Tuesday, 28 Apr 2015 - AMC

Dow +72.17 at 18110.14, Nasdaq -4.82 at 5055.42, S&P +5.84 at 2114.76

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

Market took a rebound just after some profit taking at the opening. I reckon that was some short covering however it is noticeable that the market was still held by the resistance level. Pretty much a flat session ahead of FOMC meeting on Wednesday. Meanwhile at the European market, Tuesday was a sea of red for all markets and UK's GDP still remaining weak.                                      

Market Summary

Industry Watch

Strong: Energy, Telecom Services

Weak: Consumer Discretionary, Health Care, Industrials, Technology

Other Market Moving Factor:

• Apple (AAPL) reports better than expected results and guides in-line
• High-beta chipmakers, biotechnology, and transport stocks underperform
• Dollar Index tracking fifth consecutive decline

[BRIEFING.COM] The stock market ended the Tuesday session on a mixed note with the Dow (+0.4%) and S&P 500 (+0.3%) registering modest gains while the Nasdaq (-0.1%) settled in the red. 

Equity indices spent the bulk of the trading day near their flat lines, save for a morning retreat, which was retraced in short order. The brief pullback occurred after a disappointing Consumer Confidence report and unfolded amid reports from Al Arabiya indicating that a U.S. cargo vessel was seized by Iran. The U.S. Navy promptly refuted the report with subsequent stories revealing that the cargo ship came from the Marshall Islands, which are under U.S. protectorate. Furthermore, the ship was released a couple hours after the initial stoppage. 

Although the major averages returned to their flat lines in short order, extending the rebound proved challenging even though nine sectors finished in the green. 

The top-weighted technology sector (+0.2%) was limited to a modest gain with its largest component—Apple (AAPL 130.56, -2.09)—falling 1.6% despite beating earnings and revenue estimates; however, the stock entered the session with a 6.3% gain since April 17, suggesting a strong report was already priced in. 

Apple's pullback prevented the Nasdaq Composite from ending in the green while biotechnology also contributed to the underperformance of the index. The iShares Nasdaq Biotechnology ETF (IBB 344.50, -4.05) slipped below its 50-day moving average, losing 1.2% to extend this week's decline to 5.3%. However, the health care sector (+0.4%) ended in the green thanks to better than expected earnings fromMerck (MRK 59.98, +2.88). Similarly, Pfizer (PFE 34.48, -0.11) reported above-consensus results, but cautious guidance overshadowed its earnings beat. 

Staying on the earnings theme, Twitter (TWTR 42.27, -9.39) was scheduled to report after the close, but the company jumped the gun and released its results during the final hour of the session. The company beat bottom-line estimates, but its revenue and revenue guidance missed expectations. The stock was halted for a brief time, but widened its loss upon resumption, settling lower by 18.2%.  

Elsewhere, the consumer discretionary sector (-0.3%) was the only group that couldn't climb out of the red. Many apparel retailers registered losses with Coach (COH 39.65, -2.68) falling 6.3% after disappointing revenue and light same store sales overshadowed a one-cent beat. On the flip side, homebuilders held up well following better than expected earnings from M/I Homes (MHO 23.78, +0.67). Shares of MHO gained 2.9% while iShares Dow Jones US Home Construction ETF (ITB 26.80, +0.14) advanced 0.5%. 

Homebuilder stocks were able to advance even though Treasuries spent the day in a steady retreat, sending the 10-yr yield higher by six basis points to 1.99%. 

Today's participation was in-line with recent totals as more than 760 million shares changed hands at the NYSE floor. 

Economic data was limited to Consumer Confidence and Case-Shiller 20-City Index: 

• The Case-Shiller 20-city Home Price Index for February rose 5.0% against a 4.7% increase expected by the Briefing.com consensus 
• The Conference Board's Consumer Confidence Index declined to 95.2 in April from an upwardly revised 101.4 (from 101.3) while the Briefing.com consensus expected an increase to 102.2 
  • The Expectations Index fell to 87.5 in April from 96.0 in March, which was the lowest level since September 2014 
  • The Present Conditions Index dropped to 106.8 in April from 109.5 in March 

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the advance reading of Q1 GDP will be reported at 8:30 ET (Briefing.com consensus 1.0%). The Pending Home Sales report for March will cross at 10:00 ET (consensus 1.2%) while the latest policy directive from the FOMC will be released at 14:00 ET. 

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei +0.4%; Hong Kong’s Hang Seng unch; China’s Shanghai Composite -1.1%
Markets in the Asia-Pacific region finished mostly lower on Tuesday, including China’s Shanghai Composite (-1.1%), which succumbed to some profit-taking efforts. Japan’s Nikkei (+0.4%) bucked the regional trend and closed higher despite a weaker-than-expected retail sales report for March.

Economic data

• Japan
• March Retail Sales -9.7% year-over-year (expected -7.3%; prior -1.7%)
• Hong Kong
• March Trade Balance HKD -46.2 bln (expected HKD -37.5 bln; prior HKD -35.9 bln)
• Exports -1.8% month-over-month (expected +2.5%; prior +7.2%)
• Imports -2.7% month-over-month (expected -0.8%; prior -0.9%)
• Australia
• CB Leading Index +0.5% month-over-month (prior +0.4%)

Equity Markets

• Japan’s Nikkei increased 0.4% and climbed back above the 20,000 level despite a weaker-than-expected retail sales report. The advance was led by the energy (+2.0%), consumer cyclical (+1.5%), and financial (+1.0%) sectors. Individual standouts included JTEKT Corp (+11.9%), Denso Corp (+4.5%), and Toyo Seikan Group Holdings (+4.0%). Leading laggards included Tokyo Electron (-14.8%), Kyocera (-6.5%), and Hitachi Construction Machinery (-6.1%). Out of the 225 index members, 150 ended higher, 68 finished lower, and 7 were unchanged.
• Hong Kong’s Hang Seng was pretty much flat for the day, mirroring a flat showing from its influential financial sector. Leading gainers included CITIC (+5.8%), Hengan Intl (+2.1%), and China Construction Bank (+1.8%). The worst-performing stocks were China Petroleum & Chemical Corp (-4.9%), PetroChina (-4.7%), and Galaxy Entertainment (-1.7%). Out of the 50 index members, 19 ended higher 24 finished lower, and 7 were unchanged.
• China’s Shanghai Composite declined 1.1% on profit taking that followed a positive morning session. Sector losses were broad-based in the Chinese market with the energy (-4.9%) and consumer cyclical (-3.9%) sectors among the hardest-hit areas.
• India’s Sensex bounced back from Monday’s weak showing and increased 0.8%. The consumer cyclical (+2.6%), communications (+2.5%), and financial (+1.7%) sectors were pacesetters in the advance. ICICI Bank (+7.7%), Maruti Suzuki India (+5.0%), and Bharat Heavy Electricals led individual gainers while ITC Ltd (-2.7%), Coal India (-1.5%), and Reliance Industries (-1.4%) topped the list of decliners.
• Australia’s S&P/ASX 200 declined 0.6% and finished at its lows for the day. Gold stocks did relatively well in the wake of Monday’s jump in prices; however, weakness in the health care (-1.9%), energy (-0.9%), and information technology (-0.9%) sectors weighed.
• Regional advancers: None
• Regional decliners: Taiwan -0.2%; South Korea -0.5%, Singapore -0.6%, Malaysia -0.2%, Thailand -1.1%, Indonesia -0.1%, Philippines -0.9%
• Holiday closure: Vietnam (Hung King Ann)

FX

• USD/CNY -0.2% at 6.2065
• USD/INR -0.2% at 63.120
• USD/JPY -0.1% at 118.92

EUROPE

Major European indices trade lower across the board with France’s CAC (-1.6%) showing the largest decline.

• UK’s Q1 GDP +0.3% quarter-over-quarter (consensus 0.5%; prior 0.6%); +2.4% year-over-year (expected 2.6%; last 3.0%). Separately, BBA Mortgage Approvals 38,800 (consensus 37,900; last 37,500)
• French Consumer Confidence ticked up to 94 from 93, as expected

Closing Prices

• UK’s FTSE: -1.0%
• Germany’s DAX: -1.9%
• France’s CAC: -1.8%
• Spain’s IBEX: -0.3%
• Portugal’s PSI: -0.6%
• Italy’s MIB Index: -1.2%
• Irish Ovrl Index: -1.1%
• Greece ASE General Index: + 1.4%

Macroeconomic Data

Economic Data

from Briefing.com

• Case-Shiller 20-city Index : 5.0% vs 4.7% (Prior 4.5% - Down)
• Consumer Confidence : 95.2 vs 102.2 (Prior 101.4 - Up)

CONSUMER CONFIDENCE

Highlights

• The Conference Board’s Consumer Confidence Index declined to 95.2 in April from an upwardly revised 101.4 (from 101.3) in March. The Briefing.com Consensus expected the Consumer Confidence Index to increase to 102.2.

Key Factors

• That was the lowest confidence reading since December 2014.
• The Expectations Index fell to 87.5 in April from 96.0 in March. That is the lowest level since September 2014. The Present Conditions Index dropped to 106.8 in April from 109.5 in March.
• Relatively higher gasoline prices in April and a volatile stock market offset continued improvements in labor market conditions.
• The decline in confidence is unlikely to have much of an impact on consumption trends. Consumption growth relies on income growth. As long as income gains continue, consumption should closely follow.

Big Picture

• Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.

Market Internals

NYSE:

Lower Volumes than the day before – 786.6M vs 800.1M 


Advancers outpaced Decliners (adv/dec): 1920 / 1122

New Highs outpaced New Lows (highs/lows): 53 / 13

NASDAQ:

Lower Volumes than the day before – 2020.8M vs 2144.2M

Advancers outpaced Decliners (adv/dec): 1676 / 1087

New Highs outpaced New Lows (highs/lows): 66 / 40

VOLATILITY S&P500 (VIX)
12.41 -0.71 (-5.41%)

Internals are not exactly bullish neither bearish. But New Highs number saw a drop and that might means the market is starting to lose confidence. VIX is going back to test its support level.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

18,110.14 +72.17 (+0.40%)

Volume: 124,930,994 (above average of 100,954,215)
Range: 17,917.36 - 18,119.65

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,055.42 -4.83 (-0.10%)
Volume: 476.8M (above average of 442,801,599)

Range: 5,006.28 - 5,075.30

S&P 500 INDEX (SPX: CBOE)

2,114.76 +5.84 (+0.28%)

Volume: 549.7M (above average of 545,105,094)

Range: 2,094.93 - 2,116.09 

Both DOW and S&P got back to the resistance level, where the latter is on the verge of reaching a new high. NASDAQ rebound after hitting the support level. Given the MACD momentum slowing down, I don't think market should go any higher. Even so that depends on the outcome of tomorrow FOMC meeting.  

Commodities

Closing Commodities: Precious Metals Hold Gains, WTI Oil Ends Flat

• Gold and silver futures held today’s gains while the dollar index remained in the red
• June gold closed today’s pit session +$11.30 at $1213.80/oz, while May silver rose $0.25 to $16.61/oz
• May copper rose $0.01 to $2.78/lb
• WTI crude oil erased its gains and fell back below $57/barrel, ending the session $0.06 higher at $57.05/barrel
• June nat gas rose $0.02 to $2.53/MMbtu

Energy

• June crude oil futures rose $0.06/barrel to $57.05/barrel
• May natural gas closed $0.02 higher at $2.53/MMBtu
• RBOB Gasoline closed $0.01 lower at $2.00/gallon
• Heating oil closed $0.01 lower at $1.92/gallon

Agriculture

• May corn closed $0.01 higher to $3.62/bushel
• July wheat closed $0.02 higher to $4.76/bushel
• July soybeans closed $0.03 higher at $9.77/bushel
• Ethanol closed flat at $1.61/gallon
• Sugar #11 closed 0.14 cents lower to 13.17 cents/lb

Metals

• June gold ended today’s session $11.30 higher to $1213.80/oz
• May silver closed $0.25 higher (+1.5%) at $16.61/oz
• May copper closed $0.01 higher to $2.78/lb

Currencies

U.S. Dollar Index Continues Slide

• The dollar lost against all of the majors today, as falling consumer confidence conspired with a deteriorating technical picture to unwind some more of the dollar bull market
• GBP/USD rallied 0.69% despite GDP in the U.K. missing estimates at +0.3% for Q1 2015. That was half of the +0.6% growth in the prior quarter
• EUR/USD rallied again on optimism about the prospects for Greece and unwinding of the very crowded short EUR/USD trade
  • Greek 10-year yields fell 66 basis points to 10.90%
• USD/JPY fell 0.23% to 118.85 despite retail sales falling in Japan by an unexpected 1.9% in March
• The Antipodeans rallied sharply, with AUD/USD trading a 3-month high:
  • AUD/USD: +1.90% to $0.8014
  • NZD/USD: +1.16% to $0.7724

Bonds

Losses Across Curve Despite Weak Data and Strong Auction

• Weaker-than-expected consumer confidence and solid demand for 5-year notes could not support the Treasury complex today as the curve steepened and 30-year yields made a 6-week high
• Yield check:
  • 2-yr: +2 bps to 0.56%
  • 5-yr: +4 bps to 1.38%
  • 10-yr: +6 bps to 1.98%
  • 30-yr: +6 bps to 2.68%

• News:
  • Home prices rose 5% y/y in February, greater than the Briefing.com consensus of 4.7% and the prior, downwardly revised change of 4.5
  • The Conference Board's Consumer Confidence Index declined to 95.2 in April from an upwardly revised 101.4 (from 101.3) in March. The Briefing.com Consensus expected the Consumer Confidence Index to increase to 102.2
    • Relatively higher gasoline prices in April and a volatile stock market offset continued improvements in labor market conditions
    • Treasuries popped initially on the release, but gave back the gains rather quickly
  • The $35 billion 5-year note auction stopped through 1.2 basis points, indicating strong demand
    • Auction results:
      • High yield: 1.38%
      • Bid-to-cover: 2.56
      • Indirect bid: 61.2%
      • Direct bid: 5.57%

• Commodities:
  • WTI Crude fell 0.11% to $56.93/bbl
    • There was an intraday spike when news outlets falsely reported that Iran had seized an American ship. This rumor proved to be unfounded
  • Gold rallied 0.74% to $1,212.10/troy oz. -- a multi-week high
  • Copper rose 0.47% to $2.783/lb.

• Currencies:
  • EUR/USD: +0.89% to $1.0972
  • USD/JPY: -0.23% to 118.85

• Data Out Wednesday:
  • MBA Mortgage Index for the week ending 4/25 (07:00 ET)
  • Q1 GDP-Advanced Estimate (08:30ET)
  • Q1 Chain Deflator-Adv (08:30 ET)
  • March Pending Home Sales (10:00 ET)
  • Crude Inventories for the week ending 4/25 (10:30 ET)
  • April FOMC Rate Decision (14:00 ET)
• New Supply:
  • $29 billion 7-year note auction (results at 13:00 ET)

Treasury Yields:

• 2 Year Note 0.56% +0.02
• 5 Year Note 1.39% +0.03
• 10 Year Note 2.00% +0.06
• 30 Year Bond 2.68% +0.07

2/30 Spread: 212 bps ( +5 ) …  2/10 Spread: 144 bps ( +4 )

Preview for Wednesday 28 Apr, 2015

Economic Data

Wednesday (29 Apr) :

• MBA Mortgage Index : (Prior 2.3%) 
• GDP-Adv. : 1.1% (Prior 2.2%)
• Chain Deflator-Adv. : 0.5% (Prior 0.1%)
• Pending Home Sales : 1.6% (Prior 3.1%)
• Crude Inventories : (Prior 5.315M)
• FOMC Rate Decision : 0.25% (Prior 0.25%)

Earnings Highlights

Wednesday (29 Apr) :
BMO - ABB ACCO ADT ALR AMED AME ANTM AVY BGCP BOKF BC CCJ CG CRI CBG CBZ FUN CVE GIB CFR CUBI DHX DXYN DX ETN EDR EVER EXC FDML FCH FCAU BEN FI GRMN GD GEL GT GWB GRUB HERO HES HLT HCBK HUM ICON ISSI IDCC IP LVLT LINE LFUS LL MA MWV MTOR MDLZ NYCB NEE NOR NSC NOCNCLH OIIM OCR PCG PX Q REV ROL RES SAIA SLGN SLAB SPIL SO SPR SAVE SPW HOT SNCR TRI TWX UMC VRX WOOF WM WCIC WEX
AMC - AKR AFFX DOX MTGE AEL ARII AMSF AR ANH ARRS ASH ATRC ATW AVG AXS BIDU BSAC BLKB SAM CBT CACI CWT CMO CSII CSCD CAVM CRL CHMT CMPR CNO COHR FIX CNW CSGP CUB CW DXCM DRWI DRE DNB DYAX ELX ELGX ESV EPE EQIX EQY ES EXL EXR FOE FLEX FORM FORR GLUU LOPE HOLX HOS HY INGN TILE ISIL IO IPCM JBT KAMN KEG KRC KEX KRA KTOS LQ LOCK LNC MAC MTW MN MANT MAR MMLP MDAS MEOH MAA MEP MC MOMO MUR NCIT NSR NE NFBK NXPI OIS ASGN OGS PEIX PRXL PDM PPC POWI PTC QEP QRVO KWR STR QUIK O RVBD RRTS RKT ROG SIGI SCI SFLY SGI SSS SPOK STAA STMP STNR SU SPRT TAL TCO TEX TX TTEK TFSL TTMI UNM ECOL VAR VRTX WTS WLL WMB WMGI XL YELP

Summary

Technology sector seems to run out of steam. They have been pushing the market higher lately and that could bring some weakness to the market. Anyway I feel that Tuesday was more of a pullback as many were short covering ahead of a big day on Wednesday.

Watch out for the GDP number and FOMC meeting. That is definitely giving the market more volatility. Wednesday is crucial as it should determine if the market would see a bullish breakout or correction.

Direction for Wednesday 29 Apr, 2015; Abstain

2015 Daily Directional Accuracy: 31/61 (50.82%) 
2015 Weekly Directional Accuracy: 8/14 (57.14%)