Dow -27.16 at 17613.68, Nasdaq -3.21 at 4661.50, S&P -5.23 at 2023.03
What a wild day! Market opened with strong gain but lose it all with the short selling later on. I was thinking of a wrong call again but the market just went down after a while and kind of makes me not sure what the market is going to be like actually. I suppose since it is earnings season and it gets more volatility...Market is getting more and more defensive. I suppose cautious is the key right now with the oil prices continue to drop. An important note is that 30-year bonds yield has decreased to a recent low which shows a pessimistic long term growth. I suppose that has probably led from the lower crude oil prices.
Direction for Tuesday 13 Jan, 2015; Down
Market Summary
Industry Watch
Strong: Utilities
Weak: Energy, Financials, Health Care, Materials, Industrials
Other Market Moving Factor:
- Crude oil on the defensive once again
- S&P 500 unable to hold 50-day moving average (2046)
[BRIEFING.COM] The stock market enjoyed broad-based support at the start of the Tuesday session, but the opposite was true when the session ended. The S&P 500 lost 0.3% with eight sectors settling in the red.
The final standing masks the fact that the benchmark index was up in excess of 1.0% at the start of the day. The S&P 500 spent the first 90 minutes near its high, but the absence of intraday buying interest opened the door to a retreat that accelerated when the S&P cut through its 50-day moving average (2046/2047).
Commodity-related sectors fueled the pullback from highs with energy (-0.7%) and materials (-1.2%) ending the day at the bottom of the barrel. The two groups struggled to keep pace with the market in the early going and their underperformance became more notable during the afternoon retreat. Alcoa (AA 15.80, -0.37) ended lower by 2.3% despite reporting better than expected results for the quarter. Commodities, meanwhile, endured another rough day. Copper fell 4.6% to $2.60/lb while crude oil settled lower by 0.3% at $45.92/bbl after hitting an overnight low under the $44.50/bbl level.
Like energy and materials, the remaining cyclical sectors came unglued during the afternoon, but the discretionary sector (-0.1%) was able to end ahead of the S&P 500 even as homebuilders cratered. This morning, KB Home (KBH 13.87, -2.70) rallied in reaction to its revenue beat on earnings that included a deferred tax asset valuation allowance; however, the stock plunged to its October low after management said during its post-earnings conference call that the company does not expect to hit its margin goal in 2015. Instead, first-quarter margins are expected to show a significant year-over-year decline. The news sent shares of KBH lower by 16.3% while the iShares Dow Jones US Home Construction ETF (ITB 25.99, -0.68) fell 2.6% as investors adjusted their expectations for the growth-sensitive industry.
Elsewhere, the technology sector (-0.1%) spent the day ahead of the broader market with Apple (AAPL 110.16, +0.91) contributing to the relative strength. The largest sector component jumped 0.8% after Credit Suisse upgraded the stock to ‘Outperform' from ‘Neutral.' Other large cap sector members ended mixed with Google (GOOGL 501.80, +4.74) climbing 1.0% and Microsoft (MSFT 46.36, -0.25) falling 0.5%.
The technology sector helped the Nasdaq Composite (-0.1%) finish the day a bit ahead of the broader market. Similarly, biotechnology stocks outperformed with the iShares Nasdaq Biotechnology ETF (IBB 314.97, -0.09) ending little changed, but the health care sector (-0.5%) settled among the laggards.
Treasuries registered modest gains with the 10-yr yield slipping one basis point to 1.90%.
Today's participation was ahead of average with more than 850 million shares changing hands at the NYSE floor.
Economic data was limited to JOLTs and Treasury Budget:
- The Job Openings and Labor Turnover Survey showed that openings increased to 4.972 million from 4.830 million in November
- The Treasury Budget for December showed a surplus of $1.90 billion, which followed the prior surplus of $53.20 billion
- The Briefing.com consensus expected the surplus to hit $3.00 billion
Macroeconomic Data
Economic Data
from Briefing.com
- JOLTS - Job Openings : 4.972M (Prior 4.830M)
- Treasury Budget : $1.9B vs $3.0B (Prior $53.2B)
TREASURY BUDGET
Highlights
- The Treasury budget showed a surplus of $1.9 bln in December, down from a surplus of $53.2 bln in December 2013. The Treasury data are not seasonally adjusted, and the December surplus cannot be compared to the $56.8 bln deficit recorded in November. The Briefing.com Consensus expected a budget surplus of $3.0 bln.
Key Factors
- The December surplus was slightly smaller than the CBO's forecast of a surplus of $3.0 bln.
- Total revenues increased to $335.3 bln in December 2014 from $285.0 bln in December 2013, a gain of $50.3 bln.
- Total outlays increased by $101.6 bln to $333.5 bln in December 2014 from $231.8 bln in December 2013.
- Fiscal year-to-date, the deficit is $176.7 bln, $4.1 bln more than the comparable period in FY14.
Big Picture
- Raw data available at http://www.fms.treas.gov/mts/index.html
Market Internals
NYSE:
Higher Volumes than the day before – 875.9M vs 778.5M
Decliners outpaced Advancers (adv/dec): 1464 / 1642
New Highs outpaced New Lows (highs/lows): 207 / 126
NASDAQ:
Higher Volumes than the day before – 2153.6M vs 1853.8M
Decliners outpaced Advancers (adv/dec): 1336 / 1406
New Highs outpaced New Lows (highs/lows): 115 / 112
VOLATILITY S&P500 (VIX)
20.56 +0.96 (+4.90%)
I think it is more to a not here or there situation. Market internals is not bearish entirely so I presume the sell off were probably more to profit-taking. Meanwhile VIX does show some more fear in the market.
Technical Updates
17,613.68 -27.16 (-0.15%)
Volume: 99,355,008 (above average of 90,228,478)
Range: 17,498.23 - 17,923.01
4,661.50 -3.21 (-0.07%)
Volume: 566,516,755 (above average of 464,958,550)
Range: 4,624.28 - 4,751.34
S&P 500 INDEX (SPX: CBOE)
2,023.03 -5.23 (-0.26%)
Volume: 610,182,000 (above average of 524,461,750)
Range: 2,008.25 - 2,056.93
I think the market is likely to go sideway before a breakout that decide whether we will go into a bearish side or continue the rally. At this point in time I won't really rely much on technicals...
Commodities
Commodities
Closing Commodities: WTI Crude Oil Rallies In Electronic Trade; Nat Gas Extends Gains As Well
- In electronic trade, WTI crude oil rallied back into positive territory, erasing today’s losses
- Feb crude oil closed pit trading $0.15 lower at $45.95/barrel, but is now up 1% at $46.50/barrel.
- Natural gas futures also rallied in electronic trade, extending gains
- Feb nat gas is now +6% at $2.96/MMBtu
- Feb gold rose $5 today to $1233.80/oz, while Mar silver ran notable higher today, ending $4% higher at $17.13/oz
- Copper remained in the red all day, closing today’s session at $0.09 lower at $2.64/lb
Energy Price Action
- Feb crude oil fell $0.15/barrel to $45.92/barrel
- Natural gas rose 15 cents to $2.95/MMBtu
- RBOB Gasoline closed 1 cent lower to $1.27/gallon
- Heating oil fell 2 cents to $1.63/gallon
Agricultural Price Action
- Mar corn closed $0.16 lower at $3.86/bushel
- Mar wheat fell $0.07 cents to $5.48/bushel
- Feb soybeans ended $0.12 lower at $10.01/bushel
- Ethanol closed $0.05 lower at $1.41/gallon
- Sugar #11 fell 0.04 cents to 14.87 cents/gallon
Metals Price Action
- Feb gold ended today’s session $5 higher at $1233.80/oz
- Mar silver ended +$.61 (+3.7%) higher at $17.13/oz
- Mar copper closed $0.09 lower to $2.64/lb
Currencies
Dollar Nears 11-Year High:
- The Dollar Index threatens an 11-year high as trade probes the 92.30 area.
- EURUSD is -65 pips @ 1.1765 as action presses to nine-year lows. The single currency remains weak as expectations of a launch of European QE have provoked calls for parity by mid-2015. The issue will be front and center tomorrow as the European Court of Justice is expected to rule on the validity of the European Central Bank's OMT program. The allowance of the program would pave the way for the central bank to launch the much-anticipated bazooka. Eurozone industrial production is scheduled to cross the wires tomorrow.
- GBPUSD is -20 pips @ 1.5150 as trade checks on key support near 1.5100. Sterling tested the key level early in the session as CPI printed a 15-year low, pushing back rate hike expectations. Bank of England Governor Mark Carney will testify tomorrow on the Financial Stability Report.
- USDCHF is +65 pips @ 1.0210 as trade presses to its best level in almost four and a half years. Today's lack of news and da ta out of Switzerland has kept action tightly tethered to the euro.
- USDJPY is -65 pips @ 117.65 as trade dives to a one-month low. The pair looked as though it was going to hold the 50 dma (118.36), but selling proved to be too much as money moved into the yen amid the afternoon safety bid.
- AUDUSD is -5 pips @ .8150 amid an uneventful trade. The pair has spent the entire U.S. session in a tight 35 pip range. China's new loans data may be release overnight.
- USDCAD is flat @ 1.1970. Action remains near its best levels in six years.
Bonds
Treasuries Book Another Gain:
- Treasuries gained for the 12th time in 13 sessions.
- The complex got off to a strong start, pressuring yields ahead of the cash open.
- Selling emerged at the onset of U.S. trade, running yields back into positive territory. However, some light buying developed into the afternoon, dropping yields off their highs ahead of the disappointing $21B 10Y note reopening.
- The auction tailed, drawing 1.930% (WI 1.916%) and a light 2.61x bid/cover. Indirect (50.0%) and direct (9.2%) bids both missed their 12-auction averages, leaving primary dealers with 40.8% of the supply.
- Some selling developed in response to the tepid results, but trade quickly raced to its best levels since early on in the U.S. session as a sudden reversal in equities caused money to rush back into the complex.
- Trade would near the early highs, but not take them out.
- Up front, the 2Y slipped -0.4bps to 53.7 bps. Action continues to test support at the level.
- In the belly, the 5Y slid -2.9bps to 1.359%. Action posted its lowest close since the October 15 panic.
- The 10Y fell -2.2bps to 1.890%. The benchmark yield finished at levels last seen in May 2013, but was unable to take out the October low.
- The long end lagged as the 30Y eased -1bp to 2.482%. Early buying dropped the yield to within 1bp of its all-time low print (2.452%).
- Curve flattening continued as the 2-10-yr spread narrowed to 135.5bps.
- Precious metals ended mixed as gold fell -$2 to $1231 and silver climbed +$0.47 to $17.03.
- Data: MBA Mortgage Index (7), retail sales, import/export prices (8:30), business inventories (10), and the Fed's Beige Book (14).
- Auction: $13B 30Y bond reopening.
- Fed Speak: Philly's Plosser gives his economic outlook (9).
- 2 Year Note 0.54% -0.02
- 5 Year Note 1.37% -0.02
- 10 Year Note 1.91% -0.01
- 30 Year Bond 2.49% UNCH
2/30 Spread: 195 bps ( +2 ) … 2/10 Spread: 137 bps ( +1 )
Preview for Wednesday 14 Jan, 2015
Earnings Highlights
Wednesday:
BMO - JPM, NORD, SJR, WFC
AMC - CLC, GEF, FUL, HGR
BMO - JPM, NORD, SJR, WFC
AMC - CLC, GEF, FUL, HGR
Summary
The bulls seem to run out of steams now. With earnings kicking in and more economic data releasing this week, I would expect more volatility in the market. Not to mention the crude oil factor.
I would expect a breakout or some short-coverning on Wednesday. Tomorrow we will have Beige book out at 2.00pm ET.
I would expect a breakout or some short-coverning on Wednesday. Tomorrow we will have Beige book out at 2.00pm ET.
Direction for Wednesday 14 Jan, 2015; Up
2015 Daily Directional Accuracy: 3/7 (42.86%)
2015 Weekly Directional Accuracy: 0/1 (0.00%)
2015 Weekly Directional Accuracy: 0/1 (0.00%)
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