Dow -11.61 at 18116.04, Nasdaq -15.44 at 5010.97, S&P -3.68 at 2104.42
Market was not having a clear direction and it doesn't seem to go any higher despite the fact that Dollar Index has taken a dip. The selling in the last two hours brought the market down to slightly negative. I think the market in general is still in the midst of breaking higher but the bearish tone in the final hours on Monday seems to show otherwise.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.
Direction for Monday 23 Mar, 2015; Down
Market Summary
Industry Watch
Strong: Consumer Staples, Technology, Telecom Services
Weak: Health Care, Materials, Industrials
Other Market Moving Factor:
- Dollar Index extends pullback
- Biotechnology underperforms
[BRIEFING.COM] 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 late last 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.
Today's dollar pullback was a supportive factor for crude oil as the energy component climbed off its overnight low ($45.35/bbl) to end higher by 1.8% at $47.44/bbl. WTI crude spent the bulk of the day near its flat line, but spiked ahead of the pit close without any headlines to account for the move.
Interestingly, the energy sector (-0.2%) began among the leaders, but retreated steadily throughout the session. As for other cyclical groups, technology (+0.1%) and consumer discretionary (-0.1%) outperformed while financials (-0.4%) and industrials (-0.8%) struggled.
The industrial sector was pressured by transport stocks after Kansas City Southern (KSU 106.48, -9.21) lowered its guidance. The company cited slower year-to-date carload growth, devaluation of the Mexican peso against the dollar, and lower fuel surcharge revenue as reasons for the reduced outlook. Shares of KSU plunged 8.0% while the broader Dow Jones Transportation Average lost 2.0%.
On the flip side, the technology sector was underpinned by its top component—Apple (AAPL 127.21, +1.31)—and a spate of other large cap names while high-beta chipmakers lagged. NVIDIA (NVDA 22.71, -0.76) was a notable laggard, falling 3.2%, after Goldman Sachs downgraded the stock to ‘Sell.' For its part, the PHLX Semiconductor Index lost 1.0%.
Furthermore, the relative weakness among chipmakers contributed to the underperformance of the Nasdaq Composite. The tech-heavy index had to contend with broad-based losses in the biotech space after Vertex Pharmaceuticals (VRTX 125.79, -5.21) reported below-consensus results from one of its trials while Gilead Sciences (GILD 100.26, -2.03) was clipped after Bloomberg reported that some patients who had been taking Gilead's hepatitis C drugs in combination with certain heart drugs have developed complications. Vertex and Gilead lost 4.0% and 2.0%, respectively while iShares Nasdaq Biotechnology ETF (IBB 358.28, -8.24) settled lower by 2.3%.
Biotechnology also weighed on the health care sector, keeping the group in-line with the market. The remaining countercyclical sectors displayed relative strength with utilities (+0.1%), telecom services (+0.1%), and consumer staples (+0.3%) ending ahead of the broader market.
Treasuries settled on their highs with the 10-yr yield down three basis points at 1.91%.
Today's participation was below average with roughly 716 million shares changing hands at the NYSE floor.
Economic data was limited to existing home sales for February, which increased 1.2% from January to an annualized rate of 4.88 million units (Briefing.com consensus 4.90 million).
Supply problems continue exerting downward pressure on home sales. Inventories remained at a 4.6 months' supply at the current sales rate for the second consecutive month. During normal periods of market activity, inventories are generally maintained at 6.0 months' supply.
Tomorrow, February CPI (Briefing.com consensus 0.2%) and core CPI (consensus 0.1%) will be released at 8:30 ET while the FHFA Housing Price Index will cross at 9:00 ET. The day's data will be topped off with the 10:00 ET release of the New Home Sales report for February (consensus 465K).
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei +1.0%; Hong Kong’s Hang Seng +0.5%; China’s Shanghai Composite +2.0%
Monday produced a mixed showing from markets in the Asia-Pacific region, with many of the smaller regional markets ending lower. Singapore, which finished little changed, was in the spotlight following news of the death of former prime minister and founding father Lee Kuan Yew. China’s Shanghai Composite continued its hot streak, logging its ninth straight gain (+2.0%). Japan’s Nikkei, meanwhile, tacked on 1.0% and is within striking distance of topping the 20,000 level.
Economic data
- Singapore
- February CPI -0.3% year-over-year (expected -0.2%; prior -0.4%)
- New Zealand
- Westpac Consumer Sentiment (Q1) 117.4 (prior 114.8)
Equity Markets
- Japan’s Nikkei increased 1.0%, led by strength in the consumer non-cyclical (+1.9%), consumer cyclical (+1.2%), and basic materials (+1.0%) sectors. The financial sector was flat. Eisai Co (+20.7%) led all gainers following a brokerage upgrade of the stock. SCREEN Holdings CO (+6.6%), Aeon Co (+5.0%), Sharp Corp (+4.6%), and Suzuki Motor Corp (+4.5%) followed next in line. Out of the 225 index members, 155 closed higher, 62 ended lower, and 8 finished unchanged.
- Hong Kong’s Hang Seng increased 0.5%, bolstered by strength in the technology (+3.0%), communications (+1.5%), and financial (+0.9%) sectors. Sino Land Co (+4.9%), China Resources Land Ltd (+3.2%), China Overseas Land & Investment (+3.2%), Lenovo Group (+3.0%), and Hong Kong Exchanges and Clearing (+2.9%) were the biggest individual gainers. Out of the 50 index members, 23 closed higher, 26 ended lower, and 1was unchanged.
- China’s Shanghai Composite increased 2.0% and finished at its high for the day in a move that saw all sectors increase. Monday marked the ninth straight day of gains for the Composite. Over that stretch, it has increased 12.2% with speculation about added policy stimulus helping to power the advance.
- India’s Sensex declined 0.2%, held back by a relatively soft showing from the energy (-0.5%), technology (-0.5%), industrial (-0.3%) and financial (-0.3%) sectors that offset strength in the utilities (+1.8%) and basic materials (+1.5%) sectors. Bharat Heavy Electricals (-3.7%) led all decliners while Hindalco Industries (+3.2%) paced the individual winners.
- Australia’s S&P/ASX 200 slipped 0.3% after flirting with the 6,000 level for the first time since 2008. Premier Investments led all gainers with an 11.1% gain after meeting first-half profit expectations.
- Regional advancers: Taiwan +0.1%, Philippines +0.3%
- Regional decliners: South Korea -0.03%, Singapore -0.1%, Malaysia -0.4%, Thailand -0.7%, Indonesia -0.1%, Vietnam -0.8%
FX
- USD/CNY +0.1% at 6.2150
- USD/INR -0.1% at 62.210
- USD/JPY -0.2% at 119.86
EUROPE
Major European indices trade mostly lower with Germany’s DAX (-1.0%) leading the retreat while Spain’s IBEX (+0.2%) outperforms. Greek Prime Minister Alexis Tsipras is scheduled to meet with German Chancellor Angela Merkel in Berlin today in an attempt at creating a sustainable solution to Greece’s problems. Also of note, the Financial Times has obtained a copy of a letter sent by Mr. Tsipras to Ms. Merkel, in which the Greek Premier warns that Athens could fail to meet its impending debt payments.
- UK’s CBI Industrial Trends Orders fell to 0 from 10 (expected 9)
CLOSING PRICES
- UK’s FTSE: + 0.2%
- Germany’s DAX: -1.2%
- France’s CAC: -0.7%
- Spain’s IBEX: + 0.3%
- Portugal’s PSI: + 0.3%
- Italy’s MIB Index: -0.5%
- Irish Ovrl Index: -0.8%
- Greece ASE General Index: + 3.0%
Macroeconomic Data
Economic Data
from Briefing.com
- Existing Home Sales : 4.88M vs 4.90M (Prior 4.82M)
EXISTING HOME SALES
Highlights
- Existing home sales increased 1.2% in February to 4.88 mln from an unrevised 4.82 mln in January. The Briefing.com Consensus expected existing home sales to increase to 4.90 mln.
Key Factors
- Inclement winter weather conditions may have played a small part in the softer-than-expected existing home sales level. Sales in the Northeast declined 6.5% and sales in the Midwest were flat.
- The winter weather, however, was not the reason why overall sales trends remain weak and below 5.0 mln.
- Supply problems continue to keep downward pressure on home sales. Inventories remained at a 4.6 months’ supply at the current sales rate for a second consecutive month. During normal periods of buying and selling, inventories are generally maintained at 6.0 months’ supply.
- The lack of inventory continued to push up prices. The median existing home price increased 7.5% year-over-year in February to $202,600. That was the 36th consecutive month of year-over-year price increases.
- While the price gains are good for homeowners, it makes it more difficult for first-time buyers to enter the market. First-time home buyers accounted for only 29% of purchases in February. That was up from 28% in January, but well below normal (40%) market conditions.
- Individual investor demand softened in February, accounting for only 14% of transactions after accounting for 17% of sales in January. Sales of distressed properties accounted for 11% of total February sales, which was the same rate as January.
Big Picture
- High prices are making it difficult to draw in first-time buyers. Without them, existing home sales growth cannot meaningfully accelerate.
Market Internals
NYSE:
Lower Volumes than the day before – 733.7M vs 1871.8M
Advancers outpaced Decliners (adv/dec): 1777 / 1277
New Highs outpaced New Lows (highs/lows): 238 / 16
NASDAQ:
Lower Volumes than the day before – 1591.4M vs 2611.5M
Advancers outpaced Decliners (adv/dec): 1492 / 1313
New Highs outpaced New Lows (highs/lows): 165 / 36
VOLATILITY S&P500 (VIX)
13.41 +0.39 (+3.00%)
Internals are showing the same sign of flatness as well. However it is slanted towards some bullishness as VIX has a slight pullback but it is still well remained under 15.00. It is likely to see VIX to rise higher so maybe the market should see a correction happening.
Technical Updates
18,116.04 -11.61 (-0.06%)
Volume: 98,029,168 (above average of 94,148,881)
Range: 18,116.04 - 18,205.93
5,010.97 -15.44 (-0.31%)
Volume: 394,239,950 (below average of 436,080,105)
Range: 5,010.97 - 5,031.39
Range: 5,010.97 - 5,031.39
S&P 500 INDEX (SPX: CBOE)
2,104.42 -3.68 (-0.17%)
Volume: 500,086,000 (below average of 523,680,738)
Range: 2,104.42 - 2,114.86
The indices are not able to get above their resistance level. From the candlestick pattern it seems like we might see a sideway or probably a small correction coming.
Commodities
Closing Commodities: Copper Rallying In Electronic Trade, WTI Crude Rallies Into The Close
- Copper surged 2.5% higher here in late-day trade, rising as high as $2.88/lb
- In pit trade, May copper closed the day $0.03 higher at $2.79/lb
- WTI crude oil futures rallied into the close, rising as high as $47.61/barrel
- Crude held most of those gains, closing $0.86 higher at $47.44/barrel
- Nat gas was in the red all day with the Apr contract losing $0.06 at $2.73/MMBtu
- Precious metals continue to climb higher in electronic trade
- Apr gold rose $3.20 in pt trade to $1187.70/oz and is now at $1190.40/oz
- Meanwhile, May silver gained $0.03 to $16.90/oz and is now at $17.10/oz
Energy Price Action
- May crude oil futures rose $0.86/barrel to $47.44/barrel
- Apr natural gas closed $0.06 lower at $2.73/MMBtu
- RBOB Gasoline closed $0.01 higher at $1.80/gallon
- Heating oil closed flat at $1.72/gallon
Agricultural Price Action
- May corn closed $0.05 higher at $3.90/bushel
- May wheat closed $0.05 higher at $5.35/bushel
- May soybeans closed $0.09 higher at $9.82/bushel
- Ethanol closed $0.02 higher at $1.51/gallon
- Sugar #11 closed 0.06 cents higher at 12.74 cents/lb
Metals Price Action
- Apr gold ended today’s session $3.20 higher at $1187.70/oz
- May silver closed $0.03 higher at $16.90/oz
- May copper closed $0.03 higher at $2.79/lb
Currencies
- The euro has been holding on to early gains as it trades near the mid-range of 1.0950. Earlier ECB President Mario Draghi testified in front of the European Parlimant on monetary policy. Mr. Draghi defended the central bank's actions and denied that the bank was 'blackmailing' Greece as suggested in a Q&A session. Mr. Draghi noted that the program was already benefiting the EU economy. He also dispelled speculation that the ECB did not have enough debt to purchase with its monthly program. Looking ahead, markets will be watching the preliminary PMI data due out tomorrow morning.
- The pound has also pushed higher but failed to test the 1.50 level. Market focus will turn to tomorrow's inflation report (5:30am ET) as participants try to figure out how much of an impact Europe is having on the U.K..
- The yen has held the 120 level as it moves back into that 118-120 level. The yen has erased some of its recent losses over the past few sessions. Some of the weakness is being attributed to the perception that the Bank of Japan and Abe's ruling government are at odds over the next direction for monetary policy and structural reforms. This will be a closely followed story in the markets in the coming months.
Holding the Line:
- After a great week last week, the Treasury market saw sellers keep mostly to the sidelines on Monday
- Yields were little changed, although the belly of the curve managed to pad some of its recent gains
- 2-yr yield unch at 0.58%
- 3-yr yield -2 bps at 0.93%
- 5-yr yield -2 bps at 1.39%
- 7-yr yield -2 bps at 1.71%
- 10-yr yield -2 bps at 1.91%
- 30-yr bond +1 bp at 2.51%
- Although there wasn't much going on in terms of trading the market, there was a lot going on around the Treasury market
- Greek Prime Minister Tsipras and German Chancellor Merkel met in Berlin
- CNBC.com, citing a Reuters translation, reported that Tsipras acknowledged foreigners (and Germany in particular) are not to blame for Greece's problems and that he is committed to introducing structural reforms
- ECB President Draghi appeared before the Economic and Monetary Affairs Committee of the European Parliament, declaring that growth is gaining momentum, that inflation rates should start rising gradually towards the end of the year, and that the ECB sees no signs that there will not be enough bonds to purchase under its asset purchase program
- European sovereigns succumbed to a fit of profit taking leading up to, and following, his remarks
- The February Existing Home Sales report showed a 1.2% increase in home sales to 4.88 mln units from 4.82 mln in January
- Supply constraints and inclement weather were cited as likely drags on sales activity in February
- Median home prices rose 7.5% to $202,600
- Fed Speak
- St. Louis Fed President Bullard (non-FOMC voter) highlighted potential for increased volatility given mismatch between fed funds futures path and the Fed's economic summary projections
- Fed Vice Chair Fischer (FOMC voter) told the Economic Club of New York that a rate hike will likely be warranted before the end of the year
- More currency drama
- U.S. Dollar Index dropped 0.9% to 97.03, with another big move in the euro (+1.2% at 1.0942) acting as the primary drag
- More oil price drama
- WTI crude futures dipped below $45.50 in early action before bounding back in a spirited recovery try that saw prices settle up 1.9% at $47.44/bbl
- Rally in oil prices helped by weaker dollar and occurred despite OPEC reportedly noting it isn't in a hurry to cut production to arrest the slide in oil prices
- Greek Prime Minister Tsipras and German Chancellor Merkel met in Berlin
- Looking ahead to Tuesday:
- St. Louis Fed President Bullard sits on panel discussing future of international monetary policy and its impact on global economic recovery (06:05 ET)
- February Consumer Price Index (08:30 ET)
- January FHFA Housing Price Index (09:00 ET)
- February New Home Sales (10:00 ET) $26 billion 2-yr note auction
Treasury Yields:
- 2 Year Note 0.60% UNCH
- 5 Year Note 1.41% -0.01
- 10 Year Note 1.92% -0.01
- 30 Year Bond 2.51% +0.01
2/30 Spread: 191 bps ( +1 ) … 2/10 Spread: 132 bps ( -1 )
Preview for Tuesday 24 Mar, 2015
Tuesday (24 Mar) :
- 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)
Earnings Highlights
Tuesday (24 Mar) :
BMO - GIII HDS IHS MKC
BMO - GIII HDS IHS MKC
AMC - AMPH CBK HQY INGN SONC SCS TRQ
Summary
Market seems rather reluctant to go any higher now. Technically wise we should see a slight correction in the market soon. So I am not optimistic of going bullish at the moment.
We will be seeing the CPI numbers from the US tomorrow and that might give the market some more reason to profit take.
We will be seeing the CPI numbers from the US tomorrow and that might give the market some more reason to profit take.
Direction for Tuesday 24 Mar, 2015; Down
2015 Daily Directional Accuracy: 20/40 (50.00%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
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