Dow +168.69 at 18127.72, Nasdaq +34.04 at 5026.42, S&P +18.65 at 2107.53
Generally the market rallied on Friday but it looks like NASDAQ is running out of steams and there are some profit taking before the market closed. The Dollar Index continues to slump and so it causes crude oil prices to rise after the release of oil rigs numbers from Baker Hughes...Market is looking cautious subsequent to the FOMC meeting on Wednesday. Despite the big caps are lagging, technology sector and the small caps (Russell 2000) are still displaying some strength. Generally speaking the market is likely to go up than down judging from the situation.
There is no economic data tomorrow and I think we are likely to see some post effect of the dovish Fed statement in the market to bring the market some more...
Direction for Friday 20 Mar, 2015; Up
Market Summary
Industry Watch
Strong: Consumer Discretionary, Consumer Staples, Energy, Technology
Weak: Industrials
Other Market Moving Factor:
- S&P 500 enters Friday +1.8% week-to-date
- Quadruple witching expected to boost volume
[BRIEFING.COM] The major averages ended the week on an upbeat note with the Dow Jones Industrial Average (+0.9%) in the lead. The price-weighted index ended the week higher by 2.1% while the S&P 500 (+0.9%) gained 2.7% for the week.
Equity indices climbed throughout the session with trading volume running well above average due to today's quadruple witching. As a result, more than two billion shares changed hands at the NYSE floor.
Meanwhile, the Dollar Index (97.89, -1.37), which was a point of focus throughout the week, fell 1.4% to narrow its March gain to 2.5%. Notably, the euro gained 1.3%, climbing to 1.0800 against the greenback with the move partially supported by upbeat comments from the Eurogroup. Specifically, Greece has agreed to present a new reform plan within the next few days in order to receive funds needed to prevent a liquidity shortage.
Today's pullback in the dollar was a supportive factor for the commodity market. Crude oil settled higher by 2.4% at $46.58/bbl, but backed off its best level of the session after the latest Baker Hughes rig count registered its 15th consecutive weekly decline (-56 to 1069). Meanwhile, the energy sector (+1.4%) finished well ahead of other groups.
Elsewhere among cyclical sectors, financials (+1.3%) and consumer discretionary (+1.1%) outperformed with the discretionary sector rallying behind homebuilders after KB Home (KBH 15.26, +1.19) reported better than expected results. Shares of KBH jumped 8.4% while the broader iShares Dow Jones US Home Construction ETF (ITB 27.82, +0.54) gained 2.0%. Meanwhile, apparel and luxury retailers were a bit more mixed. Dow component Nike (NKE 101.98, +3.66) spiked 3.7% after beating bottom-line estimates while Tiffany & Co (TIF 82.99, -3.38) lost 3.9% after below-consensus revenue and light guidance overshadowed in-line earnings.
Also of note, the technology sector (+0.5%) slumped to the bottom of the leaderboard during the final minutes as Apple (AAPL 126.05, -1.45) fell to a fresh session low.
Over on the countercyclical side, the consumer staples sector (+1.2%) outperformed while health care (+0.8%) lagged. Despite today's underperformance, health care gained 4.5% for the week, ending ahead of other sectors. Volatility in the biotech space pressured the sector from its early high as the iShares Nasdaq Biotechnology ETF (IBB 366.52, +1.27) narrowed its gain to 0.4% after being up near 2.0% at the start. The early strength stemmed from a 9.8% spike in the shares of Biogen Idec (BIIB 475.98, +42.33) after the company issued an encouraging report on a developmental drug for the treatment of Alzheimer's disease. For its part, the biotechnology ETF logged a 5.7% gain for the week.
Treasuries climbed throughout the morning, ending on their highs with the 10-yr yield lower by five basis points at 1.93%.
Monday's economic data will be limited to the Existing Home Sales report for February, which will be released at 10:00 ET.
- Nasdaq Composite +6.1% YTD
- Russell 2000 +5.1% YTD
- S&P 500 +2.4% YTD
- Dow Jones Industrial Average +1.7% YTD
The stock market rebounded from the previous week's decline with a Monday rally that sent the S&P 500 (+1.3%) back above its 50-day moving average (2,060). The benchmark index narrowed its March loss to 1.1% while the Nasdaq (+1.2%) and Russell 2000 (+0.6%) underperformed, but still logged solid gains to start the week. Unperturbed by disappointing economic data, equity indices rallied out of the gate and registered the bulk of their gains during the first hour of action. Countercyclical health care (+2.2%) and utilities (+1.7%) held the lead throughout the session, but most other sectors also posted solid gains. The only group that couldn't make it out of the red was the materials sector (-0.1%) as Dow component DuPont (DD) weighed after Bank of America/Merrill Lynch downgraded the stock to ‘Underperform' from ‘Buy.'
The market ended Tuesday on a mixed note ahead of Wednesday's release of the latest policy directive from the Federal Reserve. The Nasdaq Composite added 0.2% while the S&P 500 and Dow Jones Industrial Average lost 0.3% and 0.7%, respectively. Equity indices endured some selling in the early going, but the Nasdaq spent the day ahead of the broader market thanks to relative strength in the technology sector (+0.1%). Specifically, shares of Apple (AAPL) climbed 1.7%, which underpinned the sector and the Nasdaq. Meanwhile, most large cap components struggled, which was also the case with high-beta chipmakers. The PHLX Semiconductor Index fell 0.7%. That being said, the daylong strength within the technology sector helped the broader market erase the bulk of its early decline. The Nasdaq received another measure of support from biotechnology with the iShares Nasdaq Biotechnology ETF (IBB) climbing 0.6% to a new record.
Equities spent the first half of the Wednesday session in the red, but surged into the green following the latest policy statement from the Federal Open Market Committee. The S&P 500 settled higher by 1.2% with all ten sectors ending in the green. Over the past few days, much of the discussion centered around Wednesday's FOMC Statement with participants speculating whether the central bank was going to remove its call for patience. Although the Fed took out "patient," the statement remained quite dovish as the Fed lowered its 2015 GDP forecast range to 2.3%-2.7% from 2.6%-3.0% that was expected in December. Furthermore, the central bank lowered its inflation forecast range to 0.6%-0.8% from 1.0%-1.6%. Staying on the inflation theme, the committee noted that it needs to be "reasonably confident" that inflation will move back towards the 2.0% objective before hiking rates. The S&P 500 spiked about 20 points immediately following the statement and continued its advance as the afternoon progressed. Similarly, Treasuries surged in reaction to the diminished likelihood of June rate hike with the 10-yr yield falling 10 basis points to 1.95%. The benchmark note continued its advance during electronic trading, pressuring its yield to the lowest level since early February (1.92%).
Thursday ended on a mixed note. The S&P 500 lost 0.5% after spending the entire session in negative territory while the Nasdaq Composite added 0.2%. The tech-heavy Nasdaq extended its week-to-date gain to 2.5% while the S&P 500 extended its weekly advance to 1.7%. Wednesday's dovish FOMC policy statement pressured the greenback, but the Dollar Index (99.23, +0.67) wasted no time, stringing together a swift comeback. The index added 0.7% on Thursday and returned to Tuesday's low. Notably, the euro retraced the bulk of Wednesday's move, returning below 1.0650 versus the dollar. Likewise, the dollar strength weighed on crude oil, sending the energy component lower by 2.5% to $45.50/bbl. In turn, this kept the energy sector (-1.7%) near the bottom of the barrel while the other commodity-related sector—materials (-1.7%)—finished just behind energy.
DOW
NASDAQ
S&P
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei +0.4%; Hong Kong’s Hang Seng -0.4%; China’s Shanghai Composite +1.0%
Asia was somewhat mixed with Hong Kong, South Korea and Thailand closing down, while Japan and China remained both closed higher, although both did have a rocky session trading on both sides of the flat line all night. There was no significant macro data out of the region, so catalysts were few and far between during the night. The BOJ minutes did not provide any significant surprises. Probably the most notable take-away from the release was that that some of the members expressed concern over the recent volatility in the JGBs, as well as adding that the current pace of bond purchases may be unsustainable.
Economic Data
- Japan
- BOJ Minutes released
- China
- Mar MNI Business Indicator 52.2 vs 52.8 in Feb
- New Zealand
- Mar ANZ Consumer Conf 124.6 vs 124 in Feb
Equity Markets
- Japan’s Nikkei traded 0.4% stronger on the day. Consumer Discretionary (+1.4%) and IT (+0.5%) highlighted the session as the best performing sectors, while Consumer Staples and Industrials brought up the rear, both trading flat on the day.
- Hong Kong’s Hang Seng closed down 0.4% with Tencent Holdings (-1.7%) and Petro China (-0.7%) weighing on the index.
- China’s Shanghai closed the week strong, with gains of over 1%. Brokerage stocks saw strength during the Mainland’s session, with interest by the masses picking up with the Shanghai Composite flirting with multi-year highs.
- India’s Sensex was a drag in the region, falling 0.7% on the day. Some of the most notable laggards were ICBC (-3.5%), Tata Motors (-2.3%) and State Bank of India (-1.2%). Wipro (+2.2%) and Infosys (+1.2%) were bright spots on the day
Currencies
EUROPE
Major European indices trade higher across the board with Germany’s DAX (+1.1%) in the lead. According to the Eurogroup, Greece will present a new reform plan within the next few days in order to receive funds needed to prevent a liquidity shortage.
CLOSING PRICES
- USD/CNY +0.1% at 6.2046
- USD/INR -0.1% at 62.445
- USD/JPY +0.2% at 121.07
EUROPE
Major European indices trade higher across the board with Germany’s DAX (+1.1%) in the lead. According to the Eurogroup, Greece will present a new reform plan within the next few days in order to receive funds needed to prevent a liquidity shortage.
- Eurozone January Current Account surplus expanded to EUR29.40 billion from EUR22.50 billion (expected surplus of EUR21.30 billion)
- Germany’s February PPI +0.1% month-over-month (expected 0.2%; last -0.6%); -2.1% year-over-year (consensus -1.9%; last -2.2%)
- UK’s February Public Sector Net Borrowing GBP6.22 billion (expected GBP7.70 billion; prior -GBP8.93 billion)
- Spain’s trade deficit widened to EUR2.60 billion from EUR1.82 billion (expected deficit of EUR1.95 billion)
CLOSING PRICES
- UK’s FTSE: + 0.8%
- Germany’s DAX: + 1.2%
- France’s CAC: + 1.0%
- Spain’s IBEX: + 3.0%
- Portugal’s PSI: + 2.0%
- Italy’s MIB Index: + 1.6%
- Irish Ovrl Index: + 1.6%
- Greece ASE General Index: + 2.9%
Macroeconomic Data
Economic Data
from Briefing.com
- No Economic Data
Market Internals
NYSE:
Higher Volumes than the day before – 1871.8M vs 738.5M
Advancers outpaced Decliners (adv/dec): 2472 / 621
New Highs outpaced New Lows (highs/lows): 287 / 22
NASDAQ:
Higher Volumes than the day before – 2611.5M vs 1664.9M
Advancers outpaced Decliners (adv/dec): 1675 / 1134
New Highs outpaced New Lows (highs/lows): 232 / 40
VOLATILITY S&P500 (VIX)
13.02 -1.05 (-7.46%)
Internals are getting back to a bullish state again. VIX has dropped significantly across the week and is approaching a support level at 12.00. This has shown the confidence is growing back to the market. Anyway VIX is also at the lower bound of its Bollinger Band so it is likely to see some retracement in the next few sessions.
Technical Updates
18,127.65 +168.62 (+0.94%)
Volume: 334,245,155 (above average of 94,155,622)
Range: 17,961.13 - 18,197.29
5,026.42 +34.04 (+0.68%)
Volume: 1,069,260,868 (above average of 436,947,096)
Range: 5,020.06 - 5,042.14
Range: 5,020.06 - 5,042.14
S&P 500 INDEX (SPX: CBOE)
2,108.10 +18.83 (+0.90%)
Volume: 1,560,822,000 (above average of 524,461,000)
Range: 2,090.32 - 2,113.92
NASDAQ met its trend line while DOW and S&P are on the verge of their respective resistance too. Now the next action is to see if the market manages to get a bullish breakout. If it does I think we might see a rally until April (before Sell in May). MACD is showing a convergence here to reflect the underlying strength in the bullish movement.
Commodities
Energy Price Action
- May crude oil futures rose $1.08/barrel to $46.58/barrel
- Apr natural gas closed $0.03 lower at $2.79/MMBtu
- RBOB Gasoline closed $0.07 higher at $1.79/gallon
- Heating oil closed $0.06 lower at $1.72/gallon
Highlights:
- Crude Oil:
- The Baker Hughes rig count showed a decline of 56 rigs, to a total of 1069. The rig count has dropped for 15 consecutive weeks, and this week’s drop included 41 oil and 15 natural gas rigs
- The Bureau of Land Management (BLM) released its final ruling on hydraulic fracturing activities on both Public and Tribal Lands. Key components to take effect within 90 days include:
- Provisions ensuring the protection of groundwater supplies via well integrity validation and cement barriers
- The public disclosure of chemicals used by companies in the fracturing process
- Established, higher standards for interim storage of recovered waste fluids
- Measures to lower cross-well contamination by chemicals and fluids involved in the fracturing process
Agricultural Price Action
- May corn closed $0.11 higher at $3.85/bushel
- May wheat closed $0.19 higher at $5.30/bushel
- May soybeans closed $0.11 higher at $9.73/bushel
- Ethanol closed $0.04 higher at $1.49/gallon
- Sugar #11 closed 0.06 cents higher at 12.68 cents/lb
Metals Price Action
- Apr gold ended today’s session $15.20 higher at $1184.50/oz
- May silver closed $0.74 higher at $16.87/oz
- May copper closed $0.10 higher at $2.76/lb
Currencies
- The Dollar Index continues to be volatile as it pulls back approx 100 pips from the session highs. The DXY was able to run back to 99 but has rolled back over and is now at the low end of $98. If selling continues then 94-95 will be a key level to watch and one that should hold support. There was no economic data of note today.
- The euro is seeing a small rally today. The single currency is being helped by comments from an EU Summit that shows that both Greece and the EU are trying to find a resolution to the current crisis. The headlines match those that have been seen over the past couple of months so there remains plenty of skepticism. But there are signs that Greece would receive some immediate funds and help shore up its liquidity position which is a market concern.
- The pound continues to be whipped around in the 1.47-1.50 space. The volatility has been incredible as markets try and predict how the situation in Europe and the U.S. weigh on the U.K. and its recovery. Next week an inflation report will be closely watched. And all this is the back drop ahead of a May 7 election.
- The yen in the meantime has moved back into the 120 level. Yen fell to test 121 for support and it did indeed hold up. The latest Bank of Japan minutes were released and revealed that the Japanese government had urged the central bank to go slow on its inflation target. The drop in oil prices is also having a an effect on inflation as it drastically lowers import prices as one could well imagine
Good Day, Great Week:
- The Treasury finished a great week on a good note with additional gains across the curve, led by the belly
- 2-yr yield -2 bps to 0.59% (-7 bps for the week)
- 5-yr yield -5 bps to 1.42% (-17 bps for the week)
- 7-yr yield -5 bps to 1.73% (-19 bps for the week)
- 10-yr yield -4 bps to 1.93% (-18 bps for the week)
- 30-yr bond -3 bps to 2.50% (-20 bps for the week)
- The strength in Treasuries on Friday was a bit surprising as there were several news items working against the bullish orientation
- Major stock indexes in the U.S. and abroad traded higher
- Headlines out of the EU Summit made it sound as if Germany and Greece are working to get on same page to prevent a "Grexit" (Greece exit from eurozone); and
- Atlanta Fed President Lockhart (FOMC voter) said he'll watch the incoming data, but that it's his feeling the June, July, or September FOMC meetings would be an appropriate time for interest rate liftoff
- Notwithstanding the aforementioned headlines, Treasuries held a bid throughout the trading session. The resilience could be attributed in part to the following factors:
- Interest rate differentials. The yield on the German bund dipped to 0.15%.
- Chicago Fed President Evans (FOMC voter) noting his belief that the Fed can delay interest rate hikes without hurting its ability to fight inflation down the road
- Some conservative positioning in front of the weekend; and
- Some flight to safety in the midst of some tremendous currency volatility
- The U.S. Dollar Index fell as much as 1.6% on Friday to 97.45 in a move that was governed by some remarkable strength in the euro
- EUR/USD +1.5% to 1.0808 (the euro hit 1.088 intraday)
- USD/JPY -0.6% to 120.19
- Weak dollar lent some support to the commodities market where crude oil prices staged a dramatic intraday reversal
- WTI crude futures, down 1.0% early in the session, topped $47.00/bbl in the early afternoon before settling up 2.4% at $46.58/bbl
- Gold +1.0% to $1181.10/troy z.
- Copper +3.6% to 2.75/lb
- Monday: February Existing Home Sales (10:00 ET); Cleveland Fed President Mester (non-FOMC voter) speaks in Paris(04:40 ET); Fed Vice Chair Fischer (FOMC voter) speaks at the Economic Club of New York (11:30 ET) (Note: NY Fed President Dudley introduces him); San Francisco Fed President Williams (FOMC voter) speaks in Sydney, Australia (22:00 ET)
- Tuesday: St. Louis Fed President Bullard (non-FOMC voter) speaks on a panel in London (06:05 ET); February Headline and Core CPI (08:30 ET); January FHFA Housing Price Index (09:00 ET); February New Home Sales (10:00 ET); $26 billion 2-yr note auction (13:00 ET)
- Wednesday: Chicago Fed President Evans (FOMC voter) speaks before the Official Monetary and Financial Institutions Forum (06:30 ET); MBA Mortgage Index for the week ending 3/21 (07:00 ET); February Durable Goods Orders and Durable Goods Orders ex-transportation (08:30 ET); Crude Inventories (10:30 ET); $35 billion 5-yr note auction (13:00 ET)
- Thursday: St. Louis Fed President Bullard (non-FOMC voter) gives public lecture on economy and monetary policy (04:35 ET); Initial and Continuing Jobless Claims (08:30 ET); Atlanta Fed President Lockhart (FOMC voter) participates in discussion on monetary policy and the economic outlook (09:00 ET); Natural Gas Inventories (10:30 ET); $29 billion 10-yr note auction (13:00 ET)
- Friday: Q4 GDP and GDP Deflator (3rd Estimate) (08:30 ET); March Michigan Sentiment -- Final (10:00 ET)
Treasury Yields:
- 2 Year Note 0.60% -0.03
- 5 Year Note 1.42% -0.06
- 10 Year Note 1.93% -0.05
- 30 Year Bond 2.50% -0.04
2/30 Spread: 190 bps ( -1 ) … 2/10 Spread: 133 bps ( -2 )
Preview for the week Monday 23 Mar to Friday 27 Mar, 2015
Economic Data
Monday (23 Mar) :
- Existing Home Sales : 4.90M (Prior 4.82M)
- CPI : 0.2% (Prior -0.7%)
- Core CPI : 0.1% (Prior 0.2%)
- FHFA Housing Price Index : (Prior 0.8%)
- New Home Sales : 470K (Prior 481K)
- MBA Mortgage Index : (Prior -3.9%)
- Durable Orders : 0.5% (Prior 2.8%)
- Durable Goods - ex transportation : 0.3% (Prior 0.0%)
- Crude Inventories : (Prior 9.622M)
- Initial Claims : 293K (Prior 291)
- Continuing Claims : 2425K (Prior 2417K)
- Natural Gas Inventories : (Prior -45 bcf)
- GDP - Third Estimate : 2.4% (Prior 2.2%)
- GDP Deflator - Third Estimate : 0.1% (Prior 0.1%)
- Michigan Sentiment - Final : (Prior 91.2)
Earnings Highlights
Monday (23 Mar) :
BMO - FMSA
BMO - FMSA
AMC - APP DCO FLXN PRGN PWRD TCPI WG
Tuesday (24 Mar) :
BMO - GIII HDS IHS MKC
AMC - AMPH CBK HQY INGN SONC SCS TRQ
Wednesday (25 Mar) :
BMO - APOL BRG DXLG FRAN IKGH LDOS LNN PAYX YGE
AMC - FIVE FNV FUL OTIV PSUN PVH RHT TGB USDP VRNT VTAE WOR
Thursday (26 Mar) :
BMO - ACN CVGW CMGE CMC CAG DANG FRED LE LULU MEA MOV NEOG SCHL SIG SPCB WGO
AMC - AIR CARA GME HGR OXM PRGS REED RH SPKE UPLD
Friday (27 Mar) :
BMO - BBRY CCL FINL
AMC - None Scheduled
Summary
The Fed talk on Wednesday definitely turns things around for the week. The announcement of more easy money in the economy seems to delight the market. On the other hand, the yield curve has continued to flatten and this is not a healthy sign either.
NASDAQ has hit a new high while DOW and S&P are catching up as well. Can this be a sign of market overbought? Let's see if the market is able to do a breakout next week.
NASDAQ has hit a new high while DOW and S&P are catching up as well. Can this be a sign of market overbought? Let's see if the market is able to do a breakout next week.
Direction for Monday 23 Mar, 2015; Down
2015 Daily Directional Accuracy: 19/39 (48.72%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
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