Dow +139.55 at 17868.76, Nasdaq +61.63 at 4787.64, S&P +21.85 at 2068.59
Market took a rebound after it went down to test the resistance level. However it appears to me that the market is more like a short covering at first with more buyers coming in later due to the speculation in the Greece's debt situation...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
Market Summary
Industry Watch
Strong: Consumer Discretionary, Consumer Staples, Health Care, Technology
Weak: Energy, Financials, Industrials, Materials
Other Market Moving Factor:
- Futures spike following Bloomberg report indicating Greece may receive six-month extension: European Commission denies existence of formal proposal
- Yesterday's laggards outperform
[BRIEFING.COM] The major averages snapped their two-day losing streak with a Tuesday rally that allowed the S&P 500 (+1.1%) to settle at its best level of the year. The benchmark index finished ahead of the Dow (+0.8%) and Russell 2000 (+0.6%), but behind the Nasdaq Composite (+1.3%).
Market participants were greeted this morning with Greece-related headlines, which should have been expected considering the EU finance ministers meeting will take place tomorrow. The rumor mill was active from the early morning, starting with a Bloomberg report indicating the European Commission will propose a six-month extension for Greece. The report cited unnamed sources and was met with a swift denial from the European Commission spokeswoman, who said there is no formal proposal on the table at this time, but talks are "intensive." German Finance Minister Wolfgang Schaeuble also offered a denial, simply calling the report "wrong."
Lost in the whirlwind was the fact that the Bloomberg report took place not long after Greek Defense Minister Panos Kammenos entertained the possibility of looking for financial support elsewhere, naming the United States, Russia, and China as potential options.
The stock market rallied happily following the initial report and held its ground through the subsequent denials. The S&P 500 spent the bulk of the early afternoon in a narrow range, but powered to a fresh high ahead of the close. It is worth noting that market breadth did not turn positive until the final 90 minutes, meaning the number of advancers equaled that of decliners even as the market sported a solid gain at midday.
Nine of ten sectors registered gains with yesterday's laggards leading the way. To that effect, three of four countercyclical sectors finished ahead of the broader market with health care (+1.6%) and utilities (+2.1%) ending in the lead.
The health care space received support from biotechnology, evidenced by a 1.6% gain in the iShares Nasdaq Biotechnology ETF (IBB 318.26, +4.85). The high-beta biotech group gave a boost to the Nasdaq, and the tech-heavy index received another measure of support from chipmaker names. Qualcomm (QCOM 70.26, +3.15) raised its guidance after settling an anti-trust investigation in China for $975 million while Micron (MU 31.09, +2.74) announced an amendment to one of its supply agreements. The two names posted respective gains of 4.7% and 9.7% while the PHLX Semiconductor Index spiked 3.4%. As for the technology sector, the top-weighted group advanced 1.6%.
Elsewhere among cyclical sectors, the consumer discretionary space (+1.2%) settled ahead of the market while the other four groups underperformed.
Notably, the industrial sector (+0.6%) could not keep up with the market even as transport stocks displayed strength (Dow Jones Transportation Average +0.9%). Machinery stocks kept the sector among the laggards following cooler-than-expected inflation data from China. Dow component Caterpillar (CAT 83.90, -0.77) lost 0.9% while Joy Global (JOY 43.84, -0.94) fell 2.1%.
On the downside, the energy sector (-0.2%) spent the day in negative territory, but erased the bulk of its loss ahead of the close. The sector had to contend with a 5.5% plunge in crude oil ($50.06/bbl) while Halliburton (HAL 42.60, -0.91) lost 2.1% after Houston Business Journal reported the company will reduce its workforce by 6.5%-8.0%.
Treasuries spent some time on either side of their flat lines before locking in slim losses with the 10-yr yield higher by a basis point at 1.99%.
Participation was below average for the second consecutive day with roughly 770 million shares changing hands at the NYSE floor.
Economic data was limited to Wholesale Inventories and JOLTS:
- Wholesale inventories increased 0.1% in December following an unrevised 0.8% increase in November while the Briefing.com consensus expected an increase of 0.2%
- The BEA estimated that wholesale inventories increased 0.6% in the advance Q4 2014 GDP report, which will likely result in negative revisions for fourth quarter GDP
- Durable goods inventories increased 0.2% in December after increasing 0.9% in November
- Petroleum inventories declined 6.2%, causing a 0.1% downtick in nondurable goods inventories
- The Job Openings and Labor Turnover Survey showed that openings increased to 5.028 million from 4.847 million in December
Macroeconomic Data
Economic Data
from Briefing.com
- Wholesales Inventories : 0.1% vs 0.2% (Prior 0.8%)
- JOLTS - Job Openings : 5.028M (Prior 4.847M - Down)
WHOLESALES INVENTORIES
Highlights
- Wholesale inventories increased 0.1% in December following an unrevised 0.8% increase in November. The Briefing.com Consensus expected wholesale inventories to increase 0.2%.
Key Factors
- The BEA estimated that wholesale inventories increased 0.6% in the advance Q4 2014 GDP report. The downside miss will likely result in negative revisions for fourth quarter GDP.
- Durable goods inventories increased 0.2% in December after increasing 0.9% in November. A 6.2% decline in petroleum inventories led to a 0.1% decline in nondurable goods inventories.
- Wholesale sales fell 0.4% for a second consecutive month in December. Nearly the entire decline can be attributed to lower petroleum prices, which reduced petroleum sales by 13.7% in December.
- The inventory-to-sales ratio increased to 1.22 in December from 1.21 in November.
Big Picture
- Wholesale inventories are just one component of total business inventories. Manufacturing and retail inventories make up the rest of total business inventories. The market ignores this release and doesn't pay much attention to the full business inventory release that comes a few days later. Improved inventory management in recent years has reduced the economic swings associated with inventories and has helped produce a long-term downtrend in the inventory-to-sales ratio.
Market Internals
NYSE:
Higher Volumes than the day before – 785.1M vs 775.8M
Advancers outpaced Decliners (adv/dec): 1749 / 1329
New Highs outpaced New Lows (highs/lows): 81 / 33
NASDAQ:
Higher Volumes than the day before – 1765.7M vs 1631.4M
Advancers outpaced Decliners (adv/dec): 1693 / 1086
New Highs outpaced New Lows (highs/lows): 53 / 40
VOLATILITY S&P500 (VIX)
17.23 -1.32 (-7.12%)
Internals are neither bullish nor bearish in my opinion. But maybe it points more towards a rather weak bullishness. VIX went down and I think the market feel there is still underlying optimism. Nonetheless as long as VIX is still above 15.00 I still consider it to be a long shot.
Technical Updates
17,868.76 +139.55 (+0.79%)
Volume: 89,933,039 (below average of 93,229,390)
Range: 17,729.24 - 17,890.34
4,787.65 +61.63 (+1.30%)
Volume: 441,959,229 (below average of 450,186,843)
Range: 4,737.12 - 4,793.27
S&P 500 INDEX (SPX: CBOE)
2,068.59 +21.85 (+1.07%)
Volume: 537,838,000 (above average of 529,843,585)
Range: 2,048.62 - 2,070.86
Here is the third candle reversal. However the indices are going to test their respective resistance level. From the technicals it seems that we might see a breakout soon. If the volume starts coming in and market manages to break higher, I reckon we are going to see a (short) rally perhaps.
Commodities
Closing Commodities: WTI Crude Oil Prices Collapse Following IEA Report
- WTI crude oil futures sold off today following three consecutive days of gains
- One catalyst weighing on crude today was the IEA Oil Market Report, which had some bearish commentary
- Ultimately, Mar crude oil closed the day $2.93 lower at $50.06/barrel
- Mar nat gas gained $0.08 to $2.68/MMBtu
- Precious metals lost steam today, but showed only modest losses
- Apr gold fell $9.50 to $1232.10/oz, while Mar silver lost $0.21 to $16.86/oz
- Mar copper lost $0.04 to $2.54/lb
Energy Price Action
- Mar crude oil futures fell $2.93/barrel to $50.06/barrel
- Mar natural gas rose $0.08 cents to $2.68/MMBtu
- RBOB Gasoline closed $0.03 lower (or -1.9%) at $1.55/gallon
- Heating oil closed $0.05 lower (or -2.7%) at $1.83/gallon
- Key News: The IEA released its Oil Market Report for February:Forecast of global oil demand growth for 2015 remained unchanged
- Agency revised the “call” on OPEC production to 30.2 mb/d, above OPEC’s stated production target of 30 mb/d
Agricultural Price Action
- Mar corn closed $0.03 lower at $3.88/bushel
- Mar wheat closed $0.08 lower at $5.21/bushel
- Feb soybeans ended $0.10 lower at $9.69/bushel
- Ethanol closed flat D/D at $1.46/gallon
- Sugar #11 closed flat D/D at 14.71 cents/lb
Metals Price Action
- Apr gold ended today’s session $9.50 lower at $1232.10/oz
- Mar silver ended $0.21 lower at $16.86/oz
- Mar copper closed $0.04 lower at $2.54/lb
Currencies
Currency Commentary: EU Meetings on Tap
- There is volatility in markets but the Dollar Index is back to trading at the high end of 94. The rate hike theme continues to garner steam with the Fed’s Lacker and Williams both out today calling for rate hikes. Economic data was mixed with December Wholesale Inventories missing expectations while the JOLTS- Job Opening, a jobs report that tends to catch Janet Yellen’s attention, was better than expected.
- The euro is holding the 1.13 level as markets prepare for a busy couple of days of meetings. There have already been a few rumors on a deal/no deal between Greece and the Eurozone. We would note that the EU Finance Ministers meet tomorrow and EU Leaders will hold a Summit on Thursday. It is unlikely anything will be announced ahead of the Thursday meeting. On the economic front, both France and Italy posted better than expected Industrial production numbers.
- The pound test and held 1.52 support in early trade. The U.K. saw its Manufacturing and Industrial Production numbers fall short. But there appears to be a growing appetite for cable at the 1.52 level. Markets will continue to watch Europe to see if impacts the U.K., but the longer cable holds 1.52 the more attracted investors will get.
- The yen remains weak as it is trading in the 119 level. Markets are gearing up for a test of the 1.20 support level. At today’s G-20 meeting, Japanese officials have noted that they have not heard any complaints from other countries with regards to its aggressive monetary policy
Switchback:
- The final results may not show it, yet Treasuries covered a decent bit of ground Tuesday, driven in part by technical factors that kept the 10-yr yield pinned between resistance at its early January high (2.02%) and its post-employment report high of 1.96%
- There was ample news to digest, which contributed to the switchback action
- Plenty of headline hoopla surrounding negotiations between Greece and the troika
- Initial headline suggested a 6-month extension could be in the works
- Follow-up headline indicated that German Finance Minister Wolfgang Schaueble shot down the earlier report
- China reported weak inflation data for January
- CPI +0.8% yr/yr (1.0% expected; prior 1.5%) and PPI -4.3% yr/yr (-3.8% expected; prior -3.3%)
- U.S. stock market vacillated early on Greece/troika headlines, but found its footing and rallied in afternoon trade
- $24 billion 3-yr note auction met with average demand
- Drew a high yield of 1.05% on a 3.34 bid-to-cover ratio (prior 12-auction average was 3.30)
- Indirect bidders with a relatively high 48.9% of accepted offers and direct bidders with a low 7.2%
- Fed speak
- Richmond Fed President Lacker (an FOMC voter) gave an innocuous speech on "Education, Innovation, and Economic Growth," yet Reuters reported later that he told reporters a rate hike in June is an attractive option
- The same Reuters article also pointed to a Financial Times article that indicated San Francisco Fed President Williams (an FOMC voter) suggested a rate hike from the Fed is getting closer and closer
- Oil prices were up early but eventually rolled over, pressured by a stronger dollar, technical resistance, and supply concerns
- WTI crude settled down 5.5% at $50.06/bbl
- Plenty of headline hoopla surrounding negotiations between Greece and the troika
- Treasury yields were ultimately little changed by the end of the session
- 2-yr yield -1 bp at 0.65%
- Interesting that it held firm despite the reportedly hawkish comments from two voting FOMC members
- 3-yr yield -1 bp at 1.03%
- 5-yr yield unch at 1.51%
- 10-yr yield +1 bp at 1.99%
- 30-yr yield +2 bps at 2.57%
- 2-yr yield -1 bp at 0.65%
- Economic data
- NFIB Small Business Optimism Index dropped 2.5 points to 97.9, weighed down by a dip in expectations for the next six months
- December Wholesale Inventories +0.1% (Briefing.com consensus +0.2%; prior +0.8%)
- Weaker than the 0.6% jump estimated by the BEA in the advance Q4 GDP report. The downside miss will most likely result in negative revisions for Q4 GDP.
- December JOLTS - Job Openings were 5.028 million versus a downwardly revised 4.847 million in prior month (from 4.972 mln)
- Highest level of job openings since January 2001
- Quit rate of 1.9% was unchanged from November
- Auction Wednesday: $24 billion 10-yr note auction (13:00 ET)
- Fed speak Wednesday: Dallas Fed President Fisher (non-FOMC voter) at 08:00 ET on "Monetary Policy and a Reflection on Almost 10 Years at the Fed"
- Data Wednesday: Weekly MBA Mortgage Index (07:00 ET), January Treasury Budget (14:00 ET)
Treasury Yields:
- 2 Year Note 0.67% +0.02
- 5 Year Note 1.52% +0.03
- 10 Year Note 2.01% +0.05
- 30 Year Bond 2.58% +0.06
2/30 Spread: 191 bps ( +4 ) … 2/10 Spread: 134 bps ( +3 )
Preview for Wednesday 11 Feb, 2015
Wednesday (11 Feb) :
- MBA Mortgage Index : (Prior 1.3%)
- Crude Inventories : (Prior 6.333M)
- Treasury Budget : (Prior -$10.3B)
Earnings Highlights
Wednesday (11 Feb) :
BMO - WBAI ACCO AFSI AOL ARMH BGCP CSTE EG EEFT EZCH GNRC HSIC LO LPX MRKT MDLZ MOS OC PAG PEP RTI TRI TWX USAK WOOF VPG VOYA WCG WEC WIX ZTS
BMO - WBAI ACCO AFSI AOL ARMH BGCP CSTE EG EEFT EZCH GNRC HSIC LO LPX MRKT MDLZ MOS OC PAG PEP RTI TRI TWX USAK WOOF VPG VOYA WCG WEC WIX ZTS
AMC - ACHC ABCO HIVE AEM AMBR AMAT BIDU CJES CTLT CTL CAKECSCO CPA CSOD CXW CVA CRAY CYS DDR DIOD EFC EFX EXL FEYE FORR FET GLOB HNI HOS HUBS NSIT ITRI LPSN LXFT MET NAVG NCIT NTAP NTWK NU NVDA OII PNRA PPC QDEL REG SWM SCSS SKX STMP SLF SPRT TAL TTGT TSLA TSO TRIP TCS WFM AUY ZEN ZU
Summary
Market is pretty volatile in a sense as there are uncertainty from Greece and crude oil. I reckon currently there is no clear direction on where the market is going, most likely we are going to see a sideway as mentioned in technical analysis. But if the market is able to reach higher, I believe we would see more momentum given it is supported with volume.
Tomorrow I think we might see some profit-taking and maybe more speculation.
Tomorrow I think we might see some profit-taking and maybe more speculation.
Direction for Wednesday 11 Feb, 2015; Down
2015 Daily Directional Accuracy: 9/24 (37.50%)
2015 Weekly Directional Accuracy: 4/5 (80.00%)
2015 Weekly Directional Accuracy: 4/5 (80.00%)
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