Dow +110.24 at 17972.38, Nasdaq +56.43 at 4857.61, S&P +19.95 at 2088.48
Market was brought up as news from Russia gave some speculation. I believe the buyers started coming in after the market broke above the resistance level. The only question right now is that I am not sure if the breakout is going to carry the momentum?Market remains volatile currently and it seems the big boys are not in action as well. It looks unjustifiable if the market continues to go higher without volumes backing the momentum.
Situation over at Euro regarding Greece is not yet settled and that might give the market more speculation. Meanwhile I am staying out and monitor the market before I see the green light to enter.
Direction for Thursday 12 Feb, 2015; Down
Market Summary
Industry Watch
Strong: Energy, Financials, Materials, Technology
Weak: Consumer Staples, Health Care, Telecom Services, Utilities
Other Market Moving Factor:
- Futures surge after second Minsk ceasefire agreement confirmed overnight
- Eurogroup and Greece to continue negotiations on Monday
[BRIEFING.COM] The stock market finished the Thursday session on a broadly higher note. The S&P 500 (+1.0%) settled just six points below its record high that was registered in late December while the Nasdaq Composite (+1.2%) outperformed.
Equity indices began the day with modest gains and continued their advance in undisturbed fashion throughout the day. However, participation was limited once again with 786 million shares changing hands at the NYSE floor (50-day average 836 million).
Stocks received an opening boost after it was confirmed that leaders from France, Germany, Russia, and Ukraine struck a ceasefire agreement following a marathon negotiation. The agreement is aimed at restoring the previous Minsk accord from last September, which was violated shortly after its implementation. Despite the uninspiring precedent, hopes for a longer lasting agreement this time around contributed to a global equity rally. Italy's MIB (+2.1%) led the way in Europe while Germany's DAX advanced 1.6%.
As for Greece, Bloomberg reported that Germany is ready to soften its negotiating stance while Eurogroup chief Jeroen Dijsselbloem and Greek Prime Minister Alexis Tsipras agreed to begin a "technical assessment" of the common ground between Greece and the current program in preparations for the next Eurogroup meeting on Monday.
Eight of ten sectors ended the day in positive territory with materials (+1.8%), technology (+1.6%), and energy (+1.3%) spending the day in the lead. Other cyclical sectors posted slimmer gains, but most ended ahead of the broader market while industrials (+0.9%) finished just behind the S&P 500.
Notably, the top-weighted technology sector was underpinned by Cisco Systems (CSCO 29.46, +2.53), which surged 9.4% after beating estimates and raising its quarterly dividend 10.5% to $0.21/share. In turn, Cisco's outperformance helped the Nasdaq spend the day ahead of the broader market.
Meanwhile, another Nasdaq component—Tesla (TSLA 202.99, -9.81)—lost 4.6% in reaction to disappointing results due to below-consensus deliveries in Q4.
High-beta chipmakers also contributed to the strength of the tech-heavy index after NVIDIA (NVDA 22.30, +1.49) reported better than expected results that sparked price target hikes at Canaccord, Needham, and Topeka, among others. The stock spiked 7.2% while the PHLX Semiconductor Index rose 1.6%.
Elsewhere, the energy sector received support from crude oil, which spent the day in positive territory. The energy component notched an intraday high near $51.39/bbl and settled near that level with a 4.7% gain for the day.
In M&A news, Expedia (EXPE 89.57, +11.35) agreed to acquire Orbitz (OWW 11.72, +2.10) for $12.00/share, which boosted other travel-related names. Priceline.com (PCLN 1091.95, +31.89) was a notable outperformer, climbing 3.0%.
Also of note, the price-weighted Dow spent the day behind the broader market due to a 6.4% decline in American Express (AXP 80.48, -5.53) after the company announced it will not renew its co-brand and merchant acceptance agreements with Costco (COST 147.76, +0.30) once the current agreement expires on March 31, 2016.
Treasuries traded lower in overnight action, but surged following today's disappointing Retail Sales report. The 10-yr note inched away from its high, but still ended in the green with the benchmark yield lower by a basis point at 1.98%.
Economic data included Initial Claims, Retail Sales, and Business Inventories:
- The weekly initial claims level increased to 304,000 from an upwardly revised 279,000 (from 278,000) while the Briefing.com consensus expected an increase to 285,000
- The continuing claims level declined to 2.354 million from an upwardly revised 2.405 million (from 2.400 million) while the consensus expected a decline to 2.395 million
- Retail sales declined 0.8% in January after declining an unrevised 0.9% in December while the Briefing.com consensus expected a decline of 0.4%
- Excluding autos, sales fell an even larger 0.9% in January after declining by the same amount in December while the consensus expected these sales to also decline 0.4% in January
- Core retail sales, which exclude motor vehicle dealers, gasoline stations, and building material and supply stores, increased by a very modest 0.2% in January, which is even less impressive when compared to the sizable 0.7% increase in aggregate earnings reported in the January employment report
- Business inventories increased 0.1% in December following a 0.2% increase in November while the Briefing.com consensus expected an increase of 0.2%
- The changes in inventories for manufacturers (-0.3%) and merchant wholesalers (0.1%) were known prior to the release. The only new information was that retailer inventories increased 0.5% in December after declining 0.3% in November
Macroeconomic Data
Economic Data
from Briefing.com
- Initial Claims : 304K vs 285K (Prior 279K - Up)
- Continuing Claims : 2354K vs 2405K (Prior 2405K - Up)
- Retail Sales : -0.8% vs -0.5% (Prior -0.9%)
- Retail Sales ex-auto : -0.9% vs -0.5% (Prior -0.9% - Down)
- Business Inventories : 0.1% vs 0.2% (Prior 0.2%)
- Natural Gas Inventories : -160bcf (Prior -115bcf)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level increased to 304,000 for the week ending February 7 from an upwardly revised 279,000 (from 278,000) for the week ending January 31. The Briefing.com Consensus expected the initial claims level to increase to 285,000.
- The continuing claims level declined to 2.354 mln for the week ending January 31 from an upwardly revised 2.405 mln (from 2.400 mln) for the week ending January 24. The consensus expected the continuing claims level to fall to 2.395 mln.
Key Factors
- We keep hearing reports of increased layoffs in the oil and gas sector, but these actions have not shown up in the claims data. The small breakout above 300,000 this week is not implying much of a change in overall labor market conditions.
Big Picture
- The initial claims level supports payroll gains in excess of 200,000 per month.
RETAIL SALES
Highlights
- Retail sales declined 0.8% in January after declining an unrevised 0.9% in December. The Briefing.com Consensus expected retail sales to decline 0.4% in January.
- Excluding autos, sales fell an even larger 0.9% in January after declining by the same amount in December. The consensus expected these sales to also decline 0.4% in January.
Key Factors
- The story of the retail sales report begins with lower gasoline prices. Sales at gasoline stations declined 9.3% in January after falling 7.4% in December. That decline weighed down overall retail sales growth.
- Unfortunately, the story doesn’t end there.
- Lower gasoline prices were expected to spark a broad acceleration in retail sales growth. Essentially, the windfall from spending less at the pump was supposed to transfer to other areas of the economy.
- That did not happen.
- Core retail sales, which exclude motor vehicle dealers, gasoline stations, and building material and supply stores, increased by a very modest 0.2% in January. The gain is even less impressive when compared to the sizable 0.7% increase in aggregate earnings reported in the January employment report.
- As sales growth underperforms income growth, the personal savings rate should inch higher.
Big Picture
- Strong income growth fails to spark retail sales demand.
BUSINESS INVENTORIES
Highlights
- Business inventories increased 0.1% in December following a 0.2% increase in November. The Briefing.com Consensus expected business inventories to increase 0.2%.
Key Factors
- The changes in inventories for manufacturers (-0.3%) and merchant wholesalers (0.1%) were known prior to the release. The only new information was that retailer inventories increased 0.5% in December after declining 0.3% in November.
- Most of the increase in retailer inventories was a result of a 1.3% increase at motor vehicle and parts dealers. Excluding motor vehicle dealers, retailer inventories increased only 0.1% in December.
- Total business sales declined 0.9% in December after declining 0.4% in November.
- The inventory-to-sales ratio increased to 1.33 in December from 1.31 in November.
Big Picture
- Business inventories include wholesale inventories, manufacturing inventories, and retail inventories. Inventories are a component of GDP, and thus are of interest to economists, but the financial markets don't pay much attention to this release. Over the long term, the inventory-to-sales ratio has been declining, due to improving techniques for inventory management.
Market Internals
NYSE:
Higher Volumes than the day before – 802.9M vs 749.6M
Advancers outpaced Decliners (adv/dec): 2425 / 677
New Highs outpaced New Lows (highs/lows): 178 / 7
NASDAQ:
Higher Volumes than the day before – 2059.1M vs 1768.9M
Advancers outpaced Decliners (adv/dec): 1939 / 825
New Highs outpaced New Lows (highs/lows): 134 / 26
VOLATILITY S&P500 (VIX)
15.34 -1.62 (-9.55%)
Well the internals are showing quite a fair bit of bullishness. Not to mention VIX is sitting on the support at 15.00. If VIX is going lower, I reckon the rally might continue.
Technical Updates
17,972.38 +110.24 (+0.62%)
Volume: 117,155,797 (above average of 94,006,798)
Range: 17,862.14 - 17,975.65
4,857.61 +56.43 (+1.18%)
Volume: 480,016,500 (above average of 450,316,399)
Range: 4,823.58 - 4,857.61
S&P 500 INDEX (SPX: CBOE)
2,088.48 +19.95 (+0.96%)
Volume: 563,402,000 (above average of 531,913,969)
Range: 2,069.98 - 2,088.53
It looks like we see a breakout pattern here. Volume is there and all three indices are seen to break above their resistance line. I suppose we should see a bullish trend to carry on...
Commodities
Closing Commodities: Oil and Copper Futures Close Near Daily Highs
- The Dollar Index continued morning weakness into the afternoon, following retail sales and claims data this morning
- WTI crude oil futures rallied after floor trading opened this morning and rose above the $51.00/barrel level. Crude pulled back and erased most of its gains quickly before buyers jumped in again. March crude went on the end the day up $2.32/barrel to $51.19/barrel, and hit a new high of the day at $51.60/barrel in electronic trading
- In addition, March Nat Gas spent most of the morning and afternoon trading in negative territory. Following the weakness in the Dollar Index, March Nat Gas reached daily lows of $2.68/MMBtu
- Metals all closed the day with modest gains, as March Silver closed the day $0.01 higher at $16.78/oz, while April Gold closed today’s session $0.10 higher to $1220.30/oz, and Mar Copper ended the day $0.07 higher at $2.61/lb
Energy Price Action
- Mar crude oil futures rose $2.32/barrel to $51.19/barrel
- Mar natural gas lower $0.09 to $2.80/MMBtu
- RBOB Gasoline closed $0.05 higher (+3.2%) at $1.60/gallon
- Heating oil closed $0.10 lower (or +5.5%) at $1.91/gallon
- Highlights
- In Natural Gas: recent weakness came off a morning that saw the commodity in positive territory.
- March nat gas closed lower following inventory data which saw a draw of 160 bcf (vs. expectations of 163 bcf).
Agricultural Price Action
- Mar corn closed $0.03 lower at $3.83/bushel
- Mar wheat closed $0.05 lower at $5.20/bushel
- Feb soybeans ended $0.05 higher at $9.83/bushel
- Ethanol closed $0.01 lower at $1.44/gallon
- Sugar #11 closed 0.33 cents higher D/D at 15.04 cents/lb
Metals Price Action
- Apr gold ended today’s session $0.10 higher at $1220.30/oz
- Mar silver ended $0.01 higher at $16.78/oz
- Mar copper closed $0.07 higher at $2.61/lb
Currencies
Dollar Loses Ground to Yen
- The proverbial “people familiar with the matter” are saying that the BoJ is comfortable with the current level of the Yen and would see further deterioration as detrimental to confidence in the Japanese economy, according to some reports
- USD/Yen is down 1.40 (-1.17%) to 118.76
Wide Range But Only 2-Yr and 5-Yr Notes Gain:
- Treasuries lost a lot of ground overnight on headlines noting a ceasefire agreement between Russia and Ukraine, but recovered their losses on the back of a weak retail sales number and despite a somewhat squishy 30-yr auction. Treasury bulls seem to have dug in here with some success, but the negative momentum in 10-yrs and bonds from early February has yet to be reversed.
- 2-yr yield hit 0.69% overnight but recovered to close at 0.61%
- 5-yr yield traded 1.56% overnight but recovered to close at 1.49%
- 10-yrs yielded 2.04% at their worst level, but climbed back to end at 1.98%
- 30-yr yields hit 2.63% before closing at 2.57%
- Retail sales for January missed expectations, declining 0.8% in January versus a Briefing.com consensus of -0.4%.
- Core retail sales, which exclude motor vehicle dealers, gasoline stations, and building material and supply stores, increased by 0.2%. Jeffrey Rosen, Briefing.com's chief economist, said that "the gain is even less impressive when compared to the sizable 0.7% increase in aggregate earnings" in January.
- Initial jobless claims were also weaker than expected (304,000 vs. Briefing.com consensus of 285,000)
- The results were overshadowed by the retail sales report and the understanding that the claims number wasn't all that far off from its trend
- Central Banks
- Sweden's Riksbank embarked upon a new QE program of 10 billion kronor. The central bank will buy government debt with maturities up to 5 years. The Riksbank also set the repo rate at -0.10%.
- The BOE governor, Mark Carney, made some hawkish remarks. He said that lower oil prices should only have a temporary effect on the inflation and growth outlook and that those deflationary effects would be mitigated by a rise in consumer demand. Gilts sold off in response.
- According to press reports, sources close to the BoJ say that there is no longer a desire there to depreciate the Yen. The bank is allegedly comfortable with current levels and would see further declines in the Yen as impediments to confidence and not beneficial to Japan's economy.
- USD/JPY sold off 1.30 (-1.08%) to 118.88.
- The Euro also rose against the USD, trading at 1.1397 and helping to drive the USD Index down 0.91 points (-0.95%) to 94.08.
- New Issuance of $16 billion in 30-yrs seemed to be taken in stride
- The high yield was 2.560%
- The bid-to-cover was 2.26, a relatively weak number compared to the last few auctions.
- Russia and Ukraine seem to have agreed upon a ceasefire. This has happened before without success and Ukraine even said today that pro-Russian rebels had moved tanks and troops into east Ukraine.
- Around 14:25 ET, Bloomberg reported that German officials are prepared to compromise with Greece, according to people close to the German contingent of the Greece/troika negotiations. This report seemed to contradict an earlier statement by German chancellor Angela Merkel, that "Europe's credibility depends on us sticking to rules."
- Friday Data
- Export and Import Prices (08:30 ET)
- University of Michigan Consumer Sentiment (10:00 ET)
Treasury Yields:
- 2 Year Note 0.61% -0.06
- 5 Year Note 1.50% -0.03
- 10 Year Note 1.99% -0.01
- 30 Year Bond 2.58% +0.01
2/30 Spread: 197 bps ( +7 ) … 2/10 Spread: 138 bps ( +5 )
Preview for Friday 13 Feb, 2015
Friday (13 Feb) :
- Export Prices ex-agri : (Prior -1.2%)
- Import Prices ex-oil : (Prior -0.1%)
- Michigan Sentiment : 98.5 (Prior 98.1)
Earnings Highlights
Friday (13 Feb) :
BMO - BAM CPN DTE ESNT EXC HPY IPG ITT SJM POR RRGB NGLS TRW VFC VTR WBC
AMC - None Scheduled
BMO - BAM CPN DTE ESNT EXC HPY IPG ITT SJM POR RRGB NGLS TRW VFC VTR WBC
AMC - None Scheduled
Summary
Market manage to have a breakout after a period of consolidation. But it is worth watching a few more session for confirmation. I suppose there should be some profit taking in tomorrow session but it is hard to see a change in trend.
Direction for Friday 13 Feb, 2015; Up
2015 Daily Directional Accuracy: 10/26 (38.46%)
2015 Weekly Directional Accuracy: 4/5 (80.00%)
2015 Weekly Directional Accuracy: 4/5 (80.00%)
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