Dow -331.34 at 17501.65, Nasdaq -74.24 at 4652.57, S&P -37.62 at 2020.58
Market certainly look terrible after Monday session. Market remained negative throughout the day after a sell off at the opening. The dropping in crude oil prices also contributed to the selling. The better performance from Defensive sector just indicates fear creeping up in the market.As we are heading into 2015, market is still looking rather weak as volume is less than average and the disappointment from the economic data. I think next week we will see how the market react when the traders are all back from the holiday.
Next week will be packed with quite a number of economic data especially FOMC minutes and Non-Farm Payroll. And that is sure going to affect the market movement. Nevertheless I think we should see some bullishness coming back for the coming week.
Direction for Monday 5 Jan, 2015; Up
From what I see in the market right now, things are not going to be optimistic. Time to tighten seatbelt...
Market Summary
Industry Watch
Strong: Consumer Staples, Health Care, Telecom Services
Weak: Consumer Discretionary, Energy, Financials, Industrials, Materials
Other Market Moving Factor:
- Euro slides near 1.1900 against the dollar amid fears of Greek exit from eurozone
- Crude oil continues retreat
[BRIEFING.COM] The stock market began the first full week of 2015 on a cautious note. The S&P 500 lost 1.8% while the Russell 2000 (-1.3%) outperformed.
Stocks began sliding at the sound of the opening bell amid weakness in Europe that was brought on by renewed fears of a potential Greek exit from the eurozone. With the January 25 Greek snap elections fast approaching, voices out of Germany have tried to calm investors, but those calls have fallen on deaf ears so far. Over the weekend, German Chancellor Angela Merkel said that a Greek exit from the eurozone would be manageable, but the comments did not stop the euro from falling below the 1.1900 level against the dollar immediately after the foreign exchange market opened on Sunday evening. The single currency was able to rebound into the 1.1940 area by Monday afternoon, but markets across Europe ended the day broadly lower.
Interestingly, the dollar rallied against the euro, but surrendered almost 100 pips to the yen (119.60), suggesting a sense of caution was present among foreign exchange traders. Treasuries also benefitted from safe-haven demand that sent the benchmark 10-yr yield lower by seven basis points to 2.04%.
As for stocks, there is no denying that today's selling produced notable losses for many influential sectors, but it is worth pointing out that the retreat unfolded over the course of the session and did not have a panicky feel of investors running for the exits. That being said, the return of global macroeconomic concerns was enough for participants to reduce their risk exposure, leaving the S&P 500 up 2.4% from its mid-December low.
All ten sectors finished in the red with energy (-4.0%) spending the entire session at the bottom of the leaderboard. The growth-sensitive group endured aggressive selling in crude oil that caused the commodity to dip below the $50.00/bbl level for the first time since April 2009. The energy component settled lower by 5.3% at $50.03/bbl and continued inching down in electronic trade.
Broadly speaking, the continued crash in oil prices has not been viewed as a positive due to the magnitude of the move. Instead, the market's consciousness is allowing for the possibility that there could be some latent financial, or economic, risk in the plummeting price of oil and the commensurate slippage in copper prices, which have fallen roughly 53% and 16%, respectively, from their highs last summer.
Like energy, four other cyclical sectors ended the day behind the broader market while technology (-1.8%) settled in-line with the S&P 500. Even transport stocks that would be expected to rally on cheaper oil struggled to keep pace. The Dow Jones Transportation Average lost 2.7% to narrow its gain from the December low to 1.3%.
Elsewhere, the four countercyclical sectors finished ahead of the broader market, but they could not stay out of the red. The health care sector (-0.6%) did make an intraday appearance in positive territory, but could not build on that short-lived gain. Gilead Sciences (GILD 96.78, +1.88) spiked 2.0% after an intraday report revealed that CVS Health (CVS 94.16, -0.94) will give preferred status to a pair of Gilead's drugs. Shares of GILD contributed to the outperformance of the iShares Nasdaq Biotechnology ETF (IBB 305.85, -0.49), which shed 0.2%.
Among other movers of note, Morgan Stanley (MS 37.49, -1.22) fell 3.2% after announcing that one of its employees has been terminated after stealing partial account information of about 10 percent of clients of the Wealth Management department. The broader financial sector lost 2.1%.
Today's slide caused participants to increase their hedges, evidenced by a 13.0% spike in the CBOE Volatility Index (VIX 20.10, +2.24).
Participation was just ahead of average as 823 million shares changed hands at the NYSE floor.
Tomorrow, Factory Orders for November (Briefing.com consensus -0.4%) and the ISM Services Index for December (consensus 58.5) will both be released at 10:00 ET.
Macroeconomic Data
Economic Data
from Briefing.com
- Auto Sales : (Prior 6.1M)
- Truck Sales : (Prior 7.9M)
Market Internals
NYSE:
Higher Volumes than the day before – 844.8M vs 598.6M
Decliners outpaced Advancers (adv/dec): 718 / 2431
New Lows outpaced New Highs (highs/lows): 78 / 82
NASDAQ:
Higher Volumes than the day before – 1776.5M vs 1056.4M
Decliners outpaced Advancers (adv/dec): 812 / 1979
New Lows outpaced New Highs (highs/lows): 46 / 47
VOLATILITY S&P500 (VIX)
19.92 +2.13 (+11.79%)
Well internals are pointing to a bearish start for the week. There is some confidence in the market despite VIX spiked to more than 21.00. But I would say the big boys are hedging against the market so I am not staying bullish at the moment.
Technical Updates
17,501.65 -331.34 (-1.86%)
Volume: 116,161,258 (above average of 90,861,340)
Range: 17,475.93 - 17,821.30
4,652.57 -74.24 (-1.57%)
Volume: 476,454,394 (above average of 473,898,769)
Range: 4,641.46 - 4,702.77
S&P 500 INDEX (SPX: CBOE)
2,020.58 -37.62 (-1.83%)
Volume: 611,506,000 (above average of 532,388,569)
Range: 2,017.34 - 2,054.44
Market continues going south with volume supporting. It is aware that all three indices broke below their 50MAs. I think the fear is pulling the market down and it is unlikely that the situation is turning around soon...
Commodities
Closing Commodities: WTI Crude Breaks Below $50/Barrel
- Oil prices got slammed today with WTI crude oil breaking below $50/barrel
- Feb crude oil closed the day $2.54 lower at $50.03/barrel, after momentarily, breaking below the $50/barrel level
- Feb natural gas fell 11 cents to $2.88/MMBtu
- Precious metals held strong despite strength in dollar index
- Feb gold rallied $17.50 to $1203.60/oz, while Mar silver rallied $0.46 to $16.23/oz
Energy Price Action
- Feb crude oil fell $2.54/barrel to $50.03/barrel
- Natural gas fell 11 cents to $2.88/MMBtu
- RBOB Gasoline dropped 5 cents to $1.38/gallon
- Heating oil dropped 5 cents to $1.75/gallon
Agricultural Price Action
- Mar corn closed $0.10 higher at $4.06/bushel
- Mar wheat rose $0.08 cents to $5.89/bushel
- Jan soybeans ended $0.38 higher at $10.40/bushel
- Ethanol closed 1 cent lower at $1.57/gallon
- Sugar #11 rose 0.09 cents to 14.26 cents/gallon
Metals Price Action
- Feb gold ended today’s session $17.50 higher at $1203.60/oz
- Mar silver ended $0.46 higher at $16.23/oz
- Mar copper closed $0.05 lower to $2.77/lb
Currencies
Dollar Rallies to Best Levels Since December 2005:
- The Dollar Index has slipped to its worst levels of U.S. trade as action presses the 91.40 level.
- Despite the recent selling the greenback remains on track to close at its best levels since December 2005.
- EURUSD is -65 pips @ 1.1935 and looks almost certain to put in its lowest close in nine years. The single currency sank to a low of 1.1868 in response to comments from German Chancellor Angela Merkel saying a Greek exit from the single currency would be ‘manageable;' however, trade has spent the U.S. session repairing that damage. Eurozone data out tomorrow includes Italian and Spanish Services PMI. Italian banks are shuttered for Epiphany Day. Both the ECB rate decision and Greek election remain close to three weeks away.
- GBPUSD is -75 pips @ 1.5250. Sterling flushed below 1.5200, its worst August 2013, in response to the weak Construction PMI number before finding some momentum during U.S. trade. Britain's Services PMI and BOE Credit Conditions Survey will cross the wires tomorrow.
- USDCHF is +50 pips @ 1.0065, but has surrendered nearly all of its early gains. A lack of tradable news and data has kept the pair at the mercy of the euro.
- USDJPY is -90 pips @ 119.60 as trade slides off 120.75 resistance. A breakdown of the 119.00 level puts the 50 dma (117.45) in the crosshairs.
- AUDUSD is +5 pips @ .8095 as action has clawed its way back into positive territory. Overnight, the hard currency fell to a fresh 56-month low of .8035, but steady buying over the course of the day has run the aussie back into the green. Australia's trade balance will be released tonight. Chinese data scheduled for tonight is limited to HSBC Services PMI.
- USDCAD is -35 pips @ 1.1750 as trade presses to its worst levels of the day. Near-term support lies in the 1.1600 region. Canada's Raw Materials Price Index will be released tomorrow.
Bonds
Yields Hit Multi-Year Lows as Treasuries Book Seventh Straight Gain:
- Treasuries posted strong gains as global equity markets came under significant pressure.
- The complex traded heavy into the cash open, but rallied throughout the day as equity markets in both Europe and the U.S. booked steep losses.
- Today marked a seventh consecutive gain for Treasuries.
- Strength had the biggest impact on the long end as the 30Y tumbled -9.2bps to 2.605%. The yield on the long bond posted its lowest close since August 2012 while moving into a test of the critical 2.550%/2.600% support area. Action is just 15bps from a record low.
- The 10Y sank -8.4bps to 2.039%. The benchmark yield broke trendline support near 2.100% on its way to its worst close since May 2013. However, it would take a move below the October 15 low of 1.870% to put in the lowest print since that time.
- In the belly, the 5Y lost -5bps to 1.568%. Action slid back below the 50 dma for the first time in three weeks and is nearing a test of the key 1.500% area.
- Up front, the 2Y eased -2bps to 0.665%. Minor support at the 0.650% level is now in play.
- Aggressive flattening along the yield curve saw the 2-10-yr spread narrow to 137.5bps, its tightest since December 2012.
- Data: Factory orders and ISM Services (10).
Treasury Yields:
- 2 Year Note 0.68% +0.02
- 5 Year Note 1.57% -0.04
- 10 Year Note 2.04% -0.08
- 30 Year Bond 2.60% -0.09
2/30 Spread: 192 bps ( -11 ) … 2/10 Spread: 136 bps ( -10 )
Preview for Tuesday 6 Jan, 2015
Earnings Highlights
Tuesday :
BMO - CVGM, CMC, LMN, ZEP
AMC - LNDC, MU, SD, SONC, TISI
Summary
Things are not looking well at the moment with crude oil prices remain volatile and the mess at Euro. On top of that, longer term yields have been flattening. I suppose we should see some short covering tomorrow but I reckon the FOMC minutes on Wednesday might pose some effect on tomorrow session.
At the moment I feel market is getting more volatile. Perhaps I will focus more on the macro instead after all it is the fundamental to the economy.
At the moment I feel market is getting more volatile. Perhaps I will focus more on the macro instead after all it is the fundamental to the economy.
Direction for Tuesday 6 Jan, 2015; Up
2015 Daily Directional Accuracy: 1/2 (50.00%)
2015 Weekly Directional Accuracy: 0/0 (0.00%)
2015 Weekly Directional Accuracy: 0/0 (0.00%)
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