Dow +225.48 at 17416.85, Nasdaq +45.41 at 4683.41, S&P +19.09 at 2021.25
Third candle reversal? The market took a rebound and from what I see I think that would probably be a short-covering session.It seems like the market is forming a downtrend. For confirmation we should see a lower highs and lower lows. I think there should be a pullback before the market continues to go down lower...
Direction for Thursday 29 Jan, 2015; Up
Market Summary
Industry Watch
Strong: Consumer Discretionary, Financials, Utilities
Weak: Energy, Health Care, Technology, Telecom Services
Other Market Moving Factor:
- Crude oil sets fresh January low after surrendering early morning gain
- S&P 500 looks to regain 100-day moving average (2,010)
[BRIEFING.COM] The stock market endured a volatile session on Thursday, but a steady rebound off morning lows helped the major averages register their first gain in three days. The Dow Jones Industrial Average paced the advance (+1.3%) while the S&P 500 (+1.0%) reclaimed its 100-day moving average (2,010).
Equities faced some selling pressure at the start amid continued weakness in crude oil. The energy component set a fresh January low in the $43.60/bbl area, but was able to charge back to unchanged by the pit close. That rebound improved the overall risk tolerance and helped the S&P 500 find support just a point above its January low (1988.12). Dip buyers entered the picture about 90 minutes after the start of the session, which helped all ten sectors rebound off their lows.
The materials space (+1.4%) finished in the lead thanks to better than expected earnings from Dow Chemical (DOW 45.02, +1.99). The stock spiked 4.6% and gave a boost to its peers. Meanwhile, the other commodity-related sector—energy (+0.2%)—was the weakest performer.
Elsewhere, the discretionary sector (+1.3%) outperformed throughout the session after several major components reported earnings. Homebuilders surged after PulteGroup (PHM 21.82, +1.24) and Ryland Group (RYL 39.62, +2.95) reported better than expected results with iShares Dow Jones US Home Construction ETF (ITB 25.86, +0.83) spiking 3.3%. Heavily-weighted Ford (F 14.85, +0.39) andMcDonald's (MCD 93.27, +4.49) also rallied after the former beat estimates while the latter announced the retirement of its Chief Executive Officer. The broad strength within the sector overshadowed an 8.8% loss in the shares of Alibaba (BABA 89.81, -8.64) after the company missed revenue expectations.
Similarly, the industrial sector (+1.2%) outperformed while technology (+1.1%) overtook the broader market into the close. Top-weighted names like Apple (AAPL 118.90, +3.59), IBM (IBM 155.48, +3.93), and Microsoft (MSFT 42.01, +0.82) jumped between 2.0% and 3.1%, which helped overshadow a 10.3% decline in Qualcomm (QCOM 63.69, -7.30) brought on by disappointing guidance for the fiscal year.
When the dust settled, four of six cyclical sectors ended ahead of the S&P 500 while the utilities sector (+1.3%) represented the only outperformer on the countercyclical side.
Treasuries spent the day in a steady retreat with the 10-yr yield climbing four basis points to 1.76%.
Today's participation was a bit above average as 843 million shares changed hands at the NYSE floor.
Economic data was limited to jobless claims and pending home sales:
- The initial claims level dropped to 265,000 for the week ending January 24 from an upwardly revised 308,000 (from 307,000) while the Briefing.com consensus expected a decline to 301,000
- Not only did the drop break three consecutive weeks above 300,000, but the initial claims level fell to its lowest level since April 2000 o As it has for the past several months, the Department of Labor reported that there were no special factors impacting the report
- The continuing claims level declined to 2.385 million from an upwardly revised 2.456 million (from 2.443 million) while the consensus expected a drop to 2.429 million
- Pending home sales for December fell 3.7% while the Briefing.com consensus expected an increase of 0.6%
Macroeconomic Data
Economic Data
from Briefing.com
- Initial Claims : 265K vs 301K (Prior 308K)
- Continuing Claims : 2385K vs 2429K (Prior 2456K)
- Pending Home Sales : -3.7% vs 0.6% (Prior 0.6%)
- Natural Gas Inventories : -94bcf (Prior -216bcf)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level dropped to 265,000 for the week ending January 24 from an upwardly revised 308,000 (from 307,000) for the week ending January 17. The Briefing.com Consensus expected the initial claims level to fall to 301,000.
- The continuing claims level declined to 2.385 mln for the week ending January 17 from an upwardly revised 2.456 mln (from 2.443 mln) for the week ending January 10. The consensus expected the continuing claims level to drop to 2.429 mln.
Key Factors
- Not only did the drop break three consecutive weeks above 300,000, but the initial claims level fell to its lowest level since April 2000.
- As it has for the past several months, the DOL reported that there were no special factors impacting the initial claims level.
- It is still unknown why the initial claims level suddenly and unexpectedly jumped above 300,000. There were reports that low oil prices were causing increased layoffs in the energy sector, but the state-specific data do not support this. For example, even though the national aggregate initial claims level was still above 300,000 for the week ending January 17, big energy producing states such as Texas and North Dakota reported that their specific initial claims levels declined by more than 1,000.
Big Picture
- The initial claims level supports monthly payroll growth above 200,000.
Market Internals
NYSE:
Higher Volumes than the day before – 863.0M vs 856.6M
Advancers outpaced Decliners (adv/dec): 2096 / 1000
New Highs outpaced New Lows (highs/lows): 211 / 145
NASDAQ:
Lower Volumes than the day before – 1993.0M vs 2094.7M
Advancers outpaced Decliners (adv/dec): 1820 / 929
New Lows outpaced New Highs (highs/lows): 41 / 115
VOLATILITY S&P500 (VIX)
18.76 -1.68 (-8.22%)
The internals are getting back some bullishness but I am still quite skeptical in fact. Despite VIX closed lower than Wednesday, but it is not convincing enough.
Technical Updates
17,461.85 +225.48 (+1.31%)
Volume: 111,691,735 (above average of 90,149,639)
Range: 17,136.30 - 17,433.13
4,683.41 +45.41 (+0.98%)
Volume: 529,674,055 (above average of 448,407,752)
Range: 4,601.76 - 4,688.41
S&P 500 INDEX (SPX: CBOE)
2,021.25 +19.09 (+0.95%)
Volume: 620,130,000 (above average of 515,720,831)
Range: 1,989.18 - 2,024.64
The respective support levels are quite significant as the indices rebound after they could not break lower. NASDAQ is forming a symmetrical triangle and S&P is likely to form a flag. It won't be long before another breakout but I reckon the bears are still in control and the market is likely to go down further.
Commodities
Closing Commodities: Silver Gets Hammered, Falling Over 7%, While Nat Gas Drops 5% Following Inventory Data
- Metals continued to trade lower today and silver futures posted the biggest loss.
- In fact, silver was the worst performing commodity today
- Mar silver ended the day 7.4% lower at $16.76/oz. Feb gold, meanwhile, fell 2.4% to $1254.90/oz
- Crude put in a small rally into the close, finishing up the day 6 cents higher at $44.59/barrel
- Mar nat gas lost 5% to $2.72/MMBtu following bearish weekly storage data
Energy Price Action
- Mar crude oil futures rose $0.06/barrel to $44.59/barrel
- Mar natural gas fell $0.13 cents (or -4.6%) to $2.72/MMBtu
- RBOB Gasoline closed $0.01 higher at $1.39/gallon
- Heating oil closed $0.01 lower at $1.60/gallon
Agricultural Price Action
- Mar corn closed $0.01 lower at $3.73/bushel
- Mar wheat closed $0.03 higher at $5.08/bushel
- Feb soybeans ended $0.02 lower at $9.68/bushel
- Ethanol closed $0.01 lower at $1.38/gallon
- Sugar #11 closed $0.31 lower (or -2%) at 14.85 cents/gallon
Metals Price Action
- Feb gold ended today’s session $30.70 lower at $1254.90/oz
- Mar silver ended $1.33 lower at $16.76 /oz
- Mar copper closed $0.03 lower to $2.45/lb
Currencies
Fed Sends Mixed Signals: The Dollar Index has pulled back from early highs and is attempting to hold the 94.40 area. Markets continue to digest the FOMC Statement from yesterday. There was a little bit for everyone as the Fed provided some dovish commentary on inflation and International Markets. But that was offset on some hawkish commentary on the economy, jobs and consumer spending trends. Economic data was mixed as Initial Claims was better than expected but December New Home Sales fell short of expectations.
- The euro fell to 1.1262 overnight but has been able to push back above the 1.13 level. Headlines between Greek and EU officials have cooled noticeably over the past 24 hours which has helped provide a small bid in the single currency. Economic data from the region remained poor with German CPI and Jobs remaining light and Eurozone Money Supply and Private Loans. This should not come as a surprise given the ECB embarking on a massive QE program.
- The pound has fallen back to the 1.5050 area this morning. 1.50 has set up as a key support level but it would appear sterling is ready to test it once again.
- The yen has fallen back into the 118 level this morning despite the risk off trade in equities. The yen has been straddling the 118 level for the past few sessions. 118.20 is setting up as a key support level in early intraday trade.
Bonds
A Breather:
- Following the release of the FOMC directive on Wednesday, Treasuries rallied sharply. On Thursday there wasn't any follow through. Yields moved up across the curve on modest selling efforts.
- 2-yr yield +1 bp to 0.50%
- 5-yr yield +3 bps to 1.27%
- 7-yr yield +2 bps to 1.55%
- 10-yr yield +3 bps to 1.75%
- 30-yr bond +2 bps to 2.31%
- Factors contributing to the price pullback included:
- A notable bounce in Greek stock and bond markets that cut back on the safe-haven trade
- Strong initial claims data out of the U.S.
- Filings fell to 265,000 for the week ending January 24 (Briefing.com consensus 301,000) from 308,000 the week before. That is the lowest initial claims reading since April 2000.
- Tepid demand at the $35 bln 5-yr note and $29 bln 7-yr note auction
- 5-yr note auction drew a high yield of 1.288% on a 2.49 bid-to-cover ratio that trailed the prior 12-auction average of 2.72. Solid demand from indirect bidders, though, which had 63.1% of accepted competitive bids (prior 12-auction average was 51.4%)
- 7-r note auction drew a high yield of 1.59% on a 2.50 bid-to-cover ratio that was just shy of the prior 12-auction average of 2.56.
- A broad-based rally effort in the stock market
- S&P 500, down 0.7% at its morning low, reversed course and was up 0.9% as of this post
- 2-10-yr spread widened to 125 bps from 122 bps at Wednesday's settlement
- Some notable resilience in the oil market today
- WTI crude futures traded below $44.00/bbl, but found support and jumped 0.2% to $44.55/bbl
- The turn oil prices helped drive the S&P 500 rally effort. The S&P 500 energy sector, down 2.0% at its lows of the morning, was unchanged as of this post
- U.S. Dollar Index +0.3% to 94.77, bolstered by weaker yen
- Precious metals hit hard
- Gold -2.3% to $1257.40/troy oz.
- Silver -6.6% to $16.91/troy oz.
- Friday's data: Advance estimate for Q4 GDP (Briefing.com consensus 3.2%; prior 5.0%) [08:30 ET]; Q4 Employment Cost Index (Briefing.com consensus 0.5%; prior 0.7%) [08:30]; Chicago PMI (Briefing.com consensus 58.0; prior 58.3) [09:45]; Final January reading for University of Michigan Consumer Sentiment (Briefing.com consensus 98.2; prior 98.2) [09:55]
Treasury Yields:
- 2 Year Note 0.51% +0.01
- 5 Year Note 1.28% +0.03
- 10 Year Note 1.77% +0.04
- 30 Year Bond 2.33% +0.04
2/30 Spread: 182 bps ( +3 ) … 2/10 Spread: 126 bps ( +3 )
Preview for Friday 30 Jan, 2015
- GDP-Adv : 3.2% (Prior 5.0%)
- Chain Deflator-Adv : 1.0% (Prior 1.4%)
- Employment Cost Index : 0.5% (Prior 0.7%)
- Chicago PMI : 58.0 (Prior 58.3)
- Michigan Sentiment - Final : 98.2 (Prior 98.2)
Earnings Highlights
Friday :
BMO - ABBV MO BZH BERY CVX CNX LLY BEN GHM IDXX IMGN IR INGR KCG LEA LM MGIC MAN MA MAT NWL NS OFG PSTB PFS SAIA SPG TY TSN WY WRX
AMC - TLMR
BMO - ABBV MO BZH BERY CVX CNX LLY BEN GHM IDXX IMGN IR INGR KCG LEA LM MGIC MAN MA MAT NWL NS OFG PSTB PFS SAIA SPG TY TSN WY WRX
AMC - TLMR
Summary
I don't see anything that could make me to bullish at the moment. It seems to me that the market is going to experience more volatile and probably a (bearish) breakout soon.
Tomorrow we will see the GDP number and that could give the market some shake up.
Tomorrow we will see the GDP number and that could give the market some shake up.
Direction for Friday 30 Jan, 2015; Up
2015 Daily Directional Accuracy: 6/17 (35.29%)
2015 Weekly Directional Accuracy: 2/3 (66.67%)
2015 Weekly Directional Accuracy: 2/3 (66.67%)
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