Dow +228.11 at 17977.42, Nasdaq +57.75 at 4929.51, S&P +27.79 at 2081.19
It looks like the market does make a rebound on Monday. I suppose there were some short-covering plus the dip buyers that resulted the market to go upside. Internals remained in divergence in the early session before it returns back to normal in the final few hours.Market is likely to see more volatility next week as we are expecting the FOMC Rate decision on Wednesday and that is going to give the market some shake. Previously the speculation of rate hike had taken the market down a fair bit and I suppose it is going to continue in the coming week.
The market is seemingly cautious and it looks as if the market has found a support and looking to rebound. But next week data might change the outlook in an instance.
Direction for Monday 16 Mar, 2015; Up
Market Summary
Industry Watch
Strong: Financials, Health Care, Industrials, Utilities
Weak: Materials
Other Market Moving Factor:
- S&P 500 reclaims 50-day moving average (2,060)
- Dollar Index pulls back
- Crude oil sets fresh 2015 low
[BRIEFING.COM] The stock market rebounded from last week's decline with a Monday rally that sent the S&P 500 (+1.4%) 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 77.07, -3.43) weighed after Bank of America/Merrill Lynch downgraded the stock to ‘Underperform' from ‘Buy.' DuPont lost 4.3% while steelmakers also pressured the sector with Market Vectors Steel ETF (SLX 30.91, -0.06) sliding 0.2%.
Meanwhile, another commodity-linked sector—energy—began the day in negative territory, but rebounded to end higher by 1.4% even as crude oil dropped to a new low for the year. The energy component settled lower by 2.1% at $43.94/bbl after testing the $43.00/bbl level this morning.
Crude oil spent the day in the red after OPEC's monthly oil market report indicated that global demand growth is unlikely to increase from the previous month's 1.17 million barrels/day. Furthermore, a pullback in the Dollar Index (99.71, -0.63) failed to provide support. The Dollar Index lost 0.6% with the greenback giving up 0.7% to the euro, which tested the 1.0600 level.
Today's relative weakness in the dollar combined with the lack of a negative response to disappointing economic data suggests that participants were not all that concerned with the possibility that the Fed will strike a hawkish tone in Wednesday's policy statement. There was no strong demand for volatility protection today with the CBOE Volatility Index (VIX 15.61, -0.39) falling 2.4%.
As mentioned earlier, the health care sector ended in the lead. Biotechnology supported the advance step-for-step with the iShares Nasdaq Biotechnology ETF (IBB 353.97, +8.64) climbing 2.5% to a new record high.
In turn, the relative strength within the biotech group was not enough to keep the Nasdaq in-line with the broader market. The tech-heavy index underperformed slightly as Facebook (FB 78.07, +0.02) and Intel (INTC 30.83, -0.10) spent the day in negative territory. Intel shed 0.3%, but that had little impact on its peers as the broader PHLX Semiconductor Index gained 1.5%.
Elsewhere among cyclical groups, the industrial sector (+1.6%) outperformed with help from transport stocks. The Dow Jones Transportation Average jumped 1.7% with 19 of its 20 components posting gains while Matson (MATX 40.73, -0.42) lost 1.0%.
Treasuries registered modest gains with the 10-yr yield slipping three basis points to 2.09%.
Today's participation was in-line with recent averages as 740 million shares changed hands at the NYSE floor.
Economic data included Empire Manufacturing Index, Industrial Production, and NAHB Housing Market Index:
- The Empire Manufacturing Survey for March registered a reading of 6.9, which was below the prior month's reading of 7.8 and below the Briefing.com consensus estimate, which was pegged at 8.8
- Industrial production increased 0.1% in February after declining a negatively revised 0.3% (from +0.2%) while the Briefing.com consensus expected an increase of 0.3%
- Manufacturing production declined 0.2% in February after declining 0.3% in January, representing the third consecutive monthly contraction
- Capacity utilization declined to 78.9% from 79.1% (consensus 79.5%)
- The NAHB Housing Market Index for March fell to 53 from 55 while the Briefing.com consensus expected an increase to 56
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei -0.04%; Hong Kong’s Hang Seng +0.5%; China’s Shanghai Composite +2.2%
It was a mixed showing across markets in the Asia Pacific region. China’s Shanghai Composite was a clear outperformer, however, as it jumped 2.2% on the back of speculation that further policy stimulus could be in the offing.
It was a mixed showing across markets in the Asia Pacific region. China’s Shanghai Composite was a clear outperformer, however, as it jumped 2.2% on the back of speculation that further policy stimulus could be in the offing.
Economic data
- India
- February WPI Inflation -2.06% year-over-year (expected -0.7%; prior -0.39%)
- February WPI Food +7.74% year-over-year (prior +8.00%)
- February WPI Fuel -14.7% year-over-year (prior -10.7%)
- February WPI Manufacturing Inflation +0.33% year-over-year (prior +1.05%)
- Indonesia
- February Trade Balance IDR 0.74 bln (expected IDR 0.52 bln; prior IDR 0.71 bln)
- February Exports -16.02% year-over-year (expected -7.6%; prior -8.1%)
- February Imports -16.24% year-over-year (expected -6.8%; prior -15.59%)
- South Korea
- February Trade Balance KRW 7.70 bln (expected KRW 7.70 bln; prior 7.70 bln)
- February Exports -3.3% year-over-year (prior -3.4%)
- February Imports -19.7% year-over-year (prior -19.6%)
- Australia
- February New Motor Vehicle Sales +2.9% (expected +1.5%; prior-1.9%)
Equity Markets
- Japan’s Nikkei finished the day with a fractional loss, fading after a rally effort early in the session. The energy (-2.7%) and utilities (-1.0%) sectors were the weakest areas. The communications sector (+0.4%) was the best-performing sector. Individual winners included Fukuoka Financial Group (+4.6%), COMSYS Holdings Corp (+4.4%), and Tokyo Dome Corp (+4.0%). Decliners were led by Inpex Corp (-4.3%), Sony Corp (-3.8%), and Chugai Pharmaceutical Co (-3.7%)
- Hong Kong’s Hang Seng increased 0.5%, paced by strength in the communications (+2.0%), consumer non-cyclical (+0.7%), utilities (+0.6%), and financial (+0.4%) sectors. Ping An Insurance (+3.2%), Belle International Holdings (+3.2%), China Mobile (+2.7%), China Life Insurance (+2.2%), and Sino Land Co (+2.2%) were the top gainers.
- China’s Shanghai Composite jumped 2.2% and closed at its highs for the session. Gains were fueled by policy stimulus expectations after Premier Li Keqiang said China has the room and tools to intervene should weakening growth negatively impact employment. Technology and financial shares led a broad-based advance.
- India’s Sensex declined 0.2% on the back of some disappointing wholesale price data. Losses were paced by the communications (-3.0%), basic materials (-2.4%), and utilities (-1.3%) sectors. Sesa Sterlite (-5.3%), Hindalco Industries (-3.7%), and Bharti Airtel (-3.0%) led individual decliners. Infosys (+2.1%) was the best-performing component.
- Australia’s S&P/ASX declined 0.3%. The index was weighed down by weakness in the energy (-1.9%), resources (-1.2%), and consumer discretionary (-1.1%) sectors.
- Regional advancers: South Korea +0.1%, Singapore +0.4%, Indonesia +0.2%
- Regional decliners: Taiwan -0.7%, Malaysia -0.1%, Thailand -1.7%, Philippines -1.0%, Vietnam -0.9%
FX:
USD/CNY +0.05% at 6.2618
USD/INR -0.4% at 62.851
USD/JPY -0.1% at 121.26
EUROPE
Major European indices trade higher across the board with Germany’s DAX (+1.4%) in the lead. The euro has climbed off Friday’s lows and currently trades higher by 0.3% against the dollar at 1.0530. Elsewhere, Russia’s President Vladimir Putin made his first public appearance in ten days and placed his country’s navy in the Arctic on combat alert.
- Swiss January Retail Sales -0.3% year-over-year (expected 2.6%; prior 1.9%) while February PPI -1.4% month-over-month (consensus 0.4%; last -0.6%); -3.6% year-over-year (expected -3.3%; prior -2.7%)
CLOSING PRICES
- UK’s FTSE: + 0.9%
- Germany’s DAX: + 2.2%
- France’s CAC: + 1.0%
- Spain’s IBEX: + 0.8%
- Portugal’s PSI: + 0.8%
- Italy’s MIB Index: + 1.0%
- Irish Ovrl Index: -1.5%
- Greece ASE General Index: -0.9%
Economic Data
from Briefing.com
- Empire Manufacturing : 6.9 vs 8.8 (Prior 7.8)
- Industrial Production : 0.1% vs 0.3% (Prior -0.3% - Down)
- Capacity Utilization : 78.9% vs 79.5% (Prior 79.1% - Down)
- NAHB Housing Market Index : 53 vs 56 (Prior 55)
- Net Long-Term TIC Flows : -$27.2B (Prior $39.2B - Up)
INDUSTRIAL PRODUCTION
Highlights
- Industrial production increased 0.1% in February after declining a negatively revised 0.3% (from +0.2%) in January. The Briefing.com Consensus expected industrial production to increase 0.3%.
Key Factors
- Manufacturing production declined 0.2% in February after declining 0.3% in January. That was the third consecutive monthly decline.
- There will likely be a lot of talk about weather conditions negatively impacting the February industrial production data. But, in actuality, the cold weather played a bigger role in boosting production than reducing it. Utilities production jumped 7.3% in February as cold weather increased the demand for heating.
- Meanwhile, the weakness in manufacturing can be traced to a sizable reduction in motor vehicles production, which isn't a a substantial industry in the heavily impacted Northeast.
- Motor vehicle and parts production declined 3.0% in February after declining 0.6% in January. That decline contributed to the entire drop in manufacturing production. Excluding motor vehicles and parts, manufacturing production was flat in February after declining 0.2% in January.
- Motor vehicle assemblies declined to 11.13 mln SAAR in February from 11.75 mln SAAR in January. That was the smallest number of auto assemblies since January 2014 when only 10.5 mln vehicles were assembled. Auto assemblies fell to 4.00 mln SAAR from 4.10 mln SAAR and truck assemblies declined to 7.14 mln SAAR from 7.66 mln SAAR.
- Mining production declined 2.5% in February after declining 1.3% in January.
Big Picture
- Manufacturing production has declined in each of the last three months.
Market Internals
NYSE:
Higher Volumes than the day before – 755.6M vs 747.5M
Advancers outpaced Decliners (adv/dec): 1992 / 1085
New Highs outpaced New Lows (highs/lows): 149 / 90
NASDAQ:
Lower Volumes than the day before – 1701.3M vs 1825.6M
Advancers outpaced Decliners (adv/dec): 1579 / 1220
New Highs outpaced New Lows (highs/lows): 175 / 73
VOLATILITY S&P500 (VIX)
15.61 -0.39 (-2.44%)
Internals do not suggest a bearish tone but it also don't really exhibit more bullishness. Volume is still lacking meanwhile and that might get a little bit worrying. VIX was literally flat on Monday despite it closed slightly lower but to me this doesn't explain the confidence in the market.
Technical Updates
17,977.42 +228.11 (+1.29%)
Volume: 101,762,339 (above average of 94,878,091)
Range: 17,751.24 - 17,988.50
4,929.51 +57.75 (+1.19%)
Volume: 417,726,344 (below average of 447,036,734)
Range: 4,889.09 - 4,929.94
Range: 4,889.09 - 4,929.94
S&P 500 INDEX (SPX: CBOE)
2,081.19 +27.79 (+1.35%)
Volume: 541,612,000 (above average of 531,484,985)
Range: 2,055.35 - 2,081.41
The 50 MAs in DOW and S&P manages to form a good support and hold the indices. It looks like the candlestick is also forming a engulfing pattern which might show more upside to come. NASDAQ also bounce off its trend support and it is approaching to break above its 20 MA.
Commodities
Closing Commodities: WTI Crude Closes Below $44/Barrel, Gold Shows Modest Gain
- Oil prices sold off again today on broad market weakness
- WTI crude came back some, but ultimately closed below $44/barrel
- Apr contract finished the day $0.95 lower at $43.94/barrel
- Apr nat gas closed $0.02 lower at $2.71/MMBtu
- Despite weakness in the dollar index, precious metals closed with only modest gains
- Apr gold ended floor trading $2.80 higher at $1153.40/oz, while May silver gained $0.12 at $15.61/oz
- May copper rose $0.01 to $2.67/lb
Energy Price Action
- Apr crude oil futures fell $0.95/barrel to $43.94/barrel
- Apr natural gas closed $0.02 lower at $2.71/MMBtu
- RBOB Gasoline fell $0.03 to $1.73/gallon
- Heating oil closed $0.01 lower at $1.70/gallon
Agricultural Price Action
- May corn closed $0.02 lower at $3.79/bushel
- May wheat closed $0.14 higher at $5.15/bushel
- May soybeans closed $0.05 lower at $9.69/bushel
- Ethanol closed $0.01 lower at $1.44/gallon
- Sugar #11 closed 0.20 cents higher at 12.90 cents/lb
Metals Price Action
- Apr gold ended today’s session $2.80 higher at $1153.40/oz
- May silver closed $0.12 higher at $15.61/oz
- May copper closed $0.01 higher at $2.67/lb
Currencies
Dollar Index Loses Ground:
- The U.S. Dollar lost ground to all majors today, falling 78 pips (0.78%) to 99.55 as traders and funds reduced long positions going into Wednesday's FOMC meeting
- There is an outside possibility that the Fed's language in reference to the strong dollar will change, although the Fed has usually been loathe to incorporate foreign exchange rates into its interest rate decisions
- EUR/USD had its biggest up day in a month, rising 100 pips (0.95%) to $1.0597. It marginally broke to a fresh record low on Friday, but failed to hold below the recent range
- German PM Angela Merkel has invited Greek PM Alexis Tsipras to Berlin on Monday
- Pound sterling gained 94 pips (0.64%) to $1.4839 USD/JPY lost 3 pips (-0.02%) to 121.37. The Yen has been trading in a very tight range, despite testing fresh 7-year lows
- The commodity currencies all gained, although they have been faring poorly through the latest US dollar rally:
- USD/CAD: -19 pips (-0.15%) to 1.2765
- AUD/USD: +19 pips (0.25%) to $0.7656
- NZD/USD: +50 pips (0.68%) to $0.7388
Treasuries Climb on Souring Outlook for U.S
- Treasury prices gained and yields fell this morning following a steady stream of uninspiring data, but the market sold off in the afternoon as equities traded to fresh session highs
- Yield check:
- 2-yr: -1 bp to 0.65%
- 5-yr: -2 bps to 1.57%
- 10-yr: -2 bps to 2.10%
- 30-yr: -33 bps to 2.67%
- The yield curve ended the day slightly flatter, as the weak economic data failed to inspire 2-year buyers but generated activity in the belly and long end
- Data Out Today:
- The NY Empire State Manufacturing data for March was worse than expected at 6.9, versus a Briefing.com consensus of 8.8 and a February reading of 7.8
- Capacity Utilization for February was 78.9%, short of the Briefing.com consensus of 79.5%. The January reading was revised to 79.1% from 79.4%
- February Industrial Production grew at 0.1%, less than the Briefing.com consensus of 0.3%. The January number was revised down to -0.3% from +0.2%
- There will likely be a lot of talk about weather conditions negatively impacting the February industrial production data. In actuality, the cold weather played a bigger role in boosting production than reducing it.
- Utilities production jumped 7.3% in February as cold weather increased the demand for heating.
- Meanwhile, the weakness in manufacturing can be traced to a sizable reduction in motor vehicles production, which isn't a a substantial industry in the heavily impacted Northeast.
- There will likely be a lot of talk about weather conditions negatively impacting the February industrial production data. In actuality, the cold weather played a bigger role in boosting production than reducing it.
- The NAHB Housing Market Index was 53 in March, down from 55 in February
- In summary, all numbers missed expectations and all revisions were downward
- Equities:
- The S&P 500 traded up 1.30% to 2080.14. Last week was a bit scary for stock investors, and the merchants of doom made some bold calls about higher volatility for equities. Today's trade showed that the stock market is currently more concerned with rate hikes than with weak economic data
- Commodities:
- WTI Crude fell to a 6-year intraday low today, based on signs of a greater-than-expected supply glut
- Copper remained unchanged at $2.66/lb.
- Gold futures rallied $1.10 (0.10%) to $1,153.50/troy oz.
- Currencies:
- EUR/USD: +83 pips (0.79%) to $1.0580
- USD/JPY: +1 pip (0.01%) to 121.40
- Data Out Tuesday:
- February Building Permits (08:30 ET)
- February Housing Starts (08:30 ET)
Treasury Yields:
- 2 Year Note 0.66% -0.02
- 5 Year Note 1.57% -0.03
- 10 Year Note 2.10% -0.03
- 30 Year Bond 2.67% -0.03
2/30 Spread: 201 bps ( -1 ) … 2/10 Spread: 144 bps ( -1 )
Preview for Tuesday 17 Mar, 2015
Tuesday (17 Mar) :
- Building Permits : 1070K (Prior 1053K)
- Housing Starts : 1040K (Prior 1065K)
Earnings Highlights
Tuesday (17 Mar) :
BMO - AKBA ARCO BURL DSW FDS HNR IOC PLUG RSPP RYI ZBRA
BMO - AKBA ARCO BURL DSW FDS HNR IOC PLUG RSPP RYI ZBRA
AMC - ADBE CDNA MCUR OCN ORCL PSUN FRSH
Summary
In my own opinion, I feel the run on Monday is not quite valid in a sense. As I still do not see a leadership in the market and the big boys are remaining idle. Furthermore we are going to expect the FOMC policy update on Wednesday so I think the market is going to be quite beforehand.
Building permits will be out tomorrow and this might give us a look on how's the economy is doing relative to the employment data from last week. I suppose the market is likely to go sideway prior to the big day on Wednesday.
Building permits will be out tomorrow and this might give us a look on how's the economy is doing relative to the employment data from last week. I suppose the market is likely to go sideway prior to the big day on Wednesday.
Direction for Tuesday 17 Mar, 2015; Down
2015 Daily Directional Accuracy: 17/36 (47.22%)
2015 Weekly Directional Accuracy: 5/8 (62.50%)
2015 Weekly Directional Accuracy: 5/8 (62.50%)
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