Dow -104.90 at 18011.14, Nasdaq -16.25 at 4994.73, S&P -12.92 at 2091.50
There is a pullback at the start of the session but the increase in selling after midday turned the market into red. The Dollar Index was rather weak lately but it looks like it is going to recover. Nonetheless market is still looking bearish...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.
Direction for Tuesday 24 Mar, 2015; Down
Market Summary
Industry Watch
Strong: Consumer Staples, Technology
Weak: Energy, Financials, Materials, Utilities
Other Market Moving Factor:
- Dollar Index recovers from early morning low
- Biotechnology outperforms
[BRIEFING.COM] The stock market registered its second consecutive decline on Tuesday with the S&P 500 retreating 0.6%. The benchmark index ended in-line with the Dow Jones Industrial Average while the Nasdaq Composite (-0.3%) outperformed slightly.
Equity indices traded near their flat lines through the first half of the session before sliding to lows during afternoon action. All ten sectors finished the day in negative territory with technology (-0.3%) registering the slimmest loss.
Also of note, the Dollar Index (97.15, +0.12) was on track for its third consecutive decline, but an early morning rebound following an in-line CPI report (+0.2%) helped the Index finish with a slim gain. Meanwhile, crude oil endured some intraday volatility before settling higher by 0.1% at $47.51/bbl.
Strikingly, crude's flat finish could not stop the energy sector (-0.8%) from ending the day among the laggards. Notably, Whiting Petroleum (WLL 30.91, -7.48) sank 19.5% after pricing a secondary share and note offering.
Elsewhere among influential sectors, financials (-0.9%) and health care (-0.9%) lagged while the remaining groups settled closer to their flat lines.
The top-weighted countercyclical group—health care—slumped during afternoon action after showing early strength that was fueled by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 355.95, -2.33) was up more than 1.0% in the early going, but settled lower by 0.7% to extend this week's decline to 2.9%.
The afternoon pullback in biotechnology sent the Nasdaq into negative territory, but the index still finished ahead of the broader market thanks to the relative strength among several large cap names. Google (GOOGL 577.54, +12.17) was a clear standout, surging 2.2%, after announcing that Ruth Porat will become the company's new CFO after holding the same position at Morgan Stanley (MS 36.24, -0.07).
Similar to Google, social media names displayed strength with Facebook (FB 85.31, +0.88), LinkedIn (LNKD 264.16, +2.32), and Twitter (TWTR 51.47, +3.01) gaining between 1.0% and 6.2% with Twitter surging to its best level since late October.
In the Treasury market, the 10-yr note spent the bulk of the day near its flat line before spiking to a fresh high in the afternoon. The benchmark yield fell four basis points to 1.87%.
Today's participation was below average with roughly 735 million shares changing hands at the NYSE floor.
Economic data included CPI, FHFA Housing Price Index, and New Home Sales:
- The CPI increased 0.2% in February after decreasing 0.7% in January, which is what the Briefing.com consensus expected.
- An uptick in energy prices catalyzed the first monthly increase in consumer prices since October. Energy prices rose 1.0% in February after declining 9.7% in January. A 2.4% increase in gasoline prices was a main contributor to higher energy prices.
- Food prices increased 0.2% in February after reporting no change in January.
- Excluding food and energy, core CPI increased 0.2% for the second consecutive month while the consensus expected an increase of 0.1%
- The FHFA Housing Price Index for January rose 0.3%, which followed a revised increase of 0.7% (from 0.8%) in December
- New home sales increased 7.8% in February to 539,000 from an upwardly revised 500,000 (from 481,000) in January while the Briefing.com consensus expected a decline to 465,000
- Higher mortgage rates didn't seem to harm sales as 593,000 new homes were sold, representing the highest rate since February 2008
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei -0.2%; Hong Kong’s Hang Seng -0.4%; China’s Shanghai Composite +0.1%
It was a generally mixed showing Tuesday from markets in the Asia-Pacific region. The focal point was the HSBC Flash Manufacturing PMI report for March for China, which hit an 11-month low of 49.2. A number below 50 is reflective of a contraction in manufacturing activity. The data point caused some early upset, but markets ultimately regrouped with China (+0.1%) leading the way on continued speculation that weakening data will invite additional policy stimulus.
Economic data
- China
- March HSBC Flash Manufacturing PMI 49.2 (expected 50.6; prior 50.7)
- Japan
- March Manufacturing PMI 50.4 (expected 52.1; prior 51.6)
- Australia
- CB Leading Index +0.4% month-over-month (prior +0.3%)
- Japan’s Nikkei declined 0.2%, clipped by the stronger yen and weakness in the communications (-0.8%), technology (-0.7%), and industrial (-0.6%) sectors. Leading decliners included JGC Corp (-4.9%), COMSYS Holdings (-3.4%), GS Yuasa Corp (-3.1%), Isuzu Motors (-2.6%), and Fukuoka Financial Group (-2.5%). Out of the 225 index members, 87 ended higher, 131 finished lower, and 7 were unchanged.
- Hong Kong’s Hang Seng declined 0.4% but finished off its lows of the day that followed the weaker than expected PMI report out of China. A 1.1% decline in the energy sector and a sluggish showing from the financial sector (-0.1%) offset a 1.1% gain in the utilities sector. Tingyi Cayman Islands Holding Corp (-2.9%), Ping An Insurance Group (-2.6%), and China Shenhua Energy (-2.1%) paced the decliners while Henderson Land Development Co (+3.7%) and China Overseas Land & Investment (+2.8%) led the winners. Out of the 50 index members, 22 ended higher, 27 finished lower, and 1 was unchanged.
- China’s Shanghai Composite battled back from large losses following the HSBC Manufacturing report, which showed a contraction in manufacturing activity in March, and ended 0.1% higher. That marked the tenth straight advance for the Composite, which has been underpinned by speculation that weakening economic data will invite further policy stimulus. The consumer non-cyclical and consumer cyclical sectors were relative strength leaders.
- India’s Sensex declined 0.1%, surrendering gains in a late-session retreat. The weakest-performing areas were the technology (-0.7%), basic materials (-0.7%), and consumer cyclical (-0.6%) sectors. Tata Motors (-3.5%), Hindalco Industries (-2.2%), and Hindustan Unilever (-1.7%) led individual decliners while Bharti Airtel (+2.8%), GAIL India Ltd (+1.6%, and Dr Reddy’s Laboratories (+1.5%) sat atop the list of individual gainers.
- Australia’s S&P/ASX 200 increased 0.2% in a choppy trading session. The gold (+2.4%), metals & mining (+0.7%), and materials (+0.6%) sectors provided leadership.
- Regional advancers: South Korea +0.2%, Singapore +0.1%, Malaysia +1.0%, Indonesia +0.2%
- Regional decliners: Taiwan -0.3%, Thailand -0.4%, Philippines -0.2%, Vietnam -0.6%
- USD/CNY -0.2% at 6.2053
- USD/INR +0.1% at 62.236
- USD/JPY -0.3% at 119.36
Major European indices trade near their flat lines while Italy’s MIB (+0.9%) outperforms. Elsewhere, Greece is expected to present another list of planned reforms to the Eurogroup by Monday.
- Eurozone Manufacturing PMI rose to 51.9 from 51.0 (expected 51.5) while Services PMI improved to 54.3 from 53.7 (consensus 53.9)
- Germany’s Manufacturing PMI increased to 52.4 from 51.1 (expected 51.5) while Services PMI jumped to 55.3 from 54.7 (expected 55.0)
- France’s Manufacturing PMI rose to 48.2 from 47.6 (consensus 48.5) while Services PMI fell to 52.8 from 53.4, as expected
- UK’s CPI +0.3% month-over-month, as expected; 0.0% year-over-year (expected 0.1%; prior 0.3%). Separately, core CPI +1.2% year-over-year (expected 1.3%; prior 1.4%) and Input PPI -13.5% year-over-year (expected -12.4%; last -14.1%)
- UK’s FTSE: -0.3%
- Germany’s DAX: + 1.0%
- France’s CAC: + 0.8%
- Spain’s IBEX: + 1.2%
- Portugal’s PSI: + 1.1%
- Italy’s MIB Index: + 1.2%
- Irish Ovrl Index: -0.2%
- Greece ASE General Index: + 3.7%
Macroeconomic Data
Economic Data
from Briefing.com
- CPI : 0.2% vs 0.2% (Prior -0.7%)
- Core CPI : 0.2% vs 0.1% (Prior 0.2%)
- FHFA Housing Price Index : 0.3% (Prior 0.7% - Down)
- New Home Sales : 539K vs 470K (Prior 481K)
CPI
Highlights
- The CPI increased 0.2% in February after decreasing 0.7% in January. The Briefing.com Consensus expected consumer prices to increase 0.2%.
- Excluding food and energy, core CPI increased 0.2% for a second consecutive month. The consensus expected these prices to increase 0.1%.
Key Factors
- An uptick in energy prices was a catalyst for causing consumer prices to increase on a monthly basis for the first time since October. Energy prices rose 1.0% in February after declining 9.7% in January. A 2.4% increase in gasoline prices was a main contributor to higher energy prices.
- Food prices increased 0.2% in February after reporting no change in January.
- There hasn’t been much movement in core prices over the last several months. Year-over-year trends have been stable, 1.7% in February, and well below the Fed’s implied CPI target of 2.5%.
- Lackluster income growth will keep core prices from accelerating any time soon.
- In February, a majority of the increase in core prices was the result of a 0.2% in shelter prices. Rent increased 0.3% and owners’ equivalent rent rose 0.2%.
- One bit of unusual news was that medical care services prices declined 0.2% in February. That was the first decline in the index since November 1975.
Big Picture
- CPI growth trends are well below the Fed's target level, and there are very few underlying pressures that would cause these trends to suddenly change.
NEW HOME SALES
Highlights
- New home sales increased 7.8% in February to 539,000 from an upwardly revised 500,000 (from 481,000) in January. The Briefing.com Consensus expected new home sales to decline to 465,000.
Key Factors
- All of the conditions in February were geared to cause a big decline in demand. Inclement weather conditions in the Northeast and Midwest were expected to keep potential buyers away from meeting with builders, and rising mortgage rates were expected make new homes unaffordable.
- Neither underlying factor seemed to play a role in new home demand.
- The weather factor was debunked as sales in the Northeast increased 152.9% in February to 43,000 from 17,000 in January.
- Higher mortgage rates didn’t seem to harm sales in February. Overall, it was the strongest selling month since 593,000 new home were sold in February 2008.
- Like the existing home sector, supply constraints may be keeping sales growth from accelerating even further. At the current sales pace, there are only 4.7 months’ supply available. That is down from 5.1 months’ in January and well below the 6.0 months’ supply kept during normal periods of buying and selling activities.
- The median new home price increased 2.6% y/y to $275,500.
Big Picture
- After a pretty flat 2014, new home sales are showing signs of acceleration.
Market Internals
NYSE:
Higher Volumes than the day before – 749.6M vs 733.7M
Decliners outpaced Advancers (adv/dec): 1329 / 1717
New Highs outpaced New Lows (highs/lows): 100 / 15
NASDAQ:
Higher Volumes than the day before – 1601.8M vs 1591.4M
Decliners outpaced Advancers (adv/dec): 1308 / 1442
New Highs outpaced New Lows (highs/lows): 109 / 27
VOLATILITY S&P500 (VIX)
13.62 +0.21 (+1.57%)
It is not that bearish but internals are still pointing towards bearishness. NASDAQ also starting to reflect the bearish sentiment. VIX is likely to continue its way higher from the candlestick pattern and that would means more downside in the market.
Technical Updates
18,011.14 -104.90 (-0.58%)
Volume: 87,194,431 (below average of 94,215,168)
Range: 18,010.44 - 18,149.24
4,994.73 -16.25 (-0.32%)
Volume: 383,803,547 (below average of 436,559,742)
Range: 4,994.56 - 5,032.48
Range: 4,994.56 - 5,032.48
S&P 500 INDEX (SPX: CBOE)
2,091.50 -12.92 (-0.61%)
Volume: 512,610,000 (below average of 524,468,375)
Range: 2,091.50 - 2,107.63
I think Tuesday session shows the market is having a correction after it failed to test its resistance level. NASDAQ is showing a reversal candlestick pattern while DOW and S&P are sitting on their support level and 20 MA respectively. Maybe we might see a fightback here (Or not)?
Commodities
Closing Commodities: WTI Crude Closes Near Unchanged Line
- WTI crude oil consolidated near the unchanged line in afternoon trade, ultimately closing pit trading $0.09 higher at $47.53/barrel.
- May natural gas was in positive territory all day, finished the session $0.08 higher at $2.81/MMBtu
- Apr gold climbed back to today’s high in afternoon trade, ending pit trading $3.80 higher at $1191.50/oz.
- May silver rose $0.04 to $16.94/oz.
- Copper inched lower in late-day trade, ending floor trading $0.01 higher at $2.80/lb
Energy Price Action
- May crude oil futures rose $0.09/barrel to $47.53/barrel
- May natural gas closed $0.08 higher at $2.81/MMBtu
- RBOB Gasoline closed flat at $1.80/gallon
- Heating oil closed $0.02 lower at $1.70/gallon
Agricultural Price Action
- May corn closed $0.03 higher at $3.93/bushel
- May wheat closed $0.11 lower at $5.24/bushel
- May soybeans closed flat at $9.82/bushel
- Ethanol closed flat at $1.51/gallon
- Sugar #11 closed 0.29 cents lower at 12.45 cents/lb
Metals Price Action
- Apr gold ended today’s session $3.80 higher at $1191.50/oz
- May silver closed $0.04 higher at $16.94/oz
- May copper closed $0.01 higher at $2.80/lb
Currencies
- The Swissy rallied and pound sterling lost today, as the U.S. dollar took a breather from a storm of volatility in March
- The U.K.'s CPI had its smallest increase since the index's inception in 1989 today, remaining unchanged in February from one year ago. Lower inflation would naturally lead the BoE to keep rates lower for longer, therefore discouraging investors and traders from holding pound sterling
- The Swiss franc jumped the most against the euro since January 15th, as traders discarded hope that the SNB would make interest rates even more negative
- GBP/USD: -112 pips (-0.75%) to $1.4849
- EUR/CHF: -119 pips (-1.13%) to 1.0455
- The antipodeans and the Japanese yen remained range-bound, ending little changed
- AUD/USD: -17 pips (-0.21%) to $0.7870
- NZD/USD: -16 pips (-0.21%)
- USD/JPY: -4 pips (-0.04%) 119.61
- EUR/USD: -33 pips (-0.30%) to $1.0919
- US Dollar Index: +15 ticks (0.15%) to 97.18
Government Bonds Make Fresh Highs as Equities Slip:
- Despite some very positive economic data today, Treasuries ended in the green, with longer maturities gaining the most ground
- Yield check:
- 2-yr: -2 bps to 0.55%
- 5-yr: -2 bps to 1.37%
- 10-yr: -4 bps to 1.87%
- 30-yr: -5 bps to 2.46%
- News and Events:
- Headline CPI for February came out in line with expectations at 0.1%, but the core number beat, coming in at 0.2% versus a Briefing.com expectation of 0.1%. While the dollar trade was volatile following the release, Treasuries shrugged off the news
- February New Home Sales beat estimates at 539K versus the Briefing.com consensus of 465K. The January number was also revised up from 481K to 500K
- The tone of the negotiations between Greece and the troika improved, sending Greece's 10-yr yield down 67 bps to 10.65%
- Jeroen Dijsselbloem, head of the Eurogroup, said that progress is being made
- Greece will submit a reform package to the Eurogroup by Monday
- European business activity reached a 46-month high
- The German manufacturing PMI rose to 52.4 in March, from 51.5 in February
- The United Kingdom's consumer price index remained unchanged in February y/y. This was the lowest reading in the history of the index (back to 1989) and sent Gilts rallying and the pound sterling lower
- Commodity prices:
- WTI Crude fell 1 cent (-0.02%) to $47.44/bbl
- Copper remained unchanged at $2.79/lb.
- Gold rallied $4.50 (0.38%) to $1192.20
- Data Out Tomorrow:
- MBA Mortgage Index for the week ending 3/21 (07:00 ET)
- February Durable Goods Orders and Durable Goods Orders ex-transportation 08:30 ET)
- Crude Inventories (10:30 ET)
- Fed Speakers:
- Chicago Fed President Evans (FOMC voter) speaks before the Official Monetary and Financial Institutions Forum (06:30 ET)
- New Supply
- $35 billion 5-year note auction (results at 13:00 ET)
- 2 Year Note 0.58% -0.02
- 5 Year Note 1.37% -0.04
- 10 Year Note 1.88% -0.04
- 30 Year Bond 2.46% -0.05
2/30 Spread: 188 bps ( -3 ) … 2/10 Spread: 130 bps ( -2 )
Preview for Wednesday 25 Mar, 2015
Wednesday (25 Mar) :
- MBA Mortgage Index : (Prior -3.9%)
- Durable Orders : 0.5% (Prior 2.8%)
- Durable Goods - ex transportation : 0.3% (Prior 0.0%)
- Crude Inventories : (Prior 9.622M)
Earnings Highlights
Wednesday (25 Mar) :
BMO - APOL BRG DXLG FRAN IKGH LDOS LNN PAYX YGE
BMO - APOL BRG DXLG FRAN IKGH LDOS LNN PAYX YGE
AMC - FIVE FNV FUL OTIV PSUN PVH RHT TGB USDP VRNT VTAE WOR
Summary
I feel the market is generally bearish at this point in time. But it is not surprised for me to see if the market gets a slight pullback tomorrow. On the technical side we should see more downside in the short run but have to pay attention to the internals as well. And watch out for third candle reversal as well.
Direction for Wednesday 25 Mar, 2015; Up
2015 Daily Directional Accuracy: 21/41 (51.22%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
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