead of the market while cyclical sectors traded in mixed fashion.
The telecom services sector (+1.2%) finished in the lead after trending higher throughout the day, but more notably, the heavily-weighted health care sector (+0.7%) posted a solid gain with help from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 303.87, +4.20) settled higher by 1.4% to extend this week's gain to 3.0%. Conversely, biotechnology helped the Nasdaq spend the day in the lead.
Although biotech provided a measure of support, the Nasdaq also drew significant strength from chipmakers after Analog Devices (ADI 54.56, +2.85) reported better than expected results. The stock spiked 5.5% while the PHLX Semiconductor Index jumped 2.1% with all but one component ending in the green.
The solid gains among chipmakers helped the technology sector (+0.9%) spend the day in a steady uptrend. However, the same could not be said for the remaining cyclical groups. Financials (+0.2%) held a slim gain throughout the day while consumer discretionary (unch), energy (-1.1%), industrials (-0.2%), and materials (+0.1%) lagged.
Notably, the energy sector widened its November loss to 2.8% as crude oil took another leg down, falling 0.5% to $73.75/bbl.
Treasuries spiked following today's data, but slipped into the close. The 10-yr yield ended lower by a basis point at 2.24%.
Intraday participation was well below average, but volume spiked into the close. As a result, just under 685 million shares changed hands at the NYSE floor.
Economic data was plentiful and almost entirely disappointing. Initial claims, durable orders ex-transportation, personal income/spending, Chicago PMI, Michigan Sentiment, and October pending/new home sales all missed expectations while headline durable orders beat:
Happy Thanksgiving!
Meanwhile, the benchmark index spent the day in a slow and steady advance despite a heavy batch of disappointing economic data that was reported this morning. The index did show some signs of defensive posturing as all four countercyclical sectors ended ahead of the market while cyclical sectors traded in mixed fashion.
The telecom services sector (+1.2%) finished in the lead after trending higher throughout the day, but more notably, the heavily-weighted health care sector (+0.7%) posted a solid gain with help from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 303.87, +4.20) settled higher by 1.4% to extend this week's gain to 3.0%. Conversely, biotechnology helped the Nasdaq spend the day in the lead.
Although biotech provided a measure of support, the Nasdaq also drew significant strength from chipmakers after Analog Devices (ADI 54.56, +2.85) reported better than expected results. The stock spiked 5.5% while the PHLX Semiconductor Index jumped 2.1% with all but one component ending in the green.
The solid gains among chipmakers helped the technology sector (+0.9%) spend the day in a steady uptrend. However, the same could not be said for the remaining cyclical groups. Financials (+0.2%) held a slim gain throughout the day while consumer discretionary (unch), energy (-1.1%), industrials (-0.2%), and materials (+0.1%) lagged.
Notably, the energy sector widened its November loss to 2.8% as crude oil took another leg down, falling 0.5% to $73.75/bbl.
Treasuries spiked following today's data, but slipped into the close. The 10-yr yield ended lower by a basis point at 2.24%.
Intraday participation was well below average, but volume spiked into the close. As a result, just under 685 million shares changed hands at the NYSE floor.
Economic data was plentiful and almost entirely disappointing. Initial claims, durable orders ex-transportation, personal income/spending, Chicago PMI, Michigan Sentiment, and October pending/new home sales all missed expectations while headline durable orders beat:
- Initial claims came in at 313,000 (Briefing.com consensus 288,000), which was above the revised prior week count of 292,000 (from 291,000)
- Continuing claims fell to 2.316 million from 2.330 million
- Durable goods orders increased 0.4% in October following an upwardly revised 0.9% (from -1.3%) decline (Briefing.com consensus -0.6%)
- A 45.3% increase in defense aircraft orders helped boost total aircraft demand by 8.7%. The gains in aircraft orders drove overall transportation orders up 3.4% after declining 3.3% in September
- Excluding transportation, orders fell 0.9% in October after increasing an upwardly revised 0.2% (from -0.2%) (consensus +0.5%)
- Personal income increased 0.2% for a second consecutive month in October (Briefing.com consensus +0.4%)
- Personal spending increased 0.2% in October after an upward revision resulted in no change (from -0.2%) in September (consensus +0.3%)
- The Chicago PMI for October fell to 60.8 from 66.2 (consensus 63.0)
- The University of Michigan Consumer Sentiment report for November was revised down to 88.8 from 89.4 (consensus 90.0)
- Pending home sales for October fell 1.1% (expected +0.5%)
- New home sales increased 0.7% in October to 458,000 from a downwardly revised 455,000 (from 467,000) (consensus 470,000)
- The weekly MBA Mortgage Index fell 4.3% to follow last week's 4.9% increase
Happy Thanksgiving!
Macroeconomic Data
Economic Data
from Bloomberg
DURABLE GOODS ORDER
Highlights
The headline number for durables looked good for October but the core number notably disappointed.
Durables orders rebounded 0.4 percent in October after September's decline of 0.9 percent. Market expectations were for a 0.5 percent decline.
The core fell 0.9 percent in October after a rise 0.2 percent the month before. Analysts projected a 0.5 percent gain for October. Transportation increased a monthly 3.4 percent after falling a monthly 3.3 percent in September.
Within transportation, defense aircraft jumped 45.3 percent after a 3.2 percent dip in September. Nondefense aircraft orders slipped 0.1 percent after falling 5.1 percent the month before. Motor vehicle orders rebounded 0.3 percent after declining 0.3 percent in September.
Outside of transportation, weakness was broad based. The only major industries seeing a gain in the latest month was computers & electronics. Declines were seen in primary metals, fabricated metals, and electrical equipment. The "other" category was flat.
The outlook for equipment investment continued to soften. Nondefense capital goods orders excluding aircraft declined 1.3 percent in both October and September. Shipments of this series decreased 0.4 percent in October after rising 0.4 percent in September.
The latest durables report indicates softness in the manufacturing sector. The next notable national numbers will be ISM and Markit surveys and then production worker hours in the employment report.
Durables orders rebounded 0.4 percent in October after September's decline of 0.9 percent. Market expectations were for a 0.5 percent decline.
The core fell 0.9 percent in October after a rise 0.2 percent the month before. Analysts projected a 0.5 percent gain for October. Transportation increased a monthly 3.4 percent after falling a monthly 3.3 percent in September.
Within transportation, defense aircraft jumped 45.3 percent after a 3.2 percent dip in September. Nondefense aircraft orders slipped 0.1 percent after falling 5.1 percent the month before. Motor vehicle orders rebounded 0.3 percent after declining 0.3 percent in September.
Outside of transportation, weakness was broad based. The only major industries seeing a gain in the latest month was computers & electronics. Declines were seen in primary metals, fabricated metals, and electrical equipment. The "other" category was flat.
The outlook for equipment investment continued to soften. Nondefense capital goods orders excluding aircraft declined 1.3 percent in both October and September. Shipments of this series decreased 0.4 percent in October after rising 0.4 percent in September.
The latest durables report indicates softness in the manufacturing sector. The next notable national numbers will be ISM and Markit surveys and then production worker hours in the employment report.
INITIAL JOBLESS CLAIMS
Highlights
Initial jobless claims spiked higher in the November 22, up 21,000 to 313,000 for the highest level since early September. There are no special factors to explain away the jump, one that if not reversed in coming weeks would mark a pivot higher for claims and a pivot lower for the jobs market. The 4-week average rose 6,250 to 294,000 which is the highest level since late September.
A plus in the report is a continued decline for continuing claims which, in lagging data for the November 15 week, fell 17,000 to 2.316 million. The 4-week average is down 18,000 to 2.352 million. And there's extra good news as the unemployment rate for insured workers is down 1 tenth to 1.7 percent for the lowest level since November 2000.
But it won't be continuing claims that the markets will react to, it will be the spike in initial claims.
Initial jobless claims spiked higher in the November 22, up 21,000 to 313,000 for the highest level since early September. There are no special factors to explain away the jump, one that if not reversed in coming weeks would mark a pivot higher for claims and a pivot lower for the jobs market. The 4-week average rose 6,250 to 294,000 which is the highest level since late September.
A plus in the report is a continued decline for continuing claims which, in lagging data for the November 15 week, fell 17,000 to 2.316 million. The 4-week average is down 18,000 to 2.352 million. And there's extra good news as the unemployment rate for insured workers is down 1 tenth to 1.7 percent for the lowest level since November 2000.
But it won't be continuing claims that the markets will react to, it will be the spike in initial claims.
CONSUMER SPENDING
Highlights
The consumer sector continues to nudge upward on income and spending. Personal income grew 0.2 percent in October after advancing 0.2 percent in September. The wages & salaries component gained 0.3 percent after increasing 0.2 percent the month before.
Personal spending gained 0.2 percent after no change in September. Strength was in services which rose 0.3 percent, matching the September pace. Nondurables rebounded 0.2 percent in October after decreasing 0.3 percent the prior month. Durables dipped 0.2 percent after falling 1.1 percent in September.
PCE inflation continues below Fed goal. Headline inflation rose only 0.1 percent on a monthly basis, matching the September number. Core PCE inflation gained 0.2 percent, following a 0.1 percent rise in September.
On a year-ago basis, headline PCE inflation held steady at 1.4 percent in October. Year-ago core inflation posted at 1.6 percent in October versus 1.5 percent in September. Both series are below the Fed goal of 2 percent year-ago inflation.
Overall, the consumer sector is slowly improving in terms of income and spending.
The consumer sector continues to nudge upward on income and spending. Personal income grew 0.2 percent in October after advancing 0.2 percent in September. The wages & salaries component gained 0.3 percent after increasing 0.2 percent the month before.
Personal spending gained 0.2 percent after no change in September. Strength was in services which rose 0.3 percent, matching the September pace. Nondurables rebounded 0.2 percent in October after decreasing 0.3 percent the prior month. Durables dipped 0.2 percent after falling 1.1 percent in September.
PCE inflation continues below Fed goal. Headline inflation rose only 0.1 percent on a monthly basis, matching the September number. Core PCE inflation gained 0.2 percent, following a 0.1 percent rise in September.
On a year-ago basis, headline PCE inflation held steady at 1.4 percent in October. Year-ago core inflation posted at 1.6 percent in October versus 1.5 percent in September. Both series are below the Fed goal of 2 percent year-ago inflation.
Overall, the consumer sector is slowly improving in terms of income and spending.
NEW HOME SALES
Highlights
New home sales are soft but sellers are getting their prices, at least in October. New home sales came in at a lower-than-expected 458,000 pace vs 455,000 in September which has been revised 12,000 lower. August, which was originally reported at 504,000, has been revised down a second time, 13,000 lower in today's report to 453,000. The combined 25,000 in today's downward revisions paint a weaker-than-expected picture of the new home market.
This report is often volatile and volatility really appears in price data which show a 16.5 percent surge in the median price to a record $305,000. The year-on-year rate, which had dipped into the negative column in September, is suddenly at plus 15.4 percent. More thorough but less timely data on home prices in yesterday's Case-Shiller and FHFA reports offer no hint of a sudden acceleration in pricing power.
Supply of new home sales for sales is steady, at 212,000 vs 210,000 and 207,000 in the prior two months. On a monthly sales basis, supply is at 5.6 months vs 5.5 months in both September and August.
Looking at regions, sales in the South, which for new home sales is larger than all other regions combined, slipped 1.9 percent in the month with the West, the second largest region, down 2.7 percent. Sales rose 15.8 percent in the Midwest, which is a relatively small region compared to the South and even to the West, while sales in the Northeast, which is a tiny region in this report, rose 7.1 percent.
This report gallops up and down from month to month but the long slope is just about dead flat. Year-on-year, new home sales are up only 1.8 percent. Pending home sales for existing homes, also released today at 10:00 a.m. ET, are likewise flat.
This report is often volatile and volatility really appears in price data which show a 16.5 percent surge in the median price to a record $305,000. The year-on-year rate, which had dipped into the negative column in September, is suddenly at plus 15.4 percent. More thorough but less timely data on home prices in yesterday's Case-Shiller and FHFA reports offer no hint of a sudden acceleration in pricing power.
Supply of new home sales for sales is steady, at 212,000 vs 210,000 and 207,000 in the prior two months. On a monthly sales basis, supply is at 5.6 months vs 5.5 months in both September and August.
Looking at regions, sales in the South, which for new home sales is larger than all other regions combined, slipped 1.9 percent in the month with the West, the second largest region, down 2.7 percent. Sales rose 15.8 percent in the Midwest, which is a relatively small region compared to the South and even to the West, while sales in the Northeast, which is a tiny region in this report, rose 7.1 percent.
This report gallops up and down from month to month but the long slope is just about dead flat. Year-on-year, new home sales are up only 1.8 percent. Pending home sales for existing homes, also released today at 10:00 a.m. ET, are likewise flat.
CRUDE OIL INVENTORIES
Highlights
A rise in domestic oil production in the November 21 week, to a record 9.1 million barrels per day, helped offset increased inputs to refineries and a dip in oil imports as oil inventories rose 1.9 million barrels to 383.0 million. Refineries operated at a strong 91.5 percent of capacity in the week and increased output of both gasoline and distillates. Supplies of gasoline to the wholesale sector are now less thin than in prior weeks, at a year-on-year plus 1.3 percent. Wholesale supplies of distillates remain thin, at minus 7.8 percent which points to increased distillate production. WTI, near $73.50, is little changed following today's report.
NATURAL GAS STORAGE
Highlights
Natural gas in storage fell a sharp 162 billion cubic feet in the November 21 week to 3,432 bcf.
Market Internals
NYSE:
Lower Volumes than the day before – 700.0M vs 846.4M
Advancers outpaced Decliners (adv/dec): 1913 / 1165
New Highs outpaced New Lows (highs/lows): 183 / 33
NASDAQ:
Lower Volumes than the day before – 1348.8M vs 1652.7M
Advancers outpaced Decliners (adv/dec): 1657 / 1057
New Highs outpaced New Lows (highs/lows): 119 / 43
VOLATILITY S&P500 (VIX)
12.07 -0.18 (-1.47%)
I can still see divergence in the internals prior to Thanksgiving on Thursday as TRIN has been staying more than 1 throughout the session. Volume is significantly weak and the market continues to go higher as mentioned at the start of the week. I suppose we should see a correction soon. Probably next week?
Technical Updates
17,827.75 +12.81 (+0.07%)
Volume: 67,447,584 (below average of 89,084,320)
Range: 17,791.16 - 17,833.76
4,787.32 +29.07 (+0.61%)
Volume: 351,085,192 (below average of 500,046,922)
Range: 4,757.48 - 4,788.00
S&P 500 INDEX (SPX: CBOE)
2,072.83 +5.80 (+0.28%)
Volume: 510,052,000 (below average of 528,201,734)
Range: 2,066.62 - 2,073.29
Volume is weak as expected as Thanksgiving day approaches. Market is at a high right now and I think it is still rather cautious prior to Black Friday and Cyber Monday. Guess we should have a breakout by next week.
Commodities, Currencies and Bonds
Currency: Weak Data Weighs on Greenback
- The Dollar Index drifts on session lows near 87.60.
- The Index was little changed into U.S. trade, but was pushed to these levels as U.S. economic data disappointed across the board.
- EURUSD is +40 pips @ 1.2510 as buyers remain in control for a third session. A quiet day for news and data out of the region has kept participants focused on the weak U.S. data. Traders continue to watch the 1.2400/1.2600 area, which has bookended trade throughout the month of November. Eurozone data scheduled for tomorrow is heavy as M3 money supply, private loans, German preliminary CPI, German unemployment change, GfK German Consumer Climate, and Spanish Flash CPI are due out.
- GBPUSD is +90 pips @ 1.5795 as action presses to its best level in two weeks. Today's bid comes despite just an in-line GDP print (0.7% QoQ) and disappointing business investment and CBI Realized Sales figures.
- USDCHF is -35 pips @ .9605 as selling persists for a third day. Action remains tightly tied to the euro thanks to the Swiss National Bank's EURCHF1.20 floor.
- USDJPY is -20 pips @ 117.75 as trade lingers near seven-year highs. An uneventful session has seen action trapped in a tight 50 pip range.
- AUDUSD is +15 pips @ .8545 as trade rallied off 52-month lows. The hard currency was battered in early trade after construction work done fell short of estimates, but recovered after the weak U.S. data. Australia's private capital expenditures will be released tonight.
- USDCAD is -20 pips @ 1.1235 as action flirts with its lowest close of November. Support in the 1.1200/1.1250 area and the 50 dma (1.1228) remain under close watch. Canadian data scheduled for tomorrow is limited to current account balance.
Bonds: Weak Data Pushes Yields to One-Month Lows
Treasury Yields:- Treasuries finished near their highs as buyers remained in control for a fourth straight session.
- The complex drifted little changed into the cash open open and rallied throughout the morning as data point after data point missed estimates.
- Yields across much of the curve finished at their lowest levels in a month.
- Initial claims jumped to 313K (288K expected) and durable orders- ex transportation fell -0.9% (+0.5% expected). Personal income was light at +0.2% (+0.3% expected), as was personal spending at +0.2% (+0.4% expected).
- The disappointing data did not stop there as Chicago PMI (60.8 actual v. 63.0 expected), Michigan Sentiment - Final (88.8 actual v. 90.0 expected), new home sales (458K actual v. 470K expected), and pending home sales (-1.1% actual v. 0.5% expected) also missed estimates.
- The complex rallied to session highs ahead of the in-line $29B 7Y note auction. The auction drew 1.960% (1.955%) and a 2.63x bid/cover. Indirect bidders (50.0%) provided support as directs (12.8%) were a bit light. Primary dealers were left with 37.2% of the supply.
- Maturities held near their best levels of the session throughout the afternoon as volume dried up into the close ahead of the Thanksgiving holiday.
- Up front, the 2Y added +0.8bps to 0.524%. Action finished at the midpoint of the 0.500%/0.550% range that has been in place during the month of November.
- In the belly, the 5Y slipped -1.6bps to 1.552%. The yield closed at a one-month low, and slid closer to 1.500% support.
- The 10Y settled -2.6bps @ 2.234%. The benchmark yield is now ~18bps off the November 7 high.
- A modest bid at the long end dropped the 30Y -2.6bps to 2.940%. A move into the 2.900% region would make for a 50% retracement of the move off the October 15 low.
- A flatter curve persisted as the 2-10-yr spread tightened to 171bps.
- Precious metals ended little changed with gold and silver @ $1197 and $16.53, respectively.
- Markets are closed Thursday in observance of Thanksgiving Day. On Friday, the U.S. Treasury market will close at 2pm ET.
- 2 Year Note 0.53% +0.02
- 5 Year Note 1.56% -0.02
- 10 Year Note 2.24% -0.03
- 30 Year Bond 2.95% -0.02
2/30 Spread: 242 bps ( -4 ) … 2/10 Spread: 171 bps ( -5 )
Preview for Friday 28 November, 2014
There is no economic data on Friday as it is only a half trading day.
Summary
It only takes the last hour to finish the day in positive for DOW as the economic data has not show any strong sign of growth. Energy sector ended in red as well, influenced by the OPEC meeting on Thursday.
Since Friday is only a half session, I reckon the volume will remain weak. Given that it is a holiday season, we should still see the week ended higher. Perhaps the market will still be volatile as we awaits for the data from Black Friday and Cyber Monday.
Since Friday is only a half session, I reckon the volume will remain weak. Given that it is a holiday season, we should still see the week ended higher. Perhaps the market will still be volatile as we awaits for the data from Black Friday and Cyber Monday.
Direction for the Friday 28 November, 2014; Up
Daily Directional Accuracy (from 25 November 2014): 0/2 (00.00%)
