Dow +13.96 at 18100.41, Nasdaq +8.72 at 5218.86, S&P +1.64 at 2128.28
There was some profit taking at the open but market managed to recover after the first 30 minutes. Even so the strength of the recovery does not seem to be convincing. As such the market saw some more selling before market closed. To sum up the whole session, it was just relatively flat with the volatility. Technology stocks such as Apple, Facebook continues to outperform and brought NASDAQ higher.From what I have seen in the market, the technology sector has been outperforming and is leading the overall market. However that could be due to influence from their earnings reports. I think the market is going to see a correction in the short term as the bulls are taking a break. But I cannot really tell as the market is still pretty uncertain. Let's see how the market reacts on Monday before reaching to any conclusion.
There are not much economic data releasing next week but instead more earnings reports, especially big names such as Halliburton, Apple, Microsoft, Amazon and Boeing.
Greece is going to re-open their banks next week but withdraw limits remain imposed. The government remains in liability to repay their debt payments to ECB on Monday. Whereas China somewhat stay off the radar after the government stepped in to prevent the market from more sell-offs and we saw the market starting to recover thereafter. Even so, China remains a time-bomb.Direction for Monday 20 July, 2015: Down
Meanwhile for commodities, I am seeing more fall in commodities prices e.g. gold and crude oil. Maybe it is due to the weakness from the China market. And the Dollar Index has been increasing for the past few sessions.
Market Summary
Industry Watch
Strong: Consumer Discretionary, Financials, Health Care, Technology
Weak: Energy, Materials, Telecom Services, Utilities
Other Market Moving Factor:
- Morgan Stanley (MS) and Halliburton (HAL) report better than expected results
Equity indices started the Monday session near their flat lines with the S&P 500 spending the initial hour in the red; however, influential sectors like technology (+0.5%), financials (+0.1%), and health care (+0.3%) displayed early strength, underpinning the broader market.
The S&P 500 was back in the green by 11:00 ET and slowly inched higher into the afternoon. Seven sectors ended the day with gains while energy (-1.3%), materials (-0.9%), and utilities (-0.5%) spent the session below their flat lines.
Notably, the energy sector retreated alongside crude oil, which fell 1.6% to $50.40/bbl. Meanwhile, the growth-sensitive sector struggled throughout the session, widening its July loss to 4.5%, even after Halliburton (HAL 40.75, +0.76) climbed 1.9% after reporting better than expected results.
On the upside, the technology sector held the lead throughout the session with gains among the likes of Apple (AAPL 132.07, +2.45), Facebook (FB 97.91, +2.94), and Visa (V 72.70, +1.82) overshadowing a 1.0% decline in the shares of Google (GOOGL 692.84, -6.78). Also of note, IBM (IBM 173.22, +0.71) gained 0.4% ahead of its quarterly report.
Interestingly, high-beta chipmakers could not keep pace with the technology sector, evidenced by a 0.7% decline in the PHLX Semiconductor Index. Similarly, high-beta transport stocks struggled (Dow Jones Transportation Average -0.4%) while the broader industrial sector (unch) settled just above its flat line. Lockheed Martin (LMT 205.13, +3.95) was in the news, spiking 2.0% after reporting better than expected results and announcing the acquisition of the Sikorsky helicopter unit from United Technologies (UTX 110.48, -0.26) for $9.0 billion in cash.
Elsewhere, Treasuries slipped into the red during overnight action and they settled near their overnight lows with the 10-yr yield rising two basis points to 2.37%.
Investor participation was relatively light today with 720 million shares changing hands at the NYSE floor.
Today's session was free of economic data and investors will not receive any data tomorrow either.
Global Market
Asian Markets Close: Japan’s Nikkei closed for holiday; Hong Kong’s Hang Seng -0.04%; China’s Shanghai Composite +0.9%
Markets in the Asia-Pacific region turned in a mixed showing. Some of the weakest performances were registered by smaller regional markets, which got clipped in part on continued weakness in the commodities arena. Japan was closed for a holiday, so trading volume in the region was not particularly heavy, according to news reports. China’s Shanghai Composite (+0.9%) was the winning standout, drawing some support from the securities regulator denouncing media reports suggesting it is looking into ways to withdraw government funds as being untrue.
Economic data
- Hong Kong
- June Unemployment Rate 3.2% (expected 3.3%; prior 3.2%)
Equity Markets
- Japan’s Nikkei closed for holiday (Ocean Day)
- Hong Kong’s Hang Seng had a fractional loss, closing down less than 0.1%. Weakness in the financial (-0.4%) and consumer cyclical (-0.7%) sectors offset strength in the communications (+0.9%) and utilities (+0.2%) sectors. Belle International Holdings (-3.5%) and Lenovo Group (-1.7%) led the laggards while China Resources Land (+1.5%) and Tencent Holdings (+1.2%) paced the winners. Out of the 50 index members, 14 ended higher, 35 finished lower, and 1 was unchanged.
- China’s Shanghai Composite increased 0.9% in a seesaw day of trading. It was down 0.8% in early action, but recovered late with a rally in the latter stages of its trading session that was aided by the country’s securities regulator saying reports the government was looking to withdraw government funds were false. The CSI 300 Index for its part jumped 0.2%, helped by the outperformance of the technology (+3.7%) and industrial (+2.3%) sectors.
- India’s Sensex slipped 0.2% but finished off its lows for the session. The financial (-0.4%) and industrial (-0.4%) sectors were the main drags. Tata Motors (-1.8%) and Vedanta (-1.6%) were the worst-performing issues. Hindalco Industries (+2.1%) and Mahindra & Mahindra (+1.4%) topped the list of winners. Out of the 30 index members, 12 ended higher and 18 finished lower.
- Australia’s S&P/ASX 200 increased 0.3%, closing near its highs for the day. The modest increase was logged on the back of strength in the information technology (+2.3%), health care (+0.8%), and financial (+0.5%) sectors. Out of the 200 index members, 105 ended higher, 81 finished lower, and 14 were unchanged.
- Regional advancers: Singapore +0.6%
- Regional decliners: South Korea -0.2%, Taiwan -0.8%, Malaysia -0.2%, Thailand -0.9%, Vietnam -1.3%, Philippines -1.0% Closed for holiday: Indonesia (National Leave)
FX
- USD/CNY unch at 6.2098
- USD/INR +0.3% at 63.6575
- USD/JPY +0.1% at 124.23
EUROPE
Major European indices trade higher across the board with Italy’s MIB (+1.6%) trading well ahead of its peers. Elsewhere, Greek banks have reopened today, but withdrawal restrictions remain in place for the time being.
- Eurozone May Current Account surplus narrowed to EUR18.00 billion from EUR24.00 billion (expected surplus of EUR23.10 billion)
- Germany’s June PPI -0.1% month-over-month (expected 0.1%; prior 0.0%); -1.4% year-over-year (consensus -1.3%; last -1.3%)
- Spain’s trade deficit narrowed to EUR1.66 billion from EUR2.25 billion (expected deficit of EUR2.00 billion)
Closing Prices
- UK’s FTSE: + 0.2%
- Germany’s DAX: + 0.5%
- France’s CAC: + 0.4%
- Spain’s IBEX: + 0.7%
- Portugal’s PSI: + 0.0%
- Italy’s MIB Index: + 1.1%
- Irish Ovrl Index: + 0.2%
- Greece ASE General Index: CLOSED
Macroeconomic Data
Economic Data
from Briefing.com
- No Economic Data
Market Internals
NYSE:
Lower Volumes than the day before – 740.0M vs 874.7M
Decliners outpaced Advancers (adv/dec): 977 / 2091
New Lows outpaced New Highs (highs/lows): 99 / 294
NASDAQ:
Lower Volumes than the day before – 1787.4M vs 1838.9M
Decliners outpaced Advancers (adv/dec): 911 / 1956
New Lows outpaced New Highs (highs/lows): 124 / 153
VOLATILITY S&P500 (VIX)
12.25 +0.30 (+2.51%)
Technical Updates
18,100.41 +13.96 (+0.08%)
Volume: 75,056,744 (below average of 93,342,186)
Range: 18,064.50 - 18,137.12
Range: 18,064.50 - 18,137.12
5,218.86 +8.72 (+0.17%)
Volume: 390.5M (below average of 433,585,604)
Volume: 390.5M (below average of 433,585,604)
Range: 5,201.49 - 5,231.94
2,128.28 +1.64 (+0.08%)
Volume: 498.1M (below average of 521,040,594)
Range: 2,123.65 - 2,132.82
DOW seems to move sideway and look more like a failed breakout. The support is likely to be around 18,080 and if it can't hold, I reckon we are going to see a correction. NASDAQ remains on the way to upside and reaches new high. The ascending trend line is likely to pose some resistance to NASDAQ as it goes higher. S&P got rejected by its resistance level at 2130-2135 area and the support would be around 2,126 level. Maybe a short pullback is imminent as the bullish momentum seems to stall...
Commodities
- The dollar saw modest momentum in today’s trading, rallying late in the afternoon, after a mid-day slump that failed to offer support to the broad commodity set
- Overall, the dollar index is positive on the day by +0.2% to 98.02
- Crude rallied from red to flat in early trade, as market participants tested the resolve of over-supply concerns.
- The rally failed to materialize into positive territory however, as the September contract then saw an extended sell-off into the close, ending -1.6% to $50.40/barrel
- Gold showed notable weakness all session, seeing almost no upward momentum from movements in the dollar. Silver fared better, but still booked losses into the close
- August gold was -3.2% to $1106.80/oz and September silver was -1.3% to $14.78/oz
- Copper tested its highs mid-day, near the $2.50 level in early afternoon trading. That move reversed going into the session’s close however, and the metal finished -1.6% to $2.48/lb
- Natural gas finished the day at -1% to $2.83/MMBtu
- Agricultural closing commodities saw heavy losses, as market sentiment ahead of this afternoon’s USDA Weekly Crop Progress Report drove corn to close -5.6% to $4.06/bu, wheat to end -5.2% to $5.34/bu and soybeans to finish -0.8% to $10.02/bu
Energy
- September crude oil futures fell $0.80 (-1.6%) to $50.40/barrel
- August natural gas closed $0.03 lower (-1%) at $2.83/MMBtu
- RBOB Gasoline closed $0.03 higher at $1.93/gallon
- Heating oil futures closed flat at $1.67/gallon
Agriculture
- September corn closed $0.24 lower (-5.6%) at $4.06/bushel
- September wheat closed $0.04 lower (-5.2%) at $5.34/bushel
- November soybeans closed $0.08 lower (-0.8%) to $10.02/bushel
- Sugar #11 closed 0.52 cents lower (4.3%) to 11.44 cents/lb
- Agricultural price action was primarily driven by this afternoon’s upcoming release of the USDA Weekly Crop Progress Report (4 pm ET)
Metals
- August gold ended today’s session $36.90 lower (-3.21%) at $1106.80/oz
- September silver closed $0.20 lower (-1.3%) at $14.78/oz
- September copper closed $0.04 lower (-1.6%) at $2.48/lb
Currencies
- The U.S. Dollar Index edged up 0.12% today to 97.98. That was its highest level since late May
- EUR/USD: +0.03% to $1.0832
- The Current Account Surplus for the eurozone as a whole unexpectedly narrowed to 18.0 bln euro in May from 24.0 bln euro in April
- Germany's Producer Price Index fell 0.1% m/m in June. The market had been looking for a gain and the PPI was flat in the month to May
- Spain's trade deficit narrowed to 1.66 bln euro in May from -2.25 bln euro in April
- GBP/USD: -0.21% to $1.5571
- The pound sterling retreated today after hitting a seven-and-a-half year high on Friday after BoE Governor Mark Carney said that interest rate liftoff could occur around the end of 2015
- USD/JPY: +0.17% to 124.27
- USD/CAD: +0.13% to 1.2990
- USD/CHF: +0.23% to 0.9637
- AUD/USD: +0.12% to $0.7379
- NZD/USD: +0.79% to $0.6572
Bonds
- The Treasury complex continued last week's curve-flattening trend today, except during today's session the directional bias was lower. There was no U.S. economic data released today
- Yield Check:
- 2-yr: +4 bps to 0.71%
- 5-yr: +4 bps to 1.71%
- 10-yr: +3 bps to 2.38%
- 30-yr: +2 bps to 3.11%
- News:
- The metals complex was torched overnight after China reported a lower-than-expected build in official holdings of gold. Gold traded a five-year low of $1,080/troy oz. but ended well off of its lows, down 2.42% to $1,104.50/troy oz.
- The New York Fed released its report on the October 15, 2014 volatility in U.S. Treasuries. The full report can be found here
- Greece reopened its banks, while maintaining a 420 euro/week withdrawal limit
- Greece also received a 7.2 bln euro bridge loan from the European Financial Stability Mechanism and immediately repaid the IMF and the ECB
- Greece is no longer in arrears to the IMF and the IMF said that that it stands ready to help Greece, where appropriate
- Greece also received a 7.2 bln euro bridge loan from the European Financial Stability Mechanism and immediately repaid the IMF and the ECB
- Separately, IMF Managing Director Christine Lagarde appointed a new chief economist, Maurice Obstfeld. He had previously taught at U.C. Berkeley and was a White House economic adviser
- St. Louis Fed President Bullard (hawk and non-FOMC voter) predicted that the FOMC would begin to raise rates at its September meeting
- Commdities:
- WTI crude: -1.73% to $50.01/bbl.
- Gold: -2.52% to $1,103.40/troy oz.
- Copper: -0.88% to $2.474/lb.
- Currencies:
- EUR/USD: +0.02% to $1.0831
- USD/JPY: +0.21% to 124.32
- Data out Tuesday:
- There are no scheduled market-moving events tomorrow
Treasury Yields:
- 2 Year Note 0.71% +0.03
- 5 Year Note 1.72% +0.05
- 10 Year Note 2.38% +0.04
- 30 Year Bond 3.10% +0.02
2/30 Spread: 239 bps ( -1 ) … 2/10 Spread: 167 bps ( +1 )
Preview for Tuesday 21 July, 2015
Economic Data
Tuesday (21 July) :
- No Economic Data
Earnings Highlights
Tuesday (21 July) :
BMO - ATI RESI ABG ASTE BHI BK CP CFG DOV FITB HOG INFY LXK LMT MAN MDSO NEOG EDU NVS NVR OMC PNR PLD RF STBA SAP SBNY SNV AMTD TCK TTS TRV UTX VZ WSO WWW
AMC - ACE AAPL HAWK CATY CMG CNMD CMRE EXPO FCB FMBI FTI FWRD FULT GPRO HTS HUBG ILMN IBKR ISRG IRBT KALU LTXB LLTC MANH MSFTNBR NAVI PKG PNFP RNST OKSB VASC VMW WSBC XOOM YHOO ZIXI
Summary
The bulls are running out of breath as we saw limited upside and more on profit taking. I suppose we should see more selling as the bullish momentum diminishes. Technology stock remains upbeat and we are going to see earnings release from Apple and Microsoft tomorrow. That could affect the market with the volatility as well.
I still hold my stance that we should see some downside or a temporary correction in the market for the short term before the market decides on where to go next, maybe another rally to the upside?
The bulls are running out of breath as we saw limited upside and more on profit taking. I suppose we should see more selling as the bullish momentum diminishes. Technology stock remains upbeat and we are going to see earnings release from Apple and Microsoft tomorrow. That could affect the market with the volatility as well.
I still hold my stance that we should see some downside or a temporary correction in the market for the short term before the market decides on where to go next, maybe another rally to the upside?
Direction for Tuesday 21 July, 2015: Down
2015 Daily Directional Accuracy: 68/112 (60.71%)
2015 Weekly Directional Accuracy: 16/26 (61.54%)
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