Monday, 9 Mar 2015 - AMC

Dow +138.94 at 17995.72, Nasdaq +15.07 at 4942.44, S&P +8.17 at 2079.43

Friday session was more towards profit taking as monitored in the internals. I believe the market is likely to rebound as we are having a good support right now.

We are having no economic news releasing on Monday so I suppose we would see some short covering before the market decides to reverse.

Direction for Monday 9 Mar, 2015; Up

DOW led the market to the upside as the big cap outperformed while NASDAQ and S&P is lagging behind. It looks as though the market makes a rebound on its support. But I am not sure if this is a short covering. 

Apple held its product launch event on Monday and the volatility from the ticker is brought to the market as well. It is obvious that the market suffered some selloff before it gets a pullback.     

Market Summary

Industry Watch

Strong: Consumer Staples, Financials, Industrials, Technology, Utilities

Weak: Energy, Materials, Telecom Services

Other Market Moving Factor:

• Eurogroup to discuss Greece today after rejecting certain reform proposals presented in the bailout extension letter
• Apple (AAPL) unveils digital watch at press event in San Francisco
• McDonald's (MCD) reports 1.7% decline in global sales; U.S. sales decline 4.0%

[BRIEFING.COM] The stock market began the week on an upbeat note with the Dow Jones Industrial Average (+0.8%) pacing the Monday advance. The price-weighted index settled well ahead of the S&P 500 (+0.4%) while the Nasdaq Composite (+0.3%) spent the bulk of the day near its flat line. 

Equity indices climbed out of the gate with cyclical sectors fueling the early advance. Meanwhile, countercyclical groups struggled early, but only the telecom services sector (-0.3%) failed to turn positive by the closing bell.  

Eight of ten sectors finished the day in the green with industrials (+0.9%) settling in the lead. The sector benefitted from solid gains among large cap names like 3M (MMM 166.37, +2.01), Boeing (BA 154.75, +1.63), and Caterpillar (CAT 80.81, +0.75) with the three Dow components advancing between 0.9% and 1.2%. The trio helped the Dow climb throughout the session while the Nasdaq underperformed due to relative weakness in biotechnology and major chipmakers like Taiwan Semiconductor (TSM 23.45, -0.64) and Intel (INTC 32.71, -0.48). 

Furthermore, the top-weighted Nasdaq component—Apple (AAPL 127.09, +0.49)—showed intraday volatility, but ended higher by 0.4% after introducing new features to its MacBook lineup and unveiling the Apple Watch with retail prices for the latter ranging from $349 to more than $10,000 for a premium version crafted with gold alloys. As for the broader technology sector (+0.5%), the group struggled in the early going, but finished among the leaders. 

Elsewhere among cyclical sectors, the discretionary space (+0.5%) also settled ahead of the broader market with shares of McDonald's (MCD 97.71, +0.58) shrugging off a 1.7% decline in February global sales that included a 4.0% drop in domestic sales. 

On the downside, the energy sector (-0.7%) started in the lead, but settled at the bottom of the leaderboard even though crude oil advanced 0.7% to $49.96/bbl. 

Treasuries began climbing overnight and continued their rally during the session to send the 10-yr yield lower by five basis points to 2.20%. The advance followed news that the Eurogroup rejected some of the reforms proposed by Greece. The two sides met once again today, but the meeting did not produce any joint statements. 

Today's participation was relatively light with fewer than 750 million shares changing hands at the NYSE floor. 

Tomorrow, the Job Openings and Labor Turnover Survey for January and the January Wholesale Inventories report (Briefing.com consensus -0.1%) will be released at 10:00 ET. 

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei +1.2%; Hong Kong’s Hang Seng -0.1%; China’s Shanghai Composite -0.2%
Gains were widespread across markets in the Asia Pacific region. The Shanghai Composite and the Hang Seng were the few notable exceptions as growth concerns on the mainland appeared to weigh on investor sentiment.

• Economic Data
  • Japan
    • January Leading Index -0.2% month-over-month (prior +1.5%); coincident indicator +2.4% month-over-month (prior +1.5%)
  • Australia
    • February AIG Construction Index 43.9 (prior 45.9)
• Equity Markets
  • Japan’s Nikkei jumped 1.2% in a broad-based advance led by the consumer non-cyclical (+2.7%), financial (+1.6%), and basic materials (+1.3%) sectors. The top-performing individual stocks were Sumitomo Dainippon Pharma Co (+12.5%), UNY Group Holdings (+10.7%), Ajinomoto Co. (+7.3%), Olympus Corp. (+5.8%), and Sumco Corp. (+5.7%). Yahoo Japan (-3.5%) was the biggest decliner.
  • Hong Kong’s Hang Seng dipped 0.1%, pressured by weakness in the communications (-0.9%) and utilities (-0.6%) sectors. The influential financial sector (-0.03%) was little changed. China Unicom (-3.0%) and Kunlun Energy Co (-1.7%) led the decliners while Lenovo Group (+2.3%) and AIA Group (+2.0%) paced the winners.
  • China’s Shanghai Composite declined 0.2%, finishing near its lows for the session. The Chinese market was pressured by losses in the technology, industrial, and consumer sectors. Leading decliners included Shanghai Potevio Co (-10.0%), Shaanxi Broadcast & TV Network Intermediary (-9.8%), China Railway Erju Co (-7.8%), Hisense Electric Co (-7.7%), and Universal Scientific Industrial Shanghai Co (-7.5%).
  • Australia’s S&P/ASX 200 slipped 0.1%, clipped by losses in the gold (-4.5%), metals & mining (-1.7%), and resources (-1.4%) sectors. Regis Resources (-26.7%), Beadell Resources (-8.2%), and Fortescue Metals Group (-6.1%) were the biggest laggards.
  • Regional advancers: Taiwan +0.5%, South Korea +0.7%, Singapore +0.7%, Malaysia +0.1%, Thailand +1.0%, Indonesia +1.2%, Philippines +0.5%
  • Regional decliners: Vietnam -0.5%
  • Holiday closure: India
• FX
  • USD/CNY -0.06% at 6.2638
  • USD/INR +0.02% at 62.404
  • USD/JPY -0.1% at 119.97

EUROPE

Major European indices trade mostly higher with Italy’s MIB (+0.7%) in the lead. According to reports, Greece has paid the first installment of EUR310 million to the IMF. The country’s next payment in the amount of EUR350 million is scheduled for next Friday.

• Eurozone Q4 GDP was left unrevised at 0.3% quarter-over-quarter and 0.9% year-over-year
• Germany’s Industrial Production rose 0.6% month-over-month (consensus 0.5%; last 1.0%)
• UK’s Inflation Expectations slowed to 1.9% from 2.5%
• France’s Trade Deficit widened to EUR3.70 billion from EUR3.40 billion (expected deficit of EUR3.00 billion)
• Swiss CPI fell 0.3% month-over-month (expected -0.1%; last -0.4%) while the year-over-year reading declined 0.8% (consensus -0.6%; prior -0.5%)
• Spain’s Industrial Production rose 0.4% year-over-year (last -0.9%)
• Italy’s PPI fell 1.1% month-over-month (previous -0.7%) while the year-over-year reading declined 2.9% (last -1.8%)

CLOSING PRICES

• UK’s FTSE: -0.7%
• Germany’s DAX: + 0.4%
• France’s CAC: + 0.0%
• Spain’s IBEX: -0.3%
• Portugal’s PSI: + 0.9%
• Italy’s MIB Index: + 0.2%
• Irish Ovrl Index: + 0.1%
• Greece ASE General Index:  -0.9%

Macroeconomic Data

Economic Data

from Briefing.com

• No Economic Data

Market Internals

NYSE:

Lower Volumes than the day before – 742.5M vs 888.6M 


Advancers outpaced Decliners (adv/dec): 1624 / 1453

New Lows outpaced New Highs (highs/lows): 48 / 80

NASDAQ:

Lower Volumes than the day before – 1689.7M vs 1899.2M

Advancers outpaced Decliners (adv/dec): 1533 / 1243

New Highs outpaced New Lows (highs/lows): 66 / 64

VOLATILITY S&P500 (VIX)

15.06 -0.14 (-0.92%)

The lower volume is showing otherwise in the internals. And it seems that the internals are not that bullish after all. VIX is still hovering around the 15.00 level but I think the market is still more bullish than bearish.             

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,995.72 +138.94 (+0.78%)

Volume: 85,824,770 (below average of 94,896,136)

Range: 17,856.56 - 18,031.04

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,942.44 +15.07 (+0.31%)

Volume: 405,494,419 (below average of 450,811,755)
Range: 4,920.82 - 4,950.47

S&P 500 INDEX (SPX: CBOE)

2,079.43 +8.17 (+0.39%)

Volume: 491,672,000 (below average of 534,709,200)

Range: 2,072.21 - 2,083.49 

One concern I am having is the divergence in MACD. While the indices are sitting on their respective support levels and it is yet to see if the market is going for another rally or just a short covering sessions.       

Commodities

Closing Commodities: Natural Gas Drops 6% On Weather Outlook

• Natural gas futures sunk lower today on a warm weather outlook.
• Front-month nat has (Apr) ended today’s session $0.17 lower (or -6%) to $2.67, closing near the day’s low.
• WTI crude oil slid off of its HoD, which was hit in the morning session.
• Apr crude ultimately finished the day $0.34 higher at $49.96/barrel.
• Gold and silver slid off of today’s highs, which were hit mid-morning. Apr gold rose $2.40 today to $1166.60/oz, while May silver -0.02% at $15.79/oz May copper +0.06 to $2.67/lb

Energy Price Action

• Apr crude oil futures rose $0.34/barrel to $49.96/barrel
• Apr natural gas fell $0.17 to $2.67/MMBtu
• RBOB Gasoline fell $0.01 to $1.87/gallon
• Heating oil closed $0.03 lower to $1.84/gallon

Notes:

• Natural Gas: prices were driven sharply lower in early trading, mainly on concerns relating to consecutive-week draws in inventory.

Agricultural Price Action

• Mar corn closed $0.03 higher at $3.83/bushel
• Mar wheat closed $0.05 higher at $4.94/bushel
• Mar soybeans closed $0.09 higher at $9.88/bushel
• Ethanol closed $0.01 higher at $1.47/gallon
• Sugar #11 closed 0.17 cents lower at 13.27 cents/lb

Metals Price Action

• Apr gold ended today’s session $2.40 higher at $1166.60/oz
• Mar silver closed $0.02 lower at $15.79/oz
• May copper closed $0.06 higher at $2.67/lb

Currencies

$/Yen Tests Multi-Year High:

• Most pairs traded sideways today, with the exception of $/Yen, which rose 42 pips (+0.35%) to 121.24, within striking distance of its December 2014 high (121.84)
• After the large dollar move following Friday's release of the February employment report, low volatility is not surprising
• EUR/USD traded a fresh 12-year low overnight at $1.0823, but immediately settled into a range slightly higher, falling 3 pips on the day (-0.03%) to 1.0855
• GBP/USD rallied back from an awful first week of March, to trade up 88 pips (+0.59%) to $1.5125
• The commodity currencies maintained a holding pattern:
  • USD/CAD: -33 pips (-0.26%) to 1.2591
  • AUD/USD: -4 pips (-0.05%) to $0.7712
  • NZD/USD: -4 pips (-0.05%) to $0.7374
• In what may be the market's biggest curve ball this year, $/CHF has almost entirely unwound its 25-big figure sell-off on January 15th. A move that took less than an hour to happen and imposed significant losses on some market makers, has been undone in less than two months.

Bonds

Treasuries Recover Some Losses:

• The Treasury complex was much kinder to investors today than it was last week, with the market finishing near its highs and making back a decent chunk of Friday's sell-off
• The gains came in all maturities, despite a mid-day sell-off in the 2-yr note
• Yield check:
  • 2-yr: -4 bps to 0.69%
  • 5-yr: -4 bps to 1.65%
  • 10-yr: -5 bps to 2.20%
  • 30-yr: -5 bps to 2.80%

• The ECB began its quantitative easing program today, which it is implementing through the Eurozone's national central banks
  • Yields on Germany and France's debt plunged, as investors seem to have underestimated the impact of the program
• In Greece, however, the 10-year yield rose 65 bps to 9.90%, as Eurozone officials seemed skeptical of Greece's latest proposal for structural reforms, including the much-mocked tourists-as-undercover-tax-inspectors proposal. Also, Greece's finance minister, Yanis Varoufakis, seemed to threaten to hold a referendum if the Eurozone did not accept Greece's proposal
• Cleveland Fed President Mester (non-FOMC voter) said that she sees Fed rate lift-off in the first half of 2015 and believes that the economy is on track for above-trend growth. Mester is a hawk, so this was not much of a surprise

• Commodities:
  • WTI Crude rose 39 cents (+0.79%) to $50.00/bbl
  • Copper rose 6 cents to $2.67/lb.
  • Gold rose slightly, after taking a battering on Friday, by $1.80 (+0.15%) to $1166.1/troy oz.

• Currencies:
  • EUR/USD: +10 pips (+0.10%) to $1.0854 (traded 12-year low of $1.0823)
  • USD/JPY: +39 pips (+0.33%) to 121.20

• Data Out Tomorrow:
  • January JOLTS -- Job Openings (10:00 ET)
  • January Wholesale Inventories (10:00 ET)
• New Issuance:
  • $24 billion 3-year note auction

Treasury Yields:

• 2 Year Note 0.70% -0.03
• 5 Year Note 1.66% -0.04
• 10 Year Note 2.20% -0.04
• 30 Year Bond 2.80% -0.03

2/30 Spread: 210 bps ( UNCH ) …  2/10 Spread: 150 bps ( -1 )

Preview for Tuesday 10 Mar, 2015

Economic Data

Tuesday (10 Mar) :

• JOTLS – Job Openings : Prior 5.028M
• Wholesale Inventories : -0.1% (Prior 0.1%)

Earnings Highlights

Tuesday (10 Mar) :
BMO - BKS BPI JW.A LINC LMIA MVIS NNBR RDUS SUP SCAI TCPC

During Hours - YOWR

AMC - ALOG HTHT EOX FCEL GCA HABT HRZN NCS NWPX ONTY SINA SUPN SURG TCRD PAY WB ZGNX

Summary

Well it looks as though the market is pulling back from the correction. I feel the internals are still looking divergence so the next few sessions should give some confirmation on my view. However it seems that the big caps are the one performing and if we see more coming from the technology and small caps, I think that would bring the market back up higher.

Direction for Tuesday 10 Mar, 2015; Down

2015 Daily Directional Accuracy: 14/31 (46.67%) 
2015 Weekly Directional Accuracy: 5/7 (71.43%)