Tuesday, 21 Apr 2015 - AMC

Dow -85.34 at 17949.59, Nasdaq +19.50 at 5014.10, S&P -3.11 at 2097.29

Earnings reports are better than expected. Most eyes are on the Greece debt issue now. I remain in my stance of having a slight correction in the market. In terms of overall market sentiment, the market is still relatively stagnant (sideway). I think there is a high chance that the market will continue to go down after some profit taking or maybe just a flat session, again.

Direction for Tuesday 21 Apr, 2015; Down

It appears that market hit a resistance on Monday and we saw some correction on Tuesday. However only NASDAQ managed to stay positive as technology outperformed. I don't really see a big move from the big players in the market yet. Market remains cautious.                          

Market Summary

Industry Watch

Strong: Consumer Staples, Health Care, Technology

Weak: Energy, Industrials, Materials, Telecom Services

Other Market Moving Factor:

• Dow components DuPont (DD), IBM (IBM), Travelers (TRV), and United Technologies (UTX) beat bottom-line estimates
• Dollar Index surrenders overnight gain

[BRIEFING.COM] The stock market ended Tuesday on a mixed note with the Dow and S&P 500 losing 0.5% and 0.2%, respectively, while the Nasdaq Composite (+0.4%) outperformed. 

Today's session was relatively quiet as equity indices diverged during the opening hour of action and maintained narrow ranges into the afternoon. The S&P 500 opened with a nine-point gain, but was back near its flat line before the opening hour ended. 

For its part, the Nasdaq spent the day near its early high thanks to solid gains among biotech names after Teva Pharmaceutical (TEVA 64.14, +0.85) offered to acquire Mylan (MYL 74.11, +6.06) for $82.00/share in cash and stock. The two names posted respective gains of 1.3% and 8.9% while the iShares Nasdaq Biotechnology ETF (IBB 364.50, +6.55) settled higher by 1.8%. Furthermore, the health care sector advanced 0.7% and was the only sector with a gain larger than 0.1%. 

Meanwhile, the consumer discretionary space (+0.1%) was the second-best performer with homebuilders showing broad strength. DR Horton (DHI 28.53, +0.49) jumped 1.8% ahead of tomorrow's earnings report while the broader iShares Dow Jones US Home Construction ETF (ITB 27.87, +0.39) gained 1.4%. On the earnings front, Under Armour (UA 83.54, -4.22) tumbled 4.8% after reporting in-line results and guiding below analyst expectations. 

In other earnings, four Dow components delivered bottom-line beats since yesterday, but only one—Travelers (TRV 101.88, -4.26)—showed year-over-year revenue growth while United Technologies (UTX 116.95, +0.44), DuPont (DD 70.69, -2.15), and IBM (IBM 164.26, -1.90) saw their top lines contract. 

Overall, cyclical sectors were responsible for the slide from opening highs with four of six growth-sensitive groups registering larger losses than the S&P 500. The energy sector (-1.0%) finished at the bottom while crude oil fell 2.3% to $56.58/bbl. The dollar was not a big factor today as the Dollar Index (97.96, +0.02) surrendered its modest overnight gain during morning action. 

Elsewhere among cyclical groups, financials (-0.5%) and industrials (-0.2%) lagged with the latter pressured by General Electric (GE 26.62, -0.40). The conglomerate surrendered 1.5% while transport stocks overcame their early weakness. The Dow Jones Transportation Average added 0.3% even though Kansas City Southern (KSU 105.17, -2.20) lost 2.1% after missing bottom-line estimates. 

Treasuries ended on their lows after sliding from their overnight highs, sending the 10-yr yield up two basis points to 1.91%. 

Today's participation was relatively light with fewer than 700 million shares changing hands at the NYSE floor. 

Investors did not receive any economic data today, but tomorrow's session will include the 7:00 ET release of the weekly MBA Mortgage Index, February FHFA Housing Price Index at 9:00 ET, and the Existing Home Sales report for March at 10:00 ET (Briefing.com consensus 5.05 million). 

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei +1.4%; Hong Kong’s Hang Seng +2.8%; China’s Shanghai Composite +1.8%
Bolstered by Wall Street’s rally on Monday, which flowed from the policy stimulus provided by the People’s Bank of China over the weekend, markets in Japan, Hong Kong, and China registered big gains in Tuesday’s trading. Regional markets were mixed.

Economic data

• Japan
• Leading Index 104.8 (expected 105.3; prior 105.0)
• Hong Kong
• March CPI +4.5% year-over-year (expected 4.5%; prior 4.6%)

Equity Markets

• Japan’s Nikkei increased 1.4% on steady buying efforts and closed at its highs for the session. The utilities (+2.3%), financial (+1.9%) and industrial (+1.9%) sectors led the gains. Individual standouts included Tokyu Corp (+6.0%), Credit Saison Co (+5.1%), Daiichi Sankyo Co (+4.4%), T&D Holdings (+4.1%), and Astellas Pharma (+4.0%). Yaskawa Electric (-2.5%) led decliners and was one of only six stocks that declined more than 1.0%. Out of the 225 index members, 178 ended higher, 36 finished lower, and 11 were unchanged. ·
• Hong Kong’s Hang Seng increased 2.8%, breaking its two-day losing streak in convincing fashion. The consumer cyclical (+8.8%), communication (+5.5%), and financial (+2.5%) sectors powered the advance. Leading gainers included China Resources Enterprise (+55.9%), whose controlling shareholder is going to purchase all of its non-retail assets, China Mobile (+7.5%), Ping An Insurance Group (+5.2%), and Hong Kong Exchanges & Clearing (+5.1%). Hengan Intl (-1.8%) and China Shenhua Energy (-1.7%) were the only stocks that fell more than 1.0%. Out of the 50 index members, 47 ended higher and 3 finished lower.
• China’s Shanghai Composite increased 1.8% as Wall Street’s positive showing helped Chinese investors refocus on the stimulative effects of the PBOC’s cut to the reserve requirement ratio. The consumer non-cyclical (+5.0%), communications (+4.7%), and financial (+3.6%) sectors helped drive a broad-based advance that left the Shanghai Composite up 115% over the last year.
• India’s Sensex declined 0.8% with losses in the consumer non-cyclical (-3.7%) and consumer cyclical (-1.4%) sectors weighing on matters. Sun Pharmaceutical (-8.5%), Hindustan Unilever (-4.0%), Maruti Suzuki India (-3.0%), Hindalco Industries (-2.9%), and Dr Reddy’s Laboratories (-2.7%) topped the list of declining issues. Axis Bank (+1.7%) led the list of winners.
• Australia’s S&P/ASX 200 increased 0.7% on the back of strength in the metals & mining (+2.2%), information technology (+2.2%), and materials (+1.9%) sectors. Separately, it was reported by CNBC that RBA Governor Stephens acknowledged overnight that the bank is willing to cut rates again if necessary but is cautious about the impact on house prices and debt levels.
• Regional advancers: Singapore +0.2%, Malaysia +0.8%, Thailand +0.6%, Indonesia +1.1%
• Regional decliners: Taiwan -0.2%, South Korea -0.1%, Philippines -0.2%, Vietnam -0.5%

FX

• USD/CNY unch at 6.2019
• USD/INR -0.5% at 62.856
• USD/JPY +0.2% at 119.43

EUROPE

Major European indices have climbed off their lows in recent action with Germany’s DAX (+0.7%) in the lead. The European Central Bank is reportedly looking at forcing haircuts on Greek banks that have accessed Emergency Liquidity Assistance in order to encourage more reform progress by the country’s government.

• Eurozone ZEW Economic Sentiment rose to 64.8 from 62.4 (expected 63.7)
• Germany’s April ZEW Economic Sentiment fell to 53.3 from 54.8 (consensus 55.3) while ZEW Current Conditions improved to 70.2 from 55.1 (expected 56.0)

Closing Prices

• UK’s FTSE: + 0.2%
• Germany’s DAX: + 0.4%
• France’s CAC: + 0.1%
• Spain’s IBEX: + 0.4%
• Portugal’s PSI: + 0.6%
• Italy’s MIB Index: -0.4%
• Irish Ovrl Index: + 0.9%
• Greece ASE General Index: -3.3%

Macroeconomic Data

Economic Data

from Briefing.com

• No Economic Data

Market Internals

NYSE:

Higher Volumes than the day before – 689.9M vs 683.4M 


Advancers outpaced Decliners (adv/dec): 1531 / 1521

New Highs outpaced New Lows (highs/lows): 79 / 12

NASDAQ:

Lower Volumes than the day before – 1700.2M vs 1632.4M

Advancers outpaced Decliners (adv/dec): 1374 / 1396

New Highs outpaced New Lows (highs/lows): 106 / 35

VOLATILITY S&P500 (VIX)
13.25 -0.05 (-0.38%)

Internals are actually not that bearish instead it is more on a flat side. So I won't really call it is a bearish session. VIX is also showing the lack in confidence and it is likely to tick higher in the next few sessions. It appears to me that the market is unlikely to still head up so downside is looking imminent.             

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,949.59 -85.34 (-0.47%)

Volume: 95,175,621 (below average of 100,593,055)
Range: 17,929.63 - 18,109.70

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,014.10 +19.50 (+0.39%)
Volume: 382.3M (below average of 444,384,128)

Range: 5,009.51 - 5,028.22

S&P 500 INDEX (SPX: CBOE)

2,097.29 -3.11 (-0.15%)

Volume: 485.1M (below average of 545,753,938)

Range: 2,094.38 - 2,109.64 

Except for NASDAQ, it can be see that the market could not break above its resistance. Meanwhile NASDAQ is also at its high which is also a strong resistance level. MACD momentum is indicating the bullishness is not pretty much convincing. So most likely we should see the market continues to go down.

Commodities

Closing Commodities: WTI Oil Sells Off, Holds Above $56

• The dollar index is back near the flat line in afternoon trade
• WTI crude oil sold off in afternoon trade, but held above the $56/area
• June crude finished the day $0.03 lower at $57.88/barrel
• May nat gas gained $0.04 to $2.58/MMBtu
• Gold held above $1200/oz.. ending +$9.5 at $1203.00/oz, while May silver ended $0.11 higher at $16.00/oz

Energy

• June crude oil futures fell $0.03/barrel to $57.88/barrel
• May natural gas rose $0.04 to $2.58/MMBtu
• RBOB Gasoline closed $0.03 lower at $1.89/gallon
• Heating oil fell $0.02 to $1.86/gallon

Agriculture

• May corn closed $0.05 lower at $3.73/bushel
• July wheat closed $0.01 higher at $5.00/bushel
• July soybeans closed flat at $9.77/bushel
• Ethanol closed $0.02 higher at $1.64/gallon
• Sugar #11 closed 0.28 cents lower at 12.41 cents/lb

Metals

• June gold ended today’s session $9.50 higher at $1203.00/oz
• May silver closed $0.11 higher at $16.00/oz
• May copper closed $0.03 lower at $2.70/lb

Currencies

Dollar Reverses Lower

• The US Dollar Index reversed overnight gains to trade down 0.07% to 97.86
• EUR/USD rallied 0.10% to $1.0751 despite Greek sovereign yields hitting highs across the curve
  • German 10-year Bund yields were slightly higher at 0.10% this morning after hitting a record low of 0.05% on Tuesday. Low yields in the European core are weighing on the currency even without the risks of Grexit
  • Germany's ZEW survey missed expectations for economic sentiment at 53.3 in April versus 54.8 in March
  • The current conditions survey, however, far exceeded expectations at 70.2 versus 55.1 prior
• USD/JPY rallied 0.32% to 119.64
• AUD/USD fell 0.09% to $0.7716
• NZD/USD rallied 0.13% to $0.7674
• USD/CAD rose 0.47% to 1.2291

Bonds

Treasuries Fall Despite Greece Fear

• The Treasury complex gave back overnight gains despite Greek sovereign yields hitting multi-year highs across the curve
• Yield check:
  • 2-yr: unch at 0.52%
  • 5-yr: +2 bps to 1.34%
  • 10-yr: +2 bps to 1.91%
  • 30-yr: +2 bps to 2.58%

• News:
  • The ZEW Institute's survey on German economic sentiment missed expectations and fell to 53.3 in April from 54.8 in March
    • The current conditions index, however, handily beat expectations at 70.2 from 55 in the prior month
  • EU officials downplayed the possibility of a resolution to the Greek crisis at Friday's eurogroup meeting of finance ministers
  • Municipal reserves in Greece are estimated at around 1.5 billion euro and now that local governments have to keep that money at the central bank, Greece may have another 6 weeks of time before default, according to Bloomberg
  • A Chinese power-transformer maker defaulted on its debt, making it the second Chinese company in as many days to fail to meet its debt obligations
    • Chinese property developer Kaisa defaulted on its dollar-denominated debt yesterday

• Commodities:
  • WTI Crude fell 2.30% to $56.55/bbl
  • Gold rallied 0.66% to $1,201.60/troy oz.
  • Copper fell 1.35% to $2.6955/lb.

• Currencies:
  • EUR/USD: -0.01% to $1.0739
  • USD/JPY: +0.34% to 119.66

• Data Out Wednesday:
  • MBA Mortgage Index for the week ending 4/18 (07:00 ET)
  • February FHA Housing Price Index (09:00 ET)
  • March New Home Sales (10:00 ET)
  • Natural Gas Inventories for the week ending 4/18 (10:30 ET)
• New Supply:
  • $18 billion 5-year TIPS auction

Treasury Yields:

• 2 Year Note 0.55% UNCH
• 5 Year Note 1.35% +0.02
• 10 Year Note 1.92% +0.02
• 30 Year Bond 2.58% +0.02

2/30 Spread: 203 bps ( +2 ) …  2/10 Spread: 137 bps ( +2 )

Preview for Wednesday 22 Apr, 2015

Economic Data

Wednesday (22 Apr) :

• MBA Mortgage Index : (Prior -2.3%) 
• FHFA Housing Price Index : (Prior 0.3%)
• Existing Home Sales : 5.07M (Prior 4.88M)
• Crude Inventories : (Prior 1.294M)

Earnings Highlights

Wednesday (22 Apr) :
BMO - ABT APH ANGI ALV AN AZZ BK BA CFG KO DHI EMC EVR GNTX HERO HBAN KNX KFX LAD MKTX MCD BABY NLSN NOR NS OC PCH R SEIC SIX SONS STJ TROW TEL TDY TMO TUP UCBI WAB WERN
During Mkt Hours - CFNL
AMC - ALGT AFOP AWH AMP AHL AIZ AF T BDN BRKL CATY CAKE CTXS CLW CNMD CLB CLGX CVA CCI CUB CVBF CYS EGBN EBAY EFX EXPO FFIV FB DAVE FOE FTK GGG HNI HMN IBKC IGT LVS LHO LOGI MKSI MPWR NEU NFBK OII ORLY ORRF PLXS PLCM QCOM RJF SLM SGMO SCSS SKX SLG SUSQ TCBI TXN TMK TSCO TYL USTR VMI WFT WSTC XLNX

Summary

Market remains volatile but I reckon if the market broke its trend support, we should see more correction along. At this point in time I do not carry much optimism for a rally. Although a good earnings season should still give the market a push higher but in terms of sustainability I still think a correction is more likely.

Direction for Wednesday 22 Apr, 2015; Down

2015 Daily Directional Accuracy: 29/56 (51.79%) 
2015 Weekly Directional Accuracy: 8/13 (61.54%)