Dow +217.27 at 17977.68, Nasdaq +73.82 at 5071.51, S&P +22.98 at 2099.60
Well the gap up trend seems to continue from last week. That was mostly led by the agreement in Greece's bailout and markets around the world are getting upbeat about it. However the impressive spike at the opening, market still remains flat.I am seeing more volatility in July for sure. I suppose last week was more to the speculation from the China's market and Greece bailout deal. For the first 30 minutes of trading session across last week were either gaping up or gapping down. And the week ended literally flat to some upside.
As I am writing this right now, it looks like the Eurozone leaders have reached an agreement with Greece. I suppose market was still feeling the "Buying the rumours, Sell the news" prophecy and maybe we might see some profit taking after the deal is done.
Next week we will see more earnings release and quite a number of economic data that are market movers. I reckon the volatility is here to stay for the meantime and do watch the stops for your positions.Direction for Monday 13 July, 2015: Down
Meanwhile we also saw the Dollar Index went up. Market is bouncing back and we might continue to see more upside.
Market Summary
Industry Watch
Strong: Consumer Discretionary, Consumer Staples, Financials, Materials, Technology
Weak: Telecom Services, Utilities
Other Market Moving Factor:
- Greek officials agree to framework for third bailout package in exchange for reforms
- S&P 500 meets resistance at 100-day moving average (2,095)
Equity indices spiked at the start after lengthy weekend negotiations between Greek representatives and eurozone officials produced a framework for the third rescue package for Greece. The agreement, which includes EUR25 billion in bank recapitalization funds, was cheered by global equity markets, but it is worth noting that the full bailout will be discussed once the country's government passes a series of reforms on Wednesday. The far-reaching concessions will require Greece to streamline value-added taxes, broaden its tax base to increase revenue, curtail pension costs, and privatize public assets worth as much as 50 billion euros.
Global risk assets surged in reaction to the developments while outflows from the Treasury market weighed on the 10-yr note, sending its yield higher by three basis points to 2.43% after testing the 2.47% level in the early morning.
Interestingly, the euro only saw a brief spike that was followed by heavy selling with the single currency sliding 1.4% against the dollar to 1.1000. As a result, the Dollar Index (96.82, +0.80) climbed 0.8%, erasing last week's decline.
All ten sectors ended in the green with five groups adding 1.0% or more. Heavily-weighted sectors fueled today's advance with the technology sector (+1.6%) holding the lead throughout the session. Large-cap sector components like Apple (AAPL 125.66, +2.38), Facebook (FB 90.10, +2.15), Google (GOOGL 571.73, +15.62), and Microsoft (MSFT 45.53, +0.92) spiked between 1.9% and 2.8% while Seagate (STX 46.28, +0.33) advanced 0.7% despite lowering its Q4 revenue and gross margin guidance. As for chipmakers, the high-beta group struggled to keep pace with the sector, but the PHLX Semiconductor Index still added 0.8%.
Elsewhere among influential groups, the consumer discretionary sector (+1.5%) finished right behind technology while financials (+1.1%) and industrials (+1.0%) ended near the broader market. Also of note, the health care sector (+0.8%) finished behind the broader market, which masked relative strength in biotechnology, evidenced by a 1.6% gain in iShares Nasdaq Biotechnology ETF (IBB 378.89, +6.09).
Similar to health care, telecom services (+0.6%) and utilities (unch) underperformed while the consumer staples sector (+1.0%) settled just behind the S&P 500. Thanks to today's gain, the staples sector is now up 4.2% for the month, trading well ahead of the remaining nine groups.
Today's participation was comparable to recent totals as more than 730 million shares changed hands at the NYSE floor.
Economic data was limited to the Treasury Budget statement for June, which showed a surplus of $51.80 billion while the Briefing.com consensus expected a surplus of $51.00 billion. The Treasury data are not seasonally adjusted, so the June surplus cannot be compared to the $82.40 billion deficit recorded in May.
Tomorrow, June Retail Sales (Briefing.com consensus 0.3%) and Import/Export Prices for June will be released at 8:30 ET while the Business Inventories report for May will be reported at 10:00 ET (consensus 0.2%).
Global Market
Asian Markets Close: Japan’s Nikkei +1.6%; Hong Kong’s Hang Seng +1.3%; and China’s Shanghai Composite +2.4%
Markets across the Asia-Pacific region were mostly higher on Monday, aided by some better than expected trade data out of China and optimism surrounding the potential for a Greek deal. China’s Shanghai Composite led the brigade, gaining 2.4%, which left it up a tidy 13.2% over the last three sessions.
Economic data
- China
- June Trade Balance CNY 46.54 bln (expected CNY 55.70 bln; prior CNY 59.49 bln)
- Exports +2.8% year-over-year (expected -0.2%; prior -2.5%)
- Imports -6.1% (expected -15.0%; prior -17.6%)
- Japan
- May Industrial Production -2.1% month-over-month (expected -2.1%; prior -2.2%)
- May Capacity Utilization -3.0% month-over-month (prior -0.4%)
Equity Markets
- Japan’s Nikkei increased 1.6% and ended near its highs for the day. Broad-based gains were led by the consumer non-cyclical (+2.2%), financial (+1.9%), and industrial (+1.8%) sectors. Individual standouts included Nicherei Corp (+5.4%), West Japan Railway (+5.3%), and Isetan Mitsukoshi Holdings (+5.0%). JGC Corp (-2.3%) and Eisai Co (-2.3%) were the worst-performing issues. Out of the 225 index members, 205 ended higher, 16 finished lower, and 4 were unchanged.
- Hong Kong’s Hang Seng jumped 1.3% and also ended near its highs for the day. Leading gainers included the consumer cyclical (+3.5%), utilities (+1.5%), and diversified (+1.5%) sectors. Sands China (+4.7%), Hang Lung Properties (+4.6%), and China Resources Power Holdings (+4.6%) paced the winners while CITIC (-0.4%), China Petroleum & Chemical (-0.3%), and China Mobile (-0.1%) were the only stocks to register declines for the day. Out of the 50 index members, 46 ended higher, 3 finished lower, and 1 was unchanged.
- China’s Shanghai Composite continued its rebound effort, gaining 2.4% in Monday’s trade. The Composite was up as much as 3.9% intraday, which took it over the 4,000 level again, yet afternoon selling activity pared some of the gains. Including today’s action, the Shanghai Composite has risen 13.2% in the last three sessions. Leading sectors in the CSI 300 Index on Monday included the technology (+9.8%), diversified (+7.1%), and industrial (+6.9%) sectors.
- India’s Sensex increased 1.1% and ended near its best levels of the day as it followed form with regional markets. Gains were broad-based, evidenced by 27 of the 30 index members ending higher.
- Australia’s S&P/ASX 200 declined 0.3% and closed on its lows for the day. The downshift was attributed largely to reports indicating regulators said banks need to increase their capital ratios so there is no question with respect to their strength. The energy (-1.3%), resources (-1.1%), and metals & mining (-1.0%) sectors were the worst-performing groups while financials also dragged on the broader market. Out of the 200 index members, 57 ended higher, 127 finished lower, and 16 were unchanged.
- Regional advancers: South Korea +1.5%, Taiwan +1.3%, Malaysia +0.03%, Indonesia +0.7%, Singapore +1.0%, Thailand +0.3%, Vietnam +0.4%
- Regional decliners: None
FX
- USD/CNY -0.01% at 6.2084
- USD/INR +0.3% at 63.531
- USD/JPY +0.5% at 123.38
EUROPE
Major European indices trade higher across the board with France’s CAC (+1.8%) in the lead.
Regional markets have charged higher aafter marathon negotiations between Greece and European heads of state reportedly produced a basis for a third bailout package for Greece. The agreement is expected to include EUR25 billion for the recapitalization of Greek banks, but the country will be required to pass a series of reforms by July 15 in order to continue negotiating the full bailout.
Closing Prices
- UK’s FTSE: + 1.0%
- Germany’s DAX: + 1.5%
- France’s CAC: + 1.9%
- Spain’s IBEX: + 1.7%
- Portugal’s PSI: + 1.8%
- Italy’s MIB Index: + 1.0%
- Irish Ovrl Index: + 1.7%
- Greece ASE General Index: CLOSED
Macroeconomic Data
Economic Data
from Briefing.com
- Treasury Budget : $51.8B vs $51.0B (Prior $70.5B)
TREASURY BUDGET
Highlights
- The Treasury Budget showed a surplus of $51.8 bln in June, down from a surplus of $71.5 bln in June 2014. The Treasury data are not seasonally adjusted so the June surplus cannot be compared to the $82.4 bln deficit in May. The Briefing.com Consensus expected the budget surplus to decline to $51.0 bln.
Key Factors
- Total receipts increased to $342.9 bln in June 2014 from $323.6 bln in June 2014, a difference of $19.3 bln.
- Total outlays increased by $38.0 bln to $291.2 bln from $253.1 bln in June 2014.
- Fiscal year-to-date, the deficit is $313.4 bln versus $365.9 bln for the comparable period in FY 2014.
Big Picture
- Raw data available at: www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/current.htm
Market Internals
NYSE:
Higher Volumes than the day before – 753.3M vs 738.6M
Advancers outpaced Decliners (adv/dec): 2269 / 828
New Highs outpaced New Lows (highs/lows): 116 / 75
NASDAQ:
Higher Volumes than the day before – 1660.5M vs 1581.3M
Advancers outpaced Decliners (adv/dec): 2021 / 822
New Highs outpaced New Lows (highs/lows): 146 / 50
VOLATILITY S&P500 (VIX)
13.90 -6.07 (-30.40%)
Technical Updates
17,977.68 +217.27 (+1.22%)
Volume: 86,381,639 (below average of 95,078,846)
Range: 17,787.27 - 17,987.57
Range: 17,787.27 - 17,987.57
5,071.51 +73.82 (+1.48%)
Volume: 383,979,125 (below average of 434,808,845)
Volume: 383,979,125 (below average of 434,808,845)
Range: 5,036.68 - 5,074.81
2,099.60 +22.98 (+1.11%)
Volume: 504.0M (below average of 520,230,703)
Range: 2,080.03 - 2,100.67
DOW broke above its downtrend line which means the head and shoulder pattern cannot be formed. DOW is sitting on its support level and the 50MA is forming a good resistance level. Next resistance is likely to be around 18,000. NASDAQ broke above its resistance, both 20 and 50MAs and its previous uptrend line. Now it is sitting on both 20 and 50MAs as support and next resistance should be 5,100 area. Similar to DOW, S&P also broke above its downtrend line and met a resistance at its 50MA. Next resistance for S&P should be around 2,120 level. Look back at the big picture, it seems the 3 indices are back to the trading range previously as they could not break below the support level last Friday.
Commodities
Closing Commodities: WTI Closes Lower, Near $52/BarrelCommodities
- WTI rallied in mid-morning trade, briefly moving back above $53
- However, in the last two hours of trade, WTI oil prices slid lower and moved back around the $52/barrel area
- Aug crude oil closed $0.59 lower to $52.18/barrel
- Aug natural gas fell $0.09 to $2.86/MMBtu
- Gold, silver and copper futures traded mostly flat/modestly lower today
- Aug gold ended $2.80 lower to $1155.60/oz, while Sept silver fell $0.04 to $15.45/oz
- Sept copper ended flat today at $2.54/lb
Energy
- August crude oil futures fell $0.59 to $52.18/barrel
- August natural gas closed $0.09 higher at $2.86/MMBtu
- RBOB Gasoline closed $0.08 lower at $1.94/gallon
- Heating oil futures closed $0.02 lower at $1.72/gallon
Agriculture
- September corn closed $0.07 higher at $4.41/bushel
- September wheat closed flat at $5.76/bushel
- November soybeans closed $0.07 higher to $10.28/bushel
- Sugar #11 closed 0.15 cents higher to 12.56 cents/lb
Metals
- August gold ended today’s session $2.80 lower at $1155.60/oz
- September silver closed $0.04 lower at $15.45/oz
- September copper closed flat at $2.54/lb
Currencies
- The greenback gained against all of the majors today as the euro drifted lower following an overnight deal to keep Greece in the eurozone
- U.S. Dollar Index: +0.79% to 96.78
- EUR/USD: -1.31% to $1.1010
- The ZEW Index of Eurozone Economic Growth Expectations for July will be released tonight
- The July ZEW Expectations for Germany will be reported as well
- GBP/USD: -0.22% to $1.5484
- The BRC Retail Sales Monitor for June will be reported on Tuesday
- USD/JPY: +0.55% to 123.44
- In Japan, Industrial Production declined 2.1% m/m for the month of May, in line with expectations and better than the 2.2% decline in June
- Japan's Ministry of Economy, Trade, and Industry reported that the Tertiary Industry Activity Index missed expectations, falling by 0.7% m/m in June. The index declined 0.1% in May
- In Japan, Industrial Production declined 2.1% m/m for the month of May, in line with expectations and better than the 2.2% decline in June
- USD/CHF: +1.13% to 0.9493
- USD/CAD: +0.81% to 1.2758
- AUD/USD: -0.52% to $0.7408
- The NAB Business Survey for June will be released this evening
- NZD/USD: -0.27% to $0.6698
Bonds
- The U.S. Treasury complex ended with broad but modest losses today after Greek Prime Minister Alexis Tsipras capitulated to creditor demands and the proposal was set to go to the Greek Parliament
- Yield Check:
- 2-yr: +3 bps to 0.67%
- 5-yr: +4 bps to 1.70%
- 10-yr: +3 bps to 2.43%
- 30-yr: +2 bps to 3.21%
- News:
- Greece acceded to creditor demands overnight, agreeing to a deal that was modestly worse than the one that voters rejected in a July 5th referendum
- The plan includes pension cuts, privatizations of state-owned enterprises, hikes in VAT rates for some goods (and the end of exemptions for the Greek islands), and hikes in business taxes
- The ECB maintained the Emergency Liquidity Assistance (ELA) facility for Greek banks
- Extensions in debt maturities for Greek borrowing will be on the table once Greece implements reforms, although nominal haircuts are not included
- With a debt/GDP around 1.75, Greece's debt burden will remain unsustainable barring a growth miracle or a deep devaluation of the euro
- Global equity markets cheered the announcement, putting short-sellers and the under-invested back on the ropes
- The June Treasury Budget surplus narrowed to $51.8 bln versus the Briefing.com consensus of $51.0 bln
- The U.S. government released a report on the October 15th "flash crash" move in the 10-year Treasury note (30 bps) that partially implicated high-frequency trading and the report recommended updating the regulations applying to HFT
- Greece acceded to creditor demands overnight, agreeing to a deal that was modestly worse than the one that voters rejected in a July 5th referendum
- Commodities:
- WTI crude: -1.06% to $52.18/bbl.
- Gold: -0.06% to $1,157.20/troy oz.
- Copper: +0.28% to $2.5445/lb.
- Currencies:
- EUR/USD: -1.31% to $1.1010
- USD/JPY: +0.52% to 123.39
- Data out Wednesday:
- June Retail Sales and Retail Sales ex-auto (08:30 ET)
- June Export Prices ex-ag and Import Prices ex-oil (08:30 ET)
- May Business Inventories (10:00 ET)
Treasury Yields:
- 2 Year Note 0.69% +0.04
- 5 Year Note 1.71% +0.03
- 10 Year Note 2.44% +0.02
- 30 Year Bond 3.21% +0.01
2/30 Spread: 252 bps ( -3 ) … 2/10 Spread: 175 bps ( -2 )
Preview for Tuesday 14 July, 2015
Economic Data
Tuesday (14 July) :
- Retail Sales : 0.3% (Prior 1.2%)
- Retail Sales ex-auto : 0.5% (Prior 1.0%)
- Export Prices ex-agri : (Prior 0.7%)
- Import Prices ex-oil : (Prior 0.0%)
- Business Inventories : 0.2% (Prior 0.4%)
Earnings Highlights
Tuesday (14 July) :
BMO - AIR CBSH FAST JNJ JPM NORD SKIS WFC
AMC - ADTN CSX HCSG MRTN PPHM RNST YUM
BMO - AIR CBSH FAST JNJ JPM NORD SKIS WFC
AMC - ADTN CSX HCSG MRTN PPHM RNST YUM
Summary
Market is pulling back after hitting the 200MA previously. And the settlement of the on-going a-greek-ment on Sunday just gave the market more buying strength. Judging from the gap up at the opening from the last two trading session, I am seeing more confidence in the market. Despite so, I am still holding a slight skeptical towards the bullishness as I didn't see much movement in the market besides the opening 30 minutes. Looking at the internals and technicals, I suppose we should see more upside in the market.
Q3 earnings season are here and this week we will have more from the financial sector. Watch out for those big banks as they are likely to affect the market as well. For example we are seeing from JP Morgan and Wells Fargo before the market opens tomorrow.
Anyway I think the bulls have recovered and flexing their muscles now...
Market is pulling back after hitting the 200MA previously. And the settlement of the on-going a-greek-ment on Sunday just gave the market more buying strength. Judging from the gap up at the opening from the last two trading session, I am seeing more confidence in the market. Despite so, I am still holding a slight skeptical towards the bullishness as I didn't see much movement in the market besides the opening 30 minutes. Looking at the internals and technicals, I suppose we should see more upside in the market.
Q3 earnings season are here and this week we will have more from the financial sector. Watch out for those big banks as they are likely to affect the market as well. For example we are seeing from JP Morgan and Wells Fargo before the market opens tomorrow.
Anyway I think the bulls have recovered and flexing their muscles now...
Direction for Tuesday 14 July, 2015: Up
2015 Daily Directional Accuracy: 64/107 (59.81%)
2015 Weekly Directional Accuracy: 16/25 (64.00%)
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