Dow -332.78 at 17662.94, Nasdaq -82.64 at 4859.80, S&P -35.26 at 2044.17
Well that doesn't really count as a surprise for me as Monday session shown some divergence which brings about the sell off. Market is looking defensive as all sectors in red except utilities. However many have been saying the sell off was mainly due to the rise in dollar. In my opinion, I am not sure is this a temporary sell off or are there more to come?
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
Market Summary
Industry Watch
Strong: Utilities
Weak: Consumer Discretionary, Financials, Industrials, Materials, Technology
Other Market Moving Factor:
- Dollar Index reaches fresh 12-year high: +3.0% month-to-date; +8.5% quarter-to-date
- S&P 500 slides below 50-day moving average (2061)
[BRIEFING.COM] The stock market endured a daylong selloff on Tuesday with the S&P 500 (-1.7%) sliding below its 50-day moving average. The benchmark index surrendered its Q1 gain and is now down 0.7% since the end of 2014 while the Dow (-1.9%) underperformed.
Equities stumbled out of the gate after the Dollar Index (98.60, +1.01) continued its charge, climbing to a fresh 12-year high during overnight action. The index spent the morning near its overnight high and built on that gain into the afternoon. The greenback strength sent the euro into the 1.0700 area while the Dollar Index extended its March gain to 3.4%.
The continued greenback strength fueled concerns about the earnings prospects of multinational companies while also putting pressure on overseas entities that conduct their dealings in dollars. As a result, a wave of recent downward earnings revisions has lowered 2015 EPS growth expectations to just 1.1% from 9.8% on December 1, according to S&P Capital IQ.
The diminished prospects for solid earnings growth broadsided the six growth-sensitive sectors while countercyclical groups did not fare much better. Sellers remained in control throughout the day with the two largest sectors by weight—technology (-2.2%) and financials (-2.1%)—pacing the retreat.
Large cap tech names like Apple (AAPL 124.56, -2.58), Google (GOOGL 559.85, -14.25), and Facebook (FB 77.57, -1.87) lost between 2.0% and 2.5% while Qualcomm (QCOM 71.88, -0.82) outperformed, falling 1.1%, after announcing a $15 billion repurchase program and increasing its quarterly cash dividend to $0.48/share from $0.42/share.
Elsewhere among cyclical sectors, the consumer discretionary space ended in-line with the broader market, but that masked an 11.5% surge in the shares of Urban Outfitters (URBN 44.06, +4.55) after the apparel retailer beat bottom-line estimates and reported revenue in-line with its warning from February 9.
Also of note, the energy sector (-1.4%) represented the lone outperformer on the cyclical side even though crude oil fell 3.1% to $48.40/bbl.
On the countercyclical side, the utilities sector (-0.2%) settled just below its flat line after failing to hold its intraday gain. Still, the group ended atop today's leaderboard, benefitting from bond strength that pressured the 10-yr yield to 2.13% (-6 bps).
Today's participation was ahead of recent averages with more than 830 million shares changing hands at the NYSE floor.
Economic data was limited to Wholesale Inventories and JOLTS:
- Wholesale inventories increased 0.3% in January after a downward revision revealed no change (from +0.1%) in December
- The Briefing.com consensus expected a decline of 0.1%
- Surprisingly, the sharp drop in petroleum prices did not lead to a large decline in petroleum inventories. These inventories only declined 1.1% in January after declining 7.2% in December. Altogether, nondurable goods inventories declined a modest 0.1% in January.
- The January Job Openings and Labor Turnover Survey showed that job openings increased to 4.998 million from 4.877 million
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei -0.7%; Hong Kong’s Hang Seng -0.9%; China’s Shanghai Composite -0.5%
Markets in the Asia Pacific region were mostly lower following some mixed inflation data out of China that was highlighted by a 4.8% year-over-year decline in producer prices.
Economic data
- Japan
- Machine Tool Orders +28.9% year-over-year (prior +20.4%)
- M2 Money Stock +3.5% year-over-year (expected 3.5%; prior 3.4%)
- China
- February CPI +1.2% month-over-month (expected 0.8%; prior 0.3%); +1.4% year-over-year (expected 0.9%; prior 0.8%)
- February PPI -4.8% year-over-year (expected -4.3%; prior -4.3%)
- Indonesia
- January Retail Sales +10.4% year-over-year (prior +3.3%)
- Australia
- February NAB Business Confidence 0.0 (prior 3.0)
Equity Markets
- Japan’s Nikkei declined 0.7% after surrendering early gains. Weakness was paced by the basic materials (-1.2%), communications (-1.2%), and financial (-0.9%) sectors. Nippon Paper Industries (-4.4%), Inpex Corp (-3.6%), JGC Corp (-3.5%), Mitsui Engineering & Shipbuilding (-3.4%), and Aozora Bank (-3.3%) were the biggest decliners.
- Hong Kong’s Hang Seng dropped 0.9% and ended near its lows for the session. Losses were paced by the communications (-1.4%) and financial (-0.6%) sectors. Top losers included Galaxy Entertainment (-4.8%), Sands China (-3.7%), China Unicom Hong Kong (-3.3%), Lenovo Group (-3.0%), and China Resources Enterprise (-2.5%).
- China’s Shanghai Composite declined 0.5%, pulled lower by a weak outing from the financial sector. Bank of Beijing Co (-3.9%) was a notable loser along with Sinovel Wind Group (-5.0%), Hubei Xingfa Chemicals Group (-4.3%), China CNR Corp (-4.0%), and Changshu Fengfan Power Equipment Co (-3.8%).
- India’s Sensex declined 0.5% on the back of a weak showing from the financial (-1.9%) and consumer non-cyclical (-1.1%) sectors. Housing Development Finance Corp (-3.6%), Hindustan Unilever (-2.1%), Hindalco Industries (-2.1%), NTPC Ltd (-0.9%), and Axis Bank Ltd (-0.8%) topped the list of individual decliners.
- Australia’s S&P/ASX posted a fractional gain, drawing support from relative strength in financial shares, which helped offset a weak outing from the resources sector. Other areas exhibiting relative strength included the information technology (+1.0%), telecommunication services (+0.9%), and health care (+0.9%) sectors.
- Regional advancers: Indonesia +0.1%, Philippines +0.1%, Vietnam +0.2%
- Regional decliners: Taiwan -0.3%, South Korea -0.4%, Singapore -0.2%, Malaysia -0.1%, Thailand -1.8%
FX:
- USD/CNY -0.05% at 6.2620
- USD/INR -0.03% at 62.681
- USD/JPY +0.4% at 121.57
EUROPE
Major European indices trade lower across the board with Spain’s IBEX (-1.6%) leading the retreat. European yields have continued their slide to new record lows with Germany’s 10-yr yield down almost six basis points at 0.22%.
- French January Industrial Production +0.4% month-over-month (expected -0.3%; last 1.4%)
- Spain’s Retail Sales +4.1% year-over-year (consensus 2.4%; last 6.5%)
- Italy’s January Industrial Production -0.7% month-over-month (expected 0.2%; previous 0.4%; -2.2% year-over-year (consensus 0.1%; prior 0.1%)
CLOSING PRICES
- UK’s FTSE: -2.5%
- Germany’s DAX: -0.7%
- France’s CAC: -1.1%
- Spain’s IBEX: -1.2%
- Portugal’s PSI: -2.4%
- Italy’s MIB Index: -1.0%
- Irish Ovrl Index: -1.0%
- Greece ASE General Index: + 0.3%
Economic Data
from Briefing.com
- JOTLS – Job Openings : 4.998M (Prior 4.877M - Down)
- Wholesale Inventories : 0.3% vs -0.1% (Prior 0.0% - Down)
Highlights
- Wholesale inventories increased 0.3% in January after a downward revision revealed no change (from +0.1%) in December. The Briefing.com Consensus expected wholesale inventories to decline 0.1%.
Key Factors
- Surprisingly, the sharp drop in petroleum prices did not lead to a large decline in petroleum inventories. These inventories only declined 1.1% in January after declining 7.2% in December. Altogether, nondurable goods inventories declined a modest 0.1% in January.
- The small decline in nondurable inventories was more than offset by a 0.6% increase in durable inventories. Large gains were recorded in electrical (+2.4%), autos (+1.6%), and metals (+1.5%).
- Wholesale sales declined 3.1% in January after declining 0.9% in December. While some of the January decline was due to price shifts in oil prices -- petroleum sales fell 13.5% -- weak sales occurred in most of the wholesale sectors.
- The inventory-to-sales ratio spiked to 1.27 in January. That is the largest ratio since it reached that same level in July 2009.
Big Picture
- Wholesale inventories are just one component of total business inventories. Manufacturing and retail inventories make up the rest of total business inventories. The market ignores this release and doesn't pay much attention to the full business inventory release that comes a few days later. Improved inventory management in recent years has reduced the economic swings associated with inventories and has helped produce a long-term downtrend in the inventory-to-sales ratio.
Market Internals
NYSE:
Higher Volumes than the day before – 852.1M vs 742.5M
Decliners outpaced Advancers (adv/dec): 839 / 2269
New Lows outpaced New Highs (highs/lows): 21 / 125
NASDAQ:
Higher Volumes than the day before – 1857.5M vs 1689.7M
Decliners outpaced Advancers (adv/dec): 675 / 2098
New Lows outpaced New Highs (highs/lows): 47 / 99
VOLATILITY S&P500 (VIX)
16.69 +1.63 (+10.82%)
Well we see the volume start picking up and it just indicates more bearish (or is it?). VIX spiked up as it continues to show more fear or cautious in the market. Despite that I still hold my conservation whether the market is in bearish mode already...
Technical Updates
17,662.94 -332.78 (-1.85%)
Volume: 120,445,454 (above average of 95,064,951)
Range: 17,662.94 - 17,989.56
4,859.80 -82.64 (-1.67%)
Volume: 460,955,638 (above average of 450,447,320)
Range: 4,859.80 - 4,903.44
Range: 4,859.80 - 4,903.44
S&P 500 INDEX (SPX: CBOE)
2,044.16 -35.27 (-1.70%)
Volume: 618,042,000 (above average of 536,062,862)
Range: 2,044.16 - 2,076.14
From the technicals, the indices broke below their respective support levels and it also aligns with the MACD momentum. It looks like the market is continue going downhill. However NASDAQ seems to be lagging from DOW and S&P, so I think we might see more action from the tech industry.
Commodities
Closing Commodities: WTI Crude Ends Below $49/Barrel
- The dollar index continues to hold its gains, which has been weighing on most commodities today
- Natural gas futures traded higher all day today and ended pit trading $0.06 higher to $2.73/MMBtu
- WTI crude oil slid lower and fell as low as $48.20/barrel. Apr crude closed near that LoD, ending $1.56 lower at $48.40/barrel
- Apr gold finished floor trading $6.50 lower at $1160.10/oz, while May silver lost $0.15 to $15.64/lb
- May corn gained $0.05 to $3.88/bushel following bullish USDA WASDE numbers.
Energy Price Action
- Apr crude oil futures fell $1.56/barrel to $48.40/barrel
- Apr natural gas rose $0.06 to $2.73/MMBtu
- RBOB Gasoline fell $0.05 to $1.82/gallon
- Heating oil closed $0.03 lower to $1.81/gallon
Agricultural Price Action
- May corn closed $0.05 higher at $3.88/bushel
- May wheat closed flat at $4.94/bushel
- May soybeans closed $0.04 lower at $9.84/bushel
- Ethanol closed flat at $1.47/gallon
- Sugar #11 closed 0.25 cents lower at 13.02 cents/lb
Note:
- Corn: The USDA released its March WASDE report, which forecast a 2.7% drop in corn inventory to 1.777 bln bushels; forecast for global corn inventory dropped 2.3% to 185.28 mmt
Metals Price Action
- Apr gold ended today’s session $6.50 lower at $1160.10/oz
- Mar silver closed $0.15 lower at $15.64/oz
- May copper closed $0.05 lower at $2.62/lb
Currencies
U.S. Dollar Index Rises:
- The U.S. Dollar rose against every other major except for the Yen today, as negative yields in Europe prompted investors to eschew their euro for dollars and commodity prices declined
- EUR/USD fell 123 pips or 1.13% to $1.0720 to its lowest level since 2003
- The yield on Germany's 10-year Bund fell 9 bps to 0.19%, leading fixed-income investors to seek yield elsewhere
- $/Yen traded a fresh 7-year high at 122.01, before giving back the gains and falling 32 pips (-0.26%) to 121.11
- The pound sterling fell only 16 pips (-0.1%) to $1.5089
- The commodity currencies all lost ground against the dollar
- WTI Crude fell $1.43 (-2.86%) to $48.57/bbl
- AUD/USD fell 60 pips (-0.78%) to $0.7625
- NZD/USD declined 69 pips (-0.94%) to $0.7271
- USD/CAD rose 37 pips (0.29%) to 1.2661
Treasuries Rally Sharply:
- The Treasury complex rose today to pre-February employment report levels, as U.S. equity losses and declining yields in Europe encouraged investors to seek safety and yield in U.S. governments
- The curve flattened sharply with 2's/10's down 6 bps to 144 bps and 5's/30's fell 4 bps to 111 bps
- Yield check:
- 2-yr: -1 bp to 0.68%
- 5-yr: -4 bps to 1.61%
- 10-yr: -7 bps to 2.12%
- 30-yr: -8 bps to 2.72%
- The ECB's quantitative easing program had not been properly priced into European sovereign yields, and even yields in France and Germany have fallen dramatically over the past two days. Just today, French and German 10-year notes were down 8 and 9 basis points respectively
- Negative nominal yields prevail in all German debt maturities up to 7 years
- January Wholesale Inventories came in ahead of expectations (Actual 0.3%, Briefing.com consensus -0.1%, prior 0.0%), but that did little to temper demand for Treasuries
- The $24 billion 3-year note auction was met with solid demand. The high yield was 1.104%, the bid-to-cover ratio was 3.33, and the indirect bid was 51.4%
- Commodity Prices:
- WTI Crude fell sharply, down $1.44 (-2.84%) to $48.61/bbl
- Copper fell, along with all metals, ending down 5 cents (-1.80%) to $2.62/lb.
- Gold fell $6.30 (-0.54%) to $1160.2/troy oz.
- Currencies:
- EUR/USD: -145 pips (-1.34%) to $1.0699
- $/Yen: -31 pips (-0.26%) to 121.13
- Data Out Wednesday:
- MBA Mortgage Index for the week ending 3/7 (07:00 ET)
- Crude Oil Inventories (10:30 ET)
- February Treasury Budget (14:00 ET)
- New Supply
- $21 billion 9-year 11-month auction (reopening) (13:00 ET)
Treasury Yields:
- 2 Year Note 0.70% UNCH
- 5 Year Note 1.62% -0.04
- 10 Year Note 2.14% -0.06
- 30 Year Bond 2.73% -0.07
2/30 Spread: 203 bps ( -7 ) … 2/10 Spread: 144 bps ( -6 )
Preview for Wednesday 11 Mar, 2015
Wednesday (11 Mar) :
- MBA Mortgage Index : Prior 0.1%
- Crude Inventories : Prior 10.303M
- Treasury Budget : Prior -$193.5B
Earnings Highlights
Wednesday (11 Mar) :
BMO - BLT BWS EXPR FGP FLY FSYS VRA WRES
BMO - BLT BWS EXPR FGP FLY FSYS VRA WRES
AMC - CHMI CMTL CNAT PLOW HMIN IPAR KKD MW MYRG NEFF OME RST SCLN SHAK TAHO XOMA XNET ZOES
Summary
It is time to stay hedge at this point in time as I believe the market is going to remain volatile amid rate hike speculation. And the ECB's QE is also having some effect on dollar and the bond rate which somehow contributed to the selling on Tuesday. Right now I am staying hedge and watching the market movement. I still think market is lacking a direction and is likely to go sideway for the meantime. Although I must say there should be some short-covering tomorrow after the massive sell off...
Direction for Wednesday 11 Mar, 2015; Up
2015 Daily Directional Accuracy: 15/32 (46.88%)
2015 Weekly Directional Accuracy: 5/7 (71.43%)
2015 Weekly Directional Accuracy: 5/7 (71.43%)
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