Dow +24.29 at 18143.07, Nasdaq +6.12 at 5160.09, S&P +1.37 at 2124.22
Well market started off with some remaining momentum from Monday. But it quickly reduced to more profit taking and there was some buying activity going on in the second half of the session, even so it is not a heavy buying. I guess the bulls are starting to run out of steam soon? Meanwhile NASDAQ continues to be the most bullish among the 3 indices. The Dollar Index continues to rise amid mixed economic data. And crude oil also rallied on Tuesday ahead of inventories data.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
Market Summary
Industry Watch
Strong: Consumer Discretionary, Financials, Telecom Services
Weak: Consumer Staples, Industrials, Technology, Utilities
Other Market Moving Factor:
- Hopes remain high for a Greek debt deal in the near term: Eurogroup to meet tomorrow at 17:00 GMT
- Treasuries slide and dollar rallies after Fed Governor Powell says two rate hikes could take place prior to year's end
Equity indices held modest gains at the start amid continued optimism that Greece will be able to come to terms with its creditors. On that note, the Eurogroup will hold its third meeting in six days tomorrow evening. In addition, better than expected Manufacturing (52.5; consensus 52.2) and Services PMI (54.4; consensus 53.6) readings for the eurozone contributed to the upbeat sentiment overseas.
Once the U.S. session got underway, the S&P 500 held a four-point gain, but surrendered that advance just one hour into the session as heavily-weighted sectors like technology (unch), industrials (-0.2%), and consumer staples (-0.5%) weighed.
The top-weighted technology sector was able to erase the majority of its loss before the final hour, but chipmakers struggled into the afternoon. The PHLX Semiconductor Index lost 0.6% with all but six components ending in the red. On the upside, SunEdison (SUNE 32.13, +0.93) bucked the trend, spiking 3.0%.
Elsewhere, the consumer discretionary sector was underpinned by retailers and homebuilders. The SPDR S&P Retail ETF (XRT 101.69, +0.92) climbed 0.9% while iShares Dow Jones US Home Construction ETF (ITB 27.70, +0.05) added 0.2% following a better than expected New Home Sales report for May.
Also of note, the energy sector (+0.3%) struggled early, but finished among the leaders as crude oil held a solid gain throughout the day, ending the pit session higher by 1.7% at $61.02/bbl.
Similar to cyclical sectors, the four defensively-oriented groups ended the day in mixed fashion. Consumer staples (-0.5%) and utilities (-1.4%) struggled while health care (+0.2%) and telecom services (+1.3%) displayed relative strength. The health care sector eked out a slim gain even as biotechnology struggled with iShares Nasdaq Biotechnology ETF (IBB 383.25, +0.08) ending flat.
Moving on, Treasuries were little changed during afternoon action, but retreated this morning after Federal Reserve Governor Jerome Powell said that two rate hikes could take place before the end of the year if the economy doesn't suffer an unexpected slump. The 10-yr note revisited its flat line during the afternoon, but ultimately slipped into the middle of its range to send the benchmark yield higher by three basis points to 2.40%.
On a related note, the Dollar Index (95.40, +1.07) spiked 1.1% with the greenback jumping 1.6% against the euro (1.1170).
Today's participation was below average with fewer than 700 million shares changing hands at the NYSE floor.
Economic data included Durable Orders, FHFA Housing Price Index, and New Home Sales:
- Durable goods orders declined 1.8% in May after declining a downwardly revised 1.5% (from -1.0%) in April while the Briefing.com consensus expected a decline of 0.5%
- As expected, the entire decline can be traced to another big pullback in aircraft orders as Boeing (BA 144.43, -1.27) reported a big drop in sales in May, which translated into a 28.9% decline in defense and nondefense aircraft orders
- Motor vehicle orders were flat after increasing 0.4% in April
- Excluding transportation, durable goods orders increased 0.5% in May after a 0.3% decline in April (revised from -0.2%) while the consensus expected an increase of 0.6%
- The FHFA Housing Price Index for April rose 0.3%, which followed an unrevised increase of 0.3% in March
- New home sales hit their highest level since February 2008, increasing 2.2% in May to 546,000 from an upwardly revised 534,000 (from 517,000) in April while the Briefing.com consensus expected a reading of 525,000
- Regionally, there was a big disparity in demand trends with nearly the entire increase coming from an 87.5% spike in sales in the Northeast. Sales in the Midwest (-5.7%) and South (-4.3%) declined on a month-to-month basis. Sales in the West increased 13.1% to 138,000, but remain below January levels
Global Market
Asian Markets Close: Japan’s Nikkei +1.9%; Hong Kong’s Hang Seng +0.9%; China’s Shanghai Composite +2.2%
It was another good day for most markets in the Asia-Pacific region, which continued to draft off reports of encouraging developments surrounding a potential (and another) bailout deal for Greece. China’s Shanghai Composite stole the trading show, swinging 7.3% between its low and high for the session and ending the day with a 2.2% gain.
Economic data
- China
- June HSBC Manufacturing PMI 49.6 (expected 49.4; prior 49.2)
- Japan
- June Manufacturing PMI 49.9 (expected 50.6; prior 50.9)
- Australia
- Q1 House Price Index +1.6% quarter-over-quarter (expected +2.3%; prior +2.0%)
- CB Leading Index -0.3% month-over-month (expected 0.0%)
- Singapore
- May CPI -0.4% year-over-year (expected -0.5%; prior -0.5%)
Equity Markets
- Japan’s Nikkei increased 1.9% and finished at its highs for the day, bolstered by broad-based gains. The basic materials (+2.5%), financial (+2.2%), and technology (+2.1%) sectors were the best-performing areas. Individual standouts included Mitsui Chemicals (+7.5%), Mitsubishi Chemical Holdings (+6.4%), and Tosoh Corp (+5.7%). Sumitomo Chemical (-4.9%) and Sharp Corp (-1.8%) led a small group of losers. Out of the 225 index members, 211 ended higher, 11 finished lower, and 3 were unchanged.
- Hong Kong’s Hang Seng jumped 0.9%, helped by strength in the communications (+1.7%), energy (+1.4%), and financial (+1.0%) sectors. China Resources Power Holdings (+3.8%), China Mobile (+3.2%), and BOC Hong Kong Holdings (+3.1%) sat atop the list of winners. Link REIT (-4.3%) and China Construction Bank (-3.1%) were the only two stocks to lose more than 1.0%. Out of the 50 index members, 42 ended higher and 8 finished lower.
- China’s Shanghai Composite declined as much as 4.8% in early action, but then soared in the second half of its trading session, rallying 7.3% to end the day with a 2.2% gain. The advance followed on the heels of the flash HSBC Manufacturing PMI report for June, which was better than expected but still in contraction territory at 49.6. The utilities (+4.5%) and industrial (+4.4%) sectors were the best-performing areas in the Chinese market on Tuesday.
- India’s Sensex increased 0.3%, aided by strength in its industrial (+1.6%), communications (+1.4%), and energy (+1.1%) sectors. Out of the 30 index members, 19 ended higher and 11 finished lower.
- Australia’s S&P/ASX 200 increased 1.3%, led by strength in the health care (+2.0%), telecom services (+1.6%), and financial (+1.6%) sectors. Kathmandu Holdings (+5.6%) was the top-performing issue while Flight Centre Ltd (-13.6%) was the biggest laggard. Out of the 200 index members, 160 ended higher, 34 finished lower, and 6 were unchanged.
- Regional advancers: South Korea +1.3%, Taiwan +0.5%, Singapore +0.7%
- Regional decliners: Malaysia -0.3%, Indonesia -0.4%, Thailand -0.2%, Vietnam -0.2%, Philippines -0.8%
FX
- USD/CNY -0.04% at 6.2068
- USD/INR +0.1% at 63.601
- USD/JPY +0.2% at 123.68
EUROPE
Major European indices trade higher across the board with Germany’s DAX (+1.4%) in the lead as regional markets extend yesterday’s gains amid continued optimism that a deal between Greece and its creditors will be secured in the near future. The Eurogroup is scheduled to meet once again to discuss a potential debt deal with Greek representatives tomorrow at 17:00 GMT. In addition, a set of better than expected PMI readings from the region has contributed to the strength in equity markets.
- Eurozone June Flash Manufacturing PMI 52.5 (expected 52.2; prior 52.2) while Flash Services PMI 54.4 (consensus 53.6; last 53.8)
- Germany’s June Flash Manufacturing PMI 51.9 (consensus 51.3; last 51.1) while Flash Services PMI 54.2 (consensus 53.0; previous 53.0)
- UK’s June CBI Industrial Trends Orders -7 (consensus 1; prior -5)
- French June Flash Manufacturing PMI 50.5 (expected 49.5; last 49.4) while Flash Services PMI 54.1 (consensus 52.6; previous 52.8). Separately, June Business Survey slipped to 100 from 103 (consensus 103)
- Italy’s April Retail Sales +0.7% month-over-month (expected 0.1%; last -0.1%) while the year-over-year reading was flat (prior -0.2%)
Closing Prices
- UK’s FTSE: + 0.1%
- Germany’s DAX: + 0.7%
- France’s CAC: + 1.2%
- Spain’s IBEX: + 0.3%
- Portugal’s PSI: + 3.1%
- Italy’s MIB Index: + 0.4%
- Irish Ovrl Index: + 0.9%
- Greece ASE General Index: + 6.1%
Macroeconomic Data
Economic Data
from Briefing.com
- Durable Orders : -1.8% vs -0.5% (Prior -1.0%)
- Durable Goods - ex transportation : 0.5% vs 0.6% (Prior -0.2%)
- FHFA Housing Price Index : 0.3% (Prior 0.3%)
- New Home Sales : 546K vs 525K (Prior 517K)
DURABLE ORDERS
Highlights
- Durable goods orders declined 1.8% in May after declining a downwardly revised 1.5% (from -1.0%) in April. The Briefing.com Consensus expected durable goods orders to decline 0.5%.
- Excluding transportation, durable goods orders increased 0.5% in May after a 0.3% decline in April (revised from -0.2%). The consensus expected these orders to increase 0.6%.
Key Factors
- As expected, the entire decline can be traced to another big pullback in aircraft orders. Boeing (BA) reported a big drop in sales in May. That translated into a 28.9% decline in defense and nondefense aircraft orders in May.
- Motor vehicle orders were flat after increasing 0.4% in April.
- Despite weak regional manufacturing surveys, demand for manufacturing goods was strong in May. Machinery orders increased 0.4% and computer and electronic products orders increased 2.2%. Both primary and fabricated metal orders increased 0.6% in May.
- The only major sectors that reported declines, outside of transportation, were electrical equipment (-0.4%) and other durable goods (-0.3%).
- Business capital demand rebounded in May. Orders of nondefense capital goods excluding aircraft increased 0.4% in May after declining 0.3% in April. Shipments, which factor into GDP growth calculations, increased 0.3% for a second consecutive month.
Big Picture
- A steep drop in aircraft orders masked an otherwise strong durable goods orders report.
NEW HOME SALES
Highlights
- New home sales increased 2.2% in May to 546,000 from an upwardly revised 534,000 (from 517,000) in April. The Briefing.com Consensus pegged new home sales at 525,000.
Key Factors
- That was the most new homes sold since February 2008.
- New home sales are measured by signed contracts and not actual closing. Buyers likely took notice of the increase in 10-year Treasury yields that began at the very end of April. With mortgage rates heading higher, buyers signed contracts to take advantage of relatively low interest rates.
- A similar bump in sales is likely to be reported in the June existing home sales report.
- Regionally, there was a big disparity in demand trends. Nearly the entire increase in sales came from an 87.5% increase in sales in the Northeast. Sales in the Midwest (-5.7%) and South (-4.3%) declined on a month-to-month basis. Sales in the West increased 13.1% to 138,000, but remain below January levels.
- Total supply was unchanged at 206,000. The increase in sales reduced the months’ supply at the current sales rate to 4.5 months from 4.6 months in April. A healthy market typically has 6.0 months of supply. Builders will need to increase their production if they are going to get inventories back to their normal and healthy range.
- The median home sales price declined 1.0% y/y to $282,800. That was the first year-over-year decline in prices since a 3.1% drop in September 2014.
Big Picture
- New home demand has accelerated from 2013 and 2014 levels.
Market Internals
NYSE:
Lower Volumes than the day before – 690.4M vs 714.4M
Advancers outpaced Decliners (adv/dec): 1791 / 1286
New Highs outpaced New Lows (highs/lows): 145 / 46
NASDAQ:
Lower Volumes than the day before – 1605.0M vs 1616.5M
Advancers outpaced Decliners (adv/dec): 1580 / 1217
New Highs outpaced New Highs (highs/lows): 193 / 32
VOLATILITY S&P500 (VIX)
12.11 -0.63 (-4.95%)
Technical Updates
18,144.07 +24.29 (+0.13%)
Volume: 75,971,866 (below average of 95,273,525)
Range: 18,108.10 - 18,188.81
Range: 18,108.10 - 18,188.81
5,160.10 +6.13 (+0.12%)
Volume: 364.1M (below average of 421,535,835)
Volume: 364.1M (below average of 421,535,835)
Range: 5,139.33 - 5,163.42
2,124.20 +1.35 (+0.06%)
Volume: 453.1M (below average of 512,314,123)
Range: 2,119.89 - 2,128.03
DOW is still held below by the resistance from its channel. S&P did not advance much and is still sitting on its support level, forming a doji like candlestick pattern. NASDAQ did not break above its previous high which might reflect some sort of resistance. Now it is up to the market to see whether it can overcome the resistance level, otherwise we should see a correction bringing the market down to probably the 20/50 MA serving as support.
Commodities
Closing Commodities: WTI Oil Closed Above $61/Barrel, Silver Falls 2.4%Commodities
- The dollar index traded higher today, which helped weigh on select commodities.
- Energy was strong in morning action, oil futures held gains following morning strength, while natural gas futures erased all of its gains and is now unchanged at $2.73/MMBtu
- Aug crude oil ended today’s session +1.01% at $61.02/barrel.
- July nat gas lost $0.01 to $2.72/MMBtu
- Aug gold fell $7.70 today to $1176.70/oz, while July silver really underperformed, losing 2.4% to $15.75/oz
- Despite the strong dollar index, copper futures rose $0.04 to $2.61/lb
Energy
- August crude oil futures rose $1.01 to $61.02/barrel
- July natural gas closed $0.01 lower at $2.72/MMBtu
- RBOB Gasoline closed $0.02 higher at $2.05/gallon
- Heating oil futures closed $0.04 higher to $1.92/gallon
Agriculture
- July corn closed $0.06 higher at $3.67/bushel
- September wheat closed $0.21 higher (+4.1%) at $5.28/bushel
- November soybeans closed $0.01 higher to $9.60/bushel
- Ethanol closed $0.03 higher at $1.55/gallon
- Sugar #11 closed 0.23 cents lower to 11.25 cents/lb
Metals
- August gold ended today’s session $7.70 lower at $1176.70/oz
- July silver closed $0.40 lower (-2.4%) at $15.75/oz
- July copper closed $0.04 higher at $2.61/lb
Currencies
- The US Dollar Index gained 1.18% today to 95.45 after traders who had bought euros in anticipation of a post-Greek accord rally were disappointed and unwound their positions. During the U.S. session, New Home Sales for May sailed past estimates and this added to the dollar's gains
- EUR/USD: -1.63% to $1.1163
- The Greek sovereign 10-year note yield fell 54 basis points to 10.36% as hope for a deal between Greece and its official creditors mounted
- The eurozone's Markit Composite PMI beat expectations, rising to 54.1 in June from 53.6 in May
- Both Germany and France beat expectations in the service and manufacturing sectors, demonstrating some resilience in the face of uncertainty surrounding Greece
- GBP/USD: -0.73% to $1.5714
- In the U.K., CBI Industrial Trends Orders fell to -7 in June from -5 in May, falling short of expectations for a positive reading
- USD/JPY: +0.38% to 123.87
- Japan's Manufacturing PMI missed expectations and fell to 49.9 in June from 50.9 in April
- USD/CHF: +1.41% to 0.9342
- USD/CAD: +0.24% to 1.2344
- AUD/USD: -0.03% to $0.7724
- NZD/USD: -0.39% to 0.6843
Bonds
Treasuries Drop (but Recover) on Strong New Home Sales
- U.S. government notes and bonds edged lower today after a renewed global appetite for risk and stronger U.S. data left the Tplex without much buying interest. The losses were broadly shared across the curve
- Yield Check:
- 2-yr: +2 bps to 0.69%
- 5-yr: +2 bps to 1.69%
- 10-yr: +3 bps to 2.40%
- 30-yr: +3 bps to 3.20%
- News:
- Greece has submitted a proposal to its official creditors (the IMF, European Commission, and ECB) that appears to make enough concessions to obtain more financing
- The proposal raises VAT on many goods and services
- It raises pension contributions
- It increases business taxes
- Durable Goods Orders fell 1.8% in May after declining a downwardly revised 1.5% (from -1.0%) in April. The Briefing.com consensus expected -0.5%
- The entire decline could be attributed to a big fall in aircraft orders
- Excluding transportation, Durable Goods Orders increased 0.5% in May after a 0.3% decline in April (revised from -0.2%). The consensus expected +0.6%
- Fed governor Jerome Powell (FOMC voter and monetary policy moderate) said that conditions for a rate hike may be in place by September
- He also said that the strong dollar is a drag on the U.S. economy and that he was not concerned about equity valuations
- The FHFA Housing Price Index climbed 0.3% in April, the same gain as was seen in March
- New Home Sales rose 2.2% in May to 546,000 from an upwardly revised 534,000 (from 517,000) in April. The Briefing.com consensus called for 525,000 sales
- This was the highest number of new homes sold since February 2008
- Nearly the entire increase in sales came from an 87.5% increase in sales in the Northeast
- The $26 billion 2-year note auction was met with solid demand and stopped through by less than 1 basis point
- High yield: 0.692%
- Bid-to-cover: 3.28
- Indirect bid: 38.5%
- Direct bid: 10.15%
- Greece has submitted a proposal to its official creditors (the IMF, European Commission, and ECB) that appears to make enough concessions to obtain more financing
- Commodities:
- WTI crude: +1.28% to $61.15/bbl.
- Gold: -0.67% to $1,176.20/troy oz.
- Copper: +1.77% to $2.6125/lb.
- Currencies:
- EUR/USD: -1.55% to $1.1171
- USD/JPY: _0.45% to 123.95
- Data out 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)
- New Issuance:
- $35 billion 5-year note auction (13:00 ET)
Treasury Yields:
- 2 Year Note 0.70% +0.02
- 5 Year Note 1.71% +0.03
- 10 Year Note 2.42% +0.05
- 30 Year Bond 3.20% +0.04
2/30 Spread: 250 bps ( +2 ) … 2/10 Spread: 172 bps ( +3 )
Preview for Wednesday 24 June, 2015
Economic Data
Wednesday (24 June) :
- 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)
Earnings Highlights
Wednesday (24 June) :
BMO - LEN MON
AMC - APOG BBBY GLPW FUL HGR MLHR SCS WOR
BMO - LEN MON
AMC - APOG BBBY GLPW FUL HGR MLHR SCS WOR
Summary
As far as I concern, market is still moving in the range with NASDAQ being the exception. The bullish momentum seems to have quiet down as we are expecting GDP number the next day. With that being a market mover, I am thinking there should be some profit-taking ahead. While for the Greece's deal, as soon as it is settled I believe we might see some wild move in the market too. Meantime stay cautious.
Direction for Wednesday 24 June, 2015: Down
2015 Daily Directional Accuracy: 54/94 (57.45%)
2015 Daily Directional Accuracy: 54/94 (57.45%)
2015 Weekly Directional Accuracy: 13/22 (59.09%)
No comments:
Post a Comment