Dow -292.60 at 17718.54, Nasdaq -118.21 at 4876.52, S&P -30.45 at 2061.05
No pullback at all! Market tanked throughout the session and this shows how bearish the market at the moment. Although I must say the market is getting defensive now and it is better to be cautious. The Dollar Index continues to go down and this causes the crude oil to spike up somehow. Not to mention the effect from Yemen strike brought the oil price to around $49 and it is likely to continue climbing.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
Market Summary
Industry Watch
Strong: Consumer Staples, Energy, Utilities
Weak: Consumer Discretionary, Financials, Industrials, Technology
Other Market Moving Factor:
- Dollar Index retreats
- High-beta biotechnology and chipmaker names underperform
- Kraft (KRFT) to merge with HJ Heinz
[BRIEFING.COM] The stock market registered its third consecutive decline on Wednesday with the S&P 500 ending lower by 1.5%. The benchmark index settled below its 50-day moving average (2,067) while the Nasdaq Composite (-2.0%) underperformed throughout the day.
The S&P 500 hovered near its flat line during the opening hour, but high-beta groups like biotechnology, chipmakers, and transport stocks began showing weakness early on and continued their retreat throughout the day. As a result, eight sectors settled in the red with five ending behind the benchmark index.
Most notably, the technology sector surrendered 2.7% with chipmakers enduring even more aggressive selling. All 30 components of the PHLX Semiconductor Index (-4.6%) finished in the red with ARM Holdings (ARMH 49.90, -3.31) and Lam Research (LRCX 72.75, -6.01) leading the slide with respective losses of 6.2% and 7.6% while heavyweight Intel (INTC 29.89, -0.90) tumbled 2.9%.
The sharp losses within the tech sector pressured the Nasdaq while biotechnology also weighed on the index. The iShares Nasdaq Biotechnology ETF (IBB 341.30, -14.65) slumped 4.1%, extending its week-to-date loss to 6.9%. Meanwhile, the health care sector (-1.8%) outperformed in the early going, but settled among the laggards. Shares of Merck (MRK 58.26, -0.37) contributed to the opening strength after announcing a new $10 billion share repurchase program, but ended lower by 0.5%. For its part, the health care sector narrowed its March gain to 0.8% while the remaining nine groups are down at least 1.1% for the month (consumer discretionary).
Elsewhere among countercyclical groups, the consumer staples sector (-0.2%) slipped into the red during the final hour, but still finished well ahead of the broader market thanks to a 34.9% surge in the shares of Kraft (KRFT 83.15, +21.83) after the company agreed to merge with H.J. Heinz. KRFT shareholders are expected to receive a special dividend of $16.50 when the deal closes.
Also of note, the industrial sector (-1.7%) lagged throughout the session amid broad weakness in transport stocks. The Dow Jones Transportation Average slid 2.0% to widen its Q1 decline to 4.6%. Airlines paced the retreat with four of five carriers losing more than 3.0%.
On the upside, the energy sector added 1.2% thanks to daylong strength in crude oil that sent the energy component higher by 3.5% to $49.19/bbl. WTI crude received a measure of support from dollar weakness as the Dollar Index (96.88, -0.32) slipped 0.3%.
Interestingly, Treasuries retreated alongside equities with the 10-yr yield climbing five basis points to 1.92%.
Economic data was limited to Durable Orders and MBA Mortgage Index:
- Durable goods orders declined 1.4% in February after increasing a downwardly revised 2.0% (from 2.8%) in January while the Briefing.com consensus expected an increase of 0.4%
- Aircraft orders, which played a major role in the overall orders increase for January, reversed direction in February. Total aircraft orders -- defense and nondefense -- declined 14.0% in February after increasing 68.1% in January
- Excluding transportation, durable goods orders declined 0.4% in February after declining a downwardly revised 0.7% (from 0.0%) in January. The consensus expected these orders to increase 0.3%.
- The weekly MBA Mortgage Index rose 9.5% to follow last week's 3.9% decline
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei +0.2%; Hong Kong’s Hang Seng +0.5%; China’s Shanghai Composite -0.8%
It was another mixed showing from markets in the Asia-Pacific region on Wednesday as Wall Street’s weak finish on Tuesday limited the bullish enthusiasm. China was the weak spot as the Shanghai Composite (-0.8%) saw its ten session winning streak come to an end.
Economic data
- Japan
- Corporate Services Price Index +3.3% year-over-year (expected +3.3%; prior +3.5%
- South Korea
- Q4 GDP revised to 0.3% quarter-over-quarter (expected +0.4%; prior +0.4%); +2.7% year-over-year (expected +2.7%; prior +2.7%)
- New Zealand
- February Trade Balance widened to NZD 50 mln (expected NZD 392 mln; prior NZD 33 mln)
- Japan’s Nikkei increased 0.2%, overcoming mid-session losses and ending near its high for the day. The basic materials (+0.9%), financial (+0.6%), and industrial (+0.2%) sectors were key sources of support. Sojitz Corp (+6.1%), Kajima Corp (+4.7%), and Ricoh Co (+4.7%) led individual gainers while Eisai Co (-5.4%) succumbed to profit taking and paced declining issues. Out of the 225 index members, 132 ended higher, 81 finished lower, and 12 were unchanged.
- Hong Kong’s Hang Seng increased 0.5% and is now up 4.4% year-to-date. The advance was underpinned by strength in the consumer non-cyclical (+2.9%), diversified (+1.7%), and financial (+0.9%) spaces. Hengan Intl (+5.4%), Sands China (+2.3%), and China Overseas Land & Investment Ltd (+2.3%) topped the list of individual winners. Out of the 50 index members, 30 ended higher, 18 finished lower, and 2 were unchanged.
- China’s Shanghai Composite declined 0.8%, ending its ten session winning streak. Financials were the major weak spot after Agricultural Bank of China checked in with disappointing earnings and noted that it increased its provision for bad loans. Sinopec Oilfield Services (-5.0%) and Loncin Motor Co (-4.9%) were the worst-performing stocks. Following Wednesday’s retreat, the Shanghai Composite is up 13.2% year-to-date.
- India’s Sensex declined 0.2% with a weak showing from the industrial (-2.2%) and energy (-1.0%) sectors acting as an influential drag. The top five individual decliners were NTPC Ltd (-3.5%), GAIL India (-2.5%), Larsen & Toubro (-2.4%), Coal India (-2.2%), and State Bank of India (-1.9%). Tata Motors (+1.8%) led all gainers.
- Australia’s S&P/ASX 200 increased 0.1%, drawing support from the consumer discretionary (+0.5%) and financial (+0.4%) sectors. The S&P/ASX 200 is up 10.4% year-to-date.
- Regional advancers: South Korea +0.1%, Singapore +0.2%, Malaysia +0.3%, Philippines +0.1%
- Regional decliners: Taiwan -0.7%, Thailand -0.1%, Indonesia -0.8%, Vietnam -1.2%
FX
- USD/CNY +0.1% at 6.2110
- USD/INR +0.1% at 62.404
- USD/JPY -0.2% at 119.57
EUROPE
Major European indices trade lower across the board with Spain’s IBEX (-1.1%) leading the retreat.
- Germany’s Ifo Business Climate rose to 107.9 from 106.8 (expected 107.3) as Business Expectations improved to 103.9 from 102.5 (consensus 103.0) while Current Assessment rose to 112.0 from 111.3, as expected
- UK’s BBA Mortgage Approvals came in at 37,300 (expected 36,900; last 36,500)
- French Business Survey slipped to 99 from 100, as expected
- Spain’s PPI -1.6% year-over-year (expected -1.8%; prior -2.8%)
CLOSING PRICES
- UK’s FTSE: -0.4%
- Germany’s DAX: -1.0%
- France’s CAC: -1.2%
- Spain’s IBEX: -0.8%
- Portugal’s PSI: -0.8%
- Italy’s MIB Index: -0.8%
- Irish Ovrl Index: -0.9%
- Greece ASE General Index: Closed
Macroeconomic Data
Economic Data
from Briefing.com
- MBA Mortgage Index : 9.5% (Prior -3.9%)
- Durable Orders : -1.4% vs 0.4% (Prior 2.0% - Down)
- Durable Goods - ex transportation : -0.4% vs 0.3% (Prior -0.7% - Down)
- Crude Inventories : 8.170M (Prior 9.622M)
DURABLE ORDERS
Highlights
- Durable goods orders declined 1.4% in February after increasing a downwardly revised 2.0% (from 2.8%) in January. The Briefing.com Consensus expected durable goods orders to increase 0.4%.
- Excluding transportation, durable goods orders declined 0.4% in February after declining a downwardly revised 0.7% (from 0.0%) in January. The consensus expected these orders to increase 0.3%.
Key Factors
- Aircraft orders, which played a major role in the overall orders increase for January, reversed direction in February. Total aircraft orders – defense and nondefense – declined 14.0% in February after increasing 68.1% in January.
- The latest regional manufacturing surveys were extremely downbeat and the national ISM New Orders Index fell to a 23-month low in February. The actual hard orders data confirmed the weakness represented in those surveys.
- Nearly every major durable goods manufacturing sector saw a decline in orders in February. Only primary metals (+1.0%) and electrical equipment, appliances, and components (+4.1%) were in the black.
- It’s hard to blame weather conditions for the decline in orders. Shipments of durable goods excluding aircraft – which is a measure of production and requires workers to be physically in the factories – were only down a modest 0.1% in February after declining 1.5% in January.
- Business investment demand weakened considerably in February. Orders of nondefense capital goods excluding aircraft declined 1.4% after declining only 0.1% in January. That was the largest contraction in business capital goods since declining 1.9% in October 2014.
- The impact of falling demand on first quarter GDP growth, however, will be limited. Shipments of nondefense capital goods excluding aircraft managed a small 0.2% increase in February after declining 0.4% in January.
Big Picture
- Orders of nondefense capital goods excluding aircraft, a proxy for business investment, have declined for the past 6 consecutive months.
Market Internals
NYSE:
Higher Volumes than the day before – 791.0M vs 749.6M
Decliners outpaced Advancers (adv/dec): 809 / 2257
New Highs outpaced New Lows (highs/lows): 83 / 14
NASDAQ:
Higher Volumes than the day before – 2189.7M vs 1601.8M
Decliners outpaced Advancers (adv/dec): 534 / 2263
New Highs outpaced New Lows (highs/lows): 68 / 42
VOLATILITY S&P500 (VIX)
15.44 +1.82 (+13.36%)
I would say market internals remain bearish still. With the volume coming in, this makes the bearish more convincing. One point to note will be the New Highs are relatively higher than New Lows, but it looks like falling as well. VIX took a huge spike to above 15.00 and this certainly put the seatbelt on.
Technical Updates
17,718.54 -292.60 (-1.62%)
Volume: 106,593,805 (above average of 95,195,600)
Range: 17,718.54 - 18,041.97
4,876.52 -118.21 (-2.37%)
Volume: 518,105,413 (above average of 440,709,739)
Range: 4,876.52 - 5,006.76
Range: 4,876.52 - 5,006.76
S&P 500 INDEX (SPX: CBOE)
2,061.05 -30.45 (-1.46%)
Volume: 582,073,000 (above average of 529,780,215)
Range: 2,061.05 - 2,097.43
All the three indices formed a huge bearish candle. It looks like they are hitting their respective trend lines and that might give us some pullback.
Commodities
Closing Commodities: WTI Rallies Above $49/Barrel, Nat Gas Falls
- WTI crude oil futures rallied today in afternoon trading, climbing as high as $49.46/barrel
- May crude finished today’s pit trading session $1.66 higher at $49.19/barrel
- However, oil is pulling back in electronic trade and is now +3% at $48.92/barrel
- Natural gas futures remained consolidated after sliding lower this morning, ending today’s session $0.07 lower at $2.74/MMBtu
- Apr gold rose $5.70 today to $1197.20/oz, while May silver gained +$0.06 at $17.00/oz
Energy Price Action
- May crude oil futures rose $1.66/barrel to $49.19/barrel
- May natural gas closed $0.07 lower at $2.74/MMBtu
- RBOB Gasoline closed $0.04 higher at $1.84/gallon
- Heating oil closed $0.02 higher at $1.72/gallon
Agricultural Price Action
- May corn closed $0.01 higher at $3.94/bushel
- May wheat closed $0.05 lower at $5.19/bushel
- May soybeans closed $0.04 lower at $9.78/bushel
- Ethanol closed $0.01 lower at $1.50/gallon
- Sugar #11 closed 0.07 cents higher at 12.52 cents/lb
Metals Price Action
- Apr gold ended today’s session $5.70 higher at $1197.20/oz
- May silver closed $0.06 higher at $17.00/oz
- May copper closed $0.01 lower at $2.79/lb
Currencies
- EUR/USD rose 58 pips (0.53%) to $1.0971 today, encouraged by an IFO Business Climate Index in Germany that beat expectations. The reading for March was 107.9, versus 106.8 in February. Following the weak durable goods number in the U.S., the pair failed to make any progress
- GBP/USD rallied 37 pips (0.25%) to $1.4883 on news that 37,305 new home loans were approved in February, better than expectations and the 36,517 in January
- USD/JPY fell 24 pips (-0.20%) to 119.51 after trading as low as 119.24 following the bad durable goods number
- Aussie and Kiwi peaked at 08:30 ET, an hour before U.S. equities began to go sour, and traded down for the rest of the session
- AUD/USD: -25 pips (-0.31%) to $0.7848
- NZD/USD: -16 pips (-0.21%) to $0.7620
- USD/CAD: +7 pips (0.06%) to 1.2510
- USD/CHF: +22 pips (0.23%) to 0.9613
Governments Decline:
- The 30-year had its biggest decline today since the release of the February employment report, despite an ugly day for U.S. equities. Treasuries of all maturities traded lower, as traders and investors booked profits from a 13-day rally and a 5-year auction met with lackluster demand
- Yield check:
- 2-yr: +1 bp to 0.60%
- 5-yr: +5 bps to 1.41%
- 10-yr: +5 bps to 1.92%
- 30-yr: +4 bps to 2.50%
- News:
- The MBA Mortgage Index rose 9.5% last week, versus a decline of 3.9% for the week prior
- Durable Goods Orders for the month of February fell 1.4%, versus the Briefing.com consensus of +0.4% and the January number of -2.0%, which was revised down from 2.8%. Durable Goods Orders excluding transportation were -0.4%, versus the Briefing.com consensus of 0.3% and the January reading of -0.7%, revised down from 0.0%
- The latest regional manufacturing surveys were extremely downbeat and the national ISM New Orders Index fell to a 23-month low in February. The actual hard orders data confirmed the weakness represented in those surveys
- Aircraft orders, which played a major role in the overall orders increase for January, reversed direction in February
- Nearly every major durable goods manufacturing sector saw a decline in orders in February
- The $35 billion 5-year note auction met tepid demand, with an unconvincing bid-to-cover ratio of 2.35
- High yield: 1.387%
- Bid-to-cover: 2.35
- Indirect bid: 56.7%
- Commodities:
- WTI Crude rallied $1.53 (3.22%) to $49.04/bbl
- Copper fell 1 cent to $2.79/lb.
- Gold rose $4.10 (0.34%) to $1195.5/troy oz.
- Currencies:
- EUR/USD: +50 pips (0.46%) to $1.0964
- USD/JPY: -20 pips (-0.17%) to 119.54
- Data Out Thursday:
- Initial and Continuing Jobless Claims (08:30 ET)
- Natural Gas Inventories (10:30 ET)
- New Supply:
- $29 billion 7-year note auction (results at 13:00 ET)
- Fed Speakers:
- St. Louis Fed President Bullard (non-FOMC voter) gives public lecture on economy and monetary policy (04:35 ET)
- Atlanta Fed President Lockhart (FOMC voter) participates in discussion on monetary policy and the economic outlook (09:00 ET)
Treasury Yields:
- 2 Year Note 0.59% +0.01
- 5 Year Note 1.41% +0.04
- 10 Year Note 1.93% +0.05
- 30 Year Bond 2.50% +0.04
2/30 Spread: 191 bps ( +3 ) … 2/10 Spread: 134 bps ( +4 )
Preview for Thursday 26 Mar, 2015
Thursday (26 Mar) :
- Initial Claims : 293K (Prior 291)
- Continuing Claims : 2425K (Prior 2417K)
- Natural Gas Inventories : (Prior -45 bcf)
Earnings Highlights
Thursday (26 Mar) :
BMO - ACN CVGW CMGE CMC CAG DANG FRED LE LULU MEA MOV NEOG SCHL SIG SPCB WGO
BMO - ACN CVGW CMGE CMC CAG DANG FRED LE LULU MEA MOV NEOG SCHL SIG SPCB WGO
AMC - AIR CARA GME HGR OXM PRGS REED RH SPKE UPLD
Summary
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
2015 Daily Directional Accuracy: 21/42 (50.00%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
2015 Weekly Directional Accuracy: 6/9 (66.67%)
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