Monday, 27 Apr 2015 - AMC

Dow -42.17 at 18037.97, Nasdaq -31.84 at 5060.24, S&P -8.77 at 2108.92

As we are approaching the month of May, it is less likely that the market might still continue to rally. Looking at the market, technology sector is the one that is influencing the market going higher. And it is getting more defensive.

We are going to see more economic data this week and also the FOMC meeting on Wednesday. I think that should give the market some catalyst for a correction perhaps. Furthermore the Greece's debt situation is not settling and it's only the matter of time it will default. Sum up all, I don't think the market would still rally and perhaps a sell in May is more appropriate.

Direction for Monday 27 Apr, 2015; Down

So much for the breakout. Market opened higher but it didn't last long before a heavy profit taking that takes the market down. Perhaps now is the time we see a real correction after the much speculations that fuelled the market to a high. The Dollar Index is also seeing a downward slide and crude oil did not relate much to that as it was more to profit taking in the Monday session.                                      

Market Summary

Industry Watch

Strong: Energy, Financials, Industrials, Technology, Materials

Weak: Consumer Discretionary, Consumer Staples, Health Care, Utilities

Other Market Moving Factor:

• China's Shanghai Composite soars 3.0% after MNI reports PBoC may begin buying local government bonds
• Cyclical sectors outperform

[BRIEFING.COM] The stock market began the week with a pullback from record levels, but not before setting fresh intraday record highs during the opening minutes of action. The S&P 500 (-0.4%) registered its first decline in four sessions while the Nasdaq Composite (-0.6%) underperformed. 

Equity indices displayed modest gains in the early going to follow a relatively quiet weekend. It is worth noting that China's Shanghai Composite soared 3.0% after MNI reported the People's Bank of China is looking into purchasing local government bonds. Meanwhile, European markets began the day under pressure, but finished with solid gains amid optimism that followed reports Greece has reshuffled its negotiating team. 

As for U.S. stocks, the S&P 500 held an eight-point gain at the start with cyclical sectors underpinning the early strength; however, biotechnology lagged from the early going and pressured the health care sector (-1.8%) to the bottom of the leaderboard. For its part, the iShares Nasdaq Biotechnology ETF (IBB 348.55, -15.15) lost 4.2% and contributed to the underperformance of the Nasdaq. 

Biotechnology weighed on S&P 500 and the Nasdaq while the Dow (-0.2%) was able to end a little ahead since the price-weighted index does not contain any biotech listings. That being said, the largest Dow component by weight—Goldman Sachs (GS 196.52, -1.47)—lost 0.7% while the financial sector (-0.3%) settled a step ahead of the S&P 500. 

Similar to financials, four of the remaining five cyclical groups settled ahead of the broader market while the consumer discretionary sector (-0.9%) underperformed. On the flip side, materials (+0.9%) and technology (+0.4%) spent the day in positive territory. 

The materials sector enjoyed broad support, including a 4.6% spike in Dow component DuPont (DD 74.81, +3.29) after Institutional Shareholder Services recommended Nelson Peltz for the company's board of directors. Steelmakers and miners also rallied with Market Vectors Gold Miners ETF (GDX 19.76, +0.40) and Market Vectors Steel ETF (SLX 35.79, +0.29) gaining 2.1% and 0.8%, respectively. 

Elsewhere, the technology sector (+0.4%) kept the market from sliding deeper into negative territory thanks to solid gains among large cap components. Most notably, Apple (AAPL 132.65, +2.37) climbed 1.8% ahead of its quarterly report while chipmakers held up relatively well with the PHLX Semiconductor Index adding 0.3%. The modest uptick in the chip index masked an 8.4% plunge in the shares of Applied Materials (AMAT 19.97, -1.83) brought on by news that the company terminated its combination agreement with Tokyo Electron due to regulatory concerns. 

Treasuries retreated throughout the morning, but reversed course to erase the bulk of their losses. The 10-yr yield ticked up a basis point to 1.92%. 

Today's participation was ahead of recent averages with more than 780 million shares changing hands at the NYSE floor. 

Tomorrow, the Case-Shiller 20-city Index for February will be reported at 9:00 ET (Briefing.com consensus 4.7%) while the April Consumer Confidence report will cross the wires at 10:00 ET (expected 102.2).

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei -0.2%; Hong Kong’s Hang Seng +1.3%; China’s Shanghai Composite +3.0%
Overall, it was a somewhat mixed outing for Asian-Pacific markets on Monday, yet it was another gangbuster day for the Shanghai Composite, which soared 3.0% on the back of continued buying momentum from retail investors and speculation the government is considering merging state-owned enterprises.

Economic data

• China
• March Industrial Profits -0.4% year-over-year (prior -4.2%)
• Q1 Industrial Profits -2.7% year-over year

Equity Markets

• Japan’s Nikkei declined 0.2% with losses in the financial (-0.6%), energy (-0.6%), and consumer cyclical (-0.6%) sectors weighing on matters. Shiseido Co (-5.0%), Mitsubishi Motors (-4.1%), and Sumitomo Dainippon Pharma Co (-3.6%) topped the list of decliners. Nippon Paper Industries (+5.1%) and NEC Corp (+4.9%) paced the winners. Out of the 225 index members, 83 ended higher, 132 finished lower, and 10 were unchanged.
• Hong Kong’s Hang Seng increased 1.3%. The energy (+3.9%), technology (+1.4%), and financial (+1.0%) sectors were the biggest movers. Individual standouts included China Petroleum and Chemical Corp (+7.2%), PetroChina (+6.7%), Kunlun Energy (+4.8%), HSBC Holdings (+3.6%), and China Unicom Hong Kong (+2.8%). China Mengniu Dairy (-1.9%) and Belle Intl (-1.7%) were the only stocks to drop more than 1.0%. Out of the 50 index members, 40 ended higher and 10 finished lower.
• China’s Shanghai Composite increased 3.0%. According to a Bloomberg report, the rally was fueled in part by speculation that the government is considering merging state-owned enterprises. The energy (+4.5%) and industrial (+2.2%) sectors were the biggest movers in the Chinese market on Monday, with the latter bumping up after a report showing industrial profits were down 0.4% in March year-over-year versus a 4.2% decline in the first two months. Sinopec Shanghai Petrochemical, Guangshen Railway, China Petroleum & Chemical, and Air China all rose by the daily limit of 10%.
• India’s Sensex declined 1.0%. Losses were paced by the consumer non-cyclical (-2.5%), communications (-2.0%), and financial (-1.5%) sectors. Bharat Heavy Electricals (-3.3%), State Bank of India (-3.1%), and Dr Reddy’s Laboratories (-2.8%) topped the list of decliners. Maruti Suzuki India (+3.0%), Sesa Sterlite (+2.5%), and Wipro (+2.0%) were the only stocks that gained in excess of 1.0%.
• Australia’s S&P/ASX 200 increased 0.8%, bolstered by a jump in iron ore prices. The metals & mining (+2.1%), resources (+2.0%), and materials (+1.7%) sectors were the biggest movers. Fortescue Metals Group climbed 16.3% and was the best-performing stock in the index.
• Regional advancers: Taiwan +0.6%, Philippines +0.1%
• Regional decliners: South Korea -0.1%, Malaysia -0.2%, Thailand -0.4%, Indonesia -3.5%, Vietnam -0.6%

FX

• USD/CNY +0.4% at 6.2190
• USD/INR -0.4% at 63.518
• USD/JPY +0.3% at 119.33

EUROPE

Major European indices trade higher across the board with Germany’s DAX (+1.4%) in the lead. Greece remains in limbo following the Eurogroup meeting, but Eurogroup chief Jeroen Dijsselbloem said he does not believe that a third bailout for Greece is needed at this time.

• Germany’s March Import Price Index +1.0% month-over-month (expected 0.5%; prior 1.4%); -1.4% year-over-year, as expected
• UK’s CBI Industrial Trends Orders ticked up to 1 from 0 (consensus 4).

Closing Prices

• UK’s FTSE: + 0.5%
• Germany’s DAX: + 1.9%
• France’s CAC: + 1.3%
• Spain’s IBEX: + 1.2%
• Portugal’s PSI: + 1.6%
• Italy’s MIB Index: + 1.6%
• Irish Ovrl Index: + 0.8%
• Greece ASE General Index: + 4.4%

Macroeconomic Data

Economic Data

from Briefing.com

• No Economic Data

Market Internals

NYSE:

Higher Volumes than the day before – 800.1M vs 669.2M 


Decliners outpaced Advancers (adv/dec): 1144 / 1929

New Highs outpaced New Lows (highs/lows): 88 / 12

NASDAQ:

Higher Volumes than the day before – 2144.2M vs 1871.7M

Decliners outpaced Advancers (adv/dec): 828 / 1962

New Highs outpaced New Lows (highs/lows): 131 / 48

VOLATILITY S&P500 (VIX)
13.12 +0.83 (+6.75%)

Internals are showing quite a bearish session especially with the support of volume. VIX ticked higher as it rebounds from the support level. Upside strength remains weak and unconvincing. But I don't think we would see market to recover yet

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

18,037.97 -42.17 (-0.23%)

Volume: 121,110,419 (above average of 101,123,550)
Range: 18,024.66 - 18,175.56

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,060.25 -31.84 (-0.63%)
Volume: 506,277,002 (above average of 442,697,574)

Range: 5,053.54 - 5,119.83

S&P 500 INDEX (SPX: CBOE)

2,108.92 -8.77 (-0.41%)

Volume: 590,999,000 (above average of 545,367,723)

Range: 2,107.04 - 2,125.92 

All 3 indices are forming a bearish engulfing pattern. DOW and S&P are facing a strong resistance. I don't think there is much confidence on going higher. If we are not going higher, down is the only way...

Commodities

Closing Commodities: Silver Surges 5%, Oil Ends Below $57/Barrel

• Gold and silver futures held today’s strong gains, ending near today’s highs
• June gold rallied $27.20 to $1202.50/oz, while May silver gained $0.72 (or +5%) to $16.36/oz
• Natural gas futures remained in the red all day on mild weather, ending -$0.06 to $2.51/MMBtu
• WTI crude oil lost gains, closing $0.16 lower at $56.99/barrel.
• Brent/WTI crude oil spread is currently about $8/barrel.

Energy

• June crude oil futures fell $0.16/barrel to $56.99/barrel
• May natural gas closed $0.06 lower at $2.51/MMBtu
• RBOB Gasoline closed $0.01 higher at $2.01/gallon
• Heating oil closed flat at $1.93/gallon

Agriculture

• May corn closed $0.03 lower to $3.61/bushel
• July wheat closed $0.15 lower to $4.74/bushel
• July soybeans closed $0.04 higher at $9.74/bushel
• Ethanol closed $0.01 higher to $1.61/gallon
• Sugar #11 closed 0.08 cents higher to 13.31 cents/lb

Metals

• June gold ended today’s session $27.20 higher (+2.3%) to $1202.50/oz
• May silver closed $0.72 higher (+4.6%) at $16.36/oz
• May copper closed $0.04 higher to $2.77/lb

Currencies

Dollar Hits 4-Week Low

• The U.S. Dollar Index fell 0.16% today to 96.76 on optimism in the Greece/Brussels Group negotiations and general profit-taking due to some technical deterioration in what has been a very long and strong bull run in the greenback
• EUR/USD rallied 0.08% to $1.0883 after Greek Prime Minister Alexis Tsipras rejiggered Greece's negotiating team and put Finance Minister Yanis Varoufakis in a supervisory role
  • During Friday's negotiations, a fair number of personal comments regarding the finance minister had been reported in the media and perhaps this forced Tsipras to reevaluate the situation
• USD/JPY rallied 0.10% to 119.08
  • Overnight, Fitch downgraded Japan by one notch to A with a stable outlook
    • The downgrade was attributed to Japan's failure to offset a delay in a sales tax hike with savings elsewhere in the budget
• The commodity currencies rallied along with metals prices
  • AUD/USD: +0.47% to $0.7861
  • NZD/USD: +0.58% to $0.7652
  • USD/CAD: -0.80% to 1.2087
• The British pound rallied along with the relief rally in Greece and the eurozone
  • GBP/USD: +0.32% to $1.5235

Bonds

Treasuries End Mixed

• The Treasury complex traded lower in a curve-flattering trade during a data-free trading session. The small end-of-day changes obscure significant movement within the ranges. An auction, improved hopes for Greece, and an equity sell-off were the main catalysts
• Yield check:
  • 2-yr: +2 bps to 0.52%
  • 5-yr: +2 bps to 1.34%
  • 10-yr: +1 bp to 1.92%
  • 30-yr: unch at 2.61%

• News:
  • The dominant theme of the day was Greek PM Alexis Tsipras's decision to modify his team that negotiates with the Brussels Group (the creditors)
    • The team will now be led by junior foreign minister Euclid Tsakalotos who, like Yanis Varoufakis, is a trained economist. Tsakalotos is said to be a close ally of Tsipras's 
    • Finance Minister Yanis Varoufakis will now merely supervise the team
    • The shakeup sent Greek 10-year yields down 99 basis points to 11.56%
    • While some experts say that this doesn't change the fundamental picture in Greece, the markets are saying otherwise
  • The $26 billion 2-year note auction was met with lackluster demand, as the auction tailed 0.1 basis point
    • Auction results:
      • High yield: 0.54%
      • Bid-to-cover: 3.30 (12-auction average of 3.42)
      • Indirect bid: 38.1% (12-auction average of 35.32%)
      • Direct Bid: 14.6% (12-auction average of 16.44%)
  • The S&P 500 pulled back from a record high, losing 0.38% to 2,109.55

• Commodities:
  • Gold rallied 2.36% to $1,202.70/troy oz.
  • WTI Crude fell 0.51% to $56.86/bbl
  • Copper rallied 0.71% to $2.7675/lb.

• Currencies:
  • EUR/USD: +0.12%  to $1.0888
  • USD/JPY: +0.13% to 119.10

• Data Out Tuesday:
  • February Case-Shiller 20-City Index (09:00 ET)
  • April Consumer Confidence (10:00 ET)
• New Supply:
  • $35 billion 5-year note auction (results at 13:00 ET)

Treasury Yields:

• 2 Year Note 0.54% UNCH
• 5 Year Note 1.36% +0.02
• 10 Year Note 1.94% +0.01
• 30 Year Bond 2.61% -0.01

2/30 Spread: 207 bps ( -1 ) …  2/10 Spread: 140 bps ( +1 )

Preview for Tuesday 28 Apr, 2015

Economic Data

Tuesday (28 Apr) :

• Case-Shiller 20-city Index : 4.7% (Prior 4.6%)
• Consumer Confidence : 102.2 (Prior 101.3)

Earnings Highlights

Tuesday (28 Apr) :
BMO - FLWS CAS AET AMG AGCO GAS AIXG AKS ALLY AXE AUO AUDC BSX BPBMY CCG CPLA CARB CNC CBR CIR CIT COH CNX GLW OFC CRY CTG CMI DFRG DORM ECL ENTG ETR FCF FMER FSRV FBC F FELE FDP GPI HSII HMC HSP ICLR IDXX IIVI IPI IPGP JEC JBLU LRN LXK MAS MCGC MHFI MRK MRGE MDXG NOV NCI NEO OSK PH PAG PFE PHG POR PROV SC SALT SIR ST SERV SIAL SIRI STCK SVU XRS TXT TMUS TRS TWIN UMBF UBSI UTHR UPS VLO VDSI WDR WAT WHR WWW WYN YNDX
AMC - ACHC AEGN AFL AKAM AHGP ARLP ANIK ARI AMCC ACGL APAM AZPN BLDP BGFV BMR HAWK BXMT BWLD CALX CBL CGI CHE CINF CRUS CNL CLF CEB CMRE DDR DHT BOOM EIX ESRT EPIQ EPR EQR EEFT EXAC XCO ESRX FARO FEIC FFIC GNW GPRO GPRE HLIT HELE HIW HURN IPHI IACI INAP IGT KAI KALU KBR KFRC KRFT LOGM MTSI MRCY MSTR MWA NANO NATI NCR NVDQ OHI OTEX OI PNRA PEI PSEM PSB RSYS RRC RNST RNG RPXC SBCF SFS SWI TAHO SKT TE TPX TSS CLUB TRMK TWTR SLCA X ULTI VRSK VRTS WRI WSBC WDC WSH WYNN XOOM AUY

Summary

Prior to the FOMC meeting on Wednesday, I am expecting a fair quiet session for tomorrow. I suppose we should still see some profit taking but market should stay volatile. Nonetheless I feel the market is prone to having a correction unless we have an excellent earnings for Q2. That might still keep the market in an upbeat mode.

Direction for Tuesday 28 Apr, 2015; Down

2015 Daily Directional Accuracy: 31/60 (51.67%) 
2015 Weekly Directional Accuracy: 8/14 (57.14%)