Dow -55.16 at 17983.07, Nasdaq -29.47 at 4777.44, S&P -10.23 at 2080.34
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
It seems like the bulls are running out of steam. As we are heading to the last trading day of 2014, are we going to finish strong? Let's read on...
Market Summary
Industry Watch
Strong: Financials, Materials
Weak: Industrials, Technology, Utilities
Other Market Moving Factor:
- Japanese yen strengthens after ruling coalition announces plans to cut effective corporate tax rate below 30%
- Crude oil remains volatile
[BRIEFING.COM] The stock market ended the Tuesday session on a broadly lower note. The Nasdaq Composite (-0.6%) was the weakest performer among the major averages while the S&P 500 (-0.5%) ended a bit ahead of the tech-heavy index.
Equities began the day in negative territory and remained below their flat lines until the close. However, participation was very limited with just 525 million shares changing hands at the NYSE floor. The light activity was also reflected by narrow trading ranges with the S&P 500 bounded between 2,080 and 2,084 for most of the session.
Overall, cyclical sectors were responsible for the bulk of the weakness as three of six growth-sensitive groups settled in-line with or behind the broader market while the utilities sector (-2.1%) was the only laggard on the countercyclical side.
The utilities sector spent the entire session at the bottom of the leaderboard to narrow its 2014 gain to 26.6%. Despite today's retreat, the rate-sensitive group remains on track to finish the year ahead of the other nine sectors while health care, which has spiked 24.5% in 2014, is all but sure to finish the year in the second place.
Similar to utilities, the energy sector (-0.6%) slumped out of the gate amid early weakness in crude oil, which endured a volatile session. The energy component faced selling pressure overnight, but was able to climb into the green this morning, ending higher by 0.8% at $54.10/bbl. Today's uptick in the price of crude could not prevent oil services provider Civeo (CVEO 3.92, -4.35) from slashing its guidance for next year, which caused the stock to plunge 52.6%.
Elsewhere, other influential sectors like industrials (-0.5%) and technology (-0.7%) kept the market under pressure while consumer discretionary (-0.4%), financials (-0.1%), and health care (-0.4%) displayed relative strength.
For the most part, the health care sector withstood weakness in the biotech group that pressured the iShares Nasdaq Biotechnology ETF (IBB 304.62, -3.39) lower by 1.1%. This in turn contributed to the underperformance of the Nasdaq Composite.
Treasuries notched their highs shortly after the opening bell before retreating throughout the day. The 10-yr yield slipped one basis point to 2.19%.
Economic data was limited to Consumer Confidence and Case-Shiller 20-City Index:
- The Conference Board's Consumer Confidence Index increased to 92.6 in December from an upwardly revised 91.0 (from 88.7) while the Briefing.com consensus expected an increase to 94.4
- Over the last month, gasoline prices dropped to their lowest point in more than five years, equity markets have reached historic highs, and the employment situation improved notably, but the December reading came in below the 94.1 that was recorded in October
- The Case-Shiller 20-city Home Price Index for October rose 4.5% against a 4.4% increase expected by the Briefing.com consensus
- The prior month's reading was revised down to 4.8% from 4.9%
Macroeconomic Data
Economic Data
from Briefing.com
- Case-Shiller 20-city Index : 4.5% vs 4.4% (Prior 4.8%)
- Consumer Confidence : 92.6 vs 94.4 (Prior 91.0)
Highlights
- The Conference Board’s Consumer Confidence Index increased to 92.6 in December from an upwardly revised 91.0 (from 88.7) in November. The Briefing.com consensus expected the index to increase to 94.4.
Key Factors
- Over the last month, gasoline prices dropped to their lowest point in more than five years, equity markets have reached historic highs, and the employment situation notably improved.
- Clearly, the factors behind the confidence data warranted a strong increase in the overall index. Yet, the December reading is still below October’s 94.1 report.
- Fortunately, consumer confidence is not a reliable indicator for future consumption growth. Consumption relies on income gains. As long as income continues to move on an upward-trending path, consumption growth should follow.
Big Picture
- Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.
Market Internals
NYSE:
Lower Volumes than the day before – 539.0M vs 552.1M
Decliners outpaced Advancers (adv/dec): 1270 / 1815
New Highs outpaced New Lows (highs/lows): 118 / 42
NASDAQ:
Higher Volumes than the day before – 1251.7M vs 1220.6M
Decliners outpaced Advancers (adv/dec): 1050 / 1684
New Highs outpaced New Lows (highs/lows): 113 / 41
VOLATILITY S&P500 (VIX)
15.92 +0.86 (+5.71%)
I am seeing some confusion here. It was more bearish than bullish. VIX ended the session with a doji indicating the lack of direction in the market...
Technical Updates
17,983.07 -55.16 (-0.31%)
Volume: 47,485,500 (below average of 91,752,769)
Range: 17,959.70 - 18,035.02
4,777.44 -29.47 (-0.61%)
Volume: 316,501,988 (below average of 485,393,122)
Range: 4,772.88 - 4,803.89
S&P 500 INDEX (SPX: CBOE)
2,080.35 -10.22 (-0.49%)
Volume: 307,732,000 (below average of 545,629,250)
Range: 2,079.53 - 2,088.49
There is a pullback in the market but DOW and S&P are still sitting on their XOP. Meanwhile NASDAQ was unable to break the resistance level. And volume is still significantly low after Christmas week.
Commodities
Closing Commodities: WTI Crude Ends With Modest Gain
- Gold and silver futures both spiked following the open of pit trading, which pushed gold back above $1200/oz and silver back above $16/oz
- Feb gold rose as high as $1209.20/oz, but ended the day near the $1200 at $1200.40/oz (+$18.60).
- Mar silver ended $0.48 higher at $16.26/oz
- Natural gas remained in the red all day and fell as low as $3.08/MMBtu. By the end of today’s session, Feb nat gas closed $0.10 lower at $3.09/MMBtu
- WTI crude oil came back off overnight lows, finishing the day $0.42 higher at $54.10/barrel.
Energy Price Action
- Jan crude oil rose $0.42/barrel to $54.10/barrel
- Natural gas fell 10 cents to $3.09/MMBtu
- RBOB Gasoline remained unchanged to $1.47/gallon
- Heating oil rose 1 cent to $1.84/gallon
Agricultural Price Action
- Mar corn closed $0.07 lower at $4.06/bushel
- Mar wheat fell 11 cents to $6.03/bushel
- Jan soybeans ended $0.07 lower at $10.36/bushel
- Ethanol closed 7 cents lower at $1.57/gallon
- Sugar #11 rose 0.01 cents to 14.61 cents/gallon
Metals Price Action
- Feb gold ended today’s session $18.60 higher at $1200.40/oz
- Mar silver also ended $0.48 higher at $16.26/oz
- Mar copper closed $0.03 higher to $2.85/lb
Currencies
Dollar Probes 90.00:
- The Dollar Index is on track for its second loss in nine sessions as trade flirts with the 90.00 area.
- Current levels remain a headwind as the 200 mma lurks in the vicinity.
- EURUSD is +10 pips @ 1.2160 as action fights to avoid a fresh 28-month low. The single currency has found some footing in today's trade despite ongoing concerns of a potential Greek exit from the currency union as the anti-euro Syriza party continues to perform well in the polls ahead of the January 25 election. Banks across the eurozone are shuttered tomorrow in observance of New Year's Eve.
- GBPUSD is +50 pips @ 1.5565 as trade has won back most of yesterday's losses. Sterling tested the important 1.5500 area early, but has managed to climb off the key level. British banks will see an early close for New Year's Eve.
- USDCHF is -10 pips @ .9885 as action slips off levels last seen in August 2012. A session sans news and data has kept the pair at the mercy of the euro. Swiss banks are closed tomorrow in celebration of New Year's Eve.
- USDJPY is -120 pips @ 119.45 as a sell the news reaction develops in response to the highly anticipated announcement of corporate tax cuts. Shinzo Abe's government delivered on its promise, cutting the 2015 rate by 251 bps to 32.1% and the 2016 rate by another 80bps to 31.3%. The 119.00 area provides help while 116.00/116.50 is the more important area.Japanese banks are closed tomorrow for New Year's Eve.
- AUDUSD is +55 pips @ .8185 as trade looks likely to put in a fifth day of gains. The winning streak has managed to lift the hard currency off the .8100 level, which has managed to hold since July 2009. China's HSBC Final Manufacturing PMI is due out tonight.
- USDCAD is -35 pips @ 1.1600 as action slips to its lowest level in almost two weeks. The December highs near 1.1650 have provided some headwinds.
Bonds
Yields Slip Again:
- Treasuries slipped during much of the U.S. session, but still managed to book modest gains.
- Record low yields across much of Europe provided support early, and the complex was able to close higher despite steady selling throughout the day.
- Today's bid had the biggest impact up front as the 2Y fell -3.2bps to 0.680%. Support in the 0.650% area is now under close watch.
- In the belly, the 5Y eased -2.8bps to 1.684%. The yield broke below minor support in the 1.700% area before checking up near the 1.650% level that is guarded by both the 100 and 200 dma.
- The 10Y shed -1.7bps to 2.190%. The benchmark yield tested 2.150% support before settling at a one-week low.
- Buying at the long end pushed the 30Y down -1.8bps to 2.758%. The yield on the long bond finished on support guarding the October/December lows.
- A steeper curve developed as the 2-10-yr spread widened to 151bps.
- Precious metals gained with gold up +$17 to $1199 and silver higher by +$0.43 to $16.21.
- Data: MBA Mortgage Index (7), initial and continuing claims (8:30), Chicago PMI (9:45), and pending home sales (10).
- The U.S. Treasury market will close at 2pm ET for New Year's Eve.
Treasury Yields:
- 2 Year Note 0.69% -0.03
- 5 Year Note 1.68% -0.04
- 10 Year Note 2.20% -0.02
- 30 Year Bond 2.76% -0.02
2/30 Spread: 207 bps ( +1 ) … 2/10 Spread: 151 bps ( +1 )
Preview for Wednesday 31 Dec, 2014
Summary
Market took a step back after a rally. I feel it is more of a profit taking and the market may be experiencing a pullback before going higher early next year. Nonetheless I feel that the January Barometer is still pretty reliable. This means that we might see December ends in red...
Direction for Wednesday 31 Dec, 2014; Down
Daily Directional Accuracy (from 25 November 2014): 13/21 (61.90%)
Weekly Directional Accuracy (from 31 October 2014): 3/7 (42.86%)
Weekly Directional Accuracy (from 31 October 2014): 3/7 (42.86%)
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