Friday, 29 May 2015 - AMC

Dow -115.44 at 18010.68, Nasdaq -27.95 at 5070.03, S&P -13.40 at 2107.39

For the week, market has been uncertain. Market was trying to recover on Thursday but without much volume, the slight pullback is not getting convincing. I think the traders are staying out of the game ahead of the GDP number and it's a no brainer to continue fighting with the market.

Direction for Friday 29 May, 2015; Abstain

Market opened lower after second consecutive decrease in the GDP number. Certainly there was quite a lot of profit taking at the early session. However there was a double bottom forming in the intra-day but the recovery doesn't seem to be strong. Crude oil went into a rally mode as inventories are showing some decline and it closed above $60 on Friday. 

Back to the economy state of US, it is not yet in a technical recession but it is not far from there.                

Market Summary

Industry Watch

Strong: Energy, Health Care, Utilities

Weak: Financials, Industrials, Technology

Other Market Moving Factor:

• S&P 500 enters Friday -0.3% week-to-date
• Q1 GDP revised down to -0.7% from 0.2%, as expected
• Chicago PMI for May drops to 46.2 from 52.3 (Briefing.com consensus 53.0)

[BRIEFING.COM] The major averages registered their second consecutive decline on Friday, but they managed to end May in the green. The S&P 500 lost 0.6% today, but added 1.1% for the month while the Nasdaq Composite (-0.6%) ended in-line with the S&P 500 on Friday, but gained 2.6% in May.  

Equity indices spent the duration of the session in negative territory with heavily-weighted sectors like consumer discretionary (-0.7%), financials (-0.9%), industrials (-1.0%), and technology (-0.8%) exerting pressure on the market. Furthermore, uninspiring economic data and the lack of tangible progress between Greece and its creditors weighed on the overall sentiment.  

To be sure, stocks climbed off their late-morning lows after Greece's Economy Minister Giorgos Stathakis said his country will make its next debt payment to the International Monetary Fund. According to Mr. Stathakis, the country will pay EUR304 million next Friday. That headline was viewed as a positive sign considering deposit outflows in Greece have accelerated, dropping overall balances to levels not seen in more than ten years, according to reports.  

The late-morning boost helped the S&P 500 reclaim more than 2/3 of its decline, but the index revisited its session low during afternoon action amid persistent weakness in some of the most influential sectors. Eight sectors ended the day in negative territory with industrials (-1.0%) spending the day behind its peers. 

Once again, transport stocks struggled, evidenced by a 0.8% decline in the Dow Jones Transportation Average. The bellwether complex lost 2.2% for the week and surrendered 3.4% in May. Con-way (CNW 40.47, -1.42) was the weakest performer of the bunch, falling 3.4% after Bank of America/Merrill Lynch downgraded the stock to ‘Underperform.'  

Elsewhere, the technology sector (-0.8%) slipped behind the broader market during afternoon action, but chipmakers showed relative strength. The PHLX Semiconductor Index added 0.3% with Altera (ALTR 48.85, +1.88) spiking 4.0% amid renewed speculation the company may be acquired by Intel (INTC 34.51, +0.50). For the month, the PHLX Semiconductor Index soared 8.6% while the tech sector added 2.1%. 

All ten sectors registered losses with energy (-0.1%) ending just below its flat line even as crude oil jumped 4.5% to $60.26/bbl. Over on the countercyclical side, health care (-0.2%) and utilities (-0.2%) outperformed while consumer staples (-0.7%), and telecom services (-0.5%) ended near the broader market.  

Treasuries climbed into the afternoon, ending on their highs with the 10-yr yield down three basis points at 2.10%. 

Today's participation was above-average with month-end flows contributing to the increased activity as more than a billion shares changed hands at the NYSE floor.

Economic data included Q1 GDP, Chicago PMI, and Michigan Sentiment Index: 

• First quarter GDP was revised down to -0.7% in the second estimate from an originally reported +0.2% in the advance release, which is what the Briefing.com consensus expected 
  • That was the first contraction in GDP growth since Q1 2014 
  • The real final sales component, which strips out volatile inventories, declined 1.1%. That topped the 1.0% decline from Q1 2014 and was the biggest real final sales drop since a 3.3% decline in Q1 2009, suggesting that economic growth trends in Q1 2015 were some of the worst seen since the Great Recession 
• The Chicago PMI declined to 46.2 in May from 52.3 in April while the Briefing.com consensus expected an increase to 53.0 
  • That was the third time the Chicago PMI has fallen below 50, the expansion/contraction threshold, in the last four months 
  • With the exception of the Prices Paid Index (51.2 from 43.1), all of the sub-indexes declined and also contracted in May 
• The University of Michigan Consumer Sentiment Index was revised up to 90.7 in the May final reading from 88.6 in the preliminary reading while the Briefing.com consensus expected an increase to 89.0 
  • The month-over-month decline in sentiment generally reflects higher gasoline prices while other factors that influence sentiment trends, like equity movements and labor market conditions, were largely flat in May 

On Monday, Personal Income/Spending data for April and Core PCE Prices will be released at 8:30 ET while April Construction Spending and the May ISM Index will both be reported at 10:00 ET. 

• Nasdaq Composite +7.1% YTD 
• Russell 2000 +3.6% YTD 
• S&P 500 +2.4% YTD 
• Dow Jones Industrial Average +1.1% YTD 

Week in Review: Nasdaq Sets Fresh Record Close 

Bond and equity markets were closed on Monday for Memorial Day.  

On Tuesday, each of the major indices fell at least 1.0% as buyers proved to be a reluctant bunch. That reluctance started early and it continued for most of the session, which saw the S&P 500 flirt with testing support at its 50-day simple moving average (2096). The fact that the S&P 500 didn't pierce that level was perhaps the lone bright spot in Tuesday's action, which saw all ten sectors lose ground and all 30 Dow components end with a loss.  

The major averages enjoyed a daylong rally on Wednesday that helped the S&P 500 (+0.9%) erase the bulk of its decline from Tuesday. Meanwhile, the Nasdaq Composite (+1.5%) closed at a fresh record high and turned its weekly decline into a 0.3% advance for the week. Equity indices began the session with modest gains and enjoyed an early surge amid reports that Greek officials and Eurogroup members have started crafting a staff-level agreement to secure funds for the country. However, those reports were refuted during the next hour with Bloomberg citing a Eurogroup official as saying the two sides have yet to begin working on a joint statement. Strikingly, the stock market all but ignored the prompt refutation and continued rising into the afternoon with the technology sector (+1.8%) pacing the move. The PHLX Semiconductor Index surged 3.9% after it was reported that Avago Technologies (AVGO 141.49, +10.19) is in advanced talks to acquire Broadcom (BRCM 57.13, +10.21). Shares of AVGO jumped 7.8% while Broadcom soared 21.8%.  

The stock market spun its wheels throughout the Thursday session, ending on a modestly lower note. The S&P 500 shed 0.1% after spending the entire day in negative territory amid light volume. Equity indices began the day in the red with some residual damage to risk tolerance after China's Shanghai Composite tumbled 6.5% in reaction to more equity brokers increasing their margin requirements. Furthermore, repurchase operations conducted by the People's Bank of China stirred concerns that the central bank may be preparing to stop or slow its easing cycle. To be fair, the decline in the Shanghai Composite only caused the index to surrender its week-to-date gain. In either case, things did not get any more cheery by the start of the European session with signals from the G7 meeting in Dresden suggesting that wide-ranging differences remain between Greece and the creditor institutions. The PHLX Semiconductor Index added 0.1% after Wednesday's rumor became Thursday's news and Avago Technologies (AVGO 142.38, +0.89) confirmed its acquisition of Broadcom (BRCM 56.25, -0.91) for $37 billion.

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei +0.1%; Hong Kong’s Hang Seng -0.1%; China’s Shanghai Composite -0.2%
Markets in the Asia-Pacific region were mostly mixed on Friday. All eyes were on the Shanghai Composite following Thursday’s 6.5% plunge and it didn’t disappoint in terms of trading volatility. It saw a swing of as much as 6.0% between its intraday low and intraday high before settling the session with a pedestrian 0.2% decline.

Economic data

• Japan
• April National CPI +0.6% year-over-year (expected +0.6%; prior +2.3%); National Core CPI +0.3% year-over-year (expected +0.2%; prior +2.2%)
• April Household Spending -5.5% month-over-month (expected -0.7%; prior +2.4%); -1.3% year-over-year (expected +3.1%; prior -10.6%)
• April Industrial Production +1.0% month-over-month (expected +0.8%; prior -0.8%)
• April Construction Orders -12.1% year-over-year (prior +10.8%)
• April Housing Starts +0.4% (expected +0.1%; prior +0.7%)
• April Unemployment Rate 3.3% (expected 3.4%; prior 3.4%)
• South Korea
• April Industrial Production -1.2% month-over-month (expected +0.2%; prior -0.3%); -2.7% year-over-year (expected -0.1%; prior 0.0%)
• Retail Sales +1.6% month-over-month (expected +0.6%; prior -0.5%)
• April Service Sector Output +0.5% month-over-month (prior -0.4%)
• June Manufacturing BSI Index 75 (prior 76)
• Australia
• April Private Sector Credit +0.3% month-over-month (expected +0.5%; prior +0.5%)
• April Housing Credit +0.5% (prior +0.5%)
• April New Home Sales +0.6% month-over-month (prior +4.4%)
• Singapore
• April Bank Lending SGD 594.3 bln (prior SGD 601.1 bln)
• New Zealand
• May Business Confidence 15.7% (prior 30.2%)

Equity Markets

• Japan’s Nikkei edged up 0.1% to finish with its eleventh consecutive gain after a large batch of economic news. For the week, the Nikkei added 1.5%. Strength in the utilities (+0.9%) and communications (+0.6%) sectors helped offset weakness in the financial (-0.7%) and consumer non-cyclical (-0.4%) sectors on Friday. Upside leaders included Yahoo Japan (+11.7%), Hokuetsu Kishu Paper (+4.9%), and Toshiba (+4.8%). Kyowa Hakko Kirin (-4.3%) was the worst-performing issue. Out of the 225 index members, 104 ended higher, 107 finished lower, and 14 were unchanged.
• Hong Kong’s Hang Seng slipped 0.1%, done in by some late selling interest. For the week, the Hang Seng declined 2.0%. The weak links on Friday were the consumer cyclical (-1.2%) and consumer non-cyclical (-1.2%) sectors. Belle Intl. (-3.5%), Hang Lung Properties (-3.0%), and China Unicom Hong Kong (-2.8%) paced the decliners. China Merchants Holdings Intl. (+2.9%) led all gainers. Out of the 49 index members, 19 ended higher, 29 finished lower, and 2 were unchanged.
• China’s Shanghai Composite declined 0.2% but had been down as much as 4.0% in early trading on the heels of Thursday’s 6.5% plunge. From its intraday low to its intraday high, the Composite moved as much as 6.0%. Late selling interest prevented a positive finish. For the week, the Shanghai Composite declined 1.0%
• India’s Sensex increased 1.2% ahead of the fourth quarter GDP report. For the week, the Sensex declined 0.5%. Leading sectors on Friday included the communications (+5.6%) and consumer cyclical (+1.9%) sectors. Bharti Airtel (+5.6%), Maruti Suzuki India (+2.1%), and Coal India (+2.0%) sat atop the list of winners. Hindalco Industries (-1.8%) paced the decliners and was the only issue to decline more than 1.0%.
• Australia’s S&P/ASX 200 jumped 1.1% with end-of-month activity garnering some attribution for the upside move. For the week, the S&P/ASX 200 increased 1.9%. Friday’s session was fueled by gains in the gold (+1.8%), financials (+1.5%), and resources (+1.3%) sectors.
• Regional advancers: South Korea +0.2%, Thailand +0.2%, Philippines +1.0%
• Regional decliners: Taiwan -0.1%, Singapore -0.8%, Malaysia -0.5%, Indonesia -0.4%, Vietnam -0.6%

FX

• USD/CNY -0.05% at 6.1983
• USD/INR +0.2% at 63.876
• USD/JPY -0.1% at 123.85

EUROPE

Major European indices trade mostly lower with Germany’s DAX (-1.0%) and France’s CAC (-1.0%) leading the retreat. Investor sentiment remains dampened by the lack of progress between Greece and its creditors with latest reports indicating that deposit outflows in Greece have accelerated, dropping overall balances to levels not seen in more than ten years.

• Eurozone April Private Sector Loans 0.0% year-over-year (expected 0.2%; prior 0.1%) and M3 Money Supply +5.3% year-over-year (expected 4.9%; last 4.6%)
• Germany’s April Retail Sales +1.7% month-over-month (consensus 0.8%; prior -1.4%); +1.0% year-over-year (expected 2.5%; last 4.3%)
• France’s April Consumer Spending +0.1% month-over-month (expected 0.2%; last -0.7%) and PPI -0.4% month-over-month (consensus 0.2%; prior 0.1%)
• Spain’s May CPI -0.2% year-over-year (expected -0.5%; last -0.6%)
• Italy’s May CPI +0.2% month-over-month (expected 0.1%; prior 0.2%) while Q1 GDP was left unrevised at 0.3%, as expected

Closing Prices

• UK’s FTSE: -0.8%
• Germany’s DAX: -2.3%
• France’s CAC: -2.5%
• Spain’s IBEX: -1.7%
• Portugal’s PSI: -1.6%
• Italy’s MIB Index: -1.1%
• Irish Ovrl Index: -1.4%
• Greece ASE General Index: -1.4%

Macroeconomic Data

Economic Data

from Briefing.com

• GDP - Second Estimate : -0.7% vs -0.7% (Prior 0.2%)
• GDP Deflator - Second Estimate : -0.1% vs -0.1% (Prior -0.1%)
• Chicago PMI : 46.2 vs 53.0 (Prior 52.3)
• Michigan Sentiment - Final : 90.7 vs 89.0 (Prior 88.6)

GDP

Highlights

• First quarter GDP was revised down to -0.7% in the second estimate from an originally reported +0.2% in the advance release. GDP increased 2.2% in Q4 2014. The Briefing.com Consensus expected GDP to be revised down to -0.7%.
• Unfortunately, that wasn’t the worst of it. Real final sales, which strips out volatile inventories, declined 1.1%. That topped the 1.0% decline from Q1 2014 and was the biggest real final sales drop since a 3.3% decline in Q1 2009.That would suggest that economic growth trends in Q1 2015 were some of the worst seen since the Great Recession.

Key Factors

• That was the first contraction in GDP growth since Q1 2014.
• The BEA admitted that there are some seasonal adjustment problems with first quarter growth rates. It will tackle this problem when it releases the annual revisions with the Q2 2015 advance GDP report in July. Some of the big decline in both GDP and real final sales is expected to be reduced when the new seasonal adjustments are used.
• As expected, the revisions were mostly focused on trade and inventories.
• The real trade deficit was revised down to -$548.4 bln from -$522.1 bln in the advance release. That caused a 1.90 percentage point reduction in first quarter GDP growth, up from a 1.25 reduction in the advance release.
• Inventories were revised down from $110.3 bln in the advance release to $95.0 bln. The impact of inventories on GDP growth was also reduced from +0.74 percentage points to +0.33 percentage points.
• The rest of the GDP data were largely unchanged from the advance release.
• Personal consumption expenditures were revised down a modest 0.1 percentage points to 1.8%. That was the smallest consumption gain since a 1.2% increase in Q1 2014.
• Nonresidential investment was revised up to -2.8% from -3.4%. Both structures (-20.8% vs. -23.1%) and equipment (2.7% vs. 0.1%) were revised higher while intellectual property product investment was lowered to 3.6% from a previously reported 7.8%.
• Government spending was revised down to -1.1% from -0.8%.

Big Picture

• That was arguably the worst quarter for economic growth since the Great Recession.

CHICAGO PMI

Highlights

• The Chicago PMI declined to 46.2 in May from 52.3 in April. The Briefing.com Consensus expected the PMI to increase to 53.0.

Key Factors

• That was the third time the Chicago PMI has fallen below 50, the expansion/contraction threshold, in the last four months.
• With the exception of the Prices Paid Index (51.2 from 43.1), all of the sub-indexes declined and also contracted in May.
• The Production Index dropped to 45.8 in May from 52.7 in April. That move came as both the new orders (47.5 from 55.1) and unfilled orders (47.3 from 48.5) indices softened considerably.
• The Employment Index fell to 48.0 in May from 54.0 in April. That was the lowest reading since reaching 47.9 in April 2013.

Big Picture

• The Chicago PMI has little overall economic value, and is only watched by the financial markets because it is usually released one day in advance of the similar national ISM manufacturing survey. A significant move in this regional survey will therefore sometimes be seen as having predictive value for the ISM index.

MICHIGAN SENTIMENT

Highlights

• The University of Michigan Consumer Sentiment Index was revised up to 90.7 in the May final reading from 88.6 in the preliminary reading. The index is still down from 95.9 in April. The Briefing.com Consensus expected the Consumer Sentiment Index to increase to 89.0.

Key Factors

• The month-over-month decline in sentiment generally reflects higher gasoline prices. Other factors that influence sentiment trends, like equity movements and labor market conditions, were largely flat in May.
• The Current conditions Index was revised up to 100.8 from 99.8 in the preliminary reading. The index is down from 107.0 in April.
• The Expectations Index was revised up to 84.2 from 81.5, but down from 88.8 in April.
• The monthly decline in consumer sentiment is unlikely to have an impact on consumption trends. Consumption growth follows income growth. As long as the employment sector continues to improve, consumption growth should 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 – 580.3M vs 690.2M 


Decliners outpaced Advancers (adv/dec): 971 / 2075

New Lows outpaced New Highs (highs/lows): 51 / 56

NASDAQ:

Lower Volumes than the day before – 1655.0M vs 1724.5M

Decliners outpaced Advancers (adv/dec): 1103 / 1675

New Highs outpaced New Highs (highs/lows): 81 / 37

VOLATILITY S&P500 (VIX)
13.84 +0.53 (+3.98%)

Internals are getting more bearish and showing some decline in the New Highs. Volume is yet to return to the market, there is nothing more I can comment besides the market is still lacking confidence. VIX remains above the 20 and 50 MAs which formed a good support level. Looking at it, it might still move higher.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

18,010.68 -115.44 (-0.64%)

Volume: 139,806,458 (above average of 99,665,905)
Range: 17,967.74 - 18,128.12

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,070.03 -27.95 (-0.55%)
Volume: 545,786,924 (above average of 429,423,669)

Range: 5,057.59 - 5,099.40

S&P 500 INDEX (SPX: CBOE)

2,107.39 -13.40 (-0.63%)

Volume: 760,129,000 (above average of 528,238,015)

Range: 2,104.89 - 2,120.66 

Both NASDAQ and S&P could not overcome their resistance level while DOW is sitting on its trend line or support level. NASDAQ and DOW are forming a double top which might reflect some reversal. MACD indicator is showing a lack of bullish momentum too. Somehow upside doesn't seems to be quite credible.

Commodities

Closing Commodities: WTI Oil Rallies, Closes Above $60/Barrel

• WTI oil prices rallied today after floor trading began
• Front-month oil hit today’s low one minute after floor trading opened, at $57.72/barrel
• Five hours and two minutes later, July crude has rallied $2.98/barrel to today’s high of $60.70/barrel
• At the end of the session, crude finished $2.57 higher at $60.26/barrel
• July nat gas lost $0.08 to $2.63/MMBtu
• In the metals space, Aug gold rose $1.90 today to $1190.10/oz, while July silver gained $0.04 to $16.71/oz
• Copper fell $0.04 today to $2.73/lb

Energy

• July crude oil futures rose $2.57 to $60.26/barrel
• June natural gas closed $0.08 lower at $2.63/MMBtu
• RBOB Gasoline closed $0.09 higher to $2.06/gallon
• Heating oil futures closed $0.08 higher at $1.95/gallon
• The Baker Hughes rig count data showed a decline in US rigs by 10 to 875- marking 25 consecutive weeks of decline.

Agriculture

• July corn closed $0.01 lower to $3.52/bushel
• July wheat closed $0.10 lower to $4.78/bushel
• July soybeans closed $0.08 higher to $9.34/bushel
• Ethanol closed $0.02 lower at $1.52/gallon
• Sugar #11 closed 0.04 cents higher to 11.98 cents/lb

Metals

• August gold ended today’s session $1.90 higher to $1190.10/oz
• July silver closed $0.04 higher at $16.71/oz
• July copper closed $0.04 lower at $2.73/lb

Currencies

Majors Are Little Changed

• The U.S. dollar saw only small movements against the majors today, despite a bad miss on May's Chicago PMI (46.2 versus Briefing.com consensus of 53.0)
• EUR/USD: +0.14% to $1.0984
  • German retail sales beat expectations, rising 1.7% m/m in April against a 1.4% decline in March
  • Spanish and Italian CPI and HICP (harmonized index of consumer prices) readings also beat estimates, adding evidence to the idea that the European periphery is gaining momentum relative to the core
• USD/JPY: +0.23% to 124.02
  • The pair is trading very close to a 13-year high
• USD/CHF: -0.34% to 0.9393
• GBP/USD: -0.20% to $1.5298
• USD/CAD: +0.10% to 1.2433
  • Canadian GDP contracted 0.6% in the first quarter of 2015. That is deepest contraction since the crisis
• AUD/USD: -0.06% to $0.7654
• NZD/USD: -1.18% to $0.7109

Bonds

Governments Rally on Bad Data

• The Treasury complex pushed higher today, first on the weak Q1 GDP number (-0.7%) and then on a Chicago PMI that showed the second sub-50 reading of 2015. The 5-year led the gains, but all maturities participated
• Yield Check:
  • 2-yr: -2 bps to 0.61%
  • 5-yr: -4 bps to 1.48%
  • 10-yr: -2 bps to 2.11%
  • 30-yr: -1 bp to 2.88%

• News:
  • First quarter GDP was revised down to -0.7% in the second estimate from an originally reported +0.2% in the advance release. GDP increased 2.2% in Q4 2014. The Briefing.com Consensus expected GDP to be revised down to -0.7%
    • Real final sales, which strips out volatile inventories, declined 1.1%, reflecting a growth trend that is one of the worst since the Great Recession
    • The real trade deficit was revised down to -$548.4 bln from -$522.1 bln in the advance release. That caused a 1.90 percentage point reduction in first quarter GDP growth, up from a 1.25 reduction in the advance release
  • The Chicago PMI declined to 46.2 in May from 52.3 in April. The Briefing.com Consensus expected a gain to 53.0
    • The Production Index dropped to 45.8 in May from 52.7 in April. That move came as both the new orders (47.5 from 55.1) and unfilled orders (47.3 from 48.5) indices softened considerably
  • The University of Michigan Consumer Sentiment Index was revised up to 90.7 in the May final reading from 88.6 in the preliminary reading. The index is still down from 95.9 in April
  • The economy minister of Greece, Giorgos Stathakis, said that Greece will make the June 5th payment due to the IMF

• Commodities:
  • WTI Crude: +4.30% to $60.16/bbl
  • Gold: +0.19% to $1,191.0/troy oz.
  • Copper: -1.50% to $2.726/lb.

• Currencies:
  • EUR/USD: +0.14% to $1.0985
  • USD/JPY: +0.29% to 124.11

• Week Ahead:
  • Monday: April Personal Income and Personal Spending (08:30 ET); April PCE Prices – Core (08:30 ET); Boston Fed President Rosengren speaks before the 2015 Workforce Stars Breakfast (09:05 ET); May ISM Index (10:00 ET); April Construction Spending (10:00 ET)
  • Tuesday: April Factory Orders (10:00 ET); May Auto and Truck Sales (17:00 ET)
  • Wednesday: MBA Mortgage Index for the week of 5/30 (07:00 ET); May ADP Employment Change (08:15 ET); April Trade Balance (08:30 ET); May ISM Services (10:00 ET); Crude Inventories for the week of 5/30 (10:30 ET); Fed’s Beige Book (14:00 ET); Chicago Fed President Evans (FOMC voter) speaks before the Chicago Banking Symposium (14:15 ET)
  • Thursday: May Challenger Job Cuts (07:30 ET); Initial Jobless Claims for the week of 5/30 and Continuing Jobless Claims for the week of 5/23 (08:30 ET); Q1 Productivity – Revised and Unit Labor Costs – Revised (08:30 ET); Natural Gas Inventories for the week of 5/30 (10:30 ET)
  • Friday: May Employment Situation Report (08:30 ET); New York Fed President Dudley (FOMC voter) speaks before the Economic Club of Minnesota (12:30 ET); April Consumer Credit (14:00 ET)

Treasury Yields:

• 2 Year Note 0.61% -0.01
• 5 Year Note 1.49% -0.02
• 10 Year Note 2.12% -0.01
• 30 Year Bond 2.88% -0.01

2/30 Spread: 227 bps ( UNCH ) …  2/10 Spread: 151 bps ( UNCH )

Preview for the week Monday 1 June to Friday 5 June, 2015

Economic Data

Monday (1 June) :

• Personal Income : 0.3% (Prior 0.0%)
• Personal Spending : 0.2% (Prior 0.4%)
• PCE Prices - Core : 0.2% (Prior 0.1%)
• ISM Index : 51.9 (Prior 51.5)
• Construction Spending : 0.8% (Prior -0.6%)

Tuesday (2 June) :

• Factory Orders : 0.0% (Prior 2.1%)
• Auto Sales : (Prior 5.3M)
• Truck Sales : (Prior 7.9M)

Wednesday (3 June) :

• MBA Mortgage Index : (Prior -1.6%)  
• ADP Employment Change : 200K (Prior 169K) 
• Trade Balance : -$44.0B (Prior -$51.4B)
• ISM Services : 57.1 (Prior 57.8)
• Crude Inventories : (Prior -2.802M)
• Fed's Beige Book 

Thursday (4 June) :

• Challenger Job Cuts : (Prior 52.8%)
• Initial Claims : 280K (Prior 282K)
• Continuing Claims : 2215K (Prior 2222K)
• Productivity-Rev : -2.9% (Prior -1.9%)
• Unit Labour Cost-Rev : 5.9% (Prior 5.0%)
• Natural Gas Inventories : (Prior 112 bcf)

Friday (5 June) :

• Nonfarm Payrolls : 225K (Prior 223K)
• Nonfarm Private Payrolls : 225K (Prior 213K)
• Unemployment Rate : 5.4% (Prior 5.4%)
• Hourly Earnings : 0.2% (Prior 0.1%)
• Average Workweek : 34.5 (Prior 34.5)
• Consumer Credit : $17.0B (Prior $20.5B)

Earnings Highlights

Monday (1 June) :
BMO - CMGE
AMC - PVH QUNR

Tuesday (2 June) :
BMO - AMWD CCG CONN CBRL DAKT DG MDT NKA SOL
AMC - ABM AMBA ASNA GIII GES GWRE NCS PRGN VMEM

Wednesday (3 June) :
BMO - BF.B NX VRA
AMC - APIC DRC FIVE DATE LF MFRM GOMO VRNT

Thursday (4 June) :
BMO - BRLI CIEN CYBX SJM JOY LE MIK NAV SHLD
AMC - ALOG CMTL COO DMND ESL GLPW IDT RALY SEAC THO UTIW PAY VNCE ZOES ZUMZ

Friday (5 June) : 
BMO - IXYS LITB YGE
AMC - None Scheduled

Summary

Friday session was volatile but pretty much to the bearish side. Judging from the intra-day movement, I feels market is not yet convincing to be bearish. Perhaps there is still uncertainty in the market. Neither the market is bullish too.

Next week is the start of June and we will be seeing more economic data that should give us more insight to the US economy. That might also give the market more push to the downside. So stay close to that. OPEC meeting will be held on 5th June and that is likely to bring in more volatility to the oil futures.

Direction for Monday 1 June, 2015; Down

Direction for the week Monday 1 June to Friday 5 June, 2015; Down

2015 Daily Directional Accuracy: 43/80 (53.75%) 

2015 Weekly Directional Accuracy: 11/19 (57.89%)