Dow +26.32 at 18298.88, Nasdaq +30.15 at 5078.44, S&P +6.47 at 2129.20
Market was flat at the start but a rally afterwards brought the market to a new high. It is noticeable that market struggled to maintain at the high with some profit taking towards the end. That doesn't look much of bullishness to me. The Dollar Index made some recovery back to above $94 and this gave some pressure to crude oil.It looks to me that the bulls are getting out of breath soon or is it they are just taking a break? Market went up after some losses at the early session of the week which I suppose was more towards profit taking. From what I saw, I think the bullishness is more or less slowing down which could indicate some correction before another rally if there is.
Next week is going to be influenced with FOMC minutes releasing on Wednesday and quite a number of major economic data such as leading indicators and inflation rate. I think market is going to still consolidate amid all the speculation around.
Direction for Monday 18 May, 2015; Down
Market Summary
Industry Watch
Strong: Consumer Discretionary, Financials, Health Care, Technology, Telecom Services
Weak: Consumer Staples, Energy, Materials
Other Market Moving Factor:
- M&A news headlines quiet start to the week: Ann (ANN) to be acquired by Ascena Retail Group (ASNA) for $47/share; Endo Health (ENDP) acquires Par Pharmaceutical for $8.05 billion
The first session of the week featured a range-bound opening hour that was followed by a steady advance. Heavily-weighted financials (+0.5%) and health care (+0.5%) displayed relative strength from the start while another influential group—technology (+0.4%)—climbed ahead of the market during the early afternoon.
The afternoon strength in the tech sector was partially due to gains among chipmakers. The PHLX Semiconductor Index advanced 1.0% with Altera (ALTR 46.93, +2.51) climbing 5.7% amid reports the company is once again discussing a potential deal with Intel (INTC 33.40, +0.41). Meanwhile, large cap tech names traded in mixed fashion, but that was masked by Apple's (AAPL 130.19, +1.42) 1.1% gain after activist investor Carl Icahn sent a letter to Apple Chief Executive Officer Tim Cook, pushing for a larger buyback, and saying Apple is worth $240/share at this time.
Elsewhere, the consumer discretionary sector (+0.4%) also outperformed with retailers contributing to the strength after ANN (ANN 46.40, +7.69) agreed to be acquired by Ascena Retail Group (ASNA 14.07, -0.14) for $47.00/share, representing a 21.4% premium to Friday's closing price.
In other M&A news, Endo Health (ENDP 80.77, -4.58) fell 5.4% after announcing the acquisition of Par Pharmaceutical for $8.05 billion. For its part, the health care sector (+0.5%) ended among the leaders with biotechnology making a contribution. The iShares Nasdaq Biotechnology ETF (IBB 360.30, +4.69) advanced 1.3%, helping the Nasdaq climb ahead of the benchmark index.
On the downside, consumer staples (-0.3%) and materials (-0.4%) spent the entire session in the red while the energy sector (-0.1%) recovered the bulk of its loss ahead of the close. The growth-sensitive group traded alongside crude oil, which showed intraday weakness, but returned to unchanged ($59.69/bbl) shortly after the end of the pit session.
It is worth noting that crude oil showed resilience even though the Dollar Index (94.20, +1.06) advanced 1.1% for the day. On a related note, Treasuries spent the session in a steady retreat, pushing the 10-yr yield higher by eight basis points to 2.22%.
Today's participation was well below average with fewer than 700 million shares changing hands at the NYSE floor.
Economic data was limited to the NAHB Housing Market Index for May, which fell to 54 from 56 while the Briefing.com consensus expected an increase to 57.
Tomorrow, April Housing Starts (Briefing.com consensus 1.019 million) and Building Permits (consensus 1.065 million) will be released at 8:30 ET.
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei +0.8%; Hong Kong’s Hang Seng -0.8%; China’s Shanghai Composite -0.6%
Markets in the Asia-Pacific region were mixed on Monday in the wake of some disappointing home price data out of China and following Wall Street’s tentative showing on Friday.
Economic data
- Japan
- March Core Machinery Orders +2.9% month-over-month (expected +1.8%; prior -0.4%); +2.6% year-over-year (expected -7.2%; prior +5.9%)
- March Industrial Production -0.8% month-over-month (expected -0.3%; prior -0.3%)
- March Capacity Utilization -1.2% month-over-month (prior -3.2%)
- Tertiary Industry Activity Index -1.0% (expected -0.5%; prior +0.4%)
- China
- April House Prices -6.1% year-over-year (prior -6.1%)
- Singapore
- April Non-Oil Exports -8.7% month-over-month (expected -13.3%; prior +23.0%); +2.2% year-over-year (expected -4.2%; prior +18.5%)
- Australia
- April New Motor Vehicle Sales -1.5% month-over-month (prior +0.5%)
Equity Markets
- Japan’s Nikkei increased 0.8% and finished at its high for the day on the back of an encouraging core machinery orders report for March. The financial (+2.8%), utilities (+1.5%), and consumer cyclical (+1.2%) sectors were the top-performing sectors. Dai-ichi Life Insurance (+10.6%) led all gainers, according to reports, after announcing increased shareholder payouts. It was followed by Sumitomo Electric (+7.6%), and T&D Holdings (+5.6%). Sharp Corp (-9.1%) was the worst-performing issue. Out of the 225 index members, 181 ended higher, 37 finished lower, and 7 were unchanged.
- Hong Kong’s Hang Seng declined 0.8% but finished the day on an upswing. The communications (-1.6%), diversified (-1.4%), and energy (-1.1%) sectors were the weakest links. China Mobile (-2.8%), Sino Land Co (-2.7%), and China Resources Land (-2.6%) led individual decliners. Want Want China Holdings (+1.6%) was the only stock to gain more than 1.0%. Out of the 50 index members, 9 ended higher, 38 finished lower, and 3 were unchanged.
- China’s Shanghai Composite declined 0.6%, pressured by a report showing another year-over-year decline in property prices and ongoing concern about the liquidity impact of new listings. Losses in the Chinese market were paced by the financial (-1.8%), and basic materials (-1.1%) sectors.
- India’s Sensex increased 1.3% and ended near its high for the day. Every sector participated in the gains, which were paced by the utilities (+2.9%), consumer non-cyclical (+2.4%), and financial (+1.8%) sectors. Individual standouts included GAIL India (+3.8%), Dr Reddy’s Laboratories (+3.4%), and Tata Power Co (+3.1%). Hero MotoCorp (-0.4%) and Coal India (-0.2%) were the only two stocks that lost ground on Monday.
- Australia’s S&P/ASX 200 declined 1.3% and ended at its lows for the day with a stronger Australian dollar weighing on matters. Index declines were led by the financial (-1.9%), consumer discretionary (-1.4%), and health care (-1.2%) sectors. BHP Billiton (-7.3%) was the worst-performing stock following the disappointing debut of its spin-off, South 32. ·
- Regional advancers: Taiwan +0.3%, South Korea +0.3%, Malaysia +0.6%, Indonesia +0.2%, Philippines +0.4%
- Regional decliners: Singapore -0.1%, Thailand -0.1%, Vietnam -1.6%
FX
- USD/CNY -0.03% at 6.2043
- USD/INR +0.4% at 63.691
- USD/JPY +0.4% at 119.69
EUROPE
Major European indices trade lower across the board with Italy’s MIB (-1.7%) leading the way. European investors remain concerned with Greece’s future after a leaked letter from Prime Minister Alexis Tsipras to International Monetary Fund’s Christine Lagarde suggested the country may run out of cash soon.
- Italy’s trade surplus expanded to EUR4.06 billion from EUR3.54 billion in March (expected EUR2.50 billion)
- Swiss March Retail Sales -2.8% year-over-year (expected -2.0%; prior -3.1%)
Closing Prices
- UK’s FTSE: + 0.1%
- Germany’s DAX: + 1.3%
- France’s CAC: + 0.4%
- Spain’s IBEX: + 0.2%
- Portugal’s PSI: -0.2%
- Italy’s MIB Index: -1.2%
- Irish Ovrl Index: -0.6%
- Greece ASE General Index: + 1.6%
Macroeconomic Data
Economic Data
from Briefing.com
- NAHB Housing Market Index : 54 vs 57 (Prior 56)
Market Internals
NYSE:
Lower Volumes than the day before – 669.3M vs 818.0M
Advancers outpaced Decliners (adv/dec): 1735 / 1320
New Highs outpaced New Lows (highs/lows): 107 / 26
NASDAQ:
Lower Volumes than the day before – 1630.6M vs 1651.4M
Advancers outpaced Decliners (adv/dec): 1801 / 1001
New Highs outpaced New Lows (highs/lows): 151 / 51
VOLATILITY S&P500 (VIX)
12.73 +0.35 (+2.83%)
Internals are not giving me much sense of a direction the market is heading to. Volume is remaining weak and VIX actually went higher which reflects the growing fear in the market. I don't really think the rally on Monday is sustainable for long...
Technical Updates
18,298.88 +26.32 (+0.14%)
Volume: 79,079,455 (below average of 100,385,065)
Range: 18,244.26 - 18,325.54
Range: 18,244.26 - 18,325.54
5,078.44 +30.15 (+0.60%)
Volume: 391,347,690 (below average of 437,943,074)
Volume: 391,347,690 (below average of 437,943,074)
Range: 5,037.54 - 5,084.50
S&P 500 INDEX (SPX: CBOE)
2,129.20 +6.47 (+0.30%)
Volume: 444,239,000 (below average of 536,727,646)
Range: 2,120.01 - 2,131.78
DOW met its resistance level as it reached a high while S&P has also made a new high and hitting the trendline at the same time. But NASDAQ seems to have some underlying bullishness with the bullish candle. I suppose if market is to go higher, it should be influenced by the technology sector. Anyway the volume is relatively lower and I don't think this run could be continue much longer.
Commodities
Commodities
Closing Commodities: WTI Oil Loses Gains, Closes Lower
Energy
Agriculture
Metals
Dollar Finds Relief
Bonds
- WTI crude oil sold off today, but recovered modestly from the $59/barrel level
- By the time pit trading closed, June crude oil lost $0.25 today to $59.44/barrel
- June natural gas ended flat at $3.01/MMBtu.
- Gold remained near the flat line this afternoon, closing the session $2.30 higher at $1227.60/oz. July silver rose $0.16 to $17.73/oz
Energy
- June crude oil futures fell $0.25 to $59.44/barrel
- June natural gas closed flat at 3.01/MMBtu
- RBOB Gasoline closed $0.01 lower at $2.04/gallon
- Heating oil futures closed $0.01 lower at $1.99/gallon
Agriculture
- July corn closed $0.03 higher to $3.68/bushel
- July wheat closed $0.11 higher to $5.22/bushel
- July soybeans closed $0.02 higher to $9.55/bushel
- Ethanol closed $0.01 higher at $1.69/gallon
- Sugar #11 closed 011 cents lower to 12.78 cents/lb
Metals
- June gold ended today’s session $2.30 higher to $1227.60/oz
- July silver closed $0.16 higher at $17.73/oz
- July copper closed $0.02 lower at $2.90/lb
Currencies
- The dollar gained against all of the majors today, with the U.S. Dollar Index rising 1.13% to 94.19 in conjunction with crude oil selling and buying in global equities. The NAHB Housing Index for May, which missed expectations at 54, appeared to have no effect on the dollar trade
- EUR/USD: -0.72% to $1.1308
- The ZEW indices for the eurozone and Germany will be released during Tuesday's European session. Final CPI for the eurozone will come out too
- The Aussie declined ahead of Tuesday's release of the notes from the RBA's May meeting
- AUD/USD: -0.71% to $0.7980
- NZD/USD: -1.22% to $0.7383
- GBP/USD: -0.46% to $1.5651
- USD/JPY: +0.50% to 119.97
- USD/CHF: +1.08% to 0.9259
- Swiss Retail Sales missed expectations, falling at a 2.8% annual rate in March. February saw a 3.1% decline
- USD/CAD: +1.21% to 1.2159
Bonds
Treasuries Give Back Friday's Gains
- Most of Friday's relief rally in the Treasury complex has evaporated today on little data but a bullish stock market. The yield curve steepened, as it has been doing in most of the April/May sell-off, perhaps reflecting stronger economic growth or a Fed that's behind the curve in the face of higher energy prices rather than the expectation of sooner and faster rate hikes from the FOMC
- Yield check:
- 2-yr: +2 bps to 0.56%
- 5-yr: +7 bps to 1.53%
- 10-yr: +9 bps to 2.23%
- 30-yr: +9 bps to 3.02%
- News:
- Speaking in Stockholm, Chicago Fed President Evans (FOMC voter) maintained the FOMC's party line, saying that decisions will be data dependent and that the path of policy normalization may be more gradual than it has been in the past
- The Greek 10-year sovereign debt yield rose 74 basis points to 11.34% after the media reported that the Greek government was barely able to repay the IMF 750 million euro last week
- The NAHB Housing Index fell to 54 in May from 56 in April. The Briefing.com consensus was 57. The gauge of builders' views on prospective-buyer traffic declined by one point to 39
- Commodities:
- WTI Crude: -0.12% to $59.62/bbl
- Gold: -0.07% to $1,224.40/troy oz.
- Copper: -0.60% to $2.91/lb.
- Currencies:
- EUR/USD: -0.77% to 1.1302
- USD/JPY: +0.53% to 120.02
- Data out Tuesday:
- April Housing Starts (08:30 ET)
- April Building Permits (08:30 ET)
- Fed Speakers:
- New York Fed President Dudley (FOMC voter) presides over a meeting of the Economic Club of New York (11:45 ET)
- Fed Chair Yellen (FOMC voter) participates in a meeting of the Financial Stability Oversight Council (14:30 ET)
Treasury Yields:
- 2 Year Note 0.58% +0.03
- 5 Year Note 1.54% +0.08
- 10 Year Note 2.23% +0.09
- 30 Year Bond 3.02% +0.09
2/30 Spread: 244 bps ( +6 ) … 2/10 Spread: 165 bps ( +6 )
Preview for Tuesday 19 May, 2015
Economic Data
Tuesday (19 May) :
- Housing Starts : 1019K (Prior 926K)
- Building Permits : 1065K (Prior 1039K)
Earnings Highlights
Tuesday (19 May) :
BMO - AINV CMCM CYRN DKS EJ HD LEJU RRGB SKYS SSI TJX WMT
AMC - ADI ADSK CSC PLAY DY ETSY HEI NDSN PRGN QIHU TEDU VSAT ZPIN
BMO - AINV CMCM CYRN DKS EJ HD LEJU RRGB SKYS SSI TJX WMT
AMC - ADI ADSK CSC PLAY DY ETSY HEI NDSN PRGN QIHU TEDU VSAT ZPIN
Summary
I hardly see any increase in volume given market makes a new high, so it is most likely to be hype up action. However I am not entirely bearish as technology sector might be the turning point. Nonetheless if volume is going to remain weak, I reckon a correction is not too far from happening.
Direction for Tuesday 19 May, 2015; Down
2015 Weekly Directional Accuracy: 9/17 (52.94%)
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