Dow +103.83 at 18118.78, Nasdaq +36.97 at 5153.97, S&P +12.86 at 2122.85
I suppose it was the speculation from the Greece side that gave the market the strength for a rally to start the week. However we saw some profit taking before the noon and thereafter was rather a sideway market. Not a bearish day but it is neither a very bullish session also.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
Market Summary
Industry Watch
Strong: Energy, Health Care, Financials, Technology
Weak: Materials, Telecom Services, Utilities
Other Market Moving Factor:
- Optimism about a potential Greek debt deal boosts market sentiment, but German Finance Minister Wolfgang Schaeuble calls new proposal insufficient
- M&A activity in the health care sector: Humana (HUM) receives offer from Aetna (AET) while Cigna (CI) rejects Anthem's (ANTM) offer
Equity indices spent the entire Monday session in the green with investor sentiment receiving a boost from reports indicating Greek officials submitted a new proposal to the Eurogroup. However, regional officials did not share the market's optimism with Germany's Finance Minister Wolfgang Schaeuble saying he does not see anything new in the proposal. The Eurogroup met briefly today, setting the stage for tonight's emergency Euro Summit that was called by European Council President Donald Tusk.
Today's developments pressured global bonds with Germany's 10-yr bund yield spiking 12 basis points to 0.88%. Similarly, the U.S. 10-yr note retreated throughout the day, sending its yield higher by ten basis points to 2.36%.
Some of the outflows from the Treasury market made their way into equities as nine of ten sectors posted gains while the rate-sensitive utilities sector (-0.1%) was pressured by today's increase in yields.
Meanwhile, another countercyclical sector—health care (+0.8%)—spent the day among the leaders thanks to strength in biotechnology and insurance names. The iShares Nasdaq Biotechnology ETF (IBB 383.16, +5.68) gained 1.5% while Cigna (CI 162.65, +7.39) climbed 4.8% after rejecting Anthem's (ANTM 171.05, +5.99) offer at $184/share. Also of note, The Wall Street Journal reported that Aetna (AET 128.12, +4.05) offered to acquire Humana (HUM 189.94, -12.37) for an undisclosed amount.
Over on the cyclical side, three of six sectors—energy (+1.0%), financials (+0.8%), and technology (+0.7%)—settled ahead of the broader market with energy boosted by a 26.0% spike in the shares of Williams Companies (WMB 60.93, +12.59) after the company rejected an offer to merge with Energy Transfer Equity (ETE 65.06, -3.33) as part of an all-stock transaction valued at $64/share. For its part, crude oil erased its overnight loss to end higher by 0.6% at $60.01/bbl.
Elsewhere, the top-weighted technology sector received support from some of its largest components like Apple (AAPL 127.61, +1.01), Intel (INTC 32.26, +0.19), and Qualcomm (QCOM 67.36, +0.48) with the trio gaining between 0.6% and 0.8%.
Today's participation was below recent averages as fewer than 700 million shares changed hands at the NYSE floor.
Economic data was limited to Existing Home Sales, which increased 5.1% in May to 5.35 million SAAR from an upwardly revised 5.09 million (from 5.04 million) in April while the Briefing.com consensus expected an increase to 5.26 million
- That was the most existing homes sold in one month since November 2009 when 5.44 million were sold
- Much of the gain came from an increase in first-time home buyers who accounted for 32% of all sales in May, up from 30% observed in April, representing the largest contribution since September 2012
Global Market
Asian Markets Close: Japan’s Nikkei +1.3%; Hong Kong’s Hang Seng +1.2%; China’s Shanghai Composite CLOSED
The Asian equity markets closed higher this morning, on optimism that a deal in Greece would be accomplished after positive a take-away from news that Greek PM Tsipras presented a proposal to the EU Commission over the weekend. It prompted a rally in global equities, with Asia getting the first opportunity to advance last night. Japan posted a gain of over 1%, led by Consumer Discretionary and Telecom Sectors, which both gained 1.8%. China was closed for public holiday.
Economic data
- Japan
- May Supermarket Sales +5.7% vs +6.4% in May 2014
- May Convenience Store Sales +1.6% vs +4.0% in May 2014
Equity Markets
- Japan’s Nikkei increased 1.3%, Trade was bolstered by the optimistic reports out of Europe that a deal Greece and the IMF would get done. The Consumer Discretionary sector (+1.8%) led a broad-based advance that saw only Industrials (Unch) not participate. As such, Fast Retailing posted a strong 3.3% gain to lead the charge in the consumer space.
- Hong Kong’s Hang Seng increased 1.2%, led by strength in the financials (+1.1%). China Construction Bank (+1.3%) and Bank of China (+1.8%) outpaced the broader market
- China’s Shanghai Composite was closed for its Dragon Boat Festival Holiday
- India’s Sensex closed up 414 points, up 1.5%. Of the leaders, the realty index rose by 5%. Financials were also in focus, with ICICI Bank and Axis Bank tacking on gains of ~ 4% each
FX
- USD/CNY -0.1% at 6.1957
- USD/INR +0.1% at 63.53
- USD/JPY +0.5% at 123.20
EUROPE
Major European indices trade higher across the board after surging in reaction to reports that Greek officials presented a new proposal to the creditors. However, the proposal has been deemed as insufficient by several officials, including Germany’s Finance Minister Wolfgang Schaeuble. On a related note, the European Central Bank has increased Greece’s Emergency Liquidity Assistance limit for the third time in six days as capital continues flowing out of the country’s banking system.
- Investors did not receive any economic data today.
Closing Prices
- UK’s FTSE: + 1.7%
- Germany’s DAX: + 3.8%
- France’s CAC: + 3.8%
- Spain’s IBEX: + 4.1%
- Portugal’s PSI: + 2.2%
- Italy’s MIB Index: + 3.5%
- Irish Ovrl Index: + 0.9%
- Greece ASE General Index: + 9.0%
Macroeconomic Data
Economic Data
from Briefing.com
- Existing Home Sales : 5.35M vs 5.26M (Prior 5.04M)
EXISTING HOME SALES
Highlights
- Existing home sales increased 5.1% in May to 5.35 mln SAAR from an upwardly revised 5.09 mln (from 5.04 mln) in April. The Briefing.com Consensus expected existing home sales to increase to 5.26 mln.
Key Factors
- That was the most existing homes sold in one month since November 2009 when 5.44 mln were sold.
- The underlying dynamics were strong in May.
- Much of the gain came from an increase in first-time home buyers. First-time buyers are the lifeblood of home buying demand. These buyers accounted for 32% of all sales in May. That was up from 30% in April and was the largest contribution since September 2012.
- All-cash sales accounted for 24% of transactions for a third consecutive month. Sales to individual investors remained at 14% for a second consecutive month.
- Distressed sales were also unchanged and accounted for 10% of all sales.
- Supply continues to be a problem. While inventories increased 3.2% in May, the increase in sales brought the months' supply at the current sales rate down to 5.1 months from 5.2 months. A 6 months' supply is considered healthy during normal periods of buying and selling.
- The lack of inventory continued to push up prices. The median sales price rose 7.9% y/y in May to $228,700.
Big Picture
- The return of first-time home buyers was instrumental in driving sales growth in May.
Market Internals
NYSE:
Lower Volumes than the day before – 714.4M vs 1880.4M
Advancers outpaced Decliners (adv/dec): 1854 / 1239
New Highs outpaced New Lows (highs/lows): 159 / 40
NASDAQ:
Lower Volumes than the day before – 1616.5M vs 2328.3M
Advancers outpaced Decliners (adv/dec): 1833 / 1003
New Highs outpaced New Highs (highs/lows): 226 / 40
VOLATILITY S&P500 (VIX)
12.74 -1.22 (-8.74%)
Technical Updates
18,119.78 +103.83 (+0.58%)
Volume: 77,779,655 (above average of 95,446,180)
Range: 18,027.63 - 18,181.67
Range: 18,027.63 - 18,181.67
5,153.97 +36.97 (+0.72%)
Volume: 392,193,563 (below average of 420,955,338)
Volume: 392,193,563 (below average of 420,955,338)
Range: 5,142.78 - 5,162.13
2,122.85 +12.86 (+0.61%)
Volume: 468,228,000 (below average of 513,932,578)
Range: 2,112.50 - 2,129.87
DOW is still pushing to get over the channel as it forms a nice support with its 50 MA. NASDAQ did a breakout but the candlestick formed did not fully reflect a strong bullish sentiment. S&P is also testing its resistance level and moving near to the upper bound of its Bollinger Bands. It seems that the 3 indices remains resilient in going forward as they did not back down from their respective resistance level.
Commodities
Closing Commodities: Gold Drops 1.5%, WTI Oil Shows Modest GainCommodities
- Gold and natural gas futures remained in the red all day, while strength in the dollar index helped contribute to this weakness
- WTI crude oil posted modest gains today, ending just above the $60/level (up $0.37)
- July nat gas, however, ended $0.09 at $2.73/MMBtu
- Aug gold lost 1.5% today to $1184.40/oz, while July silver rose $0.03 to $16.15/oz
- July crude oil futures rose $0.37 to $60.01/barrel
- July natural gas closed $0.09 lower at $2.73/MMBtu
- RBOB Gasoline closed $0.03 lower at $2.03/gallon
- Heating oil futures closed $0.01 higher to $1.88/gallon
Agriculture
- July crude oil futures rose $0.37 to $60.01/barrel
- July natural gas closed $0.09 lower at $2.73/MMBtu
- RBOB Gasoline closed $0.03 lower at $2.03/gallon
- Heating oil futures closed $0.01 higher to $1.88/gallon
Metals
- August gold ended today’s session $17.50 (-1.5%) lower at $1184.40/oz
- July silver closed $0.03 higher at $16.15/oz
- July copper closed flat at $2.57/lb
Currencies
- The U.S. dollar rallied against all of the majors today after Existing Home Sales jumped 5.1% in May
- US Dollar Index: +0.23% to 94.31
- EUR/USD: -0.07% to $1.1348
- While the Greek debt crisis has been dominating the headlines, it has had relatively little effect on this currency pair lately
- Purchasing Managers' Indices for France, Germany, and the entire eurozone will be released overnight
- USD/JPY: +0.56% to 123.41
- Japan's Manufacturing PMI for June comes out tonight
- GBP/USD: -0.32% to $1.5830
Bonds
Treasuries Get Whacked By Housing Data, Greek Optimism
- The U.S. Treasury market sold off overnight on optimism over a solution (temporary or otherwise) to Greece's debt crisis. The Greek 10-yr yield was down 145 basis points this morning and European bourses had rallied sharply. After better-than-expected Existing Home Sales data in the U.S., Treasuries made another leg lower and the complex finished on lows
- Yield Check:
- 2-yr: +4 bps to 0.66%
- 5-yr: +8 bps to 1.66%
- 10-yr: +10 bps to 2.36%
- 30-yr: +10 bps to 3.15%
- News:
- Existing Home Sales increased 5.1% in May to 5.35 mln SAAR from an upwardly revised 5.09 mln (from 5.04 mln) in April. The Briefing.com consensus had expected a rise to 5.26 mln
- It was the highest number of existing homes sold in 1 month since November 2009 when 5.44 mln were sold
- Much of the gain came from an increase in first-time home buyers. First-time buyers are the lifeblood of home buying demand. These buyers accounted for 32% of all sales in May. That was up from 30% in April and was the largest contribution since September 2012
- All-cash sales accounted for 24% of transactions for the third straight month. Sales to individual investors remained at 14% for a second consecutive month
- While inventories increased 3.2% in May, the increase in sales brought the months' supply at the current sales rate down to 5.1 months from 5.2 months
- Overnight, Greece submitted a new proposal to the IMF, the ECB, and the European Commission
- The proposal, which manages to avoid Greek ruling party Syriza's red lines on cuts to pensions and VAT hikes on electricity, was received optimistically by the official creditors
- European officials are currently meeting to discuss the proposal with Greek Prime Minister Alexis Tsipras
- Existing Home Sales increased 5.1% in May to 5.35 mln SAAR from an upwardly revised 5.09 mln (from 5.04 mln) in April. The Briefing.com consensus had expected a rise to 5.26 mln
- Commodities:
- WTI crude: +0.42% to $60.22/bbl
- Gold: -1.52% to $1,183.60/troy oz.
- Copper: +0.12% to $2.572/lb.
- Currencies:
- EUR/USD: -0.20% to $1.1331
- USD/JPY: +0.55% to 123.40
- Data out 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)
- New Supply:
- $26 billion 2-year note auction (13:00 ET)
Treasury Yields:
- 2 Year Note 0.68% +0.03
- 5 Year Note 1.68% +0.09
- 10 Year Note 2.37% +0.11
- 30 Year Bond 3.16% +0.11
2/30 Spread: 248 bps ( +8 ) … 2/10 Spread: 169 bps ( +8 )
Preview for Tuesday 23 June, 2015
Economic Data
Tuesday (23 June) :
- 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)
Earnings Highlights
Tuesday (23 June) :
BMO - BBRY CCL DRI IHS
AMC - ANFI
BMO - BBRY CCL DRI IHS
AMC - ANFI
Summary
Speculation from the Greece certainly gave the market a catalyst in pushing higher. As the deal is not yet confirmed, I think we should continue to see some upside from there. With that being said, it is still better to be cautious in the market as I don't see a clear leadership in the market yet.
Direction for Tuesday 23 June, 2015: Up
2015 Daily Directional Accuracy: 53/93 (56.99%)
2015 Daily Directional Accuracy: 53/93 (56.99%)
2015 Weekly Directional Accuracy: 13/22 (59.09%)
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