Monday, 29 Dec 2014 - AMC

Dow -15.48 at 18038.23, Nasdaq +0.05 at 4806.91, S&P +1.80 at 2090.57

Next week is the last week of the year. December is still positive and we will see if there is a Santa rally this year too. 

Market sentiment is cautious I would say. Economy in the US is still recovering in a stable manner. Given January ended in red and according to January Barometer, I am not on the bullish side yet. But if we are seeing otherwise, this would probably mean a positive start for the next year since we are in the best six month of the year after all... 

Direction for Monday 29 Dec, 2014; Down

Ok the market started off cautiously and remained sideway throughout the session. DOW ended in red while NASDAQ and S&P ended in slight positive.          

Market Summary

Industry Watch

Strong: Utilities, Consumer Discretionary, Financials, Health Care, Energy

Weak: Telecom Services, Materials, Consumer Staples, Information Technology

Other Market Moving Factor:

• Political uncertainty in Greece feeds some safe-haven posturing
• Financial sector outperforms, but information technology sector underperforms
• WTI crude prices hit 5 1/2 year low after briefly trading below $53/bbl 

[BRIEFING.COM] It was a full day of trading on Monday, yet the stock market acted like it was still on vacation. Volume was light and the major indices held to narrow trading ranges that bracketed the unchanged line for much of the session. 

The S&P 500 managed to eke out its seventh gain in the last eight sessions. In doing so, it established another record closing high that pulled it ever closer to the 2100 level. 

Most of today's action happened away from the U.S. stock market. To that end, European bourses had a roller-coaster session, riding a wave of Greek politics that included a third failed vote for the prime minister's preferred presidential candidate, the subsequent announcement that parliament would be dissolved, and news that snap elections would be held on January 25. 

The Greek stock market ended Monday down 3.9%, yet that was a vast improvement over the 10% decline it suffered at one point following the failed vote. The turmoil was attributed to a growing sense of angst that the anti-austerity Syriza party will win the snap elections, cancel the austerity measures implemented as a condition for the country's bailout program, and potentially lead a Greece exit from the eurozone. 

That uncertainty, along with the renewed weakness in the Russian ruble against the dollar, prompted some safe-haven positioning in major sovereign bond markets. Arguably, it also contributed to a 3.9% jump in the CBOE Volatility Index (VIX 15.06, +0.56) as market participants aimed to hedge portfolios for near-term volatility risk.

The German bund yield fell five basis points to 0.54% while the 10-yr Treasury note yield slipped four basis points to 2.21%. 

A reversal in oil prices also provided some support for longer-dated Treasuries. Earlier this morning, WTI crude futures bumped up to $55.60/bbl amid concerns about the unrest in Libya. They soon fell out of favor, though, and traded below $53.00/bbl, marking a 5 ½ year low, before settling down 2.1% at $53.61/bbl.

The gyration in oil prices led to some commensurate gyration in the S&P 500 energy sector, but the latter ultimately found its footing and advanced 0.3% on some bottom-fishing interest. The big mover in the stock market, though, was the rate-sensitive utilities sector. It jumped 1.1%, leaving it up 16.8% for the quarter and 29.3% for the year.

That certainly helped the S&P 500 move ahead, yet it was the outperformance of the consumer discretionary (+0.7%), financial (+0.4%), energy (+0.3%), and health care (+0.3%) sectors that made the winning difference.

Gains in those heavily-weighted sectors helped offset the relative weakness of the information technology (-0.5%) and consumer staples (-0.4%) sectors. 

Within the Dow Jones Industrial Average, IBM (IBM 160.52, -1.82) and Visa (V 265.36, -1.26) were the two biggest losers while Home Depot (104.55, +0.80) and Goldman Sachs (GS 196.13, +0.68) were the two biggest gainers. 

There wasn't any economic data out of the U.S. on Monday. Tuesday's lineup will feature the Case-Shiller Home Price Index for October (Briefing.com consensus +4.4%) and the Consumer Confidence report for December (Briefing.com consensus 94.4). 

A total of 538 mln shares changed hands at the NYSE, which was far below the 50-day simple moving average of 802 million shares. 

Macroeconomic Data

• No Economic Data

Economic Data

from Briefing.com

• No Economic Data

Market Internals

NYSE:

Higher Volumes than the day before – 552.1M vs 444.8M 


Advancers outpaced Decliners (adv/dec): 1822 / 1300

New Highs outpaced New Lows (highs/lows): 245 / 36

NASDAQ:

Higher Volumes than the day before – 1220.6M vs 919.8M

Advancers outpaced Decliners (adv/dec): 1453 / 1336

New Highs outpaced New Lows (highs/lows): 155 / 43

VOLATILITY S&P500 (VIX)

15.06 +0.56 (+3.86%)

Despite the low volume period, internals are still pointing some bullishness. Although VIX went up at opening, it managed to closed lower at around 15.00 which is a support/resistance level. It seems there is still confidence in the market going bullish...    

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

18,038.23 -15.48 (-0.09%)

Volume: 53,866,598 (below average of 92,595,927)

Range: 18,021.57 - 18,073.04

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,806.91 +0.051 (+0.00%)

Volume: 312,341,492 (below average of 489,352,190)

Range: 4,798.90 - 4,813.72

S&P 500 INDEX (SPX: CBOE)

2,090.57 +1.80 (+0.09%)

Volume: 331,932,000 (below average of 546,324,969)

Range: 2,085.75 - 2,093.55 

Looking at the technicals, all three indices are reaching a resistance level. However without any volume supported, I think the market is more likely to go sideway or down.       

Commodities

Closing Commodities: WTI Oil Slides To Lowest Level Not Seen Since May 2009

• Oil prices sold off in afternoon trade, falling to a 5 1/2-year low
• Feb crude ended the day $1.06 lower at $53.68/barrel
• Natural gas futures rallied today, rising as high as $3.21/MMBtu, well off its LoD of $3.05/MMBtu
• Precious metals were weak today, but activity was not driven by the dollar index
• Feb gold lost $13.50 today to $1181.80/oz, while Mar silver fell $0.38 to $15.78/oz
• Mar copper lost $0.01 to $2.82/lb

Energy Price Action

• Jan crude oil fell $1.06/barrel to $53.68/barrel
• Natural gas rose 18 cents to $3.19/MMBtu
• RBOB Gasoline fell 5 cents to $1.47/gallon
• Heating oil fell 5 cents to $1.83/gallon

Agricultural Price Action

• Mar corn closed $0.02 lower at $4.13/bushel
• Mar wheat rose 5 cents to $6.14/bushel
• Jan soybeans ended $0.15 higher at $10.43/bushel
• Ethanol closed 1 cent lower at $1.66/gallon
• Sugar #11 fell 0.10 cents to 14.60 cents/gallon

Metals Price Action

• Feb gold ended today’s session $13.50 lower at $1181.80/oz
• Mar silver also ended $0.38 lower at $51.78/oz
• Mar copper closed $0.01 higher to $2.82/lb

Currencies

Dollar Hits Best Levels Since March 2006:

• The Dollar Index holds on session highs near 90.20 amid a lackluster trade. 
• Today's bid has the greenback on pace for its best close since March 2006. 
• EURUSD is -25 pips @ 1.2155 as trade presses fresh 28-month lows. The single currency saw an early bid in response to the news Greece will head to the polls January 25 after parliament was unable to name a president following three rounds of voting. However, action has slipped throughout the day as the news was digested and traders began to grapple with the possibility of a Greek exit from the euro. Support in the 1.2000/1.2200 area remains key. Eurozone data set for tomorrow includes M3 money supply, private loans, and Spanish Flash CPI. 
• GBPUSD is -30 pips @ 1.5525 as action flirts with its worst close since August 2013. The 1.5500 region remains under close watch. British data scheduled for tomorrow is limited to Nationwide Home Price Index. 
• USDCHF is +30 pips @ .9895 as action sits at levels last seen in August 2012. Trade remains closely tied to the euro. 
• USDJPY is +40 pips @ 120.70 as action ticks to a three-week high after the Japanese government announced a JPY3.5 trln stimulus program. The December highs near 122.00 coincide with levels last seen in 2007. 
• AUDUSD is +15 pips @ .8135 as light buying persists for a fourth day. The hard currency has found some support in the .8100 area as action checks up at 54-month lows.
• USDCAD is +5 pips @ 1.1630 as an uneventful session draws to a close. Today's choppy trade has seen the pair limited to a 45 pip range.

Bonds

Yields Fall for Third Day:

• Treasuries booked solid gains as money moved into the complex amid fears of a potential Greek exit from the euro. 
• The troubled periphery's parliament failed to name a new president after three rounds of voting, meaning early elections will be held on January 25. Recent polls have suggested the anti-euro Syriza party is the favorite. 
• Up front, the 2Y ended -2.7bps @ 0.712%. Action saw an early test of the 0.750% level, but was unable to break out to fresh 45-month highs. 
• In the belly, the 5Y shed -4.4bps to 1.712%. The yield failed an early test of resistance at the 1.750% level. 
• The 10Y fell -4.3bps to 2.207%. The benchmark yield ended the day hugging the closely watched 2.200% mark. 
• Buying at the long end dropped the 30Y -3.8bps to 2.776%. The recent lows near 2.700% remain in focus. 
• Curve flattening caused the 2-10-yr spread to tighten to 149.5bps. 
• Precious metals finished near their lows with gold -$14 @ $1181 and silver -$0.39 @ $15.76. 
• Data: Case-Shiller 20-city Index (9) and consumer confidence (10).

Treasury Yields:

• 2 Year Note 0.72% -0.01
• 5 Year Note 1.72% -0.03
• 10 Year Note 2.22% -0.03
• 30 Year Bond 2.78% -0.03

2/30 Spread: 206 bps ( -2 ) …  2/10 Spread: 150 bps ( -2 )

Preview for Tuesday 30 Dec, 2014

Summary

I think cautious is the word for the market. Perhaps the bulls need some time-out to catch a breathe before another rally. Also the market is likely to crash during low volumes too. 

Treasury yields are also showing a decreasing trend throughout the year. That is not a good sign if market continues to rise higher... 

Direction for Tuesday 30 Dec, 2014; Down

Daily Directional Accuracy (from 25 November 2014): 12/20  (60.00%)
Weekly Directional Accuracy (from 31 October 2014): 3/7 (42.86%)