Wednesday, 11 Feb 2015 - AMC

Dow -6.62 at 17862.14, Nasdaq +13.54 at 4801.18, S&P -0.06 at 2068.53

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.

Direction for Wednesday 11 Feb, 2015; Down

We certainly see a volatile session from Wednesday. Market was constantly fighting its resistance level but it is still not convincing yet. Only NASDAQ managed to stay positive as Apple outperforms.                  

Market Summary

Industry Watch

Strong: Consumer Staples, Health Care, Technology

Weak: Energy, Financials, Materials, Utilities

Other Market Moving Factor:

• Eurogroup discusses Greek debt crisis in Brussels
• Leaders from Ukraine, Russia, France, and Germany meeting in Minsk for Russia-Ukraine peace talks

[BRIEFING.COM] The stock market ended the midweek session on a flat note. The Dow and S&P 500 settled just below their unchanged levels while the Nasdaq Composite (+0.3%) outperformed throughout the session. 

Today's final NYSE volume (732 million) came in below average, which has been the case since the start of the week. However, the limited participation was not all that surprising as some investors treaded lightly, trying to avoid potential whiplash associated with headlines out of Europe. 

The EU finance ministers meeting took place earlier today, but hopes for a swift deal were dampened by Germany's Finance Minister Wolfgang Schaeuble who said he did not expect a resolution today, echoing comments made by Eurogroup Chief Jeroen Dijsselbloem. The Eurogroup is now expected to spend the weekend analyzing the divergences between the plan presented by Greek Finance Minister Yanis Varoufakis and the existing program. 

Meanwhile, leaders from France, Germany, Russia, and Ukraine met in Minsk, and according to Ukraine's delegation, they agreed to reaffirm the cease-fire agreement that was struck at the first Minsk conference on September 5, 2014. Last year's agreement was violated shortly after being put into place, and it remains to be seen whether today's reaffirmation enjoys a longer life. 

Four of ten sectors registered gains with consumer staples (+0.6%), health care (+0.1%), and technology (+0.4%) showing relative strength throughout the day. 

The consumer staples sector settled in the lead thanks to support from PepsiCo (PEP 100.40, +2.41) and Mondelez (MDLZ 36.74, +0.93) after both names reported better than expected results. Meanwhile, the other countercyclical outperformer—health care—benefited from above-consensus results reported by Zoetis (ZTS 45.77, +1.86) and a few others. As for biotechnology, the high-beta group outperformed in the early going, but slumped in afternoon action with the iShares Nasdaq Biotechnology ETF (IBB 317.25, -1.01) shedding 0.3%. 

The afternoon underperformance of biotechnology had little impact on the Nasdaq Composite, which received daylong support from Apple (AAPL 124.88, +2.86), which surged 2.3%. In addition, chipmakers displayed relative strength with the PHLX Semiconductor Index climbing 0.3% after ARM Holdings (ARMH 50.31, +1.54) reported in-line results. 

On the downside, the energy sector (-0.7%) spent the day in negative territory as crude oil struggled. The energy component held an overnight gain, but slumped to end the pit session lower by 2.4% at $48.87/bbl. The closing price masked the fact that oil tested the $48.25/bbl level after today's storage report revealed a substantial inventory build of 4.868 million barrels. 

Elsewhere, the utilities sector lost 2.4% to widen its February loss to 4.9%. 

Treasuries vacillated near their flat lines before ending little changed with the 10-yr yield at 2.00%. 

Economic data was limited to the MBA Mortgage Index and the Treasury Budget for January: 

• The weekly MBA Mortgage Index fell 9.0% to follow last week's 1.3% increase 
• The Treasury Budget for January revealed a $18.00 billion deficit while the Briefing.com consensus expected a deficit of $19.00 billion 

Tomorrow, weekly Initial Claims (Briefing.com consensus 285K) and the Retail Sales report for January (consensus -0.4%) will be released at 8:30 ET while the December Business Inventories report (consensus 0.2%) will cross the wires at 10:00 ET. 

Macroeconomic Data

Economic Data

from Briefing.com

• MBA Mortgage Index : -9.0% (Prior 1.3%)
• Crude Inventories : 4.868M (Prior 6.333M)
• Treasury Budget : -$17.5B vs -$19.0B (Prior -$10.3B)

TREASURY BUDGET

Highlights

• The Treasury Budget showed a deficit of $17.5 bln in January versus a surplus of $1.9 bln in December.  The January figure was slightly ahead of the Briefing.com consensus estimate, which called fore a deficit of $19.0 bln.

Key Factors

• Total revenues increased to $306.7 bln in January 2015 from $296.0 bln in January 2014.
• Total outlays increased to $324.3 bln in January 2015 from $306.2 bln in January 2014.
• Fiscal year-to-date, the deficit is $194.2 bln versus $182.8 bln for the comparable period in FY14

Big Picture

• The Treasury data are not seasonally adjusted, so the January deficit cannot be compared to the surplus in December.
• Raw data available at: www.fiscal,treasury.gov/fsreports/rpt/mthTreasStmt/current.htm

Market Internals

NYSE:

Lower Volumes than the day before – 749.6M vs 785.1M 


Decliners outpaced Advancers (adv/dec): 1405 / 1686

New Highs outpaced New Lows (highs/lows): 100 / 24

NASDAQ:

Higher Volumes than the day before – 1768.9M vs 1765.7M

Decliners outpaced Advancers (adv/dec): 1221 / 1493

New Highs outpaced New Lows (highs/lows): 73 / 51

VOLATILITY S&P500 (VIX)

16.96 -0.27 (-1.57%)

The lack of leadership in the market is clearly reflected in the internals. That also explains why volume is not picking up. However VIX broke below its 50MA and this continues to show some confidence. But again, if it is not supported by volumes it is not going to be convincing.   

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,862.14 -6.62 (-0.04%)

Volume: 89,894,419 (below average of 93,498,985)

Range: 17,759.65 - 17,897.21

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,801.18 +13.54 (+0.28%)

Volume: 433,804,361 (below average of 449,977,547)

Range: 4,780.13 - 4,810.36

S&P 500 INDEX (SPX: CBOE)

2,068.53 -0.06 (-0.00%)

Volume: 502,374,000 (below average of 530,927,484)

Range: 2,057.99 - 2,073.48 

It looks like the indices are looking to break above their respective resistance level. S&P forms a doji which validates the lack of direction in the market. But given the lack in volume, I suppose it might be hard for the market to get higher...    

Commodities

Closing Commodities: WTI Falls Again, Copper Ends Flat

• WTI crude oil extends yesterday’s losses and falls $1.19 to $48.87/barrel today
• Weekly EIA storage data helped weigh on prices today
• Mar nat gas rose $0.12 to $2.80/MMBtu
• Precious metals lost ground today and copper closed today’s session unchanged at $2.54/lb
• Apr gold fell $11.90 to $1220.20/oz, while Mar silver lost $16.77/oz

Energy Price Action

• Mar crude oil futures fell $1.19/barrel to $48.87/barrel (See EIA Petroleum Inventory)
• Mar natural gas rose $0.12 to $2.80/MMBtu
• RBOB Gasoline closed $0.01 lower at $1.55/gallon
• Heating oil closed $0.02 lower (or -1.1%) at $1.81/gallon
• Key Events
• EIA Petroleum Inventory Data
  • Production: U.S. crude oil refinery inputs averaged about 15.6 mln barrels per day during the week ending February 6, 2015, 20,000 barrels per day more than the previous week’s average. Refineries operated at 90.0% of their operable capacity last week.
  • Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.9 mln barrels from the previous week. At 417.9 mln barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.
  • Demand: Total commercial petroleum inventories increased by 2.2 mln barrels last week.

• Baltic Dry Index Movement
  • Overnight, the BDI fell 3 points to 553, which is a new all-time low.
    • Capesize rates fell $113 overnight (or -1.6%) to $6,739/day
    • Panamax rates rose $185 (or +5.2%) to $3,748/day.
    • Supramax rates fell $80 (or -1.5%) to $5,311/day

Agricultural Price Action

• Mar corn closed $0.02 lower at $3.86/bushel
• Mar wheat closed $0.04 higher at $5.25/bushel
• Feb soybeans ended $0.09 higher at $9.78/bushel
• Ethanol closed $0.01 lower at $1.45/gallon
• Sugar #11 closed flat D/D at 14.71 cents/lb

Metals Price Action

• Apr gold ended today’s session $11.90 lower at $1220.20/oz
• Mar silver ended $0.09 lower at $16.77/oz
• Mar copper closed flat at $2.54/lb

Currencies

Currency Commentary: DXY Testing 95

• The Dollar Index has moved back above 95 as markets brace for key European Leaders meetings over the next two days. Economic data has been light this morning with the only notable being MBA Mortgages which showed a 9.0% decline from the prior week. The January Treasury Budget report is due out at 2pm ET but is unlikely to have a big impact on trade.
• The euro is attempting to hold the 1.13 level ahead of the key EU meetings. Today, Finance Ministers are set to meet with the Greek bailout being the primary focus. We would not expect any announcement from the meeting but there will be plenty of rumors on whether or not a deal has been reached. Tomorrow’s EU Leader’s Summit is the more likely time frame for any announcements. It will be difficult for both sides to reach an agreement over the next two days. They will certainly try and paint a picture that they are closer to an agreement. But the longer this stretches on the more tedious of a position the Greek financial system is put in with bank deposits seeing the majority of pressure.
• The pound has run into resistance at 1.53 which has led to a pull back to the mid-1.52 area. The pound should follow a close correlation to the euro over the next couple of sessions.
• The yen has slipped below the 120 mark as a risk on trade appears to be forming despite the Greece concerns. This marks the first time since January 5 that the Dollar Yen trade has tested the 120 level. The multi-year low for the yen is 121.84 set on December 8. This will become a key level if the yen continues to diminish in value (BONDX, FOREX).

Bonds

Range-Bound

• Wednesday was an encouraging one for investors in 10's and 30's, with both instruments recovering intraday losses to end slightly higher. Following a disastrous six days in Treasuries, flat might be the new up
• The $24 billion 10-yr auction was met with strong interest from indirect bidders
  • High yield: 2.000%
  • Bid-to-cover: 2.62
  • Indirect bid: 59.5%
  • Direct bid: 14.9%
• The 10-yr and 30-yr yields both found resistance at their 50-day moving averages around 12:00 ET. 
• The curve has gone from steeper to flatter as the action has been on the long end and that part has finished higher, with gains in the belly of the curve as well
  • Yield Check
    • 2-yr yield unch at 0.65%
    • 5-yr yield unch at 1.51%
    • 10-yr yield -1 bp at 1.99%
    • 30-yr yield -1 bp at 2.57%
• All in all, financial markets seemed to show a more encouraging picture of the global economic and geopolitical outlook
  • Safe havens like the Yen and gold fell 
    • USDJPY +0.95 (0.79%) to 120.29 
    • Gold -10.70 (-0.88%) to $1221.40/troy ounce
  • The S&P 500 Index was trading back at 2065 at 3:00 ET today, after pulling back up to 13 points from yesterday's close
  • Crude Oil traded down to $0.86 to $49.16/bbl following a supply number that failed to support the recent rally from the mid-40's
• Dallas Fed President Fisher (non-FOMC voter) made some remarks about the structure of the Fed but did not move Treasuries
• Data Thursday Retail Sales at 08:30 ET, Jobless Claims at 08:30 ET
• Auction Thursday $16 billion 30-yr bond auction (13:00ET)

Treasury Yields:

• 2 Year Note 0.67% UNCH
• 5 Year Note 1.53% +0.01
• 10 Year Note 2.00% -0.01
• 30 Year Bond 2.57% -0.01

2/30 Spread: 190 bps ( -1 ) …  2/10 Spread: 133 bps ( -1 )

Preview for Thursday 12 Feb, 2015

Economic Data

Thursday (12 Feb) :

• Initial Claims : 285K (Prior 278K)
• Continuing Claims : 2405K (Prior 2400K)
• Retail Sales : -0.5% (Prior -0.9%)
• Retail Sales ex-auto : -0.5% (Prior -1.0%)
• Business Inventories : 0.2% (Prior 0.2%)
• Natural Gas Inventories : (Prior -115bcf)

Earnings Highlights

Thursday (12 Feb) :
BMO - ACOR AAP AB ANR APA AAWW AVP BWA BG CAB CPLA CVE CCE SCOR COR CS DBD DPS FAF FLO GNC HE HERO HIMX HSP INCY IFF JAH K LPNT LMNS MANU MFC MHFI MPW MDWD MPEL MIXT MINI TYPE NNN NCI NLSN NWE PBF PBFX PNK POOL PDS Q RDN RYN RWLK TRIX SNI SHPG SKYW LNCE SON SPW STC TIME TOWR THS VNTV VG WD WSO WWAV WWE

AMC - ALNY AEL AIG AIZ BCOR BYD BFAM CBS CGNX CXP COLM CUZ CYBR DVA DLR ELLI EGN GRPN GUID INWK IRWD JCOM KING KN KRFT LOGM MTSN MOBL MGI NEWR NR PFIE PRO QLIK RGC RSG RBCN SFLY SSTK SSNC TNGO TCO TRLA TRUP VCRA WAGE WWWW INT ZNGA

Summary

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

2015 Daily Directional Accuracy: 10/25 (40.00%) 
2015 Weekly Directional Accuracy: 4/5 (80.00%)