20 Mar 2015

Thursday, 19 Mar 2015 - AMC



Dow -117.16 at 17959.03, Nasdaq +9.55 at 4992.38, S&P -10.39 at 2088.88
As expected the FOMC update gave the market a huge volatility. Now we have to see if the rally is going to continue. Tomorrow we will be having the unemployment numbers and the leading indicators that might give the market another surprise (although unlikely I think).

With the sharp spike on Wednesday, there might be some profit taking before the run continues.

Direction for Thursday 19 Mar, 2015; Up
Market did not follow through the run and instead there was some profit taking in the early session before it continues to go sideway. NASDAQ is still leading the overall market while S&P and the big caps are lagging. 

 Part of the reason the market remained in negative was due to the pressure from the Dollar Index.           

Market Summary
Industry Watch
Strong: Health Care, Technology

Weak: Energy, Financials, Industrials, Materials, Telecom Services, Utilities

Other Market Moving Factor:
    • Biotechnology outperforms
    • Crude oil pressured once again

    [BRIEFING.COM] The stock market ended the Thursday session 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 this week's gain to 2.5% while the S&P 500 will enter the Friday session up 1.7% for the week. 

    Yesterday'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% today and returned to Tuesday's low. Notably, the euro retraced the bulk of yesterday'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. Steelmakers kept the sector pressured after Nucor (NUE 46.11, -3.16) cut its guidance well below analyst estimates. Shares of NUE tumbled 6.4% while Market Vectors Steel ETF (SLX 31.07, -1.10) fell 3.4%. 

    Elsewhere among cyclical sectors, industrials (-0.7%) and financials (-1.0%) struggled while consumer discretionary (-0.2%) and technology (-0.2%) displayed relative strength. 

    The largest sector by weight—technology—spent the day near its flat line as heavyweights like Apple (AAPL 127.50, -0.97), Google (GOOGL 563.67, -2.49), and Facebook (FB 82.75, +1.84)traded in mixed fashion while chipmakers outperformed with the PHLX Semiconductor Index adding 0.2%. 

    Conversely, the relative strength gave a boost to the Nasdaq, but the index also received significant support from biotechnology. Biogen Idec (BIIB 433.65, +5.72) jumped 1.3% after Credit Suisse raised its price target for the stock to $500 from $400 while the broader iShares Nasdaq Biotechnology ETF (IBB 365.25, +7.11) spiked 2.0%, logging its sixth consecutive advance. 

    In addition to boosting the Nasdaq, biotechnology helped the health care sector (+0.5%) finish well ahead of other groups. The countercyclical sector extended its week-to-date gain to 3.7%, overtaking the utilities sector (-1.0%), which narrowed its weekly gain to 3.3%. 

    Treasuries retraced a portion of yesterday's advance with the 10-yr yield spiking five basis points to 1.97%. 

    Today's participation was a bit light with roughly 715 million shares changing hands at the NYSE floor. 

    Economic data included Initial Claims, Current Account Balance, Leading Indicators, and Philadelphia Fed Survey: 
    • The initial claims level increased to 291,000 from an upwardly revised 290,000 (from 289,000) while the Briefing.com consensus expected an increase to 293,000 
      • There were no special factors impacting this week's claims reading 
    • The current account deficit for the fourth quarter totaled $113.50 billion while the Briefing.com consensus expected the deficit to hit $105.00 billion 
      • The third quarter deficit was revised to $98.90 billion from $100.30 billion 
    • The Philadelphia Fed's Business Outlook Survey dropped slightly to 5.0 in March from 5.2 in February while the Briefing.com consensus expected an increase to 6.9 
      • While the overall index was virtually unchanged from a month ago, the underlying details showed that a stark weakness developed over the past few weeks 
        • Shipments—or production—moved into a deep contraction in March as the related index dropped to -7.8 from +8.1 in February. 
        • New orders growth slowed as that index fell to 3.9 in March from 5.4 in February. Unfilled orders entered an even larger contraction, dropping from +7.3 in February to -13.8 in March. 
    • The Leading Indicators report for February was up 0.2%, which is what the Briefing.com consensus expected 
    There is no economic data on tomorrow's schedule. 
    Global Market

    ASIA

    Asian Markets Close: Japan’s Nikkei -0.5%; Hong Kong’s Hang Seng +1.5%; China’s Shanghai Composite +0.1%
    Most markets in the Asia-Pacific region finished higher on Thursday, rising in the wake of Wall Street’s rally following the Federal Open Market Committee’s policy announcement, which was widely regarded as dovish. The Nikkei (-0.5%) was a notable exception as a stronger yen following the FOMC decision detracted from buying interest.

    Economic data
    • Japan
      • March Tankan Index 16 (prior 11)
      • All Industries Activity Index +1.9% month-over-month (expected +1.7%; prior -0.1%)
    • New Zealand
      • Q4 GDP +0.8% quarter-over-quarter (expected +0.7%; prior +1.0%); +3.5% year-over-year (expected +3.3%; prior +3.2%)
    • South Korea
      • February PPI +0.1% month-over-month (prior -1.2%); -3.6% year-over-year (expected -1.5%; prior -3.6%)

    Equity Markets
    • Japan’s Nikkei declined 0.5% with a stronger yen weighing on sentiment. The financial (-0.7%), consumer cyclical (-0.7%), and communications (-0.6%) sectors paced the losses. Leading decliners included Mitsumi Electric Co (-3.7%), Nippon Suisan Kaisha Ltd (-3.4%), Alps Electric Co (-3.2%), Kirin Holdings (-3.0%), and Taiyo Yuden Co (-2.9%). Among the 225 index members, 68 closed higher, 149 ended lower, and 8 were unchanged.
    • Hong Kong’s Hang Seng jumped 1.5% in a broad-based advance that included gains for every sector and saw the index close at its highs for the day. The communications (+2.3%) and consumer cyclical (+2.2%) sectors led the way. Top gainers included Tencent Holdings (+6.7%), Link REIT (+5.2%), Wharf Holdings (+4.4%), Galaxy Entertainment (+3.4%), and Sands China (+3.3%). Among the 50 index members, 43 closed higher, 5 finished lower, and 2 were unchanged.
    • China’s Shanghai Composite increased 0.1%, bolstered by strength in the technology (+2.3%) and basic materials (+1.5%) that helped offset weakness in the financial (-0.9%), consumer non-cyclical (-0.8%), and consumer cyclical (-0.7%) sectors. Henan Zhongyuan Expressway Co (+10.1%) led all individual gainers while Shanghai U9 Game Co (-7.3%) paced the losers.
    • India’s Sensex dropped 0.5% and ended near its lows for the session with a final-hour selloff wiping out earlier gains. The industrial (-1.0%) and financial (-0.9%) sectors were the main drags. State Bank of India (-2.1%), Reliance Industries (-1.8%), and Tata Motors (-1.4%) were the biggest laggards.
    • Australia’s S&P/ASX 200 jumped 1.9%, helped by gains in many of its financial components and mining stocks. Thursday’s advance was the biggest gain in the ASX 200 since February 13.
    • Regional advancers: Taiwan +0.9%, South Korea +0.5%, Singapore +0.7%, Malaysia +0.6%, Thailand +0.04%, Indonesia +0.8%, Philippines +0.8%
    • Regional decliners: Vietnam -0.9%

    FX
    • USD/CNY -0.6% at 6.1942
    • USD/INR +0.1% at 62.255
    • USD/JPY +0.4% at 120.56

    EUROPE

    Major European indices trade mostly higher with Italy’s MIB (+1.1%) in the lead. According to Reuters, Greek Deputy Prime Minister Yannis Dragasakis said liquidity has become a problem and Greece will need cooperation with the EU to address the issue.
    • Swiss trade surplus narrowed to CHF2.47 billion from CHF3.41 billion (expected surplus of CHF2.87 billion)

    CLOSING PRICES
    • UK’s FTSE: + 0.3%
    • Germany’s DAX: -0.2%
    • France’s CAC: + 0.1%
    • Spain’s IBEX: + 0.4%
    • Portugal’s PSI: + 0.8%
    • Italy’s MIB Index: + 1.1%
    • Irish Ovrl Index: 0.0%
    • Greece ASE General Index: -1.9%
      Macroeconomic Data


      Economic Data
      from Briefing.com
      • Initial Claims : 291K vs 293K (Prior 290K - Up)
      • Continuing Claims : 2417K vs 2415K (Prior 2428K - Up)
      • Current Account Balance : -$113.5B vs -$105.0B (Prior -$98.9B - Down)
      • Philadelphia Fed : 5.0 vs 6.9 (Prior 5.2)
      • Leading Indicators : 0.2% vs 0.2% (Prior 0.2%)
      • Natural Gas Inventories : -45bcf (Prior -198bcf)
      UNEMPLOYMENT CLAIMS


      Highlights


      • The initial claims level increased to 291,000 for the week ending March 14 from an upwardly revised 290,000 (from 289,000) for the week ending March 7. The Briefing.com Consensus expected the initial claims level to increase to 293,000.
      • The continuing claims level declined to 2.417 mln for the week ending March 7 from an upwardly revised 2.428 mln (from 2.418 mln) for the week ending February 28. The consensus expected the continuing claims level to decrease to 2.415 mln.

      Key Factors


      • There were no special factors impacting this week's claims reading. 
      • After averaging more than 300,000 over the past 5 weeks, the dip in claims may be signaling a return to a more relaxed trend. Labor market conditions are showing small signs of improvement.

      Big Picture


      • Volatility in the claims data has made it difficult to determine labor market conditions.

      PHILADELPHIA FED


      Highlights


      • The Philadelphia Fed's Business Outlook Survey dropped slightly to 5.0 in March from 5.2 in February. The Briefing.com Consensus expected the index to increase to 6.9.

      Key Factors


      • While the overall index was virtually unchanged from a month ago, the underlying details showed that a stark weakness developed over the past few weeks.
      • Specifically, shipments -- or production -- moved into a deep contraction in March as the related index dropped to -7.8 from +8.1 in February. Unfortunately, production growth may not rebound in the immediate future. New orders growth slowed as that index fell to 3.9 in March from 5.4 in February. Unfilled orders entered an even larger contraction, dropping from +7.3 in February to -13.8 in March.
      • Employment conditions also weakened significantly in March. While the Number of Employees Index showed little change (3.5 from 3.9), the contraction in hours worked increased to -11.4 in March from -6.0 in February.

      Big Picture


      • Even though there was little movement in the index, the overall trend is pointing downward.

      LEADING INDICATORS


      Highlights


      • The Conference Board's Leading Economic Index increased 0.2% for a second consecutive month in February. That was exactly what the Briefing.com Consensus expected.

      Key Factors


      • Since 8 of the 10 components of the index are known prior to the release, the difference between the actual and consensus forecast is generally small.
      • The average manufacturing workweek, initial claims, and the ISM New Orders Index contributed negatively in the February index. These components were more-than-offset by gains in building permits, equity prices, and interest rate spreads.
      • The Conference Board's forecasts of the manufacturing sector show gains in both new orders of consumer goods and materials and orders of nondefense capital goods excluding aircraft.

      Big Picture


      • The Leading Economic Index maintains steady growth.

      Market Internals
      NYSE:
      Lower Volumes than the day before – 738.5M vs 883.2M 

      Decliners outpaced Advancers (adv/dec): 1082 / 1982
      New Highs outpaced New Lows (highs/lows): 128 / 35

      NASDAQ:
      Lower Volumes than the day before – 1664.9M vs 1971.7M
      Advancers outpaced Decliners (adv/dec): 1468 / 1308
      New Highs outpaced New Lows (highs/lows): 161 / 33

      VOLATILITY S&P500 (VIX)
      14.07 +0.10 (+0.72%)
      Clearly the volume did not maintain on Thursday and the internals are looking more bearishness. However VIX has shown some promising sign as it has been relatively unchanged and remaining below 15.00.                     


      Technical Updates
      DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
      17,959.03 -117.16 (-0.65%)
      Volume: 107,824,496 (above average of 94,300,997)
      Range: 17,934.24 - 18,072.99

      NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
      4,992.38 +9.55 (+0.19%)
      Volume: 388,563,286 (below average of 440,311,285)
      Range: 4,979.94 - 5,000.02


      S&P 500 INDEX (SPX: CBOE)
      2,089.27 -10.23 (-0.49%)
      Volume: 528,262,000 (above average of 525,586,800)
      Range: 2,085.56 - 2,098.69 

      The resistance is giving the market some reason for profit taking. NASDAQ is likely to form the evening star candlestick pattern and depending on Friday session, we might see some correction soon. However MACD momentum is still showing some confidence in the market and better still if we see more bullish trend.                   


      Commodities

      Closing Commodities: Energy Ends The Day Lower, Precious Metals And Copper Gains Despite Strength In Dollar Index
      • Natural gas slid lower today and remained weak after reporting bearish natural gas data from the EIA
      • Ultimately, Apr nat gas closed $0.10 lower at $2.82/MMBtu
      • WTI crude oil futures dropped following yesterday’s Fed-fueled rally
      • May crude ended today’s session $1.17 lower at $45.50/barrel
      • The dollar index remained strong today, but this didn’t affect metals much
      • Apr gold closed $18.20 higher at $1169.30/oz, while May silver finished $0.60 higher at $16.13/oz
      • Copper was strong today… May contract gained $0.10 to $2.66/lb

      Energy Price Action
      • May crude oil futures fell $1.17/barrel to $45.50/barrel
      • Apr natural gas closed $0.10 lower at $2.82/MMBtu
      • RBOB Gasoline closed $0.08 lower at $1.72/gallon
      • Heating oil closed $0.01 higher at $1.78/gallon

      Agricultural Price Action
      • May corn closed $0.01 lower at $3.74/bushel
      • May wheat closed flat at $5.11/bushel
      • May soybeans closed $0.02 lower at $9.62/bushel
      • Ethanol closed $0.01 lower at $1.45/gallon
      • Sugar #11 closed 0.11 cents lower at 12.62 cents/lb

      Metals Price Action
      • Apr gold ended today’s session $18.20 higher at $1169.30/oz
      • May silver closed $0.60 higher at $16.13/oz
      • May copper closed $0.10 higher at $2.66/lb

      Currencies

      U.S. Dollar Index Recovers Completely from FOMC:
      • In what looked like a flash-crash dynamic, the U.S. Dollar Index made an intraday, 5-point (5%) dive yesterday. The pace of dollar appreciation had been accelerating over the past few weeks, and hedge funds were surely piling in to the trade as the ECB began its quantitative easing and European sovereign yields plummeted. The Dollar Index is right back at pre-FOMC levels less than 24 hours later, but has now stopped out some of the weaker hands and managed to frustrate all but the most nimble traders. It's worth noting that following the Flash Crash in May of 2010, U.S. equities did eventually sell back down through their range 
      • EUR/USD: -208 pips (-1.92%) to $1.0623 (pre-FOMC level)
        • The Greece saga drags on at the European Council summit
        • Greece's 10-year debt now yields (costs Greece's government) 11.81%, up 74 basis points on the day and a 2-year high
      • USD/JPY recouped most of its losses from yesterday, rising 71 pips (0.59%) to 120.93. The pair looks set to move out of this range at some point, but yesterday was not the day
      • GBP/USD fell 233 pips (-1.56%) to 1.4714. Andrew Haldan, the Bank of England's chief economist said that the BoE "stands ready" to cut interest rates, if deflation turns out not to be transitory. He went on to say, "The risks to inflation at [the two-year time horizon] are plainly two-sided ... but my personal view is that these risks are skewed to the downside."
        • His remarks were the proximate cause of some of the selling in cable today
      • The commodity currencies gave back almost all of their gains from yesterday:
        • USD/CAD: +174 pips (1.38%) to $1.2751
        • AUD/USD: -147 pips (-1.89%) to $0.7615
        • NZD/USD: -109 pips (-1.45%) to $0.7378
      Bonds
      Government Notes and Bonds Pull Back:
      • After a one-way trade in Treasuries following the FOMC statement and subsequent press conference yesterday, the market gave back a substantial part of the gains today. The selling was concentrated in the belly, but affected all maturities
      • Yield check:
        • 2-yr: +6 bps to 0.62%
        • 5-yr: +8 bps to 1.47%
        • 10-yr: +5 bps to 1.97%
        • 30-yr: +2 bps to 2.54%
      • News:
        • Initial and Continuing Jobless Claims came out in line with expectations (Initial: 291K, Continuing: 2417K) . Governments failed to move on the news
        • The March Philadelphia Fed number missed estimates at 5.0, versus a Briefing.com consensus of 6.9 and a prior reading of 5.2
          • The details of the report showed some new weakness in the U.S. economy over the past few weeks
          • Production moved into a deep contraction in March as the related index dropped to -7.8 from +8.1 in February. New orders growth also slowed, falling to 3.9 in March from 5.4 in February. Unfilled orders enterred an even larger contraction, dropping from +7.3 in February to -13.8 in March
          • Contraction in hours worked deepened from -6.0 in February to -11.4 in March
        • Leading Economic Indicators came out in line with estimates, at 0.2%. The readying for January was also 0.2%
        • The $13 billion 10-year TIPS auction went off smoothly:
          • High yield: 0.200%
          • Bid-to-cover: 2.43
          • Indirect bid: 75.7%
      • Commodities:
        • WTI Crude fell 99 cents (-2.12%) to $45.66/bbl, but ended well off of its session low at $44.77/bbl
        • Copper rose 9 cents (3.52%) to $2.66/lb.
        • Gold rose $18.20 (1.58%) to $1169.50/troy oz., but remained below its post-FOMC high of $1177.00/troy oz.
      • Currencies:
        • EUR/USD: -194 pips (-1.79%) to $1.0636
        • USD/JPY: +74 pips (0.61%) to  120.97
      • Fed Speakers for Friday:
        • Atlanta Fed President Lockhart (FOMC-voter) (10:20 ET) 
        • Chicago Fed President Evans (FOMC-voter) speaks at the Brookings Institution
          about "Risk Management for Monetary Policy Near the Zero Lower Bound" (11:30 ET)

      Treasury Yields:
      • 2 Year Note 0.63% +0.06
      • 5 Year Note 1.48% +0.07
      • 10 Year Note 1.98% +0.05
      • 30 Year Bond 2.54% +0.03
      2/30 Spread: 191 bps ( -3 ) …  2/10 Spread: 135 bps ( -1 )













      Preview for Friday 20 Mar, 2015

      Economic Data

       Friday (20 Mar) :
      • No Economic Data

        Earnings Highlights

        Friday (20 Mar) : 
        BMO - CMCM DRI KBH TIF

        AMC - None Scheduled

        Summary
        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

        2015 Daily Directional Accuracy: 18/38 (47.37%) 
        2015 Weekly Directional Accuracy: 5/8 (62.50%)

        Posted by at

        No comments:

        Post a Comment

        Subscribe to: Post Comments (Atom)