Dow +236.36 at 18000.40, Nasdaq +62.82 at 5076.69, S&P +25.05 at 2105.20
There it is, the market did a pullback after hitting the support. Early session on Wednesday saw a rally that brought the market up and it went flat thereafter, it led me to consider whether the rally is convincing. Crude oil also rallied as we saw a significant drawdown from the inventories report, suggesting a strong demand in the market. Also, that was partly influenced by the drop in Dollar Index.I suppose we should see a pullback before a break out below the support level. That support level is rather an important one so I think there are some dip buyers coming in that would push the market back up slightly. However I am not overly bullish on that as overall sentiment is still quite bearish.
Meanwhile keep an eye for tomorrow's crude oil inventories. After the OPEC meeting and API data, this is going to be crucial to determine where the oil market is heading.
Direction for Wednesday 10 June, 2015; Up
Market Summary
Industry Watch
Strong: Energy, Financials, Industrials, Technology
Weak:
Other Market Moving Factor:
- Negotiations between Greece and creditors continue
- Germany's 10-yr bund yield tests 1.00% for the first time since September
- S&P 500 reclaims 100-day moving average (2,086), setting sights on 50-day average (2,102)
In addition to regaining its 100-day average, the S&P 500 climbed above the 50-day average (2,102) after Bloomberg reported Germany may be willing to offer a staggered deal to Greece. This deal would allow the disbursement of additional bailout funds in exchange for a Greek commitment to executing one of the reforms requested by the creditors. On a related note, the European Central Bank increased Greece's allowance to Emergency Liquidity Assistance funds by EUR2.30 billion to EUR83 billion.
The news jolted global equities, helping Germany's DAX end the day higher by 2.5%. Furthermore, selling in Germany's 10-yr bund resulted in the first test of the 1.00% level since October. Germany's benchmark yield ended the day below its session high of 1.06%, at 0.98% (+3 bps).
Similarly, U.S. Treasuries also retreated, ending near their lows with the benchmark 10-yr yield higher by seven basis points at 2.48%, representing the highest yield since late October. The recent spike in yields has been beneficial to the financial sector (+1.4%), which extended its June advance to 1.9%, ending today's session only behind technology (+1.6%). The financial space received broad support from top-weighted components like Bank of America (BAC 17.59, +0.28), Citigroup (C 57.02, +1.02), and JPMorgan Chase (JPM 68.26, +1.08) with the trio gaining between 1.6% and 1.8%.
Elsewhere, the technology sector held the lead throughout the day, receiving support from large cap names like Apple (AAPL 128.88, +1.46), Google (GOOGL 552.60, +10.44), and Microsoft (MSFT 46.61, +0.96) while chipmakers also held their own with the PHLX Semiconductor Index adding 1.3%.
Over on the countercyclical side, consumer staples (+1.0%) and utilities (+0.5%) ended behind the remaining eight groups while telecom services (+1.2%) and health care (+1.2%) finished near the broader market. The health care sector received support from biotechnology with iShares Nasdaq Biotechnology ETF (IBB 365.83, +5.19) climbing 1.4%.
Today's trading volume at the NYSE floor was relatively light in the early going, but afternoon buying helped push the total to 766 million, above the 50-day moving average of 748 million.
Economic data was limited to the MBA Mortgage Index and Treasury Budget:
- The weekly MBA Mortgage Index spiked 8.4% to follow last week's 7.6% drop
- The Treasury Budget showed a deficit of $82.40 billion in May, down from a deficit of $130.00 billion in May 2014 while the Briefing.com consensus expected a deficit of $85.00 billion
- The Treasury data are not seasonally adjusted so the May deficit cannot be compared to the $157 billion surplus in April
Global Market
Asian Markets Close: Japan’s Nikkei -0.3%; Hong Kong’s Hang Seng -1.1%; China’s Shanghai Composite -0.2%
Markets in the Asia-Pacific region were mixed on Wednesday with most of the strength found in the regional markets, which bounced back from selling pressure on Tuesday. Both the Nikkei (-0.3%) and the Shanghai Composite (-0.2%) lost ground. After much anticipation, reports indicated that MSCI announced it is delaying the inclusion of China’s ‘A’ shares in the Emerging Markets Index.
Economic data
- Japan
- April Core Machinery Orders +3.8% month-over-month (expected -2.0%; prior +2.9%); +3.0% year-over-year (expected -1.3%; prior +2.6%)
- May CGPI +0.3% month-over-month (expected +0.2%; prior +0.1%); -2.1% year-over (expected -2.2%; prior -2.1%)
- South Korea
- May Unemployment Rate 3.9% (expected 3.7%; prior 3.7%)
- June M2 Money Supply +9.3% (prior +9.0%)
- Australia
- June Westpac Consumer Sentiment 95.3 (prior 102.4)
Equity Markets
- Japan’s Nikkei declined 0.3% after dropping 1.0% in the final two hours of trading. A strengthening yen and weakness in the technology (-1.1%), basic materials (-0.8%), and industrial (-0.7%) sectors weighed on matters. Hino Motors (-4.3%), Nissan Chemical Industries (-4.2%), and Aeon Co (-3.1%) led the decliners while Mitsui Mining and Smelting (+5.6%) and Mitsubishi Materials Corp (+3.9%) sat atop the list of winners. Out of the 225 index members, 70 ended higher, 144 finished lower, and 11 were unchanged.
- Hong Kong’s Hang Seng declined 1.1% after dropping 1.5% in the final two hours of trading. Losses were led by the energy (-2.2%), communications (-1.2%), industrial (-1.1%), and financial (-1.0%) sectors. China Shenhua Energy (-3.9%), Bank of Communications (-3.4%), and China Petroleum & Chemical (-3.2%) were the biggest losers. China Merchants Holdings Intl. (+3.7%) was the best-performing issue. Out of the 50 index members, 10 ended higher and 40 finished lower.
- China’s Shanghai Composite declined 0.2%, finishing up nicely from an early 2.2% drop after MSCI announced it is delaying the inclusion of ‘A’ shares in the emerging markets index. The Composite was actually up 1.0% for the day, but slipped into negative territory with a final hour selloff. There was added news that PBOC economists cut the 2015 growth outlook to 7.0% from 7.1%. The energy (-1.4%) and financial (-0.5%) sectors were among the weakest links in the Chinese market on Wednesday.
- India’s Sensex increased 1.4% in a bounce-back trade from what has been a decidedly weak month so far (-3.6%). Leading gainers included the industrial (+4.1%) and consumer cyclical (+2.9%) sectors. Bharat Heavy Electricals (+4.1%), Bajaj Auto (+2.9%), and Reliance Industries (+2.5%) led winning issues. Hindustan Unilever (+0.1%) was the index laggard, but still finished higher. All 30 index members finished the session higher.
- Australia’s S&P/ASX 200 increased 0.1%, finishing near its highs for the day after a speech from RBA Governor Stephens alluded to the central bank being open to more rate cuts if necessary. The energy (+1.5%), consumer staples (+0.7%), and gold (+0.7%) sectors provided leadership for the index. Out of the 200 index members, 113 ended higher, 74 finished lower, and 13 were unchanged.
- Regional advancers: Taiwan +1.2%, Malaysia +0.4%, Indonesia +0.7%, Singapore +0.9%, Thailand +1.0%, Philippines +0.8%
- Regional decliners: South Korea -0.6%, Vietnam -0.1%
FX
- USD/CNY unch at 6.2058
- USD/INR -0.3% at 63.836
- USD/JPY -0.9% at 123.28
EUROPE
Major European indices trade higher across the board with Italy’s MIB (+1.7%) in the lead. Elsewhere, a senior member of Germany’s CDU party, Michael Fuchs, said the offer that has been presented to Greece is non-negotiable and that proposals brought forth by Greek officials are not serious. Germany’s 10-yr bunds have retreated, pushing their yield up nearly five basis points to 1.00%.
- UK’s April Industrial Production +0.4% month-over-month (expected 0.1%; prior 0.6%); +1.2% year-over-year (consensus 0.6%; last 1.1%). Separately, Manufacturing Production -0.4% month-over-month (expected 0.1%; prior 0.4%); +0.2% year-over-year (consensus 0.4%; last 1.2%)
- France’s April Industrial Production -0.9% month-over-month (consensus 0.4%; last -0.3%) while the April Current Account swung from a deficit of EUR1.40 billion to a surplus of EUR400 million (expected deficit of EUR1.20 billion)
- Italy’s April Industrial Production -0.3% month-over-month (expected 0.2%; last 0.5%); +0.1% year-over-year (consensus 0.8%; prior 1.4%)
Closing Prices
- UK’s FTSE: + 1.1%
- Germany’s DAX: + 2.4%
- France’s CAC: + 1.8%
- Spain’s IBEX: + 1.5%
- Portugal’s PSI: + 2.4%
- Italy’s MIB Index: + 2.5%
- Irish Ovrl Index: + 1.7%
- Greece ASE General Index: -1.1%
Macroeconomic Data
Economic Data
from Briefing.com
- MBA Mortgage Index : 8.4% (Prior -7.6%)
- Crude Inventories : -6.812M (Prior -1.948M)
- Treasury Budget : -$82.4B (Prior -$130.0B)
Highlights
- The Treasury Budget showed a deficit of $82.4 bln in May, down from a deficit of $130.0 bln in May 2014. The Treasury data are not seasonally adjusted so the May deficit cannot be compared to the $157 bln surplus in April. The Briefing.com Consensus expected the budget deficit to fall to $85.0 bln.
Key Factors
- Total receipts increased by $12.5 bln to $212.4 bln from $199.9 bln in May 2014.
- Total outlays declined to $294.8 bln in May 2015 from $329.9 bln in May 2014, a difference of $35.1 bln.
- Fiscal year-to-date, the deficit is $365.2 bln versus $436.4 bln for the comparable period in FY14.
Big Picture
- Raw data available at: www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/current.htm
Market Internals
NYSE:
Higher Volumes than the day before – 782.3M vs 718.0M
Advancers outpaced Decliners (adv/dec): 2230 / 850
New Highs outpaced New Lows (highs/lows): 122 / 79
NASDAQ:
Higher Volumes than the day before – 1780.9M vs 1744.6M
Advancers outpaced Decliners (adv/dec): 2051 / 758
New Highs outpaced New Highs (highs/lows): 164 / 40
VOLATILITY S&P500 (VIX)
13.22 -1.25 (-8.64%)
Technical Updates
18,000.40 +236.36 (+1.33%)
Volume: 96,983,811 (below average of 98,752,666)
Range: 17,765.38 - 18,045.14
Range: 17,765.38 - 18,045.14
5,076.89 +62.82 (+1.25%)
Volume: 428,374,610 (above average of 425,206,739)
Volume: 428,374,610 (above average of 425,206,739)
Range: 5,024.17 - 5,086.66
2,105.20 +25.05 (+1.20%)
Volume: 507,555,000 (below average of 523,795,538)
Range: 2,081.12 - 2,108.50
The pullback was strong in the market. DOW went up test its 50 MA and trend line while S&P broke above its 50MA but held down by the trend line. Next the indices will be approaching another of their significant resistance level. And that is going to be crucial too.
Commodities
Closing Commodities: Nat Gas Holds Gains on Demand Cues, WTI Back Above $60/BarrelCommodities
- The dollar index closed moderately lower, after trading in a narrow range around the unchanged mark for most of the session.
- The index offered inconsistent and slight pressure/support for commodities, finishing down 0.1% to 95.19
- Crude traded flat overnight, but finished positive on a strong, all-day rally driven by EIA US production forecasts
- July WTI closed at +3.4% to $60.12/barrel
- Natural gas held its earlier gains into the close, after lifting in early morning price action on intermediate term forecasts for warm national weather
- Nat gas futures closed up 4.8% to $2.84/MMBtu
- Precious metals saw a mixed close, as movements in the dollar failed to provide a definitive price trend for both gold or silver. August gold was +0.4% to $1177.60/oz and July silver was flat at $15.96/oz
- Copper closed modestly positive at +0.4% to $2.71/lb
Energy
- July crude oil futures rose $1.96 to $60.12/barrel
- July natural gas closed $0.13 higher at $2.84/MMBtu
- RBOB Gasoline closed $0.07 higher to $2.08/gallon
- Heating oil futures closed $0.07 higher at $1.92/gallon
Agriculture
- July corn closed flat at $3.65/bushel
- July wheat closed $0.05 higher to $5.33/bushel
- July soybeans closed $0.05 higher to $9.50/bushel
- Ethanol closed flat at $1.55/gallon
- Sugar #11 closed 0.09 cents lower to 12.07 cents/lb
- Note: Tomorrow the USDA releases the monthly WASDE report at noon ET, which will likely drive mid-day price action in corn, wheat and soybeans
- August gold ended today’s session $04.30 higher at $1177.60/oz
- July silver closed $0.01 higher at $15.96/oz
- July copper closed $0.01 higher at $2.71/lb
Currencies
- The dollar lost against all of the majors today. The U.S. Dollar Index falling 0.52% to 94.67
- The U.S. Treasury saw its deficit decrease to $82.4 bln in May from a -$130.0 bln deficit in April. The Briefing.com consensus called for -$85.0 bln
- EUR/USD: +0.28% to 1.1318
- French and Italian Industrial Production missed estimates for April. In France, IP fell 0.9% m/m versus -0.3% in March. In Italy, the decline was 0.3% versus growth of 0.5% in the prior month
- This weaker economic data was counteracted by the German Bund yield breaking through 1.00% for the first time since September
- GBP/USD:
- In the U.K., Manufacturing Production fell 0.4% m/m in April, lower than both expectations and the +0.4% reading from MarchBoE Governor Mark Carney is slated to speak publicly at 16:00 ET
- USD/JPY: -1.43% to 122.59
- Overnight, BoJ chief Haruhiko Kuroda said "The yen is unlikely to weaken further in real effective terms if you think with common sense, given how far it has come."
- The market responded quickly and violently, moving 150 pips in roughly 20 minutes
- Overnight, BoJ chief Haruhiko Kuroda said "The yen is unlikely to weaken further in real effective terms if you think with common sense, given how far it has come."
- USD/CHF: +0.06% to 0.9313
- USD/CAD: -0.61% to 1.2265
- AUD/USD: +0.92% to 0.7763
- NZD/USD: +0.84% to 0.7203
Bonds
Government Debt Continues Lower
- Treasuries declined today in a curve-steepening trade. The yields on 5's, 10's, and 30's touched 8-month highs. Overnight, the German Bund yield briefly touched 1.05%
- Yield Check:
- 2-yr: unch at 0.73%
- 5-yr: +4 bps to 1.79%
- 10-yr: +5 bps to 2.49%
- 30-yr: +5 bps to 3.22%
- News:
- The MBA Mortgage Index for the week ending June 6th rose 8.4% versus the prior week's decline of 7.6%
- The Pimco Total Return Fund slashed its U.S. Treasury holdings by almost two thirds in April and escaped the brunt of the selling in government debt
- Crude Oil Inventories for the week ending June 6th declined by 6.812 mln barrels versus a fall of 1.948 mln in the prior week
- Some news agencies reported that Germany would consider offering Greece a staggered deal whereby Greece would follow a major reform this year with more reforms next year. The news sent equity markets ripping higher, although the market was already vulnerable to short-covering given yesterday's reversal
- The $21 bln 10-year note Treasury auction was met with strong demand. The auction stopped through by more than 1 basis point:
- High yield: 2.461%
- Bid-to-cover: 2.74
- Indirect bid: 57.9%
- The Treasury's deficit narrowed to $82.4 bln in May. The Briefing.com consensus had called for a deficit of $85.0 bln. April saw a deficit of $130 bln
- Commodities:
- WTI crude: +1.76% to $61.20
- Gold: +0.70% to $1,185.80/troy oz.
- Copper: +1.14% to $2.745/lb.
- Currencies:
- EUR/USD: +0.25% to $1.1315
- USD/JPY: -1.30% to 122.76
- Overnight, BoJ Chief Haruhiko Kuroda told the Japanese Diet that "the yen is unlikely to weaken further in real effective terms if you think with common sense, given how far it has come."
- Data out Thursday:
- Initial Jobless Claims for the week ending 6/6 and Continuing Jobless Claims for the week ending 5/30 (08:30 ET)
- May Retail Sales and Retail Sales ex-auto (08:30 ET)
- May Export Prices ex-agriculture and Import Prices ex-oil (08:30 ET)
- April Business Inventories (10:00 ET)
- Natural Gas Inventories for the week ending 6/6 (10:30 ET)
- Treasury Auctions:
- $13 billion 30-year bonds (reopening) (results at 13:00 ET)
Treasury Yields:
- 2 Year Note 0.75% +0.03
- 5 Year Note 1.80% +0.06
- 10 Year Note 2.50% +0.08
- 30 Year Bond 3.22% +0.07
2/30 Spread: 247 bps ( +4 ) … 2/10 Spread: 175 bps ( +5 )
Preview for Thursday 11 June, 2015
Economic Data
Thursday (11 June) :
- Initial Claims : 278K (Prior 276K)
- Continuing Claims : 2200K (Prior 2196K)
- Retail Sales : 1.1% (Prior 0.0%)
- Retail Sales ex-auto : 0.7% (Prior 0.1%)
- Export Prices ex-agri: (Prior -0.7%)
- Import Prices ex-oil : (Prior -0.4%)
- Business Inventories : 0.2% (Prior 0.1%)
- Natural Gas Inventories : (Prior 132 bcf)
Thursday (11 June) :
BMO - BOJA XONE GLPW KFY LF PFIE RLD RH
AMC - None Scheduled
BMO - BOJA XONE GLPW KFY LF PFIE RLD RH
AMC - None Scheduled
Summary
The stalling after the early rally in last session does raise some question on whether it might still continue. I think market was more or less covering shorts and the effect from dip buyers. Tomorrow unemployment claims and retails sales should give the us more confirmation to the market movement. My call is that if market does not break above the trend resistance, we should see more selling soon.
Direction for Thursday 11 June, 2015; Up
2015 Daily Directional Accuracy: 47/86 (54.65%)
2015 Daily Directional Accuracy: 47/86 (54.65%)
2015 Weekly Directional Accuracy: 12/20 (60.00%)
No comments:
Post a Comment