Dow -36.94 at 18068.23, Nasdaq -17.38 at 4976.19, S&P -6.21 at 2099.12
Another volatile session to end the day. Market opened lower but it recovered after 1 hour. Market is still feeling cautious post employment reports last week. The Dollar Index continues to fall and this gave the crude oil a chance to rally.Monday was more to a quiet session. Market seems to be in a state of mixed reaction as it is neither bullish or bearish. But the technology sector is lagging and that might translates into some weakness in the market. I think tomorrow session is likely to continue with the slightly bearish condition but I don't feel it is going to be big or put it simply - flat to downside.
Direction for Tuesday 12 May, 2015; Down
Market Summary
Industry Watch
Strong: Consumer Staples, Energy, Industrials, Telecom Services
Weak: Health Care, Financials, Materials, Technology
Other Market Moving Factor:
- European bond markets remain pressured: yields spiking
- U.S. Treasuries erase overnight losses
Equity indices endured a shaky open after the overnight session featured more selling in European and U.S. bond markets; however, that pressure abated shortly before the opening bell with the U.S. 10-yr note marking its low at 8:00 ET. At that time, the benchmark yield marked a session high at 2.36% and began its daylong retreat that ended at 2.26% (-3 bps). The ensuing rally in Treasuries fostered a rebound in equities with the S&P 500 returning above its 50-day moving average (2,089) after sliding beneath that level at the start.
The S&P 500 ended the day not far below its flat line, but only two sectors finished the day with gains. The energy space (+0.4%) outperformed throughout the day thanks to a 2.5% gain in crude oil ($60.59/bbl), which was underpinned by a 0.5% decline in the Dollar Index (94.55, -0.46).
Elsewhere, the industrial sector (-0.1%) settled just below its flat line even though high-beta transport stocks lagged notably. The Dow Jones Transportation Average fell 1.2% with all 20 components registering losses while the largest sector member—General Electric (GE 27.03, +0.11)—gained 0.4%.
Meanwhile, the remaining cyclical sectors posted losses. The materials space (-1.0%) spent the day behind other groups while technology (-0.5%) and financials (-0.4%) prevented the broader market from turning positive. Similar to transport stocks, high-beta chipmakers displayed relative weakness throughout the day with the PHLX Semiconductor Index falling 0.9%.
As for large cap tech names, Microsoft (MSFT 47.35, -0.02) and Cisco Systems (CSCO 29.23, +0.02) outperformed while Google (GOOGL 538.73, -7.05) and Facebook (FB 77.46, -0.55) lagged. Also of note, Yelp (YELP 48.83, +0.21) settled lower by 0.4% after the Wall Street Journal contrasted the potential acquisition of the company with Verizon's (VZ 49.62, -0.18) purchase of AOL (AOL 50.52, +7.93) for $50/share or $4.40 billion. Recall that Yelp spiked 23.0% on Thursday after the Wall Street Journal reported the social media company is looking into a potential sale.
Similar to technology, the influential health care sector (-0.5%) presented a headwind throughout the day. The sector finished among the laggards even as the biotech group settled near the broader market with the iShares Nasdaq Biotechnology ETF (IBB 351.79, -0.50) reclaiming its 50-day moving average (349.96).
Today's participation was a bit light with fewer than 700 million shares changing hands at the NYSE floor.
Economic data was limited to the Treasury Budget and JOLTS:
- The Treasury budget showed a surplus of $157.00 billion in April 2015, up from a surplus of $106.90 billion in April 2014 and roughly in-line with the Briefing.com consensus estimate that called for a surplus of $155.00 billion
- The Treasury data are not seasonally adjusted, so the April surplus cannot be compared to the $52.90 billion deficit recorded in March
- The Job Openings and Labor Turnover Survey for March showed that job openings decreased to 4.994 million from a revised rate of 5.144 million (from 5.133 million)
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei flat; Hong Kong’s Hang Seng -1.1%; China’s Shanghai Composite +1.6%
Markets in the Asia-Pacific region were mixed Tuesday as Wall Street’s weak showing on Monday and the striking jump in sovereign bond yields around the globe curtailed investor enthusiasm. China’s Shanghai Composite was a notable exception in the region as it followed up Monday’s 3.0% gain with a 1.6% increase on Tuesday.
Economic data
- Japan
- March Leading Index 105.5 (expected 105.5; prior 104.8)
- Coincident Indicator -1.2% (prior -2.8%)
- Australia
- March Home Loans +1.6% month-over-month (expected +1.0%; prior +1.1%)
- March Invest Housing Finance +6.4% month-over-month (prior -3.4%)
- New Zealand
- REINZ House Price Index +0.5% month-over-month (prior +6.7%)
Equity Markets
- Japan’s Nikkei ended Tuesday flat, but finished the session on an upswing that recouped an earlier loss of about 150 points. The financial (+0.7%) and industrial (+0.4%) sectors provided support that offset weakness in the energy (-0.5%) and basic materials (-0.3%) sectors. Sharp Corp (+11.1%) rebounded from Monday’s drubbing to lead individual gainers and was followed by Suzuki Motor (+7.8%) and Nisshinbo Holdings (+7.7%). Nippon Kayaku (-7.7%) and Taiyo Yuden (-6.8%) were the biggest decliners. Out of the 225 index members, 136 ended higher, 83 finished lower, and 6 were unchanged.
- Hong Kong’s Hang Seng declined 1.1% and ended at its low for the day, dropping roughly 200 points in the final hour. Every sector closed the day with a loss. The technology (-2.6%) and basic materials (-2.0%) sectors were the weakest areas, but the financial sector (-1.1%) was the most influential laggard. China Overseas Land & Investment (-3.6%), China Unicom Hong Kong (-2.8%), and China Mengniu Dairy (-2.5%) were the largest decliners. Tingyi Cayman Islands Holding (+3.8%) was the only stock to gain more than 1.0%. Out of the 50 index members, 5 ended higher, 43 finished lower, and 2 were unchanged.
- China’s Shanghai Composite continued Monday’s rally and added 1.6% on Tuesday. The index closed at its high for the day, underpinned by broad-based buying interest. The utilities (+3.1%) (+3.1%), communications (+2.9%), and industrial (+2.6%) sectors led the way for the Chinese market.
- India’s Sensex declined 2.3% in a steady selloff and ended at its low for the day. The weakness preceded the release of the industrial production and CPI reports and was paced by big losses in the basic materials (-5.4%), industrial (-3.7%), and financial (-2.9%) sectors. Tata Steel (-6.2%), Vedanta Ltd (-5.2%), and Bharat Heavy Electricals (-5.2%) topped the list of decliners. Hero MotoCorp (+3.5%) and Dr Reddy’s Laboratories (+3.3%) were the only two stocks that finished the day higher.
- Australia’s S&P/ASX 200 increased 0.9% in a rebound effort that was led by the materials (+1.7%), metals & mining (+1.7%), and information technology (+1.7%) sectors.
- Regional advancers: Taiwan +0.2%, Indonesia +0.6%, Philippines +0.2%
- Regional decliners: South Korea -0.03%, Singapore -0.8%, Malaysia -0.4%, Thailand -1.0%, Vietnam -1.3%
FX
- USD/CNY -0.06% at 6.2089
- USD/INR +0.1% at 64.171
- USD/JPY -0.1% at 119.98
EUROPE
Major European indices trade lower across the board with Germany’s DAX (-1.9%) leading the retreat. According to Kathimerini, Greece has made its EUR750 million payment to the International Monetary Fund by using reserves held at the Fund, which must be replenished within a month.
- UK’s March Industrial Production +0.5% month-over-month (expected 0.1%; prior 0.1%); +0.7% year-over-year (consensus 0.2%; previous 0.1%). March Manufacturing Production +0.4% month-over-month (consensus 0.3%; last 0.5%); +1.1% year-over-year (expected 1.0%; prior 1.2%)
Closing Prices
- UK’s FTSE: -1.4%
- Germany’s DAX: -1.7%
- France’s CAC: -1.1%
- Spain’s IBEX: -1.1%
- Portugal’s PSI: -0.7%
- Italy’s MIB Index: -0.9%
- Irish Ovrl Index: -1.3%
- Greece ASE General Index: + 1.4%
Macroeconomic Data
Economic Data
from Briefing.com
- JOLTS - Job Openings : 4.994M (Prior 5.144M - Up)
- Treasury Budget : $157.0B vs $155.0B (Prior $106.9B)
Highlights
- The Treasury Budget showed a surplus of $157.0 billion in April 2015, up from a surplus of $106.9 billion in April 2014 and roughly in-line with the Briefing.com consensus estimate that called for a surplus of $155.0 billion.
Key Factors
- Total outlays were $315.0 billion while total receipts were $472.0 billion.
- Outlays increased by $7.7 billion from April 2014.
- Receipts increased by $57.6 billion from April 2014.
- Fiscal year-to-date, the deficit is is $282.8 billion versus $306.4 billion for the comparable period in FY14.
- The Treasury data are not seasonally adjusted, so the April surplus cannot be compared to the $52.9 billion deficit recorded in March.
Big Picture
- Raw data available at: www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/current.htm
Market Internals
NYSE:
Higher Volumes than the day before – 710.2M vs 696.3M
Decliners outpaced Advancers (adv/dec): 1377 / 1688
New Lows outpaced New Highs (highs/lows): 33 / 65
NASDAQ:
Lower Volumes than the day before – 1694.4M vs 1722.9M
Decliners outpaced Advancers (adv/dec): 1203 / 1574
New Highs equal New Lows (highs/lows): 59 / 59
VOLATILITY S&P500 (VIX)
13.86 +0.01 (+0.07%)
13.86 +0.01 (+0.07%)
Internals are not giving a clear picture to the market. But it still indicates some bearishness. VIX's intra-day movement was huge yet it closed just a bit above Monday's close. I can only say it is getting divergence here.
Technical Updates
18,068.23 -36.94 (-0.20%)
Volume: 89,273,563 (below average of 99,280,829)
Range: 17,924.80 - 18,119.18
Range: 17,924.80 - 18,119.18
4,976.19 -17.38 (-0.35%)
Volume: 403,841,577 (below average of 434,209,755)
Volume: 403,841,577 (below average of 434,209,755)
Range: 4,931.60 - 4,995.50
S&P 500 INDEX (SPX: CBOE)
2,099.12 -6.21 (-0.29%)
Volume: 468,682,000 (below average of 529,991,923)
Range: 2,085.57 - 2,105.06
Alright the candlestick actually gives me the sense that market is likely to stay bullish. MACD momentum is also showing a slowdown in the bearishness. Could this be a sign of market turning around to do a bullish breakout? Nonetheless I feel market is still lack of a leadership and perhaps market is likely to stay sideway.
Commodities
Commodities
Closing Commodities: WTI Crude Rallies Following OPEC Report, Ahead of API and EIA Data
Energy
Agriculture
Metals
Dollar Declines
Bonds
- Following OPEC’s monthly report and ahead of the weekly EIA storage report, WTI crude oil closed ended the day $1.49/barrel (or +2.5%) to $60.73/barrel
- Corn and ultimately closed near the unchanged line following today’s USDA WASDE report. Corn gained one cent to $3.61/bu, while wheat futures lost one cent to $4.81/bu
- June natural gas rallied 3.6% today to $2.90/MMBtu
- Metals gained today as well
- June gold rose $9.80 to $1192.70/oz, while July silver gained $0.25 to $16.55/oz.
Energy
- June crude oil futures rose $1.49 (+2.51%) to $60.73/barrel
- June natural gas closed $0.10 higher (+3.57%) at $2.90/MMBtu
- RBOB Gasoline closed $0.05 higher (+2.51%) at $2.04/gallon
- Heating oil futures closed $0.06 higher at $2.00/gallon
Agriculture
- July corn closed $0.01 higher to $3.61/bushel
- July wheat closed $0.01 lower at $4.81/bushel
- July soybeans closed $0.18 lower (-1.8%) to $9.56/bushel
- Ethanol closed $0.02 lower at $1.63/gallon
- Sugar #11 closed 0.10 cents higher to 13.58 cents/lb
- The USDA released its monthly WASDE report at Noon ET today. Data from the report put initial pressure on Wheat, Corn and Soybeans in mid-day trade, with Soybeans being the commodity to preserve a large portion of its losses into the close
Metals
- June gold ended today’s session $9.80 higher to $1192.70/oz
- July silver closed $0.25 higher at $16.55/oz
- July copper closed $0.02 higher to $2.93/lb
Currencies
- The dollar lost against all of the majors today as the bull trend that began last summer continues to consolidate
- EUR/USD: +0.67% to $1.1221
- European sovereign yields continued higher this morning, eroding one of the factors that has decimated this pair over the past several months. That said, U.S. yields went higher as well
- USD/JPY: -0.15% to 119.98
- JGB yields finally joined the global sell-off in fixed income, with the Japanese 10-year yield rising 7 basis points to 0.46%
- GBP/USD: +0.67% to $1.5681
- U.K. Manufacturing Production beat expectations rising 0.4% m/m in March versus a 0.5% increase in February
- AUD/USD: +1.22% to $0.7991
- NZD/USD: +0.47% to $0.7368
- USD/CAD: -0.85% to 1.1998
- USD/CHF: -0.60% to 0.9289
Bonds
Treasuries Recover Losses to End Green
- After getting shelled in the overnight session along with European sovereign bonds, U.S. Treasuries recovered throughout the day to end positively. Profit-taking in curve-steepening trades pressured the front end of the curve
- Yield check:
- 2-yr: -1 bp to 0.61%
- 5-yr: -3 bps to 1.57%
- 10-yr: -3 bps to 2.26%
- 30-yr: -2 bps to 3.02%
- News:
- San Francisco Fed President Williams (FOMC voter) spoke in New York today
- He said that he sees "a safer course in a gradual increase, and that calls for starting a bit earlier."
- Williams expects that unemployment will fall to 5% this year
- He noted that even if the Fed hikes rates, policy will still remain extremely accommodative between low policy rates and the Fed's $4 trillion balance sheet
- The Treasury auctioned $24 billion of 3-year notes and it found solid demand. There was a stop-through of 0.8 bps
- High yield: 1.000%
- Bid-to-cover: 3.34
- Indirect bid: 52.7%
- Direct bid:11.6%
- March JOLTS - Job Openings were 4.994 million versus 5.144 million in February
- San Francisco Fed President Williams (FOMC voter) spoke in New York today
- Commodities:
- WTI Crude: +2.23% to $60.57/bbl
- Gold: +0.84% to $1,192.9/troy oz.
- Copper: +0.95% to $2.9305/lb.
- Currencies:
- EUR/USD: +0.64% to $1.1218
- USD/JPY: -0.29% to 119.81
- Data out Wednesday:
- MBA Mortgage Index for the week ending 05/09 (07:00 ET)
- April Retail Sales and Retail Sales ex-auto (08:30 ET)
- April Export Prices ex-agriculture and Import Prices ex-oil (08:30 ET)
- March Business Inventories (10:00 ET)
- Crude Inventories for the week ending 05/09 (10:30 ET)
- New Supply:
- $24 billion 10-year note auction (13:00 ET)
Treasury Yields:
- 2 Year Note 0.61% -0.01
- 5 Year Note 1.58% -0.01
- 10 Year Note 2.28% UNCH
- 30 Year Bond 3.02% -0.01
2/30 Spread: 241 bps ( UNCH ) … 2/10 Spread: 167 bps ( +1 )
Preview for Wednesday 13 May, 2015
Economic Data
Wednesday (13 May) :
- MBA Mortgage Index : (Prior -4.6%)
- Retail Sales : 0.2% (Prior 0.9%)
- Retail Sales ex-auto : 0.4% (Prior 0.4%)
- Export Prices ex-agri : (Prior 0.2%)
- Import Prices ex-oil : (Prior -0.4%)
- Business Inventories : 0.2% (Prior 0.3%)
- Crude Inventories : (Prior -3.882M)
Earnings Highlights
Wednesday (13 May) :
BMO - AGTC ARMK ACAT CRME DSX EZCH IDRA IGT M MRKT MTLS RL PCP SHLX ELOS ZAYO ZBRA
AMC - BLCM CTRE CSCO CTRP DANG XONE FPRX JCP JACK LXFT NTES FENG PFIE RNDY SHAK SPKE STB TGB VIPS VOXX WX
BMO - AGTC ARMK ACAT CRME DSX EZCH IDRA IGT M MRKT MTLS RL PCP SHLX ELOS ZAYO ZBRA
AMC - BLCM CTRE CSCO CTRP DANG XONE FPRX JCP JACK LXFT NTES FENG PFIE RNDY SHAK SPKE STB TGB VIPS VOXX WX
Summary
Tuesday session certainly show some underlying bullishness in the market. With quite a number of economic data releasing in China, Euro, UK and US, it is likely that market would be influenced by the numbers. I suspect tomorrow session is going to be shaky as well.
Direction for Wednesday 13 May, 2015; Up
2015 Weekly Directional Accuracy: 9/16 (56.25%)
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