Dow -101.56 at 18014.28, Nasdaq -15.95 at 5117.00, S&P -11.49 at 2109.75
As expected, there were plenty of profit taking across Friday session. As Greece's situation remains uncertain, it is unlikely that many traders would risk holding to their positions across the weekend. However NASDAQ seems reluctant to go lower.It was more or less surprised for me to see the huge breakout as I was expecting to see some consolidation. Perhaps market reaction to the Fed statement is much positive. As we have seen a strong upside for the week, we might see some profit taking on Friday to end the week.
Tomorrow is Quadruple Witching which we could see more volatility and of course, volume.
Direction for Friday 19 June, 2015; Down
Market Summary
Industry Watch
Strong: Consumer Staples, Consumer Discretionary, Health Care, Industrials
Weak: Energy, Financials, Technology, Utilities
Other Market Moving Factor:
- European Central Bank raises Emergency Liquidity Assistance for Greece as agreement with creditors remains distant
- Quadruple witching expected to boost trading volume
Despite frequent—and short-lived—rumors to the contrary, the entire week passed without a deal between Greece and its creditors. That lack of progress caused more than EUR3.00 billion in outflows from the Greek banking system this week alone, which prompted the European Central Bank to increase Greece's Emergency Liquidity Assistance by EUR1.80 billion to EUR84.90 billion.
European indices ended the Friday session near their flat lines while Germany's 10-yr bund rallied, sending its yield lower by 11 basis points to 0.75%. For the week, Germany's benchmark yield fell ten basis points. Similarly, the U.S. 10-yr note rallied today with its yield dropping seven basis points to 2.26%, which extended this week's decline to 13 basis points.
All ten sectors ended the day in negative territory with the consumer staples sector (-0.1%) losing its slim gain during the final hour. The countercyclical group displayed relative strength thanks to ConAgra (CAG 43.37, +4.25), which spiked 10.9% after Jana Partners disclosed a 7.2% active stake in the company and announced plans to seek representation on the company's board of directors.
Similar to the staples sector, consumer discretionary (-0.3%) and health care (-0.1%) ended the day with slimmer losses than the broader market. The discretionary sector displayed relative strength thanks to gains among homebuilders after KB Home (KBH 16.37, +1.41) beat earnings estimates. Shares of KBH soared 9.4% while the broader iShares Dow Jones US Home Construction ETF (ITB 27.40, +0.35) gained 1.3%. To be fair, retail stocks also fared better than the broader market with SPDR S&P Retail ETF (XRT 100.40, -0.11) ending little changed.
Elsewhere, the health care sector spent the day near its flat line, locking in a 2.0% gain since last Friday, which helped the group finish the week ahead of the remaining sectors. Biotechnology was at the forefront of the weekly move with iShares Nasdaq Biotechnology ETF (IBB 377.40, -0.48) spiking 3.7% for the week.
On the downside, the energy sector (-0.9%) trailed throughout the session with crude oil contributing to the weakness. The energy component lost 1.3%, ending the pit session at $59.64/bbl. Similar to the energy sector, financials (-1.0%) struggled throughout the session. For the week, the financial sector slipped 0.1%.
It is worth noting that earlier this week, the financial sector was among the top-performing groups of the month with the strength predicated on the expectation that interest rates will continue rising. However, Wednesday's FOMC policy statement indicated the Fed is determined to stay on its current path for the time being, which pressured the financial sector as the week drew to its close.
Also of note, the top-weighted technology sector (-0.7%) struggled throughout the day, which prevented the market from stringing together a rebound rally. Large cap sector components like Apple (AAPL 126.60, -1.28), Microsoft (MSFT 46.10, -0.62), and Oracle (ORCL 41.59, -1.15) lost between 1.0% and 2.7% while chipmakers fared a bit better with the PHLX Semiconductor Index falling 0.3%.
Today's trading volume was well above average, which was due to quadruple witching. As a result, nearly two billion shares changed hands at the NYSE floor.
Monday's data will be limited to the 10:00 ET release of the Existing Home Sales report for May (Briefing.com consensus 5.26 million).
- Nasdaq Composite +8.0% YTD
- Russell 2000 +6.7% YTD
- S&P 500 +2.5% YTD
- Dow Jones Industrial Average +1.1% YTD
The stock market began the trading week on a cautious note with the S&P 500 (-0.5%) sliding below its 100-day moving average (2,089). Equities notched their session lows during the opening hour after Sunday's talks between Greek officials and the country's creditors broke down without any progress. This left the situation essentially unchanged since last week with the two sides remaining at odds over cuts to state pensions/wages and the appropriate VAT levels. The lack of progress between the two sides fueled the opening retreat, but the S&P 500 was able to cut its loss in half by midday. Equities held near their afternoon levels after Germany's Suddeutsche Zeitung reported that Eurozone officials have agreed on a plan B in the event Greece is unable to come to terms with its creditors.
The market ended Tuesday on an upbeat note with the S&P 500 adding 0.6%. In addition to posting a solid gain, the benchmark index reclaimed its 100-day moving average (2,089) after settling below that mark on Monday. Equity indices began the day near their flat lines and rallied throughout the day, unperturbed by the lack of progress between Greece and its creditors. Furthermore, the rhetoric in Athens intensified with Greek Prime Minister Alexis Tsipras saying the International Monetary Fund bears "criminal" responsibility for the current state of the Greek economy. Similar to U.S. equities, European stocks were able to rally despite the lack of positive macro developments. All ten sectors posted gains with consumer staples (+1.1%) leading the advance.
Equities ended the midweek session on an upbeat note with the S&P 500 settling four points below its 50-day moving average (2,104). The benchmark index added 0.2% while the Dow and Nasdaq posted comparable gains. The key indices began the trading day with modest gains, but the first half of the session saw a steady retreat with liquidity drying up ahead of the afternoon release of the FOMC policy statement, which called for no change to the current monetary policy stance. However, the accompanying interest rate forecast implied two 25-basis point increases before the year ends. Furthermore, the Fed lowered its 2015 GDP growth forecast range to 1.8-2.0% from the range of 2.3-2.7% that was forecast in March. Stocks struggled for direction immediately after the release, but rallied to highs during Chair Janet Yellen's press conference, which was viewed as dovish. To that point, Ms. Yellen said the central bank would like to see more "decisive evidence" on inflation and employment before hiking rates.
Stocks ended Thursday on an upbeat note with the Nasdaq Composite (+1.3%) leading the market higher. In addition to pacing the advance, the Nasdaq set a fresh nominal intraday record high at 5,143.32, overtaking levels last seen in March 2000. Equity indices rallied throughout the morning after the combination of Wednesday's FOMC policy statement and Thursday's economic data set the tone for interest rates to remain at their current levels for longer. To that point, the CPI report for May (+0.4%; Briefing.com consensus 0.5%) was cooler than expected while the remaining data points released on Thursday indicated improving economic conditions.
Global Market
Asian Markets Close: Japan’s Nikkei +0.9%; Hong Kong’s Hang Seng +0.3%; China’s Shanghai Composite -6.4%
Friday was a good day for most markets in the Asia-Pacific region, which followed Wall Street’s lead from Thursday. There was one, glaring exception and that was China’s Shanghai Composite, which dropped 6.4% as a flood of new listings sucked liquidity away from other issues. For the week, the Shanghai Composite plunged 13.3%.
Economic data
- Japan
- Bank of Japan leaves key lending rate unchanged at 0.10% as expected
- All Industries Activity Index +0.1% month-over-month (expected +0.3%; prior -1.4%)
- Leading Index 106.4 (expected 107.2; prior 107.2)
- South Korea
- May PPI +0.1% month-over-month (prior 0.0%); -3.5% year-over-year (prior -3.6%)
Equity Markets
- Japan’s Nikkei increased 0.9% and finished near its highs for the session after the Bank of Japan held its key lending rate and asset purchase program unchanged. The gains were led by the technology (+1.7%), basic materials (+1.4%), and industrial (+1.2%) sectors. Topping the list of individual winners were Furukawa (+6.5%), Teijin (+5.2%), and NH Foods (+5.0%). Tokyo Gas Co (-2.3%) and Toho Zinc Co (-2.0%) were the worst-performing issues. Out of the 225 index members, 161 ended higher, 55 finished lower, and 9 were unchanged. For the week, the Nikkei declined 1.1%.
- Hong Kong’s Hang Seng increased 0.3%, but finished the session on a weak note as losses in mainland shares accelerated. The technology (+1.6%) and utilities (+1.2%) sectors were the standout sectors while the financial sector (+0.2%) offered some additional support. CK Hutchison Holdings (+2.5%), Sun Hung Kai Properties (+2.0%), and CLP Holdings (+1.8%) paced the gainers while China Resources Enterprise (-3.3%) and China Resources Power Holdings (-2.9%) led the decliners. Out of the 50 index members, 27 ended higher, 21 finished lower, and 2 were unchanged. For the week, the Hang Seng declined 1.9%.
- China’s Shanghai Composite plunged 6.4% as a rash of new share listings drained liquidity from other stocks. The market started the session on a lower note, but selling efforts intensified in the final hour when the Shanghai Composite lost 3.7% alone. Losses were significant across all sectors. The technology sector (-3.6%) was the “best-performing” area in the Chinese market on Friday. For the week, the Shanghai Composite declined 13.3%.
- India’s Sensex increased 0.8%, bolstered by gains in the communications (+1.8%), consumer cyclical (+1.5%), and energy (+1.4%) sectors. Mahindra & Mahindra (+4.4%), Oil & Natural Gas Corp (+2.0%), and Reliance Industries (+1.9%) topped the list of individual standouts. Tata Motors (-2.8%), Sun Pharmaceutical (-1.3%), and GAIL India (-1.3%) slipped to the bottom of the Sensex pack. Out of the 30 members, 20 ended higher and 10 finished lower. For the week, the Sensex increased 3.4%.
- Australia’s S&P/ASX 200 jumped 1.3%, reclaiming everything it lost in Thursday’s trade. Gains were paced by the REIT (+2.6%), industrial (+1.7%), and health care (+1.5%) sectors. Village Roadshow (+9.1%), Sundance Energy Australia (+8.0%), and Arrium (+7.4%) were the best-performing issues. Bradken (-3.5%) and South32 (-3.5%) led a small pack of stocks lower. Out of the 200 index members, 166 ended higher, 28 finished lower, and 6 were unchanged. For the week, the S&P/ASX 200 increased 0.9%.
- Regional advancers: South Korea +0.3%, Malaysia +0.2%, Indonesia +0.8%, Singapore +0.02%, Vietnam +0.8%
- Regional decliners: Thailand -1.3%, Philippines -0.1%
- Closed for holiday: Taiwan (Make-Up Holiday)
FX
- USD/CNY +0.03% at 6.2095
- USD/INR -0.04% at 63.551
- USD/JPY +0.2% at 123.14
EUROPE
Major European indices trade higher across the board with Italy’s MIB (+1.1%) setting the pace. The weekend is set to begin without a deal between Greece and its creditors. As a result of the surrounding uncertainty, outflows from the Greek banking system have reportedly reached EUR3.00 billion this week. To that point, the European Central Bank has increased Greece’s Emergency Liquidity Assistance, according to Reuters. However, the size of the increase is currently unknown.
- Eurozone April Current Account EUR22.30 billion (expected EUR18.10 billion; prior EUR18.00 billion)
- Germany’s May PPI 0.0% month-over-month (expected 0.2%; prior 0.1%); -1.3% year-over-year (consensus -1.1%; last -1.5%)
- UK’s May Public Sector Net Borrowing GBP9.35 billion (consensus GBP10.05 billion; prior GBP5.46 billion)
Closing Prices
- UK’s FTSE: + 0.0%
- Germany’s DAX: -0.5%
- France’s CAC: + 0.3%
- Spain’s IBEX: + 0.7%
- Portugal’s PSI: + 0.7%
- Italy’s MIB Index: + 1.1%
- Irish Ovrl Index: + 1.3%
- Greece ASE General Index: + 0.6%
Macroeconomic Data
Economic Data
from Briefing.com
- No Economic Data
Market Internals
NYSE:
Higher Volumes than the day before – 1880.4M vs 852.5M
Decliners outpaced Advancers (adv/dec): 1258 / 1803
New Highs outpaced New Lows (highs/lows): 99 / 64
NASDAQ:
Higher Volumes than the day before – 2328.3M vs 1866.9M
Decliners outpaced Advancers (adv/dec): 1279 / 1574
New Highs outpaced New Highs (highs/lows): 154 / 37
VOLATILITY S&P500 (VIX)
13.96 +0.77 (+5.84%)
Technical Updates
18,015.95 -99.89 (-0.55%)
Volume: 258,302,263 (above average of 95,757,711)
Range: 18,010.58 - 18,117.71
Range: 18,010.58 - 18,117.71
5,117.00 -15.95 (-0.31%)
Volume: 994,329,461 (above average of 420,986,821)
Volume: 994,329,461 (above average of 420,986,821)
Range: 5,113.94 - 5,140.17
2,109.99 -11.25 (-0.53%)
Volume: 1,255,422,000 (above average of 513,719,554)
Range: 2,109.38 - 2,121.64
Market could not break above their respective resistance. As for NASDAQ, it looks like a false breakout to me here. Unless we see an upside in the market, it is definitely a confirmation. I think the market continues to be a swing trader's market, as we are not seeing any breakout and trend.
Commodities
Closing Commodities: Oil And Copper End Lower, Despite Pullback In Dollar IndexCommodities
- The dollar index traded higher overnight, which pressured most commodities
- The index begin to pull back in morning trade, around 8:15am ET, however, select commodities such as oi and copper futures didn’t benefit from this pullback
- Since commodities have an inverse relationship to the dollar index, one would have thought that losses in oil and copper would have have been largely erased
- However, since this didn’t happen, it’s something to make note of
- Overall, oil has its own negative catalysts, such as its oversupply situation, which helps constantly pressure prices
- Late yesterday, data showed that Chinese imports of copper for the month declined, which helped weigh on prices
- Natural gas futures reversed some to end the day higher by $0.04 at $2.82/MMBtu
- Gold and silver posted modest losses with Aug gold losing $0.10 to $1201.90/oz and July silver falling $0.04 to $16.12/oz
Energy
- July crude oil futures fell $0.78 to $59.64/barrel
- July natural gas closed $0.04 higher at $2.82/MMBtu
- RBOB Gasoline closed $0.05 lower at $2.06/gallon
- Heating oil futures closed $0.04 lower to $1.87/gallon
- Baker Hughes released weekly US rig count data this afternoon, showing a decline of 2 to 857
Agriculture
- July corn closed $0.05 lower at $3.53/bushel
- July wheat closed $0.01 higher at $4.89/bushel
- July soybeans closed $0.06 lower to $9.71/bushel
- Ethanol closed $0.02 higher at $1.48/gallon
- Sugar #11 closed 0.13 cents lower to 11.12 cents/lb
Metals
- August gold ended today’s session $0.10 lower at $1201.90/oz
- July silver closed $0.04 lower at $16.12/oz
- July copper closed $0.04 lower at $2.57/lb
Currencies
- The US Dollar Index is down 0.02% to 94.04 after trading as high as 94.50 earlier in the day
- EUR/USD: -0.02% to $1.1367
- The Eurogroup of the 19 eurozone finance ministers will meet on Monday to seek a last-minute solution for Greece's debt crisis. Failure is by no means guaranteed to send the single currency lower
- Greece has to pay the IMF 1.5 bln euro by the end of June and does not currently have enough cash to make that payment
- German PPI was unchanged in May from April. The market had been looking for growth of 0.2%
- GBP/USD: +0.04% to $1.5884
- USD/JPY: -0.35% to 122.61
- USD/CHF: -0.51% to 0.9166
- USD/CAD: +0.27% to 1.2259
- Canada's Core CPI for May grew a better-than-expected 0.4% m/m. The reading for April was +0.1%
- Core Retail Sales fell 0.6% m/m in April. This was worse than expected and the 0.7% gain from March
- AUD/USD: -0.28% to $0.7768
- NZD/USD: -0.22% to $0.6902
Bonds
Governments March Higher
- The U.S. Treasury complex pushed higher today with big gains in maturities of 5 years and longer. The only potentially market-moving event was San Francisco Fed President John C. Williams' speech and it ended up being more of the same. The Eurogroup meets on Monday to seek a last-minute solution for Greece
- Yield Check:
- 2-yr: -2 bps to 0.62%
- 5-yr: -6 bps to 1.57%
- 10-yr: -7 bps to 2.26%
- 30-yr: -7 bps to 3.06%
- News:
- Overnight, the Shanghai Composite fell 6.42%, putting the index down 13.5% from its 52-week high, reached earlier in June
- The Bank of Greece requested 3.5 bln euro of emergency funding from the ECB. 1.2 bln euro was withdrawn from Greek banks today alone. The ECB approved a 1.8 bln euro increase
- John C. Williams, president of the San Francisco Fed and an FOMC voter, gave a speech before the National Bureau of Economic Research East Asia Seminar on Economics in San Francisco today. The full text can be found here. Selected quotes:
- "Until I have more confidence that inflation will be moving back to 2 percent, I’ll continue to be in wait-and-see mode regarding raising interest rates."
- "I still believe this will be the year for liftoff, and I still believe that waiting too long to raise rates poses its own risks."
- Commodities:
- WTI Crude: -1.42% to $59.59/bbl.
- Gold: -0.10% to $1,200.90/troy oz.
- Copper: -1.44% to $2.5685/lb.
- Currencies:
- EUR/USD: -0.12% to $1.1358
- USD/JPY: -0.32% to 122.65
- Week Ahead:
- Monday: May Existing Home Sales (10:00 ET)
- Tuesday: May Durable Goods Orders and Durable Goods ex-transportation (08:30 ET); April FHFA Housing Price Index (09:00 ET); May New Home Sales (10:00 ET); $26 billion 2-year note auction (13:00 ET)
- Wednesday: MBA Mortgage Index for the week ending 6/20 (07:00 ET); Q1 GDP -- Third Estimate and Q1 GDP Deflator -- Third Estimate (08:30 ET); Crude Inventories for the week ending 6/20 (10:30 ET); $35 billion 5-year note auction (13:00 ET)
- Thursday: Initial Jobless Claims for the week ending 6/20 and Continuing Jobless Claims for the week ending 6/13 (08:30 ET); May Personal Income and Personal Spending (08:30 ET); May PCE Prices -- Core (08:30 ET); Fed Governor Powell (FOMC voter) speaks on "Building a Safer Payment System" (09:45 ET); Natural Gas Inventories for the week ending 6/20 (10:30 ET); $29 billion 7-year note auction (13:00 ET)
- Friday: June Michigan Sentiment -- Final (10:00 ET); Kansas City Fed President George (non-FOMC voter) speaks on "The Payments System" (12:45 ET)
Treasury Yields:
- 2 Year Note 0.65% -0.01
- 5 Year Note 1.59% -0.06
- 10 Year Note 2.26% -0.09
- 30 Year Bond 3.05% -0.09
2/30 Spread: 240 bps ( -8 ) … 2/10 Spread: 161 bps ( -8 )
Preview for the week Monday 22 June to Friday 26 June, 2015
Economic Data
Monday (22 June) :
- Existing Home Sales : 5.26M (Prior 5.04M)
- Durable Orders : -0.5% (Prior -1.0%)
- Durable Goods - ex transportation : 0.6% (Prior -0.2%)
- FHFA Housing Price Index : (Prior 0.3%)
- New Home Sales : 525K (Prior 517K)
- MBA Mortgage Index :
- GDP - Third Estimate : -0.2% (Prior -0.7%)
- GDP Deflator - Third Estimate : -0.1% (Prior -0.1%)
- Crude Inventories : (Prior -6.812M)
- Initial Claims : 271K (Prior 267K)
- Continuing Claims : 2210K (Prior 2222K)
- Personal Income : 0.5% (Prior 0.4%)
- Personal Spending : 0.7% (Prior 0.0%)
- PCE Prices - Core : 0.1% (Prior 0.1%)
- Natural Gas Inventories : (Prior 89 bcf)
- Michigan Sentiment - Final : 94.8 (Prior 94.6)
Earnings Highlights
Monday (22 June) :
BMO - None Scheduled
AMC - SONC
BMO - None Scheduled
AMC - SONC
Tuesday (23 June) :
BMO - BBRY CCL DRI IHS
AMC - ANFI
Wednesday (24 June) :
BMO - LEN MON
AMC - APOG BBBY GLPW FUL HGR MLHR SCS WOR
Thursday (25 June) :
BMO - ACN BKS CMC LNN MEI SJR WGO
AMC - DRC MU NKE PRGS SNX
Friday (26 June) :
BMO - FNL
AMC - None Scheduled
Summary
Greece's situation will possibly bring in more volatility to the market this coming week as traders might try to position for headline risk, relief rallies and sell-offs into fear. Market remains to be trading in range i.e. support and resistance level, unless we see a breakout.
Direction for Monday 22 June, 2015: Down
Direction for the week Monday 22 June to Friday 26 June, 2015: Down
2015 Daily Directional Accuracy: 53/92 (57.61%)
Direction for the week Monday 22 June to Friday 26 June, 2015: Down
2015 Daily Directional Accuracy: 53/92 (57.61%)
2015 Weekly Directional Accuracy: 13/22 (59.09%)
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