Monday, 30 Mar 2015 - AMC

Dow +263.65 at 17976.31, Nasdaq +56.22 at 4947.44, S&P +25.22 at 2086.24

Next week is rather crucial as it will determine if the market is likely to rebound from its support or continue to slide lower. Yield curve continues to lower and flatten and this is still not a healthy sign for the US economy.

There are many significant economic data releasing next week. It is going to be another volatile week ahead. Since it is a Good Friday week (meaning a long weekend), I suppose we should see the market to preferably go up instead.

Direction for Monday 30 Mar, 2015; Up

Market took a huge rally at the start of the session. But following that the movement was rather sideway. However it is noticeable that we had an Up Friday and Up Monday and that might reflect the underlying strength for the bullish trend.          

Market Summary

Industry Watch

Strong: Consumer Discretionary, Energy, Financials, Industrials, Materials, Utilities

Weak: 

Other Market Moving Factor:

• Dollar on the rise
• UnitedHealth (UNH) agrees to acquire Catamaran (CTRX) for $61.50/share

[BRIEFING.COM] The major averages rallied throughout the Monday session with the Dow Jones Industrial Average (+1.5%) ending in the lead while the S&P 500 (+1.2%) and Nasdaq (1.2%) followed not far behind. 

The key indices began the week on an upbeat note, aided by overnight news indicating China has loosened its lending requirements for purchases of second homes. In addition, Friday's dovish remarks from Fed Chair Janet Yellen, who said the Fed will move cautiously when raising rates, provided another measure of support. 

All ten sectors ended the day with solid gains while the S&P 500 narrowed its March loss to 0.9%. Despite the month-to-date loss, the benchmark index will enter tomorrow's session with a quarter-to-date gain of 1.3%. 

Overall, cyclical sectors had the best showing, but countercyclical groups held their own. Health care and telecom services ended at the bottom of the leaderboard, but both groups still gained close to 1.0% apiece. 

The health care sector settled behind most other groups despite showing early strength that was fueled by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 351.32, +3.86) ended higher by 1.1% after being up more than 1.5% at the start. On the M&A front, UnitedHealth (UNH 121.00, +2.99) gained 2.5% after agreeing to acquire Catamaran (CTRX 59.83, +11.51) for $61.50/share. 

Over on the cyclical side, five of six groups ended ahead of the S&P 500 while the consumer discretionary sector (+1.0%) underperformed. 

Interestingly, the energy sector (+2.1%) ended in the lead even as crude oil spent the bulk of the day in negative territory. The energy component tested the $47.75/bbl level before settling lower by 0.5% at $48.65/bbl. WTI crude will enter tomorrow's session down 11.5% for the first quarter versus a 2.7% decline for the energy sector. 

Elsewhere, the technology sector (+1.2%) caught up to the broader market during the final hour, but Intel (INTC 31.46, -0.54) weighed. The heavyweight lost 1.7%, retracing a portion of its 6.4% spike from Friday afternoon that occurred amid reports the company has approached Altera (ALTR 42.82, -1.57) about a potential takeover. However, it was reported earlier today that the deal remains on track. For its part, the PHLX Semiconductor Index gained 1.4%. 

Treasuries registered slim gains after spending the day in narrow ranges. The 10-yr yield slipped one basis point to 1.96%. On a related note, the Dollar Index (98.05, +0.76) spiked 0.8%, but the greenback strength had little impact on today's equity rally. 

Today's participation was well below average with fewer than 660 million shares changing hands at the NYSE floor. 

Economic data included Personal Income/Spending data and Pending Home Sales: 

• Personal income increased 0.4% in February after increasing an upwardly revised 0.4% (from 0.3%) in January while the Briefing.com consensus expected an increase of 0.3% 
  • The increase was in-line with the 0.4% increase in aggregate earnings that was reported in the February employment report 
  • Spending rose just 0.1% in February after declining 0.2% in January while the consensus expected an increase 0.2% 
  • Core PCE Prices rose 0.1%, as expected 
• Pending home sales for February rose 3.1% while the Briefing.com consensus expected an increase of 0.4% 

Tomorrow, the Case-Shiller 20-City Index for January will be released at 9:00 ET (Briefing.com consensus 4.6%) while March Chicago PMI (consensus 52.0) and March Consumer Confidence (expected 96.4) will be reported at 9:45 ET and 10:00 ET, respectively. 

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei +0.7%; Hong Kong’s Hang Seng +1.5%; China’s Shanghai Composite +2.6%
The Asian equity markets closed trading higher this morning, and bulls can thank China for that. The Mainland’s Central Bank was active over the past couple days with talk and actions, which have treated equity markets with very favorable beginning to the week. First, the PBOC’s Zhou spoke candidly over the weekend that growth has fallen too much and the central bank has room to act. That was backed up by PBOC researcher who warned that growth may fall below 7% for the quarter. This triggered the first wave of optimism across the equity complex. Then, later this morning, the PBOC backed up its tough talk with a move that gave the markets its second push higher when it announced it would lower restrictions on its property purchases by reducing the required down payment of second homes by 40% (so much for trying to contain the property bubble). Japanese shares were once again bid on poor data with February Industrial Production falling at its quickest clip in nine months, coming in at -3.4% (vs -1.9%e).

Economic data

• Japan
• Feb Industrial Prod -3.4% vs -1.9% exp

Equity Markets

• Japan’s Nikkei gained 0.7%, shrugging off weaker than expected Industrial production data. All sectors finished in positive territory with Consumer Staples (+1.4%) leading the way.
• Hong Kong’s Hang Seng ended +1.5% higher with gains in the financials (+2.5%) leading the charge. As such, Bank of China and China Construction Bank both posted solid gains, trading up 3.4% and 1.7% respectlively
• China’s Shanghai Composite increased 2.6% on the back of all the central bank news mentioned above. Real estate and property names were taking off in advance of the property restriction news, with Poly Real Estate trading +10% on the day
• India’s Sensex ended the day up 1.9% on the day. The index was led by industrials (+2.2%) and technology (+0.7%)

FX

• USD/CNY flat at 6.2152
• USD/INR +0.2% at 62.69
• USD/JPY +0.6% at 119.86

EUROPE

Major European indices hold gains with Germany’s DAX (+1.3%) in the lead. Elsewhere, Spain’s Economy Minister Luis de Guindos said the European economy will prove to be a positive surprise with Spain’s Q1 GDP expected to grow 0.8%.

• Eurozone March Business and Consumer Survey rose to 103.9 from 102.3 (expected 103.1)
• UK’s February BoE Consumer Credit GBP740 million (expected GBP900 million; prior GBP802 million) while Mortgage Lending GBP1.70 billion (expected GBP1.60 billion; previous GBP1.60 billion)
• Italy’s March Business Confidence rose to 103.7 from 100.5 (expected 99.8) while Consumer Confidence improved to 110.9 from 107.7, as expected
• Spain’s March CPI -0.7% year-over-year (expected -1.0%; prior -1.1%)
• Spain’s KOF Leading Indicators climbed to 90.8 from 90.3 (consensus 89.1)

CLOSING PRICES

• UK’s FTSE: + 0.5%
• Germany’s DAX: + 1.8%
• France’s CAC: + 1.0%
• Spain’s IBEX: + 1.0%
• Portugal’s PSI: + 0.1%
• Italy’s MIB Index: + 1.2%
• Irish Ovrl Index: + 1.4%
• Greece ASE General Index: + 0.5%

Macroeconomic Data

Economic Data

from Briefing.com

• Personal Income : 0.4% vs 0.3% (Prior 0.4% - Up)
• Personal Spending : 0.1% vs 0.2% (Prior -0.2%)
• PCE Prices - Core : 0.1% vs 0.1% (Prior 0.1%)
• Pending Home Sales : 3.1% vs 0.4% (Prior 1.2% - Down)

PERSONAL INCOME AND SPENDING

Highlights

• Personal income increased 0.4% in February after increasing an upwardly revised 0.4% (from 0.3%) in January. The Briefing.com Consensus expected personal income to increase 0.3%.
• Spending rose just 0.1% in February after declining 0.2% in January. The consensus expected personal spending to increase 0.1%.

Key Factors

• The increase in income was in-line with the 0.4% increase in aggregate earnings that was reported in the February employment report. 
• All of the increases in consumer sentiment over the past several months has not translated into accelerated consumption spending. Instead, consumers have opted to raise their personal savings rate, which now stands at 5.8% and is up from 5.5% in February and 4.4% in November.
• Even more disappointing, the entire increase in spending was a result of a rise in prices. Real spending declined 0.1% in February after increasing 0.2% in January.
• The increase in gasoline prices helped boost nominal nondurable goods spending 0.4% after declining 2.5% in January. Durable goods spending declined 1.0% in February after increasing 0.4% in January.
• Altogether, goods spending declined 0.1%, which was the third consecutive monthly decline.
• Services spending increased 0.2% in February after increasing 0.4% in January.

Big Picture

• Savings rise as spending growth continues on a lackluster trend.

Market Internals

NYSE:

Higher Volumes than the day before – 676.3M vs 586.4M 


Advancers outpaced Decliners (adv/dec): 2299 / 800

New Highs outpaced New Lows (highs/lows): 145 / 17

NASDAQ:

Higher Volumes than the day before – 1767.4M vs 1498.8M

Advancers outpaced Decliners (adv/dec): 1878 / 907

New Highs outpaced New Lows (highs/lows): 105 / 48

VOLATILITY S&P500 (VIX)

14.51 -0.56 (-3.72%)

Market is looking more bullish in the internals. Although volume remains below average for the time. New Highs also spiked up, reflecting the bullish sentiment. VIX closed below 15.00 but the intraday was suggesting otherwise.   

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,976.31 +263.65 (+1.49%)

Volume: 104,038,691 (above average of 98,558,210)

Range: 17,727.48 - 18,008.64

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,947.44 +56.22 (+1.15%)

Volume: 419,655,317 (below average of 452,405,459)
Range: 4,921.12 - 4,948.46

S&P 500 INDEX (SPX: CBOE)

2,086.24 +25.22 (+1.22%)

Volume: 493,690,000 (below average of 545,663,431)

Range: 2,064.11 - 2,088.97 

The market rebound off its trend support but it is likely to face a resistance from the 20MAs and support/resistance level. Meanwhile MACD momentum continues to show the slowdown in bearishness. DOW and S&P are forming a consolidation pattern at the moment.                             

Commodities

Closing Commodities: WTI Oil Stages Late-Day Rally, Ends With Modest Loss

• Heading into the close, WTI crude oil rallied sharply, rising over $1/barrel to around $48.69/barrel
• By the time floor trading ended, May crude was down $0.22 at $48.65/barrel
• May natural gas futures ended the day $0.01 higher at $2.65/MMBtu
• Strength in the dollar index, helped weigh on precious metals all day
• Apr gold ended the day $14.40 lower at $1185.50/oz, while May silver closed $0.40 to $16.68/oz

Energy Price Action

• May crude oil futures fell $0.22/barrel to $48.65/barrel
• May natural gas closed $0.01 higher at $2.65/MMBtu
• RBOB Gasoline closed $0.01 lower at $1.79/gallon
• Heating oil closed $0.01 higher at $1.73/gallon

Note:

• Crude Oil: Price action was highlighted by news that discussions between the United States and Iran over that country’s nuclear program could potentially decrease sanctions and expand its crude export activity. Tomorrow marks the deadline for concluding talks between all involved parties

Agricultural Price Action

• May corn closed $0.03 higher at $3.94/bushel
• May wheat closed $0.23 higher at $5.30/bushel
• May soybeans closed $0.01 higher at $9.69/bushel
• Ethanol closed $0.05 higher at $1.54/gallon
• Sugar #11 closed 0.14 cents lower at 11.99 cents/lb

Note:

• Price action today reflected the upcoming release of the NASS Grains and Prospective Planting Reports, both expected out at Noon tomorrow (EST).

Metals Price Action

• Apr gold ended today’s session $14.40 lower at $1185.50/oz
• May silver closed $0.40 lower at $16.68/oz
• May copper closed $0.01 higher at $2.78/lb

Currencies

US Dollar Index Resumes Upward Path

• The dollar gained against every other major today, after a very volatile month of March. While the index traded a 7-point range from October of 2011 to September 2014, the past month has seen 3 moves of 5 points
• The commodity currencies all declined, as precious metals and oil traded lower:
  • AUD/USD: -1.26% to $0.7654
  • NZD/USD: -0.72% to $0.7513
  • USD/CAD: +0.64% to 1.2690
• The euro, which is 58% of the US Dollar Index, fell 0.64% to $1.0821
  • Weekend negotiations between Greece and its creditors did not produce results, and the Greek 10-year note yield rose 16 bps to 10.98%
  • Greek Prime Minister Alexis Tsipras gave a speech before the Greek parliament. He spent most of the speech criticizing the opposition party, but did not antagonize creditors
• GBP/USD declined 0.43% to $1.4810. The U.K. has elections in 5 weeks time, and polls showing better odds for the Tories or Labour will be influencing the pound sterling's value
• Dollar/yen rallied 0.89% to 120.19

Bonds

Governments Mixed:

• Despite the major U.S. equity indices being up over 1% and pending home sales surpassing expectations, 2's,5's, and 10's ended higher for the day
• Yield check:
  • 2-yr: -1 bp to 0.59%
  • 5-yr: -2 bps 1.42%
  • 10-yr: -1 bp to 1.96%
  • 30-yr: +1 bp to 2.56%

• News:
  • Personal income rose 0.4% in February, ahead of the Briefing.com consensus estimate of 0.3%. The increase in January was 0.4%, revised up from 0.3%
  • Personal spending rose 0.1% in February, lower than the Briefing.com consensus of 0.2%, but higher than the reading for January of -0.2%
  • Core personal consumption expenditure prices rose 0.1% in February, in line with the Briefing.com consensus and the prior reading
  • The European Commission's economic sentiment index for March rose to 103.9, ahead of expectations and the 102.3 from February
    • This data point continues the steady drumbeat of improving sentiment in Europe
  • The Greek Prime Minister, Alexis Tsipras, made a speech before the Greek parliament, criticizing the opposition party
  • Negotiations between Greece and its creditors made little headway over the weekend

• Commodities:
  • WTI Crude fell 0.70% to $48.53/bbl
  • Gold fell 13.90 to 1185.90/troy oz.
  • Copper rose 0.40% to $2.78/lb.

• Currencies:
  • EUR/USD: -0.71% to $1.0813
  • USD/JPY: +0.87% 120.17

• Data Out Tuesday:
  • Richmond Fed President Lacker (FOMC voter) gives a talk titled, "Economic Outlook, March 2015" (08:00 ET)
  • January Case-Shiller 20-City Index (09:00 ET)
  • March Chicago PMI (09:45 ET)
  • March Consumer Confidence (10:00 ET)
  • Cleveland Fed President Mester (non-FOMC voter) moderates panel before the 2015 Financial Markets Conference (10:15 ET)
  • Kansas City Fed President George (non-FOMC voter) speaks on the U.S. economy (15:00 ET)

Treasury Yields:

• 2 Year Note 0.58% UNCH
• 5 Year Note 1.41% -0.01
• 10 Year Note 1.96% +0.01
• 30 Year Bond 2.55% +0.02

2/30 Spread: 197 bps ( +2 ) …  2/10 Spread: 138 bps ( +1 )

Preview for Tuesday 31 Mar, 2015

Economic Data

Tuesday (31 Mar) :

• Case-Shiller 20-city Index : 4.5% (Prior 4.5%)
• Chicago PMI : 52.0 (Prior 45.8)
• Consumer Confidence : 96.2 (Prior 96.4)

Earnings Highlights

Tuesday (31 Mar) :
BMO - CONN DANG HNR MOV OCN SAIC VTNR VTAE
AMC - DCO FRPT INGN LNDC PRGN RGSE SNX WG

Summary

Market is not showing a convincing rally and maybe we might see some profit taking tomorrow after the spike from Monday morning. The Dollar Index is making it way back higher and crude oil took a beating. And the news from the Iran nuclear deal is giving the crude oil some volatility as well.

Generally I feel the market is still heading up but due to the list of major market movement data releasing later on this week, the market is remaining volatile. So I am calling a flat session ahead.

Direction for Tuesday 31 Mar, 2015; Down

2015 Daily Directional Accuracy: 23/45 (51.11%) 
2015 Weekly Directional Accuracy: 6/10 (60.00%)

Friday, 27 Mar 2015 - AMC

Dow +34.43 at 17712.66, Nasdaq +27.86 at 4891.22, S&P +4.87 at 2061.02

Market looks relatively flat ahead of GDP number on Friday. That is going to make the market go around. With the uncertainty in oil prices, that will add on the volatility in the market.

At this point in time I am not holding any positions open (closed on yesterday) and I am looking closely at the market to see the situation before I make my trade again. I reckon the market is likely to go looking at technical but if it doesn't the sliding is going to continue. On the other hand, the GDP number is likely to disrupt the technical analysis too...

Direction for Friday 27 Mar, 2015; Up

Market did go up on Friday but as I can see from the intraday the session was relatively flat. I think the market has seemed to find a bottom for the correction and maybe we might be going to see more pullback next week...         

Market Summary

Industry Watch

Strong: Consumer Discretionary, Consumer Staples, Health Care, Utilities

Weak: Energy, Financials, Industrials

Other Market Moving Factor:

• S&P 500 enters -2.5% week-to-date
• Biotechnology outperforms

[BRIEFING.COM] The major averages registered their first advance of the week on Friday with the Nasdaq Composite (+0.6%) ending ahead of the S&P 500 (+0.2%). Despite today's modest uptick, the two indices ended with respective losses of 2.7% and 2.2% for the week. 

Overall, the final session of the week was fairly quiet with equity indices bouncing around narrow ranges. The S&P 500 spent the day in a ten-point channel with the bulk of the action occurring near its 100-day moving average (2,058). The benchmark index settled below that level on Thursday, but managed to reclaim that mark today. 

Six of ten sectors registered gains with most countercyclical groups showing relative strength. The telecom services sector was an exception, ending flat, while consumer staples (+0.6%), utilities (+0.5%), and health care (+0.7%) posted gains. 

Most notably, the third largest sector by weight—health care—was underpinned by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 347.46, +6.65) surged 2.0%, but still ended the week lower by 5.2%. Today, however, the industry group did some heavy lifting and contributed to the outperformance of the Nasdaq even as large cap technology names struggled. 

The technology sector (+0.2%) started in-line with the market, but slumped from its opening high in a move that coincided with Apple (AAPL 123.25, -0.99) turning negative. The stock settled lower by 0.8%, but managed to hold its 50-day moving average (122.67). Meanwhile, high-beta chipmakers traded in mixed fashion until the final hour when it was reported that Intel (INTC 32.00, +1.92) is in talks to acquireAltera (ALTR 44.41, +9.83). The two names soared 6.4% and 28.5%, respectively and the news set a fire under the entire chipmaker space with the PHLX Semiconductor Index surging 2.8%. It is worth noting that the late surge lifted the entire sector into positive territory.  

Elsewhere among cyclical sectors, energy (-0.7%) and financials (-0.1%) lagged while consumer discretionary (+0.5%) and industrials (+0.4%) outperformed. 

The energy sector ended the day at the bottom of the barrel, but still finished the week ahead of the remaining cyclical sectors (-0.7%). Crude oil factored into today's weakness as the energy component fell 5.0% to $48.87/bbl and continued its retreat during electronic trading. Despite the plunge, WTI crude gained 4.9% for the week. 

Also of note, the financial sector (-0.1%) finished with a slim loss today, but ended the week behind the remaining nine sectors with a 3.0% loss. 

On the flip side, the consumer discretionary sector (+0.5%) ended ahead of other cyclical groups with help from homebuilders and retailers. The iShares Dow Jones US Home Construction ETF (ITB 27.79, +0.46) gained 1.7% while SPDR S&P Retail ETF (XRT 100.24, +0.82) advanced 0.8%. 

Treasuries spent the day in a steady climb from their overnight lows with the 10-yr yield slipping four basis points to 1.96%. 

Today's participation was below average with roughly 725 million shares changing hands at the NYSE floor. 

Economic data was limited to Q4 GDP and Michigan Sentiment: 

• GDP growth in Q4 2014 was unrevised in the third estimate and remained at 2.2% after increasing 5.0% in Q3. The Briefing.com consensus expected a revision to 2.4% 
  • Real final sales saw a slight upward revision to 2.3% from 2.1%, but nothing in the data altered the notion that economic growth trends slowed down significantly in the fourth quarter 
• The University of Michigan Consumer Sentiment Index was revised up to 93.0 in the March final reading from a preliminary reading of 91.2 while the Briefing.com consensus expected a revision up to 92.0 

On Monday, February Personal Income, Personal Spending, and core PCE Prices will be released at 8:30 ET while the Pending Home Sales report for February will cross the wires at 10:00 ET. 

• Nasdaq Composite +3.3% YTD 
• Russell 2000 +2.9% YTD 
• S&P 500 +0.1% YTD 
• Dow Jones Industrial Average -0.6% YTD 

Week in Review: Stocks Pull Back 

The stock market began the trading week on a sleepy note. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) surrendered their slim gains during the final hour while the Nasdaq Composite settled lower by 0.3% after lagging throughout the session. Equity indices spent the entire Monday session near their flat lines while the Dollar Index (96.86, -1.05) extended its retreat that began during the previous week. The index fell 1.1% with the greenback giving up 1.4% to the euro (1.0966). The single currency rallied in the morning and saw little afternoon reaction to a joint press conference held by German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras. The two leaders did not provide any specifics about their earlier meeting, suggesting the two sides remain at odds with regard to finding a sustainable solution for Greece. 

Equity indices registered their second consecutive decline on Tuesday with the S&P 500 retreating 0.6%. The benchmark index ended in-line with the Dow Jones Industrial Average while the Nasdaq Composite (-0.3%) outperformed slightly. Equities traded near their flat lines through the first half of the session before sliding to lows during afternoon action. All ten sectors finished the day in negative territory with technology (-0.3%) registering the slimmest loss. Also of note, the Dollar Index (97.15, +0.12) was on track for its third consecutive decline, but an early morning rebound following an in-line CPI report (+0.2%) helped the Index finish with a slim gain. Meanwhile, crude oil endured some intraday volatility before settling higher by 0.1% at $47.51/bbl. Strikingly, crude's flat finish could not stop the energy sector (-0.8%) from ending the day among the laggards. Notably, Whiting Petroleum (WLL) sank 19.5% after pricing a secondary share and note offering. 

The market registered its third consecutive decline on Wednesday with the S&P 500 ending lower by 1.5%. The benchmark index settled below its 50-day moving average (2,067) while the Nasdaq Composite (-2.0%) underperformed throughout the day. The S&P 500 hovered near its flat line during the opening hour, but high-beta groups like biotechnology, chipmakers, and transport stocks began showing weakness early on and continued their retreat throughout the day. As a result, eight sectors settled in the red with five ending behind the benchmark index. Most notably, the technology sector surrendered 2.7% with chipmakers enduring even more aggressive selling. All 30 components of the PHLX Semiconductor Index (-4.6%) finished in the red with ARM Holdings (ARMH) and Lam Research (LRCX) leading the slide with respective losses of 6.2% and 7.6% while heavyweight Intel (INTC) tumbled 2.9%. 

On Thursday, equities posted modest losses after climbing off their opening lows. The S&P 500 shed 0.2% and settled below its 100-day moving average (2,057) while the Nasdaq Composite (-0.3%) underperformed. Equity indices could not avoid registering their fourth consecutive decline, but they were able to avoid settling on their lows. The market began the day under pressure after overnight reports revealed that coalition forces from ten countries, led by Saudi Arabia, carried out air strikes against rebel forces in Yemen. This followed Wednesday's reports indicating Yemen's President Hadi fled his country by sea. The news gave a boost to the dollar, but the yen also rallied against its peers, which signaled caution among participants in the foreign exchange market. The Dollar Index (97.36, +0.38) gained 0.4% as the greenback spiked 0.8% against the euro, sending the single currency from a morning high near 1.1050 to 1.0880. For its part, the dollar/yen pair slipped 0.3% to 119.20 after testing the 118.50 level in the morning. In addition, the latest developments in the Middle East led to concerns about potential disruptions to the energy market. As a result, crude oil surged 4.6% to $51.43/bbl. However, the energy sector (-0.2%) could not make it out of the red.

DOW

NASDAQ

S&P

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei -1.0%; Hong Kong’s Hang Seng flat; China’s Shanghai Composite +0.2%
Markets in the Asia-Pacific region were mixed again on Friday with Japan’s Nikkei (-1.0%) a notable standout to the downside following a large batch of economic data that included weaker than expected retail sales and inflation data. China’s Shanghai Composite (+0.2%) registered a modest gain but increased 2.0% for the week.

Economic data

• Japan
• February Household Spending +0.8% month-over-month (expected +0.5%; prior -0.3%; -2.9% year-over-year (expected -3.2%; prior -5.1%)
• February Retail Sales -1.8% year-over-year (expected -1.5%; prior -2.0%)
• February Unemployment Rate 3.5% (expected 3.5%; prior 3.6%)
• February Jobs/Applications Ratio 1.15 (expected 1.15; prior 1.14)
• February National CPI +2.2% year-over-year (prior +2.4%); National Core CPI +2.0% year-over-year (expected +2.1%; prior +2.2%)
• March Tokyo CPI +2.3% year-over-year (prior +2.3%); Tokyo Core CPI +2.2% year-over-year (expected +2.2%; prior +2.2%)

Equity Markets

• Japan’s Nikkei declined 1.0% following a large batch if economic data that included weaker than expected retail sales and inflation data. Losses were registered in all sectors with the basic materials (-1.6%), industrial (-1.4%), and technology (-1.2%) sectors pacing the declines. Advantest Corp (-5.1%), Marubeni Corp (-5.0%), and Nippon Yusen KK (-4.9%) topped the list of decliners while Mitsui Mining & Smelting Co (+3.3%), Panasonic Corp (+3.2%), and Unitika Ltd (+1.9%) led the winners. Out of the 225 index members, 32 ended higher, 191 finished lower, and 2 were unchanged. The Nikkei declined 1.4% for the week.
• Hong Kong’s Hang Seng ended Friday flat with gains in the financial (+0.6%) and diversified (+0.3%) sectors helping to offset losses in the consumer non-cyclical (-1.0%) sector. China Resources Land Ltd (+5.0%), China Overseas Land & Investment Ltd (+3.5%), and Sino Land Co (+1.5%) were the best-performing stocks while Lenovo Group (-1.8%), Hengan Intl (-1.7%), and China Mobile (-1.3%) were the worst-performing issues. Out of the 50 index members, 29 ended higher, 18 finished lower, and 3 were unchanged. The Hang Seng increased 0.5% for the week.
• China’s Shanghai Composite increased 0.2% despite a report showing industrial profits declined 4.2% in the first two months of the year versus last year. Reuters reports that was the largest drop for the period since early 2012. Real estate issues were among the leaders on Friday. For the week, the Shanghai Composite gained 2.0%.
• India’s Sensex ended Friday unchanged with strength in the industrial (+2.2%) and technology (+0.7%) sectors offset by weakness in the energy (-1.3%) and consumer non-cyclical (-1.2%) sectors. Top gainers included Hindalco Industries (+3.4%), State Bank of India (+2.9%), Larsen & Toubro (+2.9%) and Infosys (+2.6%). Bharti Airtel (-4.9%), Reliance Industries (-2.3%), ITC Ltd (-1.6%), and Tata Power Co (-1.5%) paced the decliners. For the week, the Sensex declined 2.8%.
• Australia’s S&P/ASX 200 increased 0.7%, finishing near its highs for the day. The utilities (+2.7%), consumer staples (+1.7%), and consumer discretionary (+1.5%) sectors led the way. For the week, the S&P/ASX 200 declined 0.9%.
• Regional advancers: Singapore +0.5%, Indonesia +0.5%, Philippines +0.1%
• Regional decliners: Taiwan -1.2%, South Korea -0.1%, Malaysia -0.3%, Thailand -0.1%, Vietnam -0.9%

FX

• USD/CNY +0.06% at 6.2152
• USD/INR -0.6% at 62.535
• USD/JPY +0.2% at 119.37

EUROPE

Major European indices are mixed with France’s CAC (+0.3%) trading ahead of its peers. Elsewhere, German Finance Ministry spokeswoman Marianne Kothe said her office has yet to receive an updated list of reforms from Greek officials and that all proposed reforms will need to be ‘quantifiable.’

• Germany’s February Import Price Index +1.4% month-over-month (expected 0.7%; last -0.8%); -3.0% year-over-year (expected -3.5%; prior -4.4%)
• UK’s March Nationwide HPI +0.1% month-over-month (last -0.1%); +5.1% year-over-year (previous 5.7%)
• French Consumer Confidence rose to 93 from 92, as expected
• Italy’s January Retail Sales +0.1% month-over-month, as expected. Industrial Sales -1.6% month-over-month (previous 1.4%) and Industrial New Orders -3.6% month-over-month (prior 4.5%)

CLOSING PRICES

• UK’s FTSE: -0.6%
• Germany’s DAX: + 0.2%
• France’s CAC: + 0.6%
• Spain’s IBEX: -0.2%
• Portugal’s PSI: + 1.1%
• Italy’s MIB Index: + 0.4%
• Irish Ovrl Index: + 0.0%
• Greece ASE General Index: + 0.5%

Macroeconomic Data

Economic Data

from Briefing.com

• GDP - Third Estimate : 2.2% vs 2.4% (Prior 2.2%)
• GDP Deflator - Third Estimate : 0.1% vs 0.1% (Prior 0.1%)
• Michigan Sentiment - Final : 93.0 vs 92.0 (Prior 91.2)

GDP-ADV

Highlights

• GDP growth in Q4 2014 was unrevised in the third estimate and remained at 2.2%. GDP increased 5.0% in Q3 2014. The Briefing.com Consensus expected fourth quarter GDP would be revised to 2.4%.
• Real final sales saw a slight upward revision to 2.3% from 2.1%, but nothing in the data altered the notion that economic growth trends slowed down significantly in the fourth quarter.

Key Factors

• As expected from the Quarterly Services Survey, consumption growth was revised up to 4.4% in the third estimate from 4.2% in the second estimate. Goods consumption increased 4.8%, up from a 4.5% gain in the second estimate, and services consumption increased 4.3%, up from a previously reported 3.8% increase.
• Total fixed investment and government spending were unrevised in the latest GDP reading. 
• The trade deficit was revised down modestly to $471.4 bln in the third estimate from $476.4 bln.

Big Picture

• Economic growth in the fourth quarter came primarily from consumption.

MICHIGAN SENTIMENT

Highlights

• The University of Michigan Consumer Sentiment Index was revised up to 93.0 in the March final reading from a preliminary reading of 91.2. The index is down from 95.4 in February. The Briefing.com Consensus expected the Consumer Sentiment Index to be revised up to 92.0.

Key Factors

• Improving job conditions -- lower initial claims levels -- offset higher gasoline prices and a volatile equity market. 
• Even though sentiment is down on a month-to-month basis, a reading above 90 is still a strong result.
• Trends in sentiment, however, don't have much of an impact on consumption growth. Consumption trends rely on income growth and not sentiment. As long as income trends higher, consumption gains should closely follow.

Big Picture

• Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.

Market Internals

NYSE:

Lower Volumes than the day before – 586.4M vs 828.5M 


Advancers outpaced Decliners (adv/dec): 1840 / 1198

New Highs outpaced New Lows (highs/lows): 50 / 29

NASDAQ:

Lower Volumes than the day before – 1498.8M vs 1996.4M

Advancers outpaced Decliners (adv/dec): 1605 / 1158

New Lows outpaced New Highs (highs/lows): 37 / 43

VOLATILITY S&P500 (VIX)

15.07 -0.73 (-4.62%)

It looks like internals are showing some optimism in bullishness. Volume is utterly lower on Friday so I won't say that the internals are entirely bullish but it is pointing more towards it. Also New Highs is slowly finding the way up. VIX took a sharp drop on Friday and closed at around 15.00. Put it all together I would say the market still possess the confidence to pull back. 

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,712.66 +34.43 (+0.19%)

Volume: 103,221,502 (above average of 97,786,331)

Range: 17,630.49 - 17,729.14

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,891.22 +27.86 (+0.57%)

Volume: 429,394,906 (below average of 450,754,477)
Range: 4,859.66 - 4,899.26

S&P 500 INDEX (SPX: CBOE)

2,061.02 +4.87 (+0.24%)

Volume: 537,750,000 (below average of 543,174,846)

Range: 2,052.96 - 2,062.83 

DOW and NASDAQ is forming sort of a double bottom while S&P is at its PHib-Fan trend support and they are likely to pullback at the support. MACD momentum seems to slow down as well and these all indicating some sign of rebound next week. Anyway confirmation is needed and perhaps we will see how the market performs on Monday.                            

Commodities

Closing Commodities: Oil Prices Drop Over 6% Following 2-Day Rally On Yemen

• Oil is the big mover today, falling $2.56 to $48.87/barrel in pit trading today
• In electronic trade, oil has extended losses and fell as low as $48.26/barrel and is now -6.1% at $48.32/barrel
• Nat gas has been in the red all day today, ultimately losing $0.05 to $2.64/MMBtu
• Metals declined today as well
• Apr gold lost $5.00 to $1199.90/oz, while May silver fell $0.06 to $17.08.
• May copper ended $0.04 lower at $2.77/lb.

Energy Price Action

• May crude oil futures fell $2.56/barrel to $48.87/barrel
• May natural gas closed $0.05 lower at $2.64/MMBtu
• RBOB Gasoline closed $0.08 lower at $1.80/gallon
• Heating oil closed $0.06 lower at $1.72/gallon

Highlights

• Crude Oil: The Baker Hughes rig count showed a weekly decline of 21 rigs to 1048 total (12 oil and 9 natural gas rigs).

Agricultural Price Action

• May corn closed flat at $3.91/bushel
• May wheat closed $0.08 higher at $5.07/bushel
• May soybeans closed $0.06 lower at $9.68/bushel
• Ethanol closed flat at $1.49/gallon
• Sugar #11 closed 0.21 cents lower at 12.13 cents/lb

Metals Price Action

• Apr gold ended today’s session $5.00 lower at $1199.90/oz
• May silver closed $0.06 lower at $17.08/oz
• May copper closed $0.04 lower at $2.77/lb

Currencies

Pound Sterling Rallies on BoE Remarks:

• The British pound rallied today on hawkish remarks from BoE Governor Carney and Monetary Policy Committee member Broadbent
  • They both dispelled notions of a rate cute, with Carney saying that the next move would most likely be up
  • Broadbent said that "the likelihood of a broad and protracted deflation, afflicting wages as aw prices, is pretty low."
  • GBP/USD rallied 23 pips (0.16%) on the day to $1.4876
• EUR/USD rallied throughout the morning, but was spurred higher just before noon ET by the announcement that Cyprus' outlook was upped to positive from stable, at B+, and that Greece's banks are considered solvent by the ECB. It is now trading up 15 pips (0.14%) to $1.0896
• The commodity currencies were mixed, despite a 5.19% fall in WTI Crude to $48.76/bbl
  • USD/CAD: +115 pips (+0.92%) to 125.96
  • AUD/USD: -79 pips (-1.01%) to $0.7754
  • NZD/USD: -19 pips (-0.25%) to $0.7573
• USD/JPY fell 8 pips (-0.07%) to 119.11

Bonds

Treasuries Make Back Some Losses:

• Without any obvious catalysts, Treasury notes and bonds ground higher throughout the day to recover some of their losses from yesterday's shelling. Only the 2-year note, however, made back all of the losses
• Yield check:
  • 2-yr: -3 bps to 0.57%
  • 5-yr: -3 bps to 1.42%
  • 10-yr: -4 bps to 1.95%
  • 30-yr: -6 bps to 2.53%

• News:
  • The 3rd revision to 2014 Q4 GDP missed estimates at 2.2%, versus a Briefing.com consensus of 2.4%, and a second estimate of 2.2%. Q3 GDP in 2014 was 5.0%
  • The 3rd revision to the 2014 Q4 GDP deflator as 0.1%, in line with consensus estimates and the prior revision
    • Real final sales saw a slight upward revision to 2.3% from 2.1%, but nothing changed the fact that growth slowed significantly in Q4
    • Markets shrugged off the announcement
  • The Michigan Consumer Sentiment Index for March exceeded the Briefing.com consensus estimate of 92.0, coming in at 93.0. The read in February was 91.2Gree
  • Greece submitted a new proposal to the Brussels Group, which will examine it over the weekend. The plan calls for 3 billion euro in additional government revenue and a primary budget surplus of 1.5%
  • Cyprus' credit outlook was raised to positive from stable at S&P, and they reaffirmed its B+ rating

• Commodities:
  • WTI Crude fell $3.04 (-5.91%) to $48.39/bbl. The geopolitical risk premium from unrest in Yemen came out today
  • Copper fell 5 cents (-1.69%) to $2.76/lb.
  • Gold fell $5.30 (-0.44%) to $1199.50/troy oz.

• Currencies:
  • EUR/USD: +24 pips (+0.22%) to $1.0905
  • USD/JPY: -11 pips (-0.9%) 119.08

• Week Ahead
  • Monday: February Personal Income and Personal Spending (08:30 ET); February PCE Prices -- Core (08:30 ET); February Pending Home Sales (10:00 ET); Fed Vice Chair Stanley Fischer (FOMC voter) speaks at dinner before the 2015 Financial Markets Conference (19:15 ET)
  • Tuesday: Richmond Fed President Lacker (FOMC voter) speaks on the "Economic Outlook, March 2015" (08:00 ET); January Case-Shiller 20-City Index (09:00 ET); March Chicago PMI (09:45 ET); March Consumer Confidence (10:00 ET); Cleveland Fed President Mester (non-FOMC voter) moderates panel before the 2015 Financial Markets Conference (10:15 ET); Kansas City Fed President George (non-FOMC voter) speaks on the U.S. economy (15:00 ET)
  • Wednesday: MBA Mortgage Index for week ending 3/28 (07:00 ET); February ADP Employment Report (08:15 ET); San Francisco Fed President Williams (FOMC voter) moderates panel before the 2015 Financial Markets Conference (08:30 ET); March ISM Index (10:00 ET); February Construction Spending (10:00 ET); Crude Inventories for the week ending 3/28 (10:30 ET); March Auto and Truck Sales (17:00 ET); Atlanta Fed President Lockhart (FOMC voter) chairs panel before the 2015 Financial Markets Conference (time TBA)
  • Thursday: March Challenger Job Cuts (07:30 ET); Fed Chair Yellen (FOMC voter) gives opening remarks before conference on economic mobility (08:30 ET); Initial and Continuing Jobless Claims (08:30 ET); February Trade Balance (08:30 ET); February Factory Orders (10:00 ET); Natural Gas Inventories for the week ending 3/28 (10:30 ET); Minneapolis Fed President Kocherlakota (non-FOMC voter) and St. Louis Fed President Bullard (non-FOMC voter) participate in conference on economic mobility (time TBA)
  • Friday: March Employment Report (08:30 ET); Minneapolis Fed President Kocherlakota (non-FOMC voter) gives welcome remarks before economic mobility conference (08:30 ET); St. Louis Fed President Bullard (non-FOMC voter) gives remarks and introduces keynote speaker at conference on economic mobility (event begins at 12:30 ET)

Treasury Yields:

• 2 Year Note 0.58% -0.03
• 5 Year Note 1.42% -0.05
• 10 Year Note 1.95% -0.06
• 30 Year Bond 2.53% -0.07

2/30 Spread: 195 bps ( -4 ) …  2/10 Spread: 137 bps ( -3 )

Preview for the week Monday 30 Mar to Friday 3 Apr, 2015

Economic Data

Monday (30 Mar) :

• Personal Income : 0.3% (Prior 0.3%)
• Personal Spending : 0.2% (Prior -0.2%)
• PCE Prices - Core : 0.1% (Prior 0.1%)
• Pending Home Sales : 0.4% (Prior 1.7%)

Tuesday (31 Mar) :

• Case-Shiller 20-city Index : 4.5% (Prior 4.5%)
• Chicago PMI : 52.0 (Prior 45.8)
• Consumer Confidence : 96.2 (Prior 96.4)

Wednesday (1 Apr) :

• MBA Mortgage Index : (Prior 9.5%) 
• ADP Employment Report : 228K (Prior 212K)
• ISM Index : 52.5 (Prior 52.9)
• Construction Spending : -0.2% (Prior -1.1%)
• Crude Inventories : (Prior 8.170M)
• Auto Sales : (Prior 5.2M)
• Truck Sales : (Prior 7.9M)

Thursday (2 Apr) :

• Challenger Job Cuts : (Prior 20.9%)
• Initial Claims : 285K (Prior 282K)
• Continuing Claims : 2423K (Prior 2416K)
• Trade Balance : -$42.0B (Prior-$41.8B)
• Factory Orders : -0.5% (Prior -0.2%)
• Natural Gas Inventories : (Prior 12 bcf)

Friday (3 Apr) :

• Nonfarm Payroll : 248K (Prior 295K)
• Nonfarm Private Payrolls : 240K (Prior 288K)
• Unemployment Rate : 5.5%( Prior 5.5%)
• Hourly Earnings : 0.2% (Prior 0.1%)
• Average Workweek : 34.6 (Prior 34.6)

Earnings Highlights

Monday (30 Mar) :

BMO - AIR CALM NCFT

AMC - EVRY MDLY PWRD TCPI

Tuesday (31 Mar) :
BMO - CONN DANG HNR MOV OCN SAIC VTNR VTAE
AMC - DCO FRPT INGN LNDC PRGN RGSE SNX WG

Wednesday (1 Apr) :
BMO - AYI IKGH MON UNF
AMC - CUB FC PRGS SIGM SPWH

Thursday (2 Apr) :
BMO - AZZ CVGW KMX GBX OMN PERY SEAC
AMC - HGR MU

Friday (3 Apr) : 
BMO - None Scheduled

AMC - None Scheduled

Summary

Next week is rather crucial as it will determine if the market is likely to rebound from its support or continue to slide lower. Yield curve continues to lower and flatten and this is still not a healthy sign for the US economy.

There are many significant economic data releasing next week. It is going to be another volatile week ahead. Since it is a Good Friday week (meaning a long weekend), I suppose we should see the market to preferably go up instead.

Direction for Monday 30 Mar, 2015; Up

Direction for the week Monday 30 Mar to Friday 3 Apr, 2015; Up

2015 Daily Directional Accuracy: 22/44 (50.00%) 
2015 Weekly Directional Accuracy: 6/10 (60.00%)