Dow +113.31 at 17904.61, Nasdaq +25.58 at 5055.55, S&P +11.86 at 2096.29
Market opened strongly and there was a slight selling at the first hour to test the bullishness. But the rally remains strong and rebound after hitting the support level. Crude oil was rather flat ahead of inventories report on Wednesday. Meanwhile Grexit is getting louder as Greece is possibly going to default on their payment.It seems more like a short covering to me and the technicals is telling me there is possibility of the market might continue to move slightly higher. Tomorrow is the start of the 2-day FOMC meeting which explains partly why the traders are taking off profits ahead. I would say market is getting more defensive and buckle up for more volatility this few days.
Direction for Tuesday 16 June, 2015; Up
I think this might be just a technical rebound as it was likely to be dip buying and short covering. As we are seeing the FOMC meeting the next 2 days, market is more or less going to be volatile and uncertainty.
Market Summary
Industry Watch
Strong: Consumer Staples, Health Care, Technology
Weak: Energy, Industrials, Utilities
Other Market Moving Factor:
- No new developments between Greece and its creditors
- S&P 500 tests 100-day moving average (2,089)
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. Mr. Tsipras' remarks were made in front of the Greek parliament with the premier adding that another round of elections is not in the cards.
Similar to U.S. equities, European stocks were able to rally despite the lack of positive developments. Meanwhile, Germany's 10-yr bund climbed, sending its yield lower by three basis points to 0.80% while the U.S. 10-yr note also rallied with its yield slipping four basis points to 2.32%.
All ten sectors posted gains with consumer staples (+1.1%) leading the advance. The sector rebounded from yesterday's underperformance amid broad strength while other countercyclical groups ended mixed with respect to the broader market. Similar to consumer staples, the telecom services sector (+0.8%) outperformed while health care (+0.5%) and utilities (+0.4%) settled behind the broader market.
The health care sector ended a bit behind the S&P 500 with biotechnology contributing to the underperformance. Still, the iShares Nasdaq Biotechnology ETF (IBB 364.38, +0.70) added 0.2%.
Moving to the cyclical side, the top-weighted technology sector (+0.6%) outperformed throughout the session while three of the remaining five growth-sensitive groups also displayed relative strength. The energy sector (+0.8%) rallied alongside crude oil, which rose 0.8% to $60.00/bbl.
Also of note, the industrial sector (+0.1%) turned positive during the late afternoon, but still ended behind the remaining nine sectors as transport stocks weighed. The Dow Jones Transportation Average lost 0.3%, extending this week's decline to 0.8%. United Continental (UAL 51.23, -1.02) was the weakest performer, falling 2.0%, while Con-way (CNW 40.30, -0.96) lost 1.6% after peer Oshkosh (OSK 46.71, -3.59) lowered its guidance.
Once again, today's participation was below average with roughly 640 million shares changing hands at the NYSE floor.
Economic data was limited to Housing Starts and Building Permits:
- Housing starts declined 11.1% in May to 1.036 million from an upwardly revised 1.165 million (from 1.135 million) in April while the Briefing.com consensus expected a decline to 1.100 million
- In April, housing starts rose 22.1%, which was a historic, multi-decade high. It was only natural for housing starts to pull back following such a large increase
- Even after the decline, May starts were above Q1 averages (978,000) and in-line with trends from Q4 2014 (1.055 million)
- Building permits rose to a seasonally adjusted annualized rate of 1.275 million in May from a revised 1.140 million for April (from 1.143 million) while the Briefing.com consensus expected a decline to 1.100 million
Global Market
Asian Markets Close: Japan’s Nikkei -0.6%; Hong Kong’s Hang Seng -1.1%; China’s Shanghai Composite -3.5%
Markets in the Asia-Pacific region were mixed on Tuesday, yet the most closely-watched markets were all lower. Japan, Hong Kong, and China ran into more selling pressure, none more so than China’s Shanghai Composite, which dropped another 3.5% on the heels of Monday’s 2.0% decline.
Economic data
- Australia
- May New Motor Vehicle Sales -1.3% month-over-month (prior -1.5%)
- India
- May Trade Balance INR 10.41 bln (expected INR -10.00 bln; prior INR 10.99 bln)
- May Exports INR 22.35 bln (prior INR 22.05 bln)
- May Imports INR 32.75 bln (prior INR 33.05 bln)
Equity Markets
- Japan’s Nikkei declined 0.6%, finishing near its lows for the session on the back of a weak showing from its financial (-1.3%), technology (-1.0%), and industrial (-0.8%) sectors. Sumitomo Mitsui Trust Holdings (-4.1%), Yokogawa Electric (-3.4%), and Shizuoka Bank (-3.4%) led the decliners while Tokyo Electric Power (+4.2%) and Mitsui Chemicals (+4.2%) led the winners. Out of the 225 index members, 37 ended higher, 181 finished lower, and 7 were unchanged.
- Hong Kong’s Hang Seng declined 1.1% and ended at its lows for the session. The energy (-2.3%), basic materials (-1.5%), and financial (-0.9%) sectors were among the weakest links. China Resources Land (-3.4%), China Resources Power Holdings (-3.0%), and China Life Insurance (-2.8%) led the laggards. Link REIT (+1.1%) was the only stock to gain more than 1.0%. Out of the 50 index members, 8 ended higher, 39 finished lower, and 3 were unchanged.
- China’s Shanghai Composite declined 3.5% on the heels of Monday’s 2.0% drop. Similar concerns were cited for the weak showing: the oncoming supply of new share listings and a crackdown on margin trading. The industrial (-5.2%), utilities (-4.6%), and basic materials (-4.0%) sectors were the weakest links in the Chinese market on Tuesday. Having lost 5.5% over the first two trading sessions of the week, the Shanghai Composite is still up 51.0% year-to-date.
- India’s Sensex increased 0.4% and finished near its highs for the session, rallying sharply in late trading after testing the 26,400 area. The consumer cyclical (+1.3%) and utilities (+0.9%) sectors were the best-performing areas. Individual standouts included Tata Power (+2.7%), State Bank of India (+2.0%), and Hindustan Unilever (+1.7%). Vedanta (-1.6%) and Dr Reddy’s Laboratories (-1.1%) led a small group of losers. Out of the 30 index members, 24 ended higher and 6 finished lower.
- Australia’s S&P/ASX 200 declined 0.1% after being up 0.6% earlier in the session. The energy (-1.3%), REIT (-1.3%), and Resources (-1.1%) sectors were the weak links. Mineral resources (-8.0%), Karoon Gas Australia (-6.1%), and Monadelphous Group (-6.0%) paced the laggards. Northern Star Resources (+6.8%) topped the list of winners. Out of the 200 index members, 45 ended higher, 138 finished lower, and 17 were unchanged.
- Regional advancers: Malaysia +0.01%, Indonesia +0.7%, Thailand +0.1%, Philippines +0.7%
- Regional decliners: South Korea -0.7%, Taiwan -0.5%, Singapore -0.8%, Vietnam -1.1%
FX
- USD/CNY -0.01% at 6.2086
- USD/INR +0.3% at 64.300
- USD/JPY +0.1% at 123.54
EUROPE
Major European indices have climbed off their worst levels of the session, but they continue holding losses. In news, the European Court of Justice said the European Central Bank’s Outright Monetary Transactions program is in-line with EU law and within the central bank’s mandate.
- Eurozone ZEW Economic Sentiment fell to 53.7 from 61.2 (consensus 60.3)
- Germany’s June ZEW Economic Sentiment dropped to 31.5 from 41.9 (expected 37.1) while ZEW Current Conditions declined to 62.9 from 65.7 (expected 63.0). Separately, May CPI +0.1%, as expected
- UK’s May CPI +0.2% month-over-month; +0.1% year-over-year. Both figures matched expectations. Separately, House Price Index +5.5% year-over-year (expected 10.2%; last 9.6%) and May Input PPI -0.9% month-over-month (consensus 0.4%; prior 1.4%)
Closing Prices
- UK’s FTSE: 0.0%
- Germany’s DAX: + 0.5%
- France’s CAC: + 0.5%
- Spain’s IBEX: + 0.3%
- Portugal’s PSI: + 0.1%
- Italy’s MIB Index: + 0.3%
- Irish Ovrl Index: + 0.1%
- Greece ASE General Index: -4.8%
Macroeconomic Data
Economic Data
from Briefing.com
- Housing Starts : 1036K vs 1100K (Prior 1165K - Up)
- Building Permits : 1275K vs 1100K (Prior 1140K - Down)
Highlights
- Housing starts declined 11.1% in May to 1.036 mln from an upwardly revised 1.165 mln (from 1.135 mln) in April. The Briefing.com Consensus expected housing starts to decline to 1.100 mln.
Key Factors
- In April, housing starts rose 22.1%, which was an historic, multi-decade high. It was only natural for housing starts to pull back following such a large increase.
- Even after the decline, May starts were above Q1 averages (978,000) and in-line with trends from Q4 2014 (1.055 mln).
- There was some concern that heavy rainfall throughout the U.S. might have impacted construction levels in May, but that doesn’t seem to be the case. The South, which suffered some of the worst flooding from the deluge in Texas, was actually the best performing area in the U.S. Starts only declined 5.0% compared to declines of 26.5% in the Northeast, 12.5% in the West, and 10.2% in the Midwest.
- Single-family construction declined 5.4% in May to 680,000 from 719,000 in April. That was a little light compared to Q4 2014 trends (700,000), but well above first quarter levels (643,000).
- The volatile multifamily construction starts declined 20.2% to 356,000 in May from 446,000 in April.
- The number of units currently under construction increased a very modest 0.5% in May, from 859,000 to 863,000.
Big Picture
- Despite the May decline, housing starts are firmly back on their late 2014 trends.
Market Internals
NYSE:
Lower Volumes than the day before – 652.7M vs 734.1M
Advancers outpaced Decliners (adv/dec): 1962 / 1111
New Lows outpaced New Highs (highs/lows): 66 / 79
NASDAQ:
Lower Volumes than the day before – 1648.0M vs 1734.8M
Advancers outpaced Decliners (adv/dec): 1647 / 1181
New Highs outpaced New Highs (highs/lows): 136 / 42
VOLATILITY S&P500 (VIX)
14.81 -0.58 (-3.77%)
Technical Updates
17,904.48 +113.31 (+0.64%)
Volume: 77,506,445 (below average of 97,724,618)
Range: 17,774.12 - 17,919.62
Range: 17,774.12 - 17,919.62
5,055.55 +25.58 (+0.51%)
Volume: 373.8M (below average of 423,412,491)
Volume: 373.8M (below average of 423,412,491)
Range: 5,022.56 - 5,063.06
2,096.29 +11.86 (+0.57%)
Volume: 410,710,000 (below average of 520,448,077)
Range: 2,082.10 - 2,097.40
Seems like a technical rebound to me. With the lack in volume supporting, I reckon the market will return to the downside once the recovery momentum runs out. The 20 and 50 MA is about to converge and the former is about to go lower the latter. I don't think there is much bullishness to cheer about.
Commodities
Closing Commodities: Natural Gas Ends Flat Following Big Run Yesterday; Oil Rises, Helped By StormCommodities
- Following a +5% run higher yesterday, natural gas futures ended the day on a dull note
- July nat gas futures closed floor trading flat at $2.89/MMBtu
- Overall, in the energy space, the tropical storm in the Gulf of Mexico is providing some uncertainty
- This helped oil futures today, which rose modestly
- July crude oil gained $0.45 at $60.00/barrel
- Metals fell today as the dollar index remained higher
- Aug gold lost $4.50 to $1181.10/oz, while July silver fell $0.11 at $15.97/oz
- July copper declined $0.04 today to $2.61/lb
Energy
- July crude oil futures rose $0.45 to $60.00/barrel
- July natural gas closed flat at $2.89/MMBtu
- RBOB Gasoline closed $0.03 higher at $2.13/gallon
- Heating oil futures closed $0.02 higher to $1.89/gallon
Agriculture
- July corn closed $0.06 higher at $3.54/bushel
- July wheat closed flat at $4.89/bushel
- July soybeans closed $0.19 higher to $9.58/bushel
- Ethanol closed $0.02 higher at $1.48/gallon
- Sugar #11 closed 0.15 cents lower to 11.31 cents/lb
Metals
- August gold ended today’s session $4.50 lower at $1181.10/oz
- July silver closed $0.11 lower at $15.97/oz
- July copper closed $0.04 lower at $2.61/lb
Currencies
- EUR/USD: -0.33% to 1.1241
- The specter of Greece defaulting on its obligations sent its 10-year sovereign yield up 59 bps to 12.62%
- GBP/USD: +0.35% to 1.5652
- U.K. inflation came out as expected. The May CPI grew 0.2% m/m, in line with estimates and the prior reading
- USD/JPY: -0.03% to 123.37
- Overnight, BoJ Governor Haruhiko Kuroda tempered his remarks from last week that sent $/Yen tumbling. He said last night that he was not "trying to assess the nominal exchange rate nor forecast its future movement"
- USD/CHF: +0.25% to 0.9322
- USD/CAD: -0.01% to 1.2315
Bonds
Treasuries End in Green
- The Treasury complex pushed higher in a broad-based rally today. Equities spent most of the day rallying and the economic data was neutral on balance, so a move higher ahead of FOMC is somewhat encouraging for the bulls
- Yield Check:
- 2-yr: -3 bps to 0.68%
- 5-yr: -4 bps to 1.66%
- 10-yr: -4 bps to 2.32%
- 30-yr: -3 bps to 3.05%
- News:
- Housing starts fell 11.1% in May to 1.036 mln from an upwardly revised 1.165 mln (from 1.135 mln) in April. The Briefing.com consensus called for housing starts to decline to 1.100 mln
- In April, housing starts rose 22.1%, a multi-decade high, so a pulll-back was almost inevitable
- Even after the decline, May starts were above Q1 averages (978,000)
- Building Permits sailed past expectations at 1275K for May versus the Briefing.com consensus of 1100K and a prior reading of 1140K (revised from 1143K)
- The European Court of Justice ruled that the Outright Monetary Transactions (OMT) program is legal, as expected
- Housing starts fell 11.1% in May to 1.036 mln from an upwardly revised 1.165 mln (from 1.135 mln) in April. The Briefing.com consensus called for housing starts to decline to 1.100 mln
- Commodities:
- WTI crude: +0.82% to $60.01/bbl.
- Gold: -0.40% to $1,181.0/troy oz.
- Copper: -1.25% to $2.614/lb.
- Currencies:
- EUR/USD: -0.31% to $1.1243
- USD/JPY: -0.01% to 123.39
- Data out Wednesday:
- MBA Mortgage Index for the week ending 6/13 (07:00 ET)
- Crude Inventories for the week ending 6/13 (10:30 ET)
- FOMC Rate Decision (14:00 ET)
Treasury Yields:
- 2 Year Note 0.71% -0.01
- 5 Year Note 1.68% -0.03
- 10 Year Note 2.32% -0.04
- 30 Year Bond 3.06% -0.03
2/30 Spread: 235 bps ( -2 ) … 2/10 Spread: 161 bps ( -3 )
Preview for Wednesday 17 June, 2015
Economic Data
Wednesday (17 June) :
- MBA Mortgage Index :
- Crude Inventories : (Prior -6.812M)
- FOMC Rate Decision : 0.25% (Prior 0.25%)
Earnings Highlights
Wednesday (17 June) :
BMO - ATU CCG FDX
AMC - CLC DRC GLPW HGR JBL ORCL PIR
BMO - ATU CCG FDX
AMC - CLC DRC GLPW HGR JBL ORCL PIR
Summary
Somehow I feel the recovery is faltering by the end of session on Tuesday. Maybe more short-covering to close their positions. As we are awaiting Fed's meeting tomorrow and the day after, I think the market is going to be filled with uncertainty. I suppose most traders are concerned with the decision of the interest rate raise and when. Nonetheless, it is better to stay out and monitor than taking a huge risk against yourself.
Direction for Wednesday 17 June, 2015; Abstain
2015 Daily Directional Accuracy: 51/90 (56.67%)
2015 Daily Directional Accuracy: 51/90 (56.67%)
2015 Weekly Directional Accuracy: 13/21 (61.90%)
No comments:
Post a Comment