Monday, 4 May 2015 - AMC

Dow +46.34 at 18070.40, Nasdaq +11.54 at 5016.93, S&P +6.20 at 2114.49

I can't really say that Friday session was a bullish one as I feel it is short-covering instead. Or maybe market is presuming the weak economic data as a factor that might delay Fed's decision to raise interest rate. And whether we would see more downside would probably affected by the employment data next week.

With May coming, maybe we should see a Sell in May this time if the momentum continues.

Direction for Monday 4 May, 2015; Up

I suppose that was continuing momentum from last Friday at the early session. It is clearly there were more short selling after the market hit the resistance level. Looks like the bulls are running out of steam here. China's manufacturing PMI reflected another disappointing growth and as resulted, crude oil prices dropped on Monday with the Dollar Index creeping up too.                                             

Market Summary

Industry Watch

Strong: Industrials, Financials, Health Care, Utilities

Weak: Energy, Materials

Other Market Moving Factor:

• Quiet start to the week
• China's Final April HSBC Manufacturing PMI hits one-year low (48.9; expected 49.4)

[BRIEFING.COM] The stock market kicked off the new trading week on an upbeat, albeit quiet, note. The Dow and S&P 500 gained 0.3% apiece while the Nasdaq Composite (+0.2%) slipped behind the broader market during afternoon action.  

"Quiet" was the general theme on Monday as most global equity markets also posted gains while Japan's Nikkei and UK's FTSE were closed for holidays. 

Seven of ten sectors finished in the green with financials (+1.0%) and utilities (+0.7%) ending in the lead. The countercyclical utilities sector lost the lead during the final hour while financials crept higher throughout the day, also overtaking the health care sector (+0.6%) during afternoon action. 

Still, the health care space ended ahead of the broader market despite an intraday pullback in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 345.19, +1.19) was up more than 2.0% at the start, but narrowed its advance to 0.4% by the close. Furthermore, the ETF was pressured back below its 50-day moving average (349.00) after spiking above that level at the start. 

Turning to the cyclical side, only the financial sector (+1.0%) could finish the day ahead of the S&P 500 while the other five growth-sensitive groups underperformed. The top-weighted technology sector (unch) spent the day behind the broader market with large cap names trading in mixed fashion. To that point, Google (GOOGL 552.84, +1.68) and IBM (IBM 173.97, +0.30) posted respective gains of 0.3% and 0.2% while Apple (AAPL 128.70, -0.25) and Microsoft (MSFT 48.24, -0.41) registered losses. Similarly, chipmakers lagged with the PHLX Semiconductor Index shedding 0.2%. The semiconductor index underperformed even as ON Semiconductor (ON 12.50, +0.69) spiked 5.8% following better than expected results.  

On the downside, the energy sector (-0.2%) was an early leader, but the group surrendered its early gain during the opening hour and remained in negative territory until the close. Crude oil weighed, but the energy component managed to trim its loss to 0.3% by the close. WTI crude settled at $58.92/bbl, likely seeing some pressure from the second consecutive advance in the Dollar Index (95.43, +0.14). 

Treasuries climbed during morning action, but reversed to lows following today's economic data with the 10-yr rising three basis points to 2.14%.  

Today's participation was on the light side with fewer than 680 million shares changing hands at the NYSE floor. 

Economic data was limited to the Factory Orders report for March, which increased 2.1% after declining a negatively revised 0.1% (from +0.2%) in February while the Briefing.com consensus expected an increase of 2.1% 

• The March gain was the first month-over-month increase since July 2014 with the bulk of the gain resulting from a 41.9% increase in March aircraft orders 
• Durable goods orders were revised up to 4.4% from 4.0% reported in the advance estimate 
• Excluding transportation, durable goods orders were revised up to +0.4% from -0.2% 

Tomorrow, the Trade Balance for March (Briefing.com consensus -$40.00 billion) will be released at 8:30 ET while the April ISM Services report (consensus 56.4) will cross the wires at 10:00 ET. 

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei closed for holiday; Hong Kong’s Hang Seng flat; China’s Shanghai Composite +0.9%
Markets in the Asia-Pacific region finished Monday mostly higher, bolstered by Wall Street’s strong showing on Friday and a downwardly revised HSBC manufacturing PMI reading out of China that stirred the pot of monetary policy stimulus speculation.

Economic data

• China
• Final April HSBC Manufacturing PMI 48.9 (expected 49.4); prior 49.2
• India
• April HSBC Manufacturing PMI 51.3 (expected 52.5; prior 52.1)
• South Korea
• April HSBC Manufacturing PMI 48.8 (expected 49.0; prior 49.2)
• March Current Account KRW 10.39 bln (prior KRW 6.44 bln)
• Australia
• March Building Approvals +2.8% month-over-month (expected -2.0%; prior -1.6%)
• March Private House Approvals +1.1% (prior +0.2%)
• ANZ Job Advertisements +2.3% month-over-month (prior -1.3%)
• April M1 Inflation Gauge +0.3% month-over-month (prior +0.4%)
• Singapore
• Q1 Unemployment Rate 1.8% (expected 2.0%; prior 1.9%)

Equity Markets

• Japan’s Nikkei closed for Golden Week holiday
• Hong Kong’s Hang Seng ended Monday flat. Individual standouts included New World Development Co (+5.2%), Wharf Holdings Ltd (+4.8%), and Sun Hung Kai Properties (+4.1%). Leading decliners included Hang Lung Properties (-3.6%), China Resources Land (-2.8%), and Cathay Pacific Airways (-2.0%). Out of the 50 index members, 34 ended higher, 14 finished lower, and 2 were unchanged.
• China’s Shanghai Composite increased 0.9%, rebounding from an early 1.2% decline that followed the report of the final HSBC Manufacturing PMI reading for April being revised down to 48.9 from 49.2. A number below 50 denotes contraction. The turn in the market was catalyzed by the expectation of more monetary policy stimulus being provided. The industrial sector (+2.2%) helped pace gains for the Chinese market.
• India’s Sensex increased 1.8%, rallying in the wake of Wall Street’s strong showing on Friday. Gains were broad based and were led by the energy (+3.9%) and communications (+3.1%) sectors. Leading gainers included Oil & Natural Gas Corp (+8.0%), Bajaj Auto (+7.2%), and Cipla Ltd (+5.9%). Only three stocks ended the day lower: ICICI Bank (-0.6%), Tata Motors (-0.4%), and Larsen & Toubro (-0.1%)
• Australia’s S&P/ASX 200 increased 0.2% and finished at their highs for the session. Overall trading action was subdued ahead of the Reserve Bank of Australia’s interest rate decision on Tuesday. The metals & mining, materials, and resources sectors led the way, offsetting some weakness in the banking sector.
• Regional advancers: Taiwan (+0.3%), South Korea +0.2%, Indonesia +1.1%, Philippines +1.3%
• Regional decliners: Singapore -0.1%, Vietnam -3.1% · Holiday closure: Malaysia (Wesak Day), Thailand (Special Holiday)

FX

• USD/CNY +0.1% at 6.2084
• USD/INR -0.2% at 63.630
• USD/JPY +0.1% at 120.22

EUROPE

Major European indices trade higher across the board with Germany’s DAX (+1.3%) in the lead. Elsewhere, according to AFP, Greek Finance Minister Yanis Varoufakis has been sidelined from discussions with European creditors. Meanwhile Prime Minister Alexis Tsipras’ spokesperson said that “everything” is going to be decided this week.

• Eurozone Final April Manufacturing PMI 52.0 (consensus 51.9; prior 51.9) while May Sentix Investor Confidence fell to 19.6 from 20.0 (expected 19.8)
• Germany’s Final April Manufacturing PMI 52.1 (expected 51.9; previous 51.9)
• France’s Final April Manufacturing PMI 48.0 (consensus 48.4; prior 48.4)
• Italy’s Final April Manufacturing PMI 53.8 (expected 53.5; prior 53.3)
• Spain’s Final April Manufacturing PMI 54.2 (consensus 54.3; last 54.7)
• Swiss April SVME PMI 47.9 (consensus 47.0; prior 47.9)

Closing Prices

• UK’s FTSE: Closed
• Germany’s DAX: + 1.4%
• France’s CAC: + 0.7%
• Spain’s IBEX: + 0.4%
• Portugal’s PSI: + 1.8%
• Italy’s MIB Index: + 0.7%
• Irish Ovrl Index: Closed
• Greece ASE General Index: + 0.4%

Macroeconomic Data

Economic Data

from Briefing.com

• Factory Orders : 2.1% vs 2.1% (Prior -0.1% - Down)

FACTORY ORDERS

Highlights

• Manufacturing orders increased 2.1% in March after declining a negatively revised 0.1% (from +0.2%) in February. The Briefing.com Consensus expected manufacturing orders to increase 2.1%.

Key Factors

• The March gain was the first month-over-month increase since July 2014. Unfortunately, almost the entire gain can be attributed to a bump in aircraft orders, which increased 41.9% in March.Durable goods orders were revised up from 4.0% in the advance estimate to 4.4%. 
• Durable goods orders declined 1.4% in February.Excluding transportation, durable goods orders were revised up from -0.2% to +0.4%.
• Nondurable goods orders declined 0.3% in March after increasing 1.1% in February. Higher petroleum prices weren't enough to keep petroleum refinery orders (-1.9% from +10.4%) in the black.
• Orders of nondefense durable goods excluding aircraft were revised up to +0.1% from -0.5% in the advance release. Shipments, which factor into future Q1 2015 GDP revisions, were unrevised at -0.4%. 

Big Picture

• The first increase in factory orders in 8 months was the result of a big increase in aircraft orders.

Market Internals

NYSE:

Lower Volumes than the day before – 697.1M vs 713.0M 


Advancers outpaced Decliners (adv/dec): 1780 / 1286

New Highs outpaced New Lows (highs/lows): 53 / 16

NASDAQ:

Lower Volumes than the day before – 1658.1M vs 1833.3M

Advancers outpaced Decliners (adv/dec): 1610 / 1181

New Highs outpaced New Lows (highs/lows): 63 / 34

VOLATILITY S&P500 (VIX)
12.85 +0.15 (+1.18%)

I can't say the internals were bullish still as volume was weak but New Highs seems to increase slightly. From what I saw in the VIX candlestick, it appears that we are going to see a rebound as the underlying strength is not convincing.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

18,070.40 +46.34 (+0.26%)

Volume: 86,013,132 (below average of 99,487,854)
Range: 18,026.02 - 18,133.76

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,016.93 +11.54 (+0.23%)
Volume: 415.4M (below average of 438,285,723)

Range: 5,013.02 - 5,043.62

S&P 500 INDEX (SPX: CBOE)

2,114.49 +6.20 (+0.29%)

Volume: 458,688,000 (below average of 536,030,200)

Range: 2,110.23 - 2,120.95 

The 3 indices are at their respective resistance level and they are unable to do a breakout except NASDAQ. But the latter is forming a head and shoulder pattern though. Personally I feel the market ain't going to go higher after subsequent testing of resistance level.  

Commodities

Closing Commodities: WTI Oil Closed Below $59/Barrel

• WTI crude oil lost steam today and finished below the $59/level
• June crude ultimately finished floor trading -$0.19 at $58.92/barrel
• In other energy, June nat gas rose $0.04 to $2.82/MMBtu
• June gold rose $12.70 to $1186.90/oz, while May silver gained $0.30 to $16.41/oz despite modest strength in the dollar index
• However, following this along with weak China econ data overnight, copper fell modestly

Energy

• June crude oil futures fell $0.19/barrel to $58.92/barrel
• June natural gas closed $0.04 higher at $2.82/MMBtu
• RBOB Gasoline closed $0.01 lower at $2.03/gallon
• Heating oil closed flat at $1.98/gallon

Agriculture

• July corn closed $0.02 lower to $3.61/bushel
• July wheat closed $0.01 lower to $4.73/bushel
• July soybeans closed $0.12 higher at $9.77/bushel
• Ethanol closed $0.03 higher at $1.62/gallon
• Sugar #11 closed 0.40 cents lower to 12.51 cents/lb

Metals

• June gold ended today’s session $12.70 higher to $1186.90/oz
• July silver closed $0.30 higher at $16.41/oz
• July copper closed $0.02 lower to $2.91/lb

Currencies

Dollar Extends Winning Streak to Two

• The U.S. Dollar Index rallied 0.10% to 95.40 today. The April employment report will be released on Friday
  • The euro currency accounted for most of the dollar's rally, with EUR/USD declining 0.51% to $1.1144. 
• The pound sterling fell 0.12% to 1.5120. The U.K. will hold its national election on May 7th and there is considerable uncertainty surrounding the outcome
• USD/JPY fell 0.05% to Y120.10
• AUD/USD fell 0.07% to $0.7845
  • The Reserve Bank of Australia will meet Tuesday, and is widely expected to cut rates
• NZD/USD fell 0.08% to $0.7534
• USD/CAD fell 0.37% to 1.2114
• USD/CHF  rallied 0.15% to 0.9341

Bonds

Treasuries Mixed as Curve Steepens

• 10 and 30-years lost ground today while 2 and 5-year notes were unchanged 
• Yield check:
  • 2-yr: unch at 0.60%
  • 5-yr: unch at 1.50%
  • 10-yr: +3 bps to 2.14%
  • 30-yr: +5 bps to 2.88%

• News:
  • China's HSBC Manufacturing PMI fell to a lower-than-expected 48.9 in April. The preliminary number was 49.2 and the Purchasing Managers' Index was at 49.6 in March
  • Factory Order growth in March was 2.1%, in-line with the Briefing.com consensus and much better than the fall of 0.1% in February
    • Almost the entire gain could be attributed to a bump in aircraft orders, which increased 41.9% in March
    • This was the first m/m increase since July of 2014
  • Chicago Fed President Evans (known dove and FOMC voter) said that he probably would not support a rate hike until early 2016
    • He said the risks of an early hike outweigh the risks of a late one and that Fed policy should arguably be more accommodative
  • The 30-year bond yield hit its 200-day moving average (2.87%) for the first time since March of 2014

• Commodities:
  • WTI Crude: -0.36% to $58.94/bbl
  • Gold: +1.16% to $1,188.10/troy oz.
  • Copper: -0.53% to $2.914/lb.

• Currencies:
  • EUR/USD: -0.49% to $1.1145
  • USD/JPY: -0.03% to Y120.14

• Data Out Tuesday:
  • March Trade Balance (08:30 ET)
  • April ISM Services (10:00 ET)
• Fed Speaker: 
  • Minneapolis Fed President Kocherlakota (non-FOMC voter) (20:00 ET)

Treasury Yields:

• 2 Year Note 0.60% UNCH
• 5 Year Note 1.51% +0.01
• 10 Year Note 2.16% +0.04
• 30 Year Bond 2.88% +0.06

2/30 Spread: 228 bps ( +6 ) …  2/10 Spread: 156 bps ( +4 )

Preview for Tuesday 5 May, 2015

Economic Data

Tuesday (5 May) :

• Trade Balance : -$40.0B (Prior $35.4B)
• ISM Services : 56.4 (Prior 56.5)

Earnings Highlights

Tuesday (5 May) :
BMO - ABMD ACTA AKRX ALLT RESI AMAG AFSI ANIP ADM BLMN BBEP BPI BBW CCG CSG CLDT CIE CVLT SCOR CRTO CYNO DTV DISCA DW EMR EIGIENR EL EXLP EXH GCAP GLT GPX GVA GTN GLDD HRS HCA HCP HW HRC HEP H ICE ISIS K KEM KMT KLIC LPX MMP MNK MSO MDC NNN NSM NBL NAO NTi NWN OZM ODP OXFD PRIM SALE SABR SGNT SBH SMG SRE SSE SKYS SPAR STWD SNSS NGLS TECH TGH MDCO TW TDG TLP TRW UAM USAK VLP VSH VPG VMC WLT WNR WNRL WEC ZTS
During Mkt Hours - YORW
AMC - AGU ATSG Y ALL AWR AMSG AMRS ANAD ANDE WTR ARC AIZ ACLS AXLL BIO BRDR CSU CTLT CDI ICEL CENT CTL CERS CYH CVG COUP CRAY CSGS CYNI DTLK DKL DK DVN FANG DLR EA ENPH ERA ESE EXAM FISV FOSLFTR GNMK GHDX GCA GMED GRPN GPOR HK HLF HRZN HPTX IAG ICUI IGTE TEG IGT IRWD XXIA JIVE KAR KGC KONA LC LMOS MHLD MIG MM MYL MYGN NVGS NYMT NFX NDLS NWPX OCLR OKE OKS OUT PACB PZZA PKD PCTI PXD PAA PAGP PBPB POWL QGEN QUAD QNST RLOC RP RGP RNR REGI REXX RUBI SBRA SKUL SM SCTY SPA SLF SUPN TTOO TMH TTGT TSRA TRNX CLUB TNET TSE TRIV USNA VRTS VVUS WAGE DIS WTW WSTC WR WGP WES WSR ZFGN ZAGG ZLTQ ZEN ZU

Summary

Monday session doesn't really indicate anything in the market or should I say it is hinting a possibility of a reversal. I am not surprised if the market is going into correction after failing to break above the resistance level. Inferring from the technical analysis, it is likely that we would see more downside the next few days.

Direction for Tuesday 5 May, 2015; Down

2015 Daily Directional Accuracy: 33/64 (51.56%) 

2015 Weekly Directional Accuracy: 9/15 (60.00%)