Monday, 9 Feb 2015 - AMC

Dow -95.08 at 17729.21, Nasdaq -18.39 at 4726.01, S&P -8.73 at 2046.74

From the technicals point of view, I think the market is likely to continue in consolidation. Unless the market manage to go higher, then maybe we might see a change in sentiment.

It is likely there are more profit-taking on Monday as market did not break above its resistance level. And that is likely to set the tone for next week...

Direction for Monday 9 Feb, 2015; Up

Market opened lower on Monday due to influence from China's disappointing trade data and Greece's debt situation. We can see that the market could not break above the resistance and thereafter was some profit taking. Throughout the session, market remained in red.               

Market Summary

Industry Watch

Strong: Energy, Materials, Technology, Telecom Services

Weak: Consumer Discretionary, Consumer Staples, Health Care, Financials

Other Market Moving Factor:

• 'Grexit' chatter picks up over the weekend after Prime Minister Tsipras hardens his stance before Greek parliament
• German Chancellor Angela Merkel to meet with President Obama to discuss lethal aid for Ukraine

[BRIEFING.COM] The stock market kicked off the new week on a sleepy note with the S&P 500 (-0.4%) spending the day in a 15-point range. The benchmark index settled ahead of the Dow (-0.5%), but that was a small victory considering the S&P 500 finished near its session low. Above all, today's trading volume was well below average with just 760 million shares changing hands at the NYSE floor. 

Equity indices faced some pressure at the start, brought on by lingering concerns about the eurozone. Yesterday, Greek Prime Minster Alexis Tsipras spoke in front of parliament, reiterating his intention to push back against eurozone's austerity measures. The continued defiance towards requests of the troika has led to increased chatter about a forced Greek exit from the single currency bloc. Meanwhile, Germany's Economic Affairs Minister Sigmar Gabriel called the tone of Mr. Tsipras' speech ‘regrettable.' Greece's Athens General Index tumbled 4.8% in response while the Greek 10-yr note sold off to send its yield higher by 64 basis points to 10.75%. 

The concerns contributed to a lower start, but the S&P 500 did not go down without a fight. The index tried to reclaim its flat line, and was able to do so briefly on the third attempt; however, the third time was hardly the charm as a slide to a fresh session low followed. Nine sectors registered losses with countercyclical health care (-1.1%) and utilities (-0.9%) ending at the bottom of the leaderboard. The utilities sector widened its February loss to 4.6% while health care lagged even as biotechnology names displayed intraday strength. The iShares Nasdaq Biotechnology ETF (IBB 313.35, -2.24) spent the bulk of the day in the green, but slumped during afternoon action to end lower by 0.7%. 

Elsewhere, another countercyclical group—consumer staples (-0.7%)—also finished behind the broader market while the six cyclical groups settled in-line with or ahead of the S&P 500. 

Most notably, the energy sector surrendered the bulk of its intraday gain during the final hour, but still ended ahead of others with crude oil underpinning the relative strength. The energy component gained 2.6% and finished the pit session at $52.99/bbl. On a related note, the Baltic Dry Index fell to a new all-time low, sliding below its worst level from August 1986. 

Similar to energy, the technology sector (-0.2%) settled near its flat line. The largest sector by weight enjoyed support from a handful of influential components like Apple (AAPL 119.70, +0.77), Oracle (ORCL 43.40, +0.42), and Qualcomm (QCOM 67.11, +0.76) while chipmakers struggled, evidenced by a 1.1% decline in the PHLX Semiconductor Index. 

Treasuries ended the day with slim gains after a daylong slide from overnight highs. The 10-yr yield slipped one basis point to 1.95%. 

Tomorrow, the Wholesale Inventories report for December (Briefing.com consensus 0.2%) and December Job Openings and Labor Turnover Survey will be reported at 10:00 ET. 

Macroeconomic Data

Economic Data

from Briefing.com

• No Economic Data

Market Internals

NYSE:

Lower Volumes than the day before – 775.8M vs 926.8M 


Decliners outpaced Advancers (adv/dec): 1263 / 1838

New Highs outpaced New Lows (highs/lows): 58 / 21

NASDAQ:

Lower Volumes than the day before – 1631.4M vs 2020.2M

Decliners outpaced Advancers (adv/dec): 1035 / 1744

New Highs outpaced New Lows (highs/lows): 46 / 29

VOLATILITY S&P500 (VIX)

18.55 +1.26 (+7.29%)

I won't put it that the internals are entirely bearish but the volume is significantly lower. Perhaps the bulls are not in the play. Fear is still building up in the market as VIX continues to go higher.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,729.21 -95.08 (-0.53%)

Volume: 81,586,325 (below average of 92,659,291)

Range: 17,685.32 - 17,821.49

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,726.01 -18.39 (-0.39%)

Volume: 411.4M (below average of 449,717,115)

Range: 4,719.61 - 4,749.47

S&P 500 INDEX (SPX: CBOE)

2,046.74 -8.73 (-0.42%)

Volume: 502.3M (below average of 527,403,585)

Range: 2,041.88 - 2,056.16 

It seems we are back into sideway again. Market did not form a higher high and I think we might see another slide. But it is worth noting that DOW and S&P are sitting on their trend line and that might get a rebound... 

Commodities

Closing Commodities: Baltic Dry Index Falls Back To All-Time Low; Crude Rallies

• Baltic Dry Index falls 5 points to its all time low of 554, initially hit in August 1986
• However, this collapse is different vs the 2008 collapse
• The 2008 collapse was largely demand driven. This current collapse if both supply and demand driven, but more supply driven (oversupply of vessels)
• Related stocks include
• DRYS, GNK, PRGN, DSX, FREE, EGLE, NM, NMM, SBLK, KEX, SB, SINO, BALT, SHIP, DCIX.
• WTI crude oil futures rallied today and rose as high as $53.99/barrel
• By the end of today’s session, Mar crude has rallied $1.32 to $52.99/barrel
• Natural gas futures were modestly higher all day after selling off from overnight low of $2.69/MMBtu
• Apr gold and Mar silver ended the day with modest gains.

Energy Price Action

• Mar crude oil futures rose $1.32/barrel to $52.99/barrel
• Mar natural gas rose $0.02 cents to $2.60/MMBtu
• RBOB Gasoline closed $0.02 higher (or +1.3%) at $1.58/gallon
• Heating oil closed $0.04 higher (or +2.2%) at $1.88/gallon

Agricultural Price Action

• Mar corn closed $0.05 higher at $3.91/bushel
• Mar wheat closed $0.01 higher at $5.29/bushel
• Feb soybeans ended $0.05 higher at $9.79/bushel
• Ethanol closed $0.02 higher at $1.46/gallon
• Sugar #11 closed 0.31 cents higher at 14.82 cents/lb

Metals Price Action

• Apr gold ended today’s session $7.00 higher at $1241.60/oz
• Mar silver ended $0.39 higher at $17.07/oz
• Mar copper closed flat compared to yesterday at $2.58/lb

Currencies

Currency Commentary: Markets Await EU Meetings

• The Dollar Index is back to rolling around in the high end of 94. The currency continues to fall short of the 95 as resistance holds. However the DXY has shown signs of once again being able to hold the 94.40 area. It has been a very quiet morning on the economic data front. The primary focus is on G-20 and EU Finance Minister meetings later in the week. Following the strong jobs report last Friday, the U.S. monetary debate will center on Janet Yellen’s Humphrey Hawkins testimony on February 24.
• The euro slipped back to the 1.12 area as markets watch Greece and the EU collide over the next steps in the Greek debt drama. Over the weekend, Greek PM Tsipras reiterated his government’s goals of reaching an extension agreement while rejecting the current bailout packages. The two sides will meet at an EU Finance Ministers meeting on Wed and a Leader’s Group meeting on Thursday in two highly anticipated events. The two sides will try and paint a picture of them closing in on an agreement. But it is unlikely that the two sides will come to an agreement this early, so investors will be watching closely to headlines and reaction to currencies. Germany showed it was performing well with the cheap euro as its trade balance posted a higher than expected surplus.
• The pound has slipped to the low end of 1.52 but has held that level following its recent break out. The ability for sterling to hold 1.52 will be important as it attempts to recover early 2015 losses.
• The yen is testing it’s 50 sma as we see it recover some of the post-jobs losses. Japan’s current account surplus came in higher than expected over the weekend. Focus will be on Machine Tool orders numbers which will be released Wednesday evening

Bonds

A Big Dig:

• We said in today's first comment that the Treasury market was digging out from Friday's hole.  Well, it happens to be a big dig.  The effort was arduous and some progress was made, yet there is still a lot of ground left to reclaim.
• Yields along the curve were either unchanged or down one or two basis points
  • 2-yr yield unch at 0.65% (intraday range 0.60% to 0.67%)
  • 5-yr yield unch at 1.48% (intraday range 1.42% to 1.48%)
  • 10-yr yield -1 bp at 1.95% (intraday range 1.885% to 1.95%)
  • 30-yr bond -2 bps at 2.52% (intraday range 2.46% to 2.52%
• Low yields for the day were all established in overnight trade, driven by some safe-haven trading precipitated by the following factors:
  • The Greek prime minister taking a defiant stand and reiterating his position that Greece will not agree to extend its bailout program
  • China's January trade report contributing to slowdown concerns that bubbled up with a 3.3% year-over-year decline in exports and a 19.9% year-over-year decline in imports
  • The continued inability of Russia and Ukraine to reach a peace agreement
  • A weak showing from European stock markets and indications that the U.S. stock market was poised for a negative start
• Notably, securities across the curve went out at, or near, their high yields for the day even while U.S. stocks were selling off to their worst levels of the day
• Technical factors appeared to be in play as a market driver.  
  • Following the attempt overnight to push the 10-yr yield back to the range it traded in from mid-January until Friday's employment report, sellers stepped in to curb buyers' enthusiasm and support did not hold.
• U.S. Dollar Index dipped 0.2% as the greenback lost ground against the euro and the yen
  • EUR/USD +0.2% to 1.1332
  • USD/JPY -0.7% to 118.48
• The weaker dollar and OPEC bumping up its 2015 world oil demand forecast by 1.17 million barrels per day helped keep a bid in oil prices
  • WTI crude settled up 2.6% at $52.99/bbl (up 19% since January 28)
• There was no U.S. economic data today. Reports tomorrow include NFIB Small Business Optimism Index for January (09:00 ET); December Wholesale Inventories (10:00); and December JOLTS - Job Openings (10:00)
  • Overnight reports will feature China's CPI report and industrial production data from Italy and the UK
• Auction up: $24 billion 3-yr note auction on Tuesday (13:00)
• Fed speak: Richmond Fed President Lacker (an FOMC voter) at 08:20 ET on "Education, Innovation, and Economic Growth"
• G20 finance ministers and central bank governors continue their 2-day meeting in Istanbul

Treasury Yields:

• 2 Year Note 0.65% UNCH
• 5 Year Note 1.49% +0.01
• 10 Year Note 1.96% +0.01
• 30 Year Bond 2.52% +0.01

2/30 Spread: 187 bps ( +1 ) …  2/10 Spread: 131 bps ( +1 )

Preview for Tuesday 10 Feb, 2015

Economic Data

Tuesday (10 Feb) :

• Wholesales Inventories : 0.2% (Prior 0.8%)
• JOLTS - Job Openings : (Prior 4.972M)

Earnings Highlights

Tuesday (10 Feb) :
BMO - ACM ALR ALLT BILE CDW KO OFC CVS CYNO DF ENTG GWR HCP HNT IMN NSP KKR MLM TAP MWW OMC PCG REGN SALE RAI SEE SFUN SAVE HOT WYN

AMC - ATEN AKAM ANDE ACGL BLKB CAP CERN CRL ELON FRT FSRV FTI FWRD GHDX GNW HIW JIVE KFRC KGC LOCK MKTO NCR PAYC PAHC PXD RLOC RPXC RKUS SGMO SGEN SCI SKT TMH TSRA THOR TRMB USNA VSAT WU WSH XOOM

Summary

The lagging from China is slowly dragging US down. There seems to be nothing for us to cheer about right now also. The market is lacking a catalyst to push higher. Meanwhile we should see the market remains volatile and sideway before another breakout.

Direction for Tuesday 10 Feb, 2015; Down

2015 Daily Directional Accuracy: 9/23 (39.13%) 
2015 Weekly Directional Accuracy: 4/5 (80.00%)