Dow -130.01 at 17371.64, Nasdaq -59.84 at 4592.73, S&P -17.97 at 2002.61
Sell off continues on Tuesday with some short-covering. Defensive sectors are outperforming the rest and this is reflecting the sentiment in the market right now.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.
Direction for Tuesday 6 Jan, 2015; Up
For an update, the first five days indicator is still in red with two more in count.
Market Summary
Industry Watch
Strong: Consumer Staples, Health Care, Telecom Services, Utilities
Weak: Consumer Discretionary, Financials, Industrials, Technology
Other Market Moving Factor:
- Financial Times, citing Oxford Economics, reports Syriza on track to win support to push back against EU austerity policies
- Crude oil extends decline
- Countercyclical sectors outperform
[BRIEFING.COM] Equity indices ended the Tuesday session in the red with the Russell 2000 (-1.7%) pacing the retreat. Meanwhile, the S&P 500 lost 0.9% with eight sectors registering losses.
The stock market held up relatively well through the first hour of action, but the return of some recent concerns pressured cyclical sectors and the broader market into negative territory. Specifically, the S&P 500 reversed from its session high after The Financial Times reported, citing Oxford Economics research, that Syriza party in Greece is on track to win enough votes that would translate into a mandate to push back against austerity policies imposed by the European Union. In addition to hitting U.S. stocks, the news knocked European markets off their highs and set a fire under U.S. Treasuries. The resulting safe-haven flows underpinned Treasuries, sending the benchmark 10-yr yield lower by seven basis points to 1.96% after marking a low just under the 1.89% level.
However, the market had more to contend with than just the update regarding Greece. Namely, crude oil continued its sharp downtrend while fund manager Bill Gross of Janus Capital published his investment outlook for 2015, which revealed that Mr. Gross expects negative returns from ‘many' asset classes. This disclosure wasn't entirely new, considering Mr. Gross was quoted by Reuters yesterday as saying "Be prepared for low returns in almost all asset categories."
As for oil, the energy component was little changed in early overnight action, but began slipping just ahead of the opening bell in Europe. Crude was unable to pull away from its overnight low, extending its decline to 4.0% at $48.10/bbl. The commodity ended the pit session down 10.5% from its 2014 close.
Meanwhile, the energy sector (-1.3%) settled near the bottom of the leaderboard, only ahead of financials (-1.5%). Major energy components like ConocoPhillips (COP 62.93, -2.71), EOG Resources (EOG 84.20, -2.48) and Schlumberger (SLB 81.72, -1.63) lost between 2.0% and 4.1% while Dow members Chevron (CVX 108.03, -0.05) and ExxonMobil (XOM 89.81, -0.48) outperformed.
Elsewhere, the industrial sector (-0.9%) also spent the day among the laggards. For the second day in a row, transport stocks were partially responsible for the underperformance as the Dow Jones Transportation Average lost 1.7%. FedEx (FDX 169.79, -0.01) was unable to hold its intraday gain, ending flat, after UBS upgraded the logistics company to ‘Buy.' As for the Transportation Average, the bellwether complex is now down 4.3% after the first two sessions of the week.
The S&P 500 was able to reclaim about a third of its decline during afternoon action with countercyclical sectors lending some support. Consumer staples (unch) and health care (-0.3%) outperformed while the two smallest sectors by weight—telecom services (+0.4%) and utilities (+0.1%)—spent the bulk of the session in positive territory.
Today's participation was well ahead of average with more than 915 million shares changing hands at the floor of the New York Stock Exchange.
Economic data was limited to Factory Orders and ISM Services:
- Factory orders posted their fourth consecutive monthly decline, falling 0.7% in November which was worse than the 0.4% decline expected by the Briefing.com consensus
- The October reading was left unrevised at -0.7%
- Orders for durable goods declined 0.9%, which was more than a previously reported 0.7% decline. Nondurable goods orders, meanwhile, declined 0.5%
- Shipments, which factor into GDP growth, declined 0.6% in November on top of a 0.9% decline in October
- The ISM Services Index for December fell to 56.2 from 59.3 while the Briefing.com consensus expected a downtick to 58.5
- The dip in December was driven by a pullback in all index categories with two indices falling into contraction:
- Backlog of Orders Index fell to 49.5 from 55.5
- Prices Index fell to 49.5 from 54.4
- The dip in December was driven by a pullback in all index categories with two indices falling into contraction:
Macroeconomic Data
Economic Data
from Briefing.com
- Factory Orders : -0.7% vs -0.4% (Prior -0.7%)
- ISM Services : 56.2 vs 58.5 (Prior 59.3)
Highlights
- Factory orders declined 0.7% in November. That was worse than the Briefing.com consensus estimate, which called for a 0.4% decline. There was no revision to factory orders for October, which also declined 0.7%.
Key Factors
- Orders for durable goods declined 0.9%, which was more than a previously reported 0.7% decline.
- Nondurable goods orders, meanwhile, declined 0.5%.
- Excluding transportation, orders declined 0.6% versus a previously reported 0.4% decline.
- Shipments, which factor into GDP growth, declined 0.6% in November on top of a 0.9% decline in October.
Big Picture
- November marked the fourth straight month of declines in factory orders.
Highlights
- The ISM Services Index for November registered a reading of 56.2 for December. That was 3.1 percentage points lower than the November reading and short of the Briefing.com consensus estimate, which was pegged at 58.5.
Key Factors
- The dip in December was driven by a pullback in all index categories.
- Notably, the New Orders Index dipped to 58.9 from 61.4; the Employment Index slipped to 56.0 from 56.7; and the New Export Orders Index dropped to 53.5 from 57.0.
- Two indexes fell into contraction, namely the Backlog of Orders Index (to 49.5 from 55.5) and the Prices Index (to 49.5 from 54.4).
Big Picture
- A number above 50 denotes expansion, so it can be said that the services sector is still doing well; it's just expanding at a slower pace than seen in November.
Market Internals
NYSE:
Higher Volumes than the day before – 942.4M vs 844.8M
Decliners outpaced Advancers (adv/dec): 1013 / 2093
New Highs outpaced New Lows (highs/lows): 139 / 126
NASDAQ:
Higher Volumes than the day before – 2150.7M vs 1776.5M
Decliners outpaced Advancers (adv/dec): 661 / 2134
New Lows outpaced New Highs (highs/lows): 41 / 79
VOLATILITY S&P500 (VIX)
21.12 +1.20 (+6.02%)
I am feeling rather divergence towards the market internals as the market does not look that bearish comparing to the price level. But NASDAQ was having a bearish session. VIX closed around 21.00 and it is a support/resistance level.
Technical Updates
17,371.64 -130.01 (-0.74%)
Volume: 101,870,484 (above average of 91,206,757)
Range: 17,262.37 - 17,581.05
4,592.74 -59.84 (-1.29%)
Volume: 553,615,812 (above average of 474,599,866)
Range: 4,567.60 - 4,667.33
S&P 500 INDEX (SPX: CBOE)
2,002.61 -17.97 (-0.89%)
Volume: 628,224,000 (above average of 534,066,985)
Range: 1,992.44 - 2,030.25
From what I see in the technicals, the indices are approaching their 61.8% Fibonacci support level respectively.. Maybe we can expect to see a rebound here.
Currencies
Commodities
Closing Commodities: Oil Remains Weak, Closed Just Above $48/Barrel
- Oil continues to be weak, while natural gas futures rallied into the close
- At the end of today’s session, Feb WTI crude oil closed $2.01 lower to $48.02/barrel
- Feb natural gas ended 6 cents higher at $2.94/MMBtu
- Precious metals rose today…. Feb gold gained $16.20 to $1219.80/oz, while Mar silver rose $0.41 to $16.64/oz
Energy Price Action
- Feb crude oil fell $2.01/barrel to $48.02/barrel
- Natural gas rose 6 cents to $2.94/MMBtu
- RBOB Gasoline dropped 2 cents to $1.36/gallon
- Heating oil dropped 2 cents to $1.73/gallon
Agricultural Price Action
- Mar corn closed $0.01 lower at $4.05/bushel
- Mar wheat rose $0.03 cents to $5.92/bushel
- Jan soybeans ended $0.12 higher at $10.52/bushel
- Ethanol closed 8 cents lower at $1.49/gallon
- Sugar #11 rose 0.61 cents (or +4.3%) to 14.87 cents/gallon
Metals Price Action
- Feb gold ended today’s session $16.20 higher at $1219.80/oz
- Mar silver ended $0.41 higher at $16.64/oz
- Mar copper closed unchanged at $2.77/lb
Currencies
Dollar Steadies at Nine-Year Highs:
- The Dollar Index holds little changed near 91.40.
- The greenback ticked to session highs near 91.65 early in U.S. trade, but was unable to take out yesterday's highs and slid back to the breakeven line as economic data disappointed.
- EURUSD is flat @ 1.1930 after recouping its early losses. The single currency threatened 29-month lows amid ongoing concerns of a Greek exit from the euro, but has recovered those losses even as new polls point to the anti-euro Syriza party being the favorite in the upcoming election. The 1.1900 area is setting up as a key level. Eurozone data out tomorrow is heavy as CPI Flash Estimate and the unemployment rate accompany German retail sales and unemployment change figures.
- GBPUSD is -60 pips @ 1.5185 as action dips to its worst levels since August 2013. Sterling remains under pressure as recent data has disappointed, pushing back expectations the Bank of England will be the first of the major Western central banks to hike rates.
- USDCHF is -10 pips @ 1.0060 as trade has slipped into the red. An early bid ran the pair to its best levels since September 2010, but trade has given up those gains in tandem with the euro recouping its early losses. Switzerland's foreign currency reserves are set for release tomorrow.
- USDJPY is -125 pips @ 118.40 as selling takes hold for a second session. The flight to safety into the yen has pushed the pair below minor support in the 119.00 area, setting up a test of the 50 dma (117.65).
- AUDUSD is +35 pips @ .8115 as trade steadies near 55-month lows. The hard currency has been helped by a narrower than anticipated trade deficit and the improvement in China's HSBC Services PMI.
- USDCAD is +50 pips @ 1.1810 as trade readies for its best close in six years. Today's bid has been fueled by the plunge in the Raw Materials Price Index (-5.8% MoM actual v. -4.6% MoM expected). Canada's trade balance and Ivey PMI are due out tomorrow.
Bonds
10Y Finishes Below 2.00%:
- Treasuries gained for an eighth straight session.
- The complex held modest gains into the cash open and tested their best levels of the day following the disappointing factory orders (-0.7% actual v. -0.4% expected) and ISM Services (56.2 actual v. 58.5 expected) data.
- However, it wasn't until a further unraveling in Europe that maturities broke out to fresh highs and continued to gain steam into the lunchtime hour.
- Many catalysts have been fingered for the move, but it seemed to correspond with headlines out of Greece indicating the anti-euro Syriza party remains on track to win the January 25 election.
- Buying continued to have the biggest impact on the long end of the curve as the 30Y slid -8.2bps to 2.523%. The yield on the long bond came within a couple bps of a record low print before settling at levels last seen in July 2012.
- The 10Y slid -7.6bps to 1.963%. The benchmark yield neared the October 15 low of 1.868% before climbing over the course of the afternoon and posting its first sub-2.00% close since May 2013.
- In the belly, the 5Y fell -7.5bps to 1.493%. The yield dropped to 1.410%, but managed to fight its way back into the 1.500% support area ahead of the close.
- Up front, the 2Y lost -5.3bps to 0.613%. Support in the area dates back to the beginning of December.
- Tightening continued along the curve as the 2-10-yr spread narrowed to 135bps.
- Precious metals saw sizable gains as gold climbed +$15 to $1219 and silver added +$0.35 to $16.56.
- Data: MBA Mortgage Index (7), ADP Employment Change (8:15), trade balance (8:30) and the latest FOMC minutes (14).
- Fed Speak: Chicago's Evans discusses "Role and impact of Monetary Policy in an Uncertain Economy" (18:30).
Treasury Yields:
- 2 Year Note 0.65% -0.03
- 5 Year Note 1.50% -0.07
- 10 Year Note 1.97% -0.07
- 30 Year Bond 2.52% -0.08
2/30 Spread: 187 bps ( -5 ) … 2/10 Spread: 132 bps ( -4 )
Preview for Wednesday 7 Jan, 2015
Earnings Highlights
Wednesday :
BMO - GBX, MON, MSM, RPM, SVU, UNF
AMC - DRWI, HGR, MG, RECN, WDFC
Summary
Tomorrow we will have some major market mover economic data releasing such as ADP Non-Farm and FOMC minutes.
Market is still looking weak as it was brought down partly by the oil prices as well as geopolitical situation at Greece. I won't be going full on long right now but I am watching very closely on the market movement.
Market is still looking weak as it was brought down partly by the oil prices as well as geopolitical situation at Greece. I won't be going full on long right now but I am watching very closely on the market movement.
Direction for Wednesday 7 Jan, 2015; Down
2015 Daily Directional Accuracy: 1/3 (33.33%)
2015 Weekly Directional Accuracy: 0/0 (0.00%)
2015 Weekly Directional Accuracy: 0/0 (0.00%)
No comments:
Post a Comment