Dow -40.31 at 17678.23, Nasdaq -13.16 at 4863.36, S&P -4.90 at 2056.15
Market found a support and made a pullback following that. However it looks like market is still reluctant to go higher despite the pullback. Or maybe that is a short covering? Crude oil remains elevated and went above $50 partly due to Yemen strike. The Dollar Index also rebound on Thursday and that is likely to give crude oil some more volatility...Market is looking cautious before Friday's GDP number announcement. I think that is why most traders took their profits prior to that. Tomorrow we will have the unemployment claims that might give the market some shakeup as well. I think there should be some short covering in the early session and it is likely market might rebound as it is sitting on a strong support.
Direction for Thursday 26 Mar, 2015; Up
Market Summary
Industry Watch
Strong: Materials, Telecom Services
Weak: Consumer Discretionary, Financials, Industrials, Utilities
Other Market Moving Factor:
- S&P 500 tests 100-day moving average (2,057)
- Crude oil tests $52/bbl following Saudi-led airstrikes on rebel positions in Yemen
- Yen strength signals risk aversion in FX market
- Chipmakers pressured after SanDisk (SNDK) lowered Q1 revenue guidance
[BRIEFING.COM] The major averages ended Thursday with modest losses after climbing off their opening lows. The S&P 500 shed 0.2% and settled below its 100-day moving average (2,057) while the Nasdaq Composite (-0.3%) underperformed.
Equity indices could not avoid registering their fourth consecutive decline, but they were able to avoid settling on their lows. Still, the benchmark index will enter the Friday session down 2.5% for the week.
The market began the day under pressure after overnight reports revealed that coalition forces from ten countries, led by Saudi Arabia, carried out air strikes against rebel forces in Yemen. This followed yesterday's reports indicating Yemen's President Hadi fled his country by sea.
The news gave a boost to the dollar, but the yen also rallied against its peers, which signaled caution among participants in the foreign exchange market. The Dollar Index (97.36, +0.38) gained 0.4% as the greenback spiked 0.8% against the euro, sending the single currency from a morning high near 1.1050 to 1.0880. For its part, the dollar/yen pair slipped 0.3% to 119.20 after testing the 118.50 level in the morning.
In addition, the latest developments in the Middle East led to concerns about potential disruptions to the energy market. As a result, crude oil surged 4.6% to $51.43/bbl. However, the energy sector (-0.2%) could not make it out of the red.
Meanwhile, the remaining cyclical sectors ended in mixed fashion. Consumer discretionary (-0.6%) and industrials (-0.3%) underperformed while materials (+0.2%) and technology (+0.1%) registered slim gains.
In the technology sector, large cap names like Apple (AAPL 124.24, +0.86), IBM (IBM 160.59, +1.39), and Oracle (ORCL 42.99, +0.06) gained between 0.1% and 0.9% while Accenture (ACN 94.17, +5.69) and Red Hat (RHT 75.36, +6.91) posted respective gains of 6.8% and 10.1% after beating estimates.
The tech sector managed to turn positive despite notable weakness among chipmakers that sent the PHLX Semiconductor Index lower by 1.4%. The industry group struggled after SanDisk (SNDK 66.20, -14.97) lowered its Q1 revenue guidance below analyst estimates.
Elsewhere, another high-beta group—biotechnology—pressured the market in the early going, but was able to return near its flat line by the end of the session. The iShares Nasdaq Biotechnology ETF (IBB 340.81, -0.49) will enter tomorrow's affair down 6.8% for the week.
Treasuries spent the day in a steady retreat from their early morning highs. The benchmark 10-yr yield spiked eight basis points to 2.01%.
Today's participation was above average with more than 808 million shares changing hands at the NYSE floor.
Economic data was limited to weekly initial claims, which declined to 282,000 from last week's unrevised 291,000 while the Briefing.com consensus expected a reading of 290,000.
After three weeks above 300,000, the 4-week moving average for initial claims has dropped below that threshold, suggesting the claims level is reestablishing a trend below 300,000.
Tomorrow, the third estimate of Q4 GDP will be released at 8:30 ET (Briefing.com consensus 2.4%) while the final reading of the Michigan Sentiment Index for March (consensus 92.0) will cross the wires at 10:00 ET.
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei -1.4%; Hong Kong’s Hang Seng -0.1%; China’s Shanghai Composite +0.5%
Not surprisingly, markets in the Asia-Pacific region followed Wall Street’s weak Wednesday lead and ended mostly lower on Thursday. Reports that Saudi Arabia and Gulf allies began military operations in Yemen in an attack against Houthi rebels added to the selling interest. China bucked the regional trend with a 0.5% gain in the Shanghai Composite.
Economic data
- Hong Kong
- February Trade Deficit narrowed to HKD 35.9 bln from HKD 37.0 bln (expected HKD -54.6 bln)
- Exports rose 7.2% month-over-month (expected +4.8%; prior +2.8%)
- Imports declined 0.9% month-over-month (expected +6.0%; prior +7.9%)
- South Korea
- March Consumer Confidence 101 (expected 104; prior 103)
- Singapore
- February Industrial Production +4.1% month-over-month (expected -0.7%; prior -4.7%); -3.6% year-over-year (expected -3.4%; prior +1.3%)
Equity Markets
- Japan’s Nikkei declined 1.4%, driven lower by losses in every sector except the energy sector (+1.6%). The technology (-3.1%), industrial (-1.6%), and financial (-1.5%) sectors were the biggest losers. Tokyo Electron (-5.8%) and Sumco Corp (-5.2%) followed form with the rout in the semiconductor space in the U.S. on Wednesday and led individual decliners in the Nikkei. Out of the 225 index members, 26 ended higher, 195 finished lower, and 4 were unchanged.
- Hong Kong’s Hang Seng declined 0.1%, helped by gains in the diversified (+0.8%), energy (+0.8%), and consumer non-cyclical (+2.0%) sectors. China Mengniu Dairy (+9.8%), Kunlun Energy (+2.6%), and CNOOC (+1.5%) were the top gainers while Lenovo Group (-2.1%) led all decliners. Out of the 50 index members, 19 ended higher, 26 finished lower, and 5 were unchanged.
- China’s Shanghai Composite bucked the regional trend and gained 0.5%, helped by gains in the energy space that included a 6% gain for PetroChina.
- India’s Sensex declined 2.3%. The downturn was driven by weakness in the financial (-3.8%), technology (-3.0%), and consumer non-cyclical (-1.9%) sectors. Bharti Airtel (+1.2%) was the only stock to gain at least 1.0%. Meanwhile, Housing Development Finance Corp (-5.2%), Wipro (-4.4%), Sesa Sterlite (-4.3%), Infosys (-3.3%), and ICICI Bank (-2.8%) topped the list of decliners.
- Australia’s S&P/ASX 200 declined 1.6%, which reports indicate was its largest daily decline since December. The banking group was a weak spot that weighed heavily on the index.
- Regional advancers: Philippines +0.4%, Singapore +0.4%
- Regional decliners: Taiwan -0.5%, South Korea -1.0%, Malaysia -0.04%, Thailand -1.1%, Indonesia -0.7%, Vietnam -0.9%
FX
- USD/CNY +0.01% at 6.2114
- USD/INR +0.4% at 62.690
- USD/JPY -0.6% at 118.76
EUROPE
Major European indices trade lower across the board with Italy’s MIB (-1.9%) pacing the retreat. Elsewhere, the Bank of Spain released its Economic Bulletin, which raised the 2015 GDP forecast to 2.8% from 2.0%.
- Eurozone February M3 Money Supply +4.0% year-over-year (consensus 4.3%; last 3.7%) and Private Sector Loans -0.1% year-over-year (consensus 0.1%; previous -0.2%)
- Germany’s GfK Consumer Climate improved to 10.0 from 9.7 (expected 9.8)
- UK’s February Retail Sales +0.7% month-over-month (consensus 0.4%; last 0.1%); +5.7% year-over-year (expected 4.7%; prior 5.9%). Core Retail Sales +0.7% month-over-month (expected 0.4%; prior -0.3%); +5.1% year-over-year (forecast 4.2%; last 5.2%). Separately, March CBI Distributive Trades Survey jumped to 18 from 1 (expected 15)
- French Q4 GDP was left unrevised at 0.1%, as expected
CLOSING PRICES
- UK’s FTSE: -1.4%
- Germany’s DAX: -0.2%
- France’s CAC: -0.3%
- Spain’s IBEX: -0.1%
- Portugal’s PSI: -1.1%
- Italy’s MIB Index: -1.1%
- Irish Ovrl Index: -1.6%
- Greece ASE General Index: -3.7%
Macroeconomic Data
Economic Data
from Briefing.com
- Initial Claims : 282K vs 290K (Prior 291K)
- Continuing Claims : 2416K vs 2215K (Prior 2422K - Up)
- Natural Gas Inventories : 12 bcf (Prior -45 bcf)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level decreased to 282,000 for the week ending March 21 from an unrevised 291,000 for the week ending March 14. The Briefing.com Consensus expected the initial claims level to decline to 290,000.
- The continuing claims level decreased to 2.416 mln for the week ending March 14 from an upwardly revised revised 2.422 mln (from 2.417 mln) for the week ending March 7. The consensus expected the continuing claims level to decline to 2.415 mln.
Key Factors
- After three weeks above 300,000, the 4-week moving average for initial claims dropped below that threshold. It seems that the initial claims level is reestablishing itself on a trend below 300,000.
Big Picture
- Initial claims have returned to a sub-300,000 trend.
Market Internals
NYSE:
Higher Volumes than the day before – 828.5M vs 791.0M
Decliners outpaced Advancers (adv/dec): 1197 / 1841
New Lows outpaced New Highs (highs/lows): 20 / 24
NASDAQ:
Lower Volumes than the day before – 1996.4M vs 2189.7M
Decliners outpaced Advancers (adv/dec): 1227 / 1518
New Lows outpaced New Highs (highs/lows): 21 / 51
VOLATILITY S&P500 (VIX)
15.80 +0.36 (+2.33%)
Internals remain bearish but it is noticeable that the New Highs vs New Lows ratio has been declining. VIX continues to rise above its 50MA and this might indicate the increase in hedging or lack of bulls participating. All in all, there is no sign of bullishness here yet.
Technical Updates
17,678.23 -40.31 (-0.23%)
Volume: 117,742,017 (above average of 97,007,016)
Range: 17,579.27 - 17,759.51
4,863.36 -13.16 (-0.27%)
Volume: 488,336,533 (above average of 448,222,609)
Range: 4,825.93 - 4,889.21
Range: 4,825.93 - 4,889.21
S&P 500 INDEX (SPX: CBOE)
2,056.15 -4.90 (-0.24%)
Volume: 619,686,000 (above average of 539,313,846)
Range: 2,045.50 - 2,067.15
All three indices are sitting on their respective support levels, and it seems to be significant. While I remain skeptical about the increase in volume is suggesting a rebound as we are expecting the GDP number on Friday.
Commodities
Closing Commodities: WTI Rallies Following Saudi Strikes In Yemen
- The dollar index rallied today off of its overnight lows, which weighed on some commodities
- WTI rallied overnight on Saudi strikes in Yemen. May crude rallied as high as $52.48/barrel and closed the day $2.24 higher at $51.43/barrel
- Nat gas held its losses today following its post-inventory sell-off. May nat gas ended today’s session $0.05 lower at $2.69/MMBtu
- Gold held gains, closing $7.70 higher at $1204.90/oz.
- Meanwhile, May silver ended $0.14 higher to $17.14/oz. Copper slid lower all day as the dollar index gained strength, ultimately ending $0.02 higher at $2.81/lb
Energy Price Action
- May crude oil futures rose $2.24/barrel to $51.43/barrel
- May natural gas closed $0.05 lower at $2.69/MMBtu
- RBOB Gasoline closed $0.04 higher at $1.88/gallon
- Heating oil closed $0.06 higher at $1.78/gallon
Agricultural Price Action
- May corn closed $0.03 lower at $3.91/bushel
- May wheat closed $0.20 lower at $4.99/bushel
- May soybeans closed $0.04 lower at $9.74/bushel
- Ethanol closed $0.01 lower at $1.49/gallon
- Sugar #11 closed 0.18 cents higher at 12.34 cents/lb
Metals Price Action
- Apr gold ended today’s session $7.70 higher at $1204.90/oz
- May silver closed $0.14 higher at $17.14/oz
- May copper closed $0.02 higher at $2.81/lb
Currencies
- The U.S. Dollar Index rallied today, up 52 ticks (0.54%) to 97.50. Initial jobless claims and continuing claims came out mostly in line with expectations, but Treasuries sold off sharply, perhaps drawing global investors into the dollar with higher yields
- EUR/USD sold off sharply, down 97 pips (-0.89%) to $1.0869. This move is hard to rationalize with the positive GfK German Consumer Climate Index report out of Germany
- Aussie and Kiwi continued their 3-day sell-off, despite gains in hard commodity prices. Iron ore, a major export for Australia, did however fall 0.26% to $57.57/dry metric ton
- AUD/USD: -12 pips (-0.16%) to $0.7818
- NZD/USD: -21 pips (-0.29%) to $0.7572
- The loonie fell despite large gains in oil prices on the back of unrest in Yemen
- WTI Crude rallied $1.94 (3.94%) to $51.15/bbl
- USD/CAD: -41 pips (-0.33%) to $1.2481
- Dollar/Yen rallied after the pressure in equities subsided around 07:00 ET, although it still ended red
- USD/JPY: -27 pips (-0.22%)
- Cable fell despite a better-than-expected rise in U.K. retail sales for February. They rose 0.7% m/m, versus 0.1% in January
- GBP/USD: -38 pips (-0.26%) to $1.4843
Belly and Long End of Curve Down Sharply
- Treasuries followed through on yesterday's selling today in a curve-steepening trade. The 2-year note only rose 1 basis point, to the 30-year's 9-basis point increase
- The Treasury complex had every reason to go higher yesterday, with the major U.S. equity indices losing at least 1.5%. The failure to rally yesterday, in such a favorable environment for government bonds, may have dented investor sentiment
- Yield check:
- 2-yr: +1 bp to 0.62%
- 5-yr: +5 bps to 1.47%
- 10-yr: +8 bps to 2.01%
- 30-yr: +9 bps to 2.60%
- News:
- Initial Jobless Claims came in slightly better than expected at 282K, versus a Briefing.com consensus of 290K and 291K for the prior week
- Continuing Claims were 2416K, versus a Briefing.com consensus of 2415K and a prior number of 2422K (revised up from 2417K)
- The Treasury complex sold in reaction
- Atlanta Fed President Lockhart did an interview on CNBC's "Squawk Box," saying that economic growth in the first quarter appears very soft
- He also said that liftoff in rates should be at the June, July, or September meeting
- Dennis Lockhart is considered a moderate member of the FOMC, and he is a voter
- The $29 billion 7-year note auction met tepid demand, much like the $35 billion 5-year auction yesterday, with a bid-to-cover ratio that was lower than we've seen in years
- High yield: 1.792%
- Bid-to-cover ratio: 2.32
- Indirect bid: 50.5%
- Commodities:
- WTI Crude has rallied sharply over the past 2 days on geopolitical trouble in Yemen
- Saudi Arabia has initiated airstrikes on Houthi rebel forces
- President Abdu Rabbu Mansour Hadi has gone into hiding
- Yemen exports less than 150k barrels of crude oil per day, but its strategic location next to the strait through which Saudi Arabia exports its oil to Asia has concerned the oil market
- Gold rose $5.50 (0.46%) to $1202.50/troy oz.
- Copper rose 0.47% to $2.81/lb.
- WTI Crude has rallied sharply over the past 2 days on geopolitical trouble in Yemen
- Currencies:
- EUR/USD: -86 pips (-0.78%) to %1.0880
- USD/JPY: -28 pips (-0.23%) to 119.24
- Data Out Friday:
- Q4 GDP and GDP Deflator (3rd Estimate) (08:30 ET)
- March Michigan Consumer Sentiment -- Final (10:00 ET)
- 2 Year Note 0.61% +0.02
- 5 Year Note 1.47% +0.06
- 10 Year Note 2.01% +0.08
- 30 Year Bond 2.60% +0.10
2/30 Spread: 199 bps ( +8 ) … 2/10 Spread: 140 bps ( +6 )
Preview for Friday 26 Mar, 2015
Friday (27 Mar) :
- 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
Friday (27 Mar) :
BMO - BBRY CCL FINL
BMO - BBRY CCL FINL
AMC - None Scheduled
Summary
Market looks relatively flat ahead of GDP number on Friday. That is going to make the market go around. With the uncertainty in oil prices, that will add on the volatility in the market.
At this point in time I am not holding any positions open (closed on yesterday) and I am looking closely at the market to see the situation before I make my trade again. I reckon the market is likely to go looking at technical but if it doesn't the sliding is going to continue. On the other hand, the GDP number is likely to disrupt the technical analysis too...
At this point in time I am not holding any positions open (closed on yesterday) and I am looking closely at the market to see the situation before I make my trade again. I reckon the market is likely to go looking at technical but if it doesn't the sliding is going to continue. On the other hand, the GDP number is likely to disrupt the technical analysis too...
Direction for Friday 27 Mar, 2015; Up
2015 Daily Directional Accuracy: 21/43 (48.84%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
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