Monday, 12 Jan 2015 - AMC

Dow -96.53 at 17640.84, Nasdaq -39.36 at 4664.71, S&P -16.55 at 2028.26

Basically the week ended flat and that is a pretty rough first week. The overall market sentiment I feel is still moving towards bearish as it has been cautious. Like I mentioned above, if the market price could not break higher its resistance level, we should see a correction then.

Next week will be the start of Q1 earnings season, as usual I suppose the volatility is going to continue.

Direction for Monday 12 Jan, 2015; Up

Direction for the week Monday 12 Jan to Friday 16 Jan, 2015; Down

Another DFDM. Could that be a sign that market is about to get more bearish? 

Market suffered some short selling at the opening and continued sideway for most of the session. However it seems like the market attempt to bounce off the support level showing some underlying strength left in the bulls despite S&P broke below its 50MA... 

Market Summary

Industry Watch

Strong: Health Care, Telecom Services

Weak: Energy, Financials, Industrials, Materials, Technology

Other Market Moving Factor:

• Biotechnology underpins health care sector
• Crude oil weakness persists
• S&P 500 drops below 50-day moving average (2046)

[BRIEFING.COM] The stock market began the new week on the defensive with the Nasdaq (-0.8%) and S&P 500 (-0.8%) pacing the slide. The Dow (-0.5%) and Russell 2000 (-0.3%) outperformed, but the two indices also spent the bulk of the day in negative territory. 

Equity indices opened the trading day with slim gains that evaporated during the first few minutes of the session. The S&P 500 slumped back below its 50-day moving average (2046) at the start and spent the rest of the day well below that level as influential sectors weighed. 

Most notably, the energy sector (-2.8%) was the weakest performer with crude oil contributing to the pressure after Goldman Sachs lowered its short-term forecast for the commodity. WTI crude ended the pit session on its low, down 4.9% at $46.07/bbl. 

Meanwhile, the remaining cyclical groups registered slimmer losses, but heavily-weighted financials (-0.9%) and technology (-1.3%) kept the market under pressure throughout the session. 

The top-weighted tech sector spent the day in a steady retreat as components of all sizes registered losses. Large cap names like Apple (AAPL 109.25, -2.76), Google (GOOGL 497.06, -3.66), and Microsoft (MSFT 46.60, -0.59) lost between 0.7% and 2.5%, while chipmakers also lagged with the PHLX Semiconductor Index falling 2.0%. 

To be fair, a small pocket of relative strength could be found among cybersecurity names after President Obama spoke about online safety, and is expected to touch on the subject once again during the State of the Union Address on January 20. Cyber-Ark Software (CYBR 38.37, +1.31) and FireEye (FEYE 35.29, +1.61) gained 3.5% and 4.8%, respectively. 

Elsewhere, biotechnology names also found themselves among the outperformers, thanks in large part to Celgene (CELG 117.00, +3.33). The stock soared 2.9% after the company issued guidance for 2015 at the JP Morgan Healthcare Conference. Meanwhile, the iShares Nasdaq Biotechnology ETF (IBB 315.06, +1.74) gained 0.6% while the health care sector (-0.1%) could not stay above its flat line. 

Similar to health care, countercyclical consumer staples (-0.3%) and utilities (-0.3%) outperformed while the telecom services sector (+0.6%) spent the day in the green. 

Treasuries slumped overnight, but spent the day in a steady advance. The benchmark 10-yr yield fell four basis points to 1.91%. 

Today's participation was roughly in-line with average as nearly 760 million shares changed hands at the NYSE floor. 

Tomorrow, the Job Openings and Labor Turnover Survey will be released at 10:00 ET while the Treasury Budget for December (Briefing.com consensus $3.00 billion) will be reported at 14:00 ET. 

Macroeconomic Data

Economic Data

from Briefing.com

• No economic data

Market Internals

NYSE:

Higher Volumes than the day before – 778.5M vs 731.9M 


Decliners outpaced Advancers (adv/dec): 1160 / 1931

New Lows outpaced New Highs (highs/lows): 177 / 143

NASDAQ:

Higher Volumes than the day before – 1853.8M vs 1706.1M

Decliners outpaced Advancers (adv/dec): 1067 / 1709

New Lows outpaced New Highs (highs/lows): 82 / 95

VOLATILITY S&P500 (VIX)

19.60 +2.05 (+11.68%)

Although market internals are not looking as bearish, VIX is showing otherwise with more fear building up. I think this does not bode well for the market in general... 

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,640.84 -96.53 (-0.54%)

Volume: 92,497,981 (above average of 90,398,482)

Range: 17,571.58 - 17,793.88

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,664.71 -39.36 (-0.84%)

Volume: 491,280,891 (above average of 465,888,853)

Range: 4,650.66 - 4,715.81

S&P 500 INDEX (SPX: CBOE)

2,028.26 -16.55 (-0.81%)

Volume: 536,631,000 (above average of 526,999,723)

Range: 2,022.58 - 2,049.30 

It seems that the indices closed below their respective 20 and 50MAs. I am seeing a head and shoulder pattern forming and that could just means more downside in the coming sessions...

Commodities

Closing Commodities: Oil Prices Tank Following Goldman Price Forecast Cut

• Oil crashed again after Goldman Sachs lowered its price forecast for WTI and Brent crude oil, falling to new lows seen since the recent collapse
• At the end of today’s session, Feb crude closed $2.33 lower at $46.07/barrel
• Natural gas futures tanked on a mild weather outlook, leaving Feb nat gas closed $15 cents lower at $2.80/MMBtu
• Feb gold rose $12.60 to $1228.0/oz, while Mar silver gained $0.11 to $16.52/oz

Energy Price Action

• Feb crude oil fell $2.33/barrel to $46.07/barrel
• Natural gas fell 15 cents to $2.80/MMBtu
• RBOB Gasoline closed 5 cents lower to $1.28/gallon
• Heating oil fell 6 cents to $1.65/gallon

Agricultural Price Action

• Mar corn closed $0.02 higher at $4.02/bushel
• Mar wheat fell $0.07 cents to $5.55/bushel
• Feb soybeans ended $0.39 lower at $10.13/bushel
• Ethanol closed $0.02 lower at $1.46/gallon
• Sugar #11 rose 0.15 cents to 14.91 cents/gallon

Metals Price Action

• Feb gold ended today’s session $12.60 higher at $1228.80/oz
• Mar silver ended $0.11 higher at $16.52/oz
• Mar copper closed $0.03 lower to $2.73/lb

Currencies       

Dollar Gives Up Early Gains:

• The Dollar Index has given up its early gains and now drifts little changed near 91.95. 
• The Index threatened its best levels since November 2003 early in the session, but was unable to breakout as sellers emerged in defense of the 92.30 area. 
• EURUSD is flat @ 1.1840 after recovering its early losses. The single currency probed the 1.1800 level early, but support there managed to hold. 
• GBPUSD is +30 pips @ 1.5185 as action has fought its way into positive territory. Support near 1.5100 withstood an early test, provoking the bounce. British data out tomorrow includes CPI, PPI Input, RPI.
• USDCHF is unchanged near 1.0140. The pair trimmed its early gains as the euro rallied back to the breakeven line.
• USDJPY is -20 pips @ 118.25 and is contending with its first sub-50 dma close since the end of July. A breakdown of 118.00 puts the 116.00 area in play. Japan's current account balance will cross the wires this evening. 
• AUDUSD is -35 pips @ .8165. The hard currency saw overnight strength following the mixed ANZ Job Advertisements and home loans data, but is now sliding back toward the key .8100 area. China's trade balance and new loans are tentatively set for release. 
• USDCAD is +85 pips @ 1.1950 as trade breaks out to a fresh six-year high. The latest Bank of Canada Business Outlook Survey showed most firms remain optimistic despite weakness in the energy sector.

Bonds

Yields Fall, 30Y Approaches Record Low:

• Treasuries ended just off their best levels of the day.
• Today's advance marked the 11th gain in 12 sessions. 
• Maturities firmed overnight and ticked to new highs ahead of the solid $24B 3Y note auction. 
• The auction drew 92.6bps and a 3.33x bid/cover. Indirect bidders (45.8%) provided support as directs (14.8%) were a bit light. Primary dealers were left with just 39.4% of the supply. 
• Post-auction buying pressed yields to fresh lows before seeing slight relief into the cash close. 
• Up front, the 2Y eased -2.4bps to 54.1bps. Action finished at a one-month low. 
• In the belly, the 5Y fell -5.5bps to 1.388%. The yield finished at a three-month low and is less than 9bps away from levels last seen in November 2013. 
• The 10Y sank -5.9bps to 1.912%. The benchmark yield put in its lowest close since May 2013. 
• Outperformance at the long end dropped the 30Y -6.4bps to 2.492%. These levels are being watched closely as the yield holds 4bps from a record low print. 
• Curve flattening continued as the 2-10-yr spread narrowed to 137bps.
• Data: JOLTS - Job Openings (10) and the Treasury Budget (14). 
• Auction: $21B 10Y note reopening. 
• Fed Speak: Minny's Kocherlakota opines on "Goal-Based Monetary Policy Report" (17).

Treasury Yields:

• 2 Year Note 0.56% -0.03
• 5 Year Note 1.39% -0.06
• 10 Year Note 1.92% -0.06
• 30 Year Bond 2.49% -0.06

2/30 Spread: 193 bps ( -3 ) …  2/10 Spread: 136 bps ( -3 )

Preview for Tuesday 13 Jan, 2015

Earnings Highlights

Tuesday:
BMO - IHS, KBH
AMC - CSX, DRWI, LLTC, PRGS

Summary

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

2015 Daily Directional Accuracy: 2/6 (33.33%) 
2015 Weekly Directional Accuracy: 0/1 (0.00%)