14 Apr 2015

Monday, 13 Apr 2015 - AMC



Dow -80.61 at 17977.04, Nasdaq -7.73 at 4988.25, S&P -9.63 at 2092.43


Market is showing quite a upside in last week. However looking into the internals, I see more divergence instead. Maybe we might see some profit taking next week. I feel the big boys are not much active as well, perhaps their involvement will be a catalyst to the market (whether be it down or up).

 Next week we will have more economic data releasing and Fed's Beige book too. I suppose market is going to be more volatile. That to be said, April is usually the most bullish month of the year.

Direction for Monday 13 Apr, 2015; Down

We start to see some profit taking and I think we might see even more of it. Market could not hold on to its resistance and went below after the second half of the session.                

Market Summary

Industry Watch
Strong: Financials, Technology. Telecom Services

Weak: Industrials, Energy, Utilities

Other Market Moving Factor:
  • Dollar Index tests March high
  • Biotechnology outperforms
  • Some reservations with the rush of the first quarter earnings reporting period starting this week

    [BRIEFING.COM] The major averages began the new trading week on a lower note. The S&P 500 surrendered 0.5% after spending the day in a steady retreat from its opening high while the Nasdaq Composite shed 0.2% after showing relative strength throughout the day. 

    All in all, the Monday session was very quiet with the S&P 500 spending the day inside a 15-point range. Investors did not receive any noteworthy data or earnings, but that will change as the week wears on. 

    Today, however, the S&P 500 appeared to be on track for its fourth consecutive advance, but the index hit resistance during the opening hour and retreated into the afternoon. A handful of heavily-weighted sectors displayed early strength, but the financial sector (+0.3%) was the only group left in the green when the session ended. 

    Elsewhere, the top-weighted technology sector (-0.3%) ended ahead of the broader market, but could not avoid turning negative. Large cap names like Apple (AAPL 126.85, -0.25), Google (GOOGL 548.64, +0.10), and Microsoft (MSFT 41.76, +0.04) held up well while chipmakers struggled with the PHLX Semiconductor Index losing 0.6%. 

    Still, the relative strength in the technology sector helped the Nasdaq spend the day ahead of the S&P 500. The index also drew support from biotechnology with the iShares Nasdaq Biotechnology ETF (IBB 358.32, +0.88) adding 0.2%. The biotech ETF registered its sixth consecutive gain after being up more than 1.0% in the early going. Conversely, the health care sector (-0.6%) ended among the laggards despite showing relative strength early. 

    Similar to health care, two other countercyclical sectors—consumer staples (-0.5%) and utilities (-1.0%)—underperformed while telecom services shed 0.2%. 

    Moving back to the cyclical side, the energy sector contributed to the early strength, but reversed to end lower by 0.8% even as crude oil settled higher by 0.5% at $51.91/bbl after testing the $53.00/bbl level. 

    Also of note, industrials (-1.1%) settled behind the remaining nine sectors as General Electric (GE 27.63, -0.88) weighed. The largest sector component fell 3.1% after spiking 10.8% on Friday. 

    Treasuries registered modest gains after climbing off their overnight lows. The 10-yr note ended on its high with the benchmark yield down two basis points at 1.93%. 

    Today's participation matched recent averages with more than 650 million shares changing hands at the NYSE floor. 

    Economic data was limited to the Treasury Budget statement for March, which showed a deficit of $53.00 billion (Briefing.com consensus -$44.00 billion). The Treasury data are not seasonally adjusted, so the March deficit cannot be compared to the $36.90 billion deficit recorded in February. 

    Tomorrow, the March Retail Sales report (Briefing.com consensus 1.0%) and March PPI (consensus 0.2%) will be released at 8:30 ET while February Business Inventories (consensus 0.3%) will be reported at 10:00 ET.

     Global Market

    ASIA

    Asian Markets Close: Japan’s Nikkei flat; Hong Kong’s Hang Seng +2.7%; China’s Shanghai Composite +2.2%
    Markets in the Asia-Pacific region finished mostly higher on Monday. Hong Kong’s Hang Seng Index and China’s Shanghai Composite continued their bull runs, rallying 2.7% and 2.2%, respectively in the face of weaker than expected trade data out of China. The latter reportedly left traders inclined to think further policy stimulus will be provided.

    Economic data
    • Japan
      • February Core Machinery Orders -0.4% month-over-month (expected -2.8%; prior -1.7%); +5.9% year-over-year (expected +3.7%; prior +1.9%)
      • M2 Money Stock +3.6% year-over-year (expected +3.6%; prior +3.5%)
    • China
      • March Trade Balance $3.08 bln (expected $45.4 bln; prior $60.6 bln)
      • Exports -15.0% year-over-year (expected +12.0%; prior +48.3%)
      • Imports -12.7% year-over-year (expected -11.7%; prior -20.5%)
    • South Korea
      • March Export Price Index -6.8% year-over-year (prior -8.1%)
      • March Import Price Index -17.1% year-over-year (prior -17.8%)

    Equity Markets
    • Japan’s Nikkei drifted through Monday’s trade and ended basically flat for the session. Gains in the communications (+0.9%) and energy (+0.3%) sectors were offset by weakness in the financial (-0.8%) and consumer non-cyclical (-0.8%) sectors. Nippon Electric Glass Co (+17.7%) and Mitsumi Electric Co (+7.2%) led all gainers while Kikkoman Corp (-3.6%) and Tokyo Gas Co (-3.5%) paced the losers. Out of the 225 index members 95 finished higher, 118 ended lower, and 12 were unchanged.
    • Hong Kong’s Hang Seng surged another 2.7% and closed at its high for the session. The Hang Seng has soared a little over 3500 points, or 14.4%, over its last eight trading sessions with mainland investors helping to power the move. Monday’s advance was led by the financial (+4.5%) sector. Hong Kong Exchanges and Clearing (+19.4%), Kunlun Energy Corp (+11.5%), Bank of China (+8.6%), and China Construction Bank (+7.8%) topped the list of winners. Out of the 50 index members, 30 ended higher, 15 closed lower, and 5 were unchanged.
    • China’s Shanghai Composite jumped 2.2% in the wake of weaker than expected trade data for March, which fueled a trade based on the notion that further policy stimulus will be provided. The consumer non-cyclical (+2.5%) and industrial (+2.4%) sectors led the Chinese market. Over its last eight trading session, the Shanghai Composite has tacked on 374 points or 10%.
    • India’s Sensex increased 0.6% ahead of the country’s Consumer Price Index report for March. Gains were paced by the industrial (+2.4%) and energy (+1.5%) sectors. Individual standouts included Bharat Heavy Electricals (+3.4%), Bharti Airtel (+3.3%), and Sun Pharmaceutical Industries (+2.8%).
    • Australia’s S&P/ASX 200 declined 0.1% with miners weighing on the proceeding amid continued concerns about weak iron ore prices. The metals and mining sector (-1.8%) sector was the weakest area, followed by materials (-1.4%) and resources (-1.1%).
    • Regional advancers: Taiwan +0.5%, South Korea +0.5%, Singapore +0.4%, Vietnam +1.0%
    • Regional decliners: Malaysia -0.1%, Indonesia -0.8%, Philippines -0.7%
    • Closed for holiday: Thailand (Songkran Festival)

    FX
    • USD/CNY +0.1% at 6.2147
    • USD/INR +0.3% at 62.483
    • USD/JPY +0.4% at 120.64

    EUROPE

    Major European indices trade in mixed fashion with Spain’s IBEX (+0.6%) showing relative strength. Elsewhere, Germany’s FAZ has reported that Greece has to prepare a list of reforms by April 20 in order to receive the next installment of EU bailout funds.
    • French Current Account deficit widened to EUR1.80 billion from EUR300 million (expected deficit of EUR1.20 billion)
    • Italy’s February Industrial Production +0.6% month-over-month (expected 0.5%; prior -0.7%); -0.2% year-over-year (consensus -1.3%; last -2.2%)

    Closing Prices
    • UK’s FTSE: -0.4%
    • Germany’s DAX: -0.3%
    • France’s CAC: + 0.3%
    • Spain’s IBEX: + 1.0%
    • Portugal’s PSI: + 0.1%
    • Italy’s MIB Index: + 0.6%
    • Irish Ovrl Index: + 0.4%
    • Greece ASE General Index: CLOSED (Easter Monday)

       Macroeconomic Data

      Economic Data
      from Briefing.com

      • Treasury Budget : -$52.9B vs -$44.0B (Prior -$36.9B)

      TREASURY BUDGET


      Highlights


      • The Treasury Budget showed a deficit of $52.9 billion in March 2015, up from a deficit of $36.9 billion in March 2014 and wider than the Briefing.com consensus estimate that called for a deficit of $44.0 billion. The Treasury data are not seasonally adjusted, so the March deficit cannot be compared to the $192.4 billion deficit recorded in February.

      Key Factors


        Total outlays were $287.1 billion while total receipts were $234.2 billion.
      • Outlays increased by $34.4 billion from March 2014. 
      • Receipts increased by $18.4 billion from March 2014.
      • Fiscal year-to-date, the deficit is is $439.5 billion versus $413.3 billion for the comparable period in FY14.

      Big Picture


      • Raw data available at: www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/current.htm

      Market Internals

      NYSE:
      Lower Volumes than the day before – 670.4M vs 671.5M 

      Decliners outpaced Advancers (adv/dec): 1166 / 1900
      New Highs outpaced New Lows (highs/lows): 106 / 6

      NASDAQ:
      Higher Volumes than the day before – 1538.6M vs 1499.5M
      Decliners outpaced Advancers (adv/dec): 1345 / 1429
      New Highs outpaced New Lows (highs/lows): 118 / 33

      VOLATILITY S&P500 (VIX)
      13.94 +1.36 (+10.81%)

      Volume remains utterly low but the internals are looking slightly to the bearish side. On the other hand new highs vs new lows are still bullish. VIX looks like a double bottom and perhaps we might see some downside in the market.        


      Technical Updates

      DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
      17,977.04 -80.61 (-0.45%)
      Volume: 120,086,996 (above average of 99,586,184)
      Range: 17,974.81 - 18,107.57

      NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
      4.988.25 -7.73 (-0.15%)

      Volume: 369,220,544 (below average of 446,395,669)
      Range: 4,985.96 - 5,024.25


      S&P 500 INDEX (SPX: CBOE)
      2,092.43 -9.63 (-0.46%)
      Volume: 489,876,000 (below average of 547,196,646)
      Range: 2,092.33 - 2,107.65 

      The indices are clearly hit with their respective resistance levels. It is quite clear that we should see a correction here. However I still feel that the market is still consolidating amid the volatile period. 


      Commodities

      Closing Commodities: WTI Oil Erases Some Gains, Closes Just Below $52, Modestly Higher
      • The dollar index held modest gains in afternoon trade, which helped weigh on select commodities, such as gold and silver.
      • Both of these precious metals remain in negative territory this afternoon, ending floor trading with modest losses.
      • Wheat futures declined as well, but fell largely due to rain in key crop regions, which helps supply prospects.
      • At the end of today’s pit trading session, May wheat lost 5% to $5.03/bushel.
      • WTI crude oil pulled back from overnight highs just above $53/barrel, closing the day out $0.28 higher at $51.92/barrel

      Energy
      • May crude oil futures rose $0.28/barrel to $51.92/barrel
      • May natural gas closed flat at $2.51/MMBtu
      • RBOB Gasoline closed flat at $1.80/gallon
      • Heating oil closed $0.01 higher at $1.78/gallon

      Agriculture
      • May corn closed $0.07 lower at $3.70/bushel
      • May wheat closed $0.24 (or -4.55%) lower at $5.03/bushel
      • May soybeans closed $0.03 lower at $9.49/bushel
      • Ethanol closed $0.02 lower at $1.55/gallon
      • Sugar #11 closed 0.18 cents higher at 13.01 cents/lb

      Metals
      • June gold ended today’s session $5.40 lower at $1199.30/oz
      • May silver closed $0.09 lower at $16.30/oz
      • May copper closed $0.01 lower at $2.72/lb

        Currencies

        U.S. Dollar Gives Back Gains
        • The dollar gained against the euro and Antipodeans today, while the pound sterling and Japanese yen rallied
        • The yen ripped higher around 8:40 ET on comments from Koichi Hamada, an adviser to Japanese PM Shinzo Abe, who said that purchasing power parity implies a fair value of around 105 for $/Yen
          • He also said that consumption in Japan will rise with higher equity prices
          • USD/JPY: -0.08% to 120.09
        • EUR/USD -0.19% to $1.0566
          • The Financial Times is reporting that Greece is making preparations for debt default unless there is an agreement by with international creditors by the end of April
          • "The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5bn of payments due to the International Monetary Fund in May and June if no agreement is struck, they said."
          • While the Financial Times noted that this may be a negotiating tactic, the financial stability of the Eurozone no longer depends upon assistance to Greece. Sovereign debt from Italy, Spain, and Portugal is apparently uncorrelated to Greek notes 
        • GBP/USD reversed higher after making a fresh multi-year low at $1.4566, trading up 0.28% to 1.4673
        Bonds

        Treasuries Reverse Losses 
        • Despite a tough overnight session, U.S. Treasuries clawed their way back to the green, with 2's, 5's, and 10's all making fresh session highs in the afternoon 
        • The yield curve steepened with 2's/10's down to 140 bps and 5's/30's down to 122 bps
        • Yield check:
          • 2-yr: -3 bps to 0.53%
          • 5-yr: -2 bps to 1.37%
          • 10-yr: -2 bps to 1.93%
          • 30-yr: unch at 2.58%
        • News:
          • San Francisco Fed President Williams said that midyear would be a good time to start a debate on a rate increase
          • The March Treasury budget deficit widened more than expected to -$52.9 billion versus the Briefing.com Consensus of -$44.0 billion
          • Chinese stocks shook off some very ugly export/import numbers. Exports fell 15% in March while imports declined 12.7% 
        • Commodities:
          • WTI Crude rallied 0.45% to $51.87/bbl, but ended well off of its high of $53.10/bbl
          • Gold took a hit from relentless dollar strength, falling 0.52% to $1198.30/troy oz.
        • Currencies:
          • EUR/USD: -0.11% to $1.0574
          • USD/JPY: -0.07% to 120.10
        • Data Out Tuesday: 
          • March Retail Sales and Retail Sales ex-auto (08:30 ET)
          • March PPI and Core PPI (08:30 ET)
          • February Business Inventories (10:00 ET)
        • Fed Speaker:
          • Minneapolis Fed President Kocherlakota (non-FOMC voter) speaks at Winona State University (20:00 ET)

        Treasury Yields:
        • 2 Year Note 0.54% -0.03
        • 5 Year Note 1.38% -0.03
        • 10 Year Note 1.94% -0.02
        • 30 Year Bond 2.58% UNCH
        2/30 Spread: 204 bps ( +3 ) …  2/10 Spread: 140 bps ( +1 )
        Preview for Tuesday 14 Apr, 2015



         Economic Data

         Tuesday (14 Apr) :
        • Retail Sales : 1.0% (Prior -0.6%)
        • Retail Sales ex-auto : 0.7% (Prior -0.1%) 
        • PPI : 0.2% (Prior -0.5%)
        • Core PPI : 0.1% (Prior -0.5%)
        • Business Inventories : 0.3% (Prior 0.0%)

        Earnings Highlights

        Tuesday (14 Apr) :
        BMO - FAST JBHT JNJ JPM SJR WFC
        AMC - CSX DRWI HCSG INTC LLTC MRTN

        Summary
        I think the correction is going to happen judging from the reaction from the market and the internals. We will have the retail sales data and PPI releasing tomorrow. Also we will have a few big companies releasing earnings as well - Johnson & Johnson, JP Morgan, Well Fargo and Intel. The strong Dollar Index also provide some pressure to the crude oil prices.

        I am not looking bullish at the moment (or for the time being). Maybe we might see a short correction before another rally? For what I know, I think the market is still moving sideway...

        Direction for Tuesday 14 Apr, 2015; Down

        2015 Daily Directional Accuracy: 25/51 (49.02%) 
        2015 Weekly Directional Accuracy: 7/12 (58.33%)

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