Dow +33.20 at 17548.62, Nasdaq +12.64 at 4922.40, S&P +4.63 at 2051.31
That surely doesn't look bullish to me. Market spiked at the opening probably due to the recovery in Shanghai Composite. And that's it. Thereafter we saw more profit taking and market ended the day at the flat line. I daresay the bears are still having the overall control in the market as upsides have been limited lately.It is possible that we have not seen the true colour of the market due to the temporary shutdown in NYSE. Let's see what the traders would do tomorrow when market opens. But I don't think there is anything optimistic to bring the market up higher. Yield curve continues to flatten as I believe investors are parking their money in the bonds market instead.
China's market is also experiencing a huge volatility in the Shanghai Composite. Even with government intervention and limited trading, the market is surely looking weak. In addition, the production index in China remains slow and that is something to be concerned.
As we are starting the Q3 earnings season, don't be surprised if the market is hit by the volatility swing.Direction for Thursday 9 July, 2015: Down
One point to note is that at this point of writing, after hours the S&P futures are back up positive after the weak session. That is certainly volatile in my opinion.
Market Summary
Industry Watch
Strong: Consumer Discretionary, Energy, Financials, Materials
Weak: Telecom Services, Utilities
Other Market Moving Factor:
- Investor sentiment boosted after China's Shanghai Composite rebounds (+5.8%)
- European Council President Donald Tusk echoes the International Monetary Fund, calling on Greece's creditors to focus on debt sustainability
Equity indices charged out of the gate after the overnight session featured a rebound in China's Shanghai Composite, which climbed 5.8%. The advance occurred as officials in China continued introducing measures aimed at halting the recent market plunge with reports indicating a special taskforce targeting "hostile short-sellers" will be established by China's Public Security Ministry and China Securities Regulatory Commission.
Elsewhere, optimistic-sounding remarks from top Eurozone officials also contributed to the opening strength as European Council President Donald Tusk said he expects Greece to submit concrete, realistic reform proposals today. Mr. Tusk continued, saying the proposals must be matched by an offer from creditors that focuses on debt sustainability.
The opening spike sent the S&P 500 above its 200-day moving average (2,056), but the index returned below that mark during the afternoon. Cyclical sectors displayed broad strength in the early going, but the top-weighed technology sector (-0.3%) faded from its high during the afternoon, ending among the laggards. In general, large cap names held up well, but the largest stock by market cap—Apple (AAPL 120.07, -2.50)—surrendered 2.0%, contributing to the sector's afternoon pullback. In addition, high-beta chipmakers continued their recent woes with the PHLX Semiconductor Index falling 1.3% to extend this week's decline to 5.7%.
Meanwhile, the remaining cyclical sectors also pulled back from their highs, but they managed to end the day ahead of the broader market. The financial sector (+0.8%) had the best showing, settling in the top half of its trading range. The sector likely drew some strength from higher market rates as Treasuries retreated throughout the day with the 10-yr yield jumping 11 basis points to 2.31%.
Also of note, the industrial sector (+0.4%) finished among the leaders thanks to relative strength among transport stocks. The Dow Jones Transportation Average rose 0.6% to narrow this week's loss to 0.9%. JB Hunt (JBHT 84.02, +1.77) was a standout performer, rallying 2.2% after Longbow upgraded the stock to ‘Buy' from ‘Neutral.'
With the Q2 earnings season about to heat up, investors received the first few reports with Alcoa (AA 10.59, +0.09) climbing 0.9% after reporting a bottom-line miss on better than expected revenue. The company reaffirmed its global aluminum demand growth forecast of 6.0%.
Over on the countercyclical side, the consumer staples sector (+0.1%) ended among the laggards with PepsiCo (PEP 94.59, -1.02) surrendering 1.1% despite beating estimates and raising its earnings growth forecast.
Despite the higher finish, there were plenty of investors seeking downside protection today with the CBOE Volatility Index (VIX 19.91, +0.25) climbing above yesterday's session high.
Today's participation was ahead of average with more than 800 million shares changing hands at the NYSE floor.
Economic data was limited to weekly Initial Claims, which increased to 297,000 for the week ending July 4 from an upwardly revised 282,000 (from 281,000) while the Briefing.com consensus expected a decrease to 276,000. Today's reading represented the highest level since the end of February when claims briefly surpassed 300,000.
The Department of Labor reported that there were no special factors that impacted the latest claims reading, but it is possible that the Independence Day holiday factored into the increase.
Tomorrow, the Wholesale Inventories report for May will be released at 10:00 ET (Briefing.com consensus 0.3%).
Global Market
Asian Markets Close: Japan’s Nikkei +0.6%; Hong Kong’s Hang Seng 3.7%; China’s Shanghai Composite +5.8%
The Asian equity markets were mostly higher in Thursday’s trade. The highlight of the night was China, which after halting half of its stocks, disallowing major stakeholders (5% holding or more) from selling shares for 6 months, and threatening to arrest short sellers, the Shanghai Composite managed to gain nearly 6% on the day. What might be most impressive is that the index was down over 3% in the first hour, before reversing off the lows for the largest 1 day gain since 2009. Helping the cause was the release of the June CPI figure, which came in at +1.4% (vs +1.3%e). This was seen as a positive for the economy (and the “market”) for not only did inflation pick up, but it leaves room for the PBOC to adjust policy. The Nikkei also rebounded 0.6% today. The June M3 data came in below expectations at +3.1% (vs 3.3%e), which also gives the BOJ some scope to continue with its currently policies.
Economic Data
- China
- Jun CPI: +1.4% vs +1.3%e
- Jun PPI: -4.8% vs -4.6%e
- Japan
- Jun Prelim Machine Tool Orders: +6.6 vs +15.0% in Jun 2014
- Australia
- JUN Employment change: +7.3K vs flat est
- Jun Unemployment rate: 6.0% vs 6.1%e
Equity Markets
- Japan’s Nikkei rose 0.6% on the day. Consumer Discretionary (+0.8%) and IT (¬+0.5%) were among the best sectors of the day. On the flip side, there was a shift out of the havens with Telecom down 1.2% and Consumer Staples losing 0.8%.
- China’s Shanghai Composite finished the wild day up 5.8% following the aforementioned measures and econ data. Among the heavy weights, CNOOC posted a gain of 3.2%, while China Mobile tacked on 1.8%.
- Hong Kong’s Hang Seng piggy-backed the Shanghai today, gaining 3.7% today. Among the notable movers, Tencent, Lenovo, and China Unicom all rose around 8% on the day.
- India’s Sensex was one of the lone losers of the region, settling down 0.4% on the day. The index was hurt most by pressure on some of the major components such as Tata Motors (-1.7%), Infosys (1.6%) and TCS (-1.5%)
FX
- USD/CNY Unch at 6.2088
- USD/INR -0.3% at 63.39
- USD/JPY +0.7% at 121.51
EUROPE
Major European indices trade higher across the board following optimistic comments from regional officials. Specifically, European Council President Donald Tusk said he expects Greece to submit concrete, realistic reform proposals today. Mr. Tusk continued, saying the proposals must be matched by a realistic offer from creditors on debt sustainability. Mr. Tusk is the latest official to signal a shift in favor of debt restructuring after the International Monetary Fund did the same last week. Separately, the Bank of England made no changes to its policy stance, keeping the key interest rate and the purchasing program unchanged at 0.5% and GBP375 billion, respectively.
- Germany’s May Trade Balance EUR22.80 billion (expected EUR21.00 billion; prior EUR21.50 billion) as Imports +0.4% month-over-month (consensus 0.9%; last -0.8%) and Exports +1.7% month-over-month (expected -0.8%; last 1.6%)
Closing Prices
- UK’s FTSE: + 1.4%
- Germany’s DAX: + 2.3%
- France’s CAC: + 2.6%
- Spain’s IBEX: + 2.7%
- Portugal’s PSI: + 4.0%
- Italy’s MIB Index: + 3.5%
- Irish Ovrl Index: + 2.0%
- Greece ASE General Index: CLOSED
Macroeconomic Data
Economic Data
from Briefing.com
- Initial Claims : 297K vs 271K (Prior 281K)
- Continuing Claims : 2334K vs 2210K (Prior 2264K)
- Natural Gas Inventories : 92 bcf (Prior 69 bcf)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level increased to 297,000 for the week ending July 4 from an upwardly revised 282,000 (from 281,000) for the week ending June 27. The Briefing.com Consensus expected the initial claims level to decrease to 276,000.
- The continuing claims level increased to 2.334 mln for the week ending June 27 from an upwardly revised 2.265 mln (from 2.264 mln) for the week ending June 20. The consensus expected the continuing claims level to fall to 2.230 mln.
Key Factors
- That was the highest initial claims level since the end of February when claims briefly surpassed 300,000.
- The Department of Labor reported that there were no special factors that impacted the latest claims reading. However, it is possible that the July 4th holiday played a role in the increase in claims.
- Even though the four-week moving average has bounced off of 15-year lows, the trends remain close to full employment averages. The latest increase in claims does not refute the notion that payrolls will continue to grow by at least 200,000 per month for the foreseeable near future.
Big Picture
- The initial claims level has moved off of its 15-year lows. Trends still support monthly nonfarm payroll growth above 200,000.
Market Internals
NYSE:
Higher Volumes than the day before – 827.4M vs 444.3M
Advancers outpaced Decliners (adv/dec): 1776 / 1299
New Lows outpaced New Highs (highs/lows): 18 / 97
NASDAQ:
Lower Volumes than the day before – 1852.9M vs 1894.2M
Advancers outpaced Decliners (adv/dec): 1771 / 1025
New Lows outpaced New Highs (highs/lows): 35 / 88
VOLATILITY S&P500 (VIX)
19.97 +0.31 (+1.58%)
Technical Updates
17,548.62 +33.20 (+0.19%)
Volume: 100,524,068 (above average of 95,934,536)
Range: 17,530.38 - 17,764.85
Range: 17,530.38 - 17,764.85
4,922.40 +12.64 (+0.26%)
Volume: 424,411,936 (below average of 434,145,169)
Volume: 424,411,936 (below average of 434,145,169)
Range: 4,920.40 - 4,982.19
2,051.31 +4.63 (+0.23%)
Volume: 553,570,000 (above average of 519,454,215)
Range: 2,049.73 - 2,074.28
DOW could not stay above its 200MA and it remained below its support level at around 17,550. I think the next support is around 17,480 region and if it fails, we are going to see it lower until probably 17,436. NASDAQ went back to test its previous uptrend channel but got rejected and still remain in downtrend. S&P also remained below its 200MA and I am going to see if it can holds above its support at 2040 level. Market is at the lower trading range and it is clear that the bulls are trying to defend the price level. Although bulls are not a pushover, bears are pretty much still in control of the market...
Commodities
Closing Commodities: WTI Crude Oil Rises, Closes Just Below $53/BarrelCommodities
- WTI crude oil futures rise after five consecutive days of losses, ending the day +$1.16 to $52.78/barrel
- In other energy, Aug natural gas rose $0.04 today to $2.72/MMBtu
- Metals were mixed today
- Aug gold fell $3.90 to $1159.60/oz, Sept silver rose $0.015 to $15.35/oz, while Sept copper gained $0.04 to $2.54/lb
Energy
- August crude oil futures rose $1.16 to $52.78/barrel
- August natural gas closed $0.04 higher at $2.72/MMBtu
- RBOB Gasoline closed $0.04 higher at $2.04/gallon
- Heating oil futures closed $0.03 higher at $1.74/gallon
Agriculture
- August crude oil futures rose $1.16 to $52.78/barrel
- August natural gas closed $0.04 higher at $2.72/MMBtu
- RBOB Gasoline closed $0.04 higher at $2.04/gallon
- Heating oil futures closed $0.03 higher at $1.74/gallon
Metals
- August gold ended today’s session $3.90 lower at $1159.60/oz
- September silver closed $0.15 higher at $15.35/oz
- September copper closed $0.04 higher at $2.54/lb
Currencies
- The U.S. Dollar Index climbed 0.37% to 96.65 today as sovereign yields moved higher and equities failed to follow through on overnight gains
- Initial Jobless Claims for the week ending 7/4 were 297K, higher than the Briefing.com consensus of 276K and the prior reading of 282K
- The $13 billion Treasury auction was met with tepid demand, tailing 1.4 bps and drawing a bid-to-cover of only 2.23
- EUR/USD: -0.56% to 1.1010
- German Chancellor Merkel and Finance Minister Schauble said that haircuts for Greek debt were not a possibility
- The Greek government will submit a new proposal to its official creditors tomorrow and negotiations will occur throughout the weekend
- German Chancellor Merkel and Finance Minister Schauble said that haircuts for Greek debt were not a possibility
- GBP/USD: -0.7% to 1.5357
- The Bank of England left its main policy rate at 0.5%, as expected
- The Chancellor of the Exchequer, George Osborne, has submitted his Summer Budget and that is being negotiated in Parliament
- USD/JPY: +0.41% to 121.29
- $/Yen has rallied from under 102.00 one year ago to as high as 125.85 in early June. There is concern among some that carry traders will be vulnerable if global events continue on this tack
- USD/CHF: +0.32% to 0.9486
- USD/CAD: -0.08% to 1.2727
- The Canadian economy saw 202.8K Housing Starts in June, ahead of expectations and up from 197K in May
- The New Housing Price Index grew a better-than-expected 0.2% m/m in May versus 0.1% growth in April
- AUD/USD: +0.26% to 0.7443
- NZD/USD: +0.20% to 0.6727
Bonds
- Despite a very disappointing session for the major U.S. equity indices and a weak Initial Jobless Claims number, Treasuries could not muster buying interest. Core European yields rose as well, but not nearly to the same degree as in the U.S. A lackluster bond auction at 13:00 ET did not help matters and the Tplex plumbed fresh lows after the results of the auction were released
- Yield Check:
- 2-yr: +4 bps to 0.58%
- 5-yr: +8 bps to 1.57%
- 10-yr: +11 bps to 2.30%
- 30-yr: +12 bps to 3.10%
- News:
- Initial Jobless Claims rose to 297,000 for the week ending July 4 from an upwardly revised 282,000 (from 281,000) for the week ending June 27. The Briefing.com consensus was for a decrease to 276,000
- Auto plants often retool during July and that was the explanation for this weeks jump in claims
- Continuing Jobless Claims increased to 2.334 mln for the week ending June 27 from an upwardly revised 2.265 mln (from 2.264 mln) for the week ending June 20. The consensus expected continuing claims to fall to 2.230 mln
- The $13 billion Treasury bond auction was met with weak demand, tailing 1.4 bps and drawing a bid-to-cover ratio at the lower end of the usual range:
- High yield: 3.084%
- Bid-to-cover: 2.23
- Indirect bid: 51.1%
- Direct bid: 8.1%
- German Chancellor Angela Merkel and German Finance Minister Wolfgang Schauble both said that debt forgiveness for Greece is not an option
- Chicago Fed President Evans (FOMC voter and dove) said he would like to hold off on rate hikes until mid-2016
- Initial Jobless Claims rose to 297,000 for the week ending July 4 from an upwardly revised 282,000 (from 281,000) for the week ending June 27. The Briefing.com consensus was for a decrease to 276,000
- Currencies:
- EUR/USD: -0.41% to $1.1027
- USD/JPY: +0.43% to 121.32
- Commodities:
- WTI crude: +2.34% to $52.86/bbl.
- Gold: -0.27% to $1,160.40/troy oz.
- Copper: +1.98% to $2.5465/lb.
- Data out Friday:
- May Wholesale Inventories (10:00 ET)
- Fed Speakers:
- Boston Fed President Eric Rosengren (non-FOMC voter) (11:35 ET)
- Fed Chair Janet Yellen (FOMC voter) (12:00 ET)
Treasury Yields:
- 2 Year Note 0.60% +0.05
- 5 Year Note 1.58% +0.08
- 10 Year Note 2.32% +0.10
- 30 Year Bond 3.11% +0.12
2/30 Spread: 251 bps ( +7 ) … 2/10 Spread: 172 bps ( +5 )
Preview for Friday 10 July, 2015
Economic Data
Friday (10 July) :
- Wholesale Inventories : 0.3% (Prior 0.4%)
Earnings Highlights
Friday (10 July) :
BMO - None
AMC - None
BMO - None
AMC - None
Summary
Market is at the verge of break lower of the trading range since March. I suppose we are going to see more volatility coming in as the bulls will do what they can to defend the price. However I am seeing a downtrend in the market with lower highs, I think it will be hard to win over the bears.
Fed Chairperson Yellen will be speaking on Friday noon 12.30pm ET. Most likely traders will be still looking at whether the Fed is raising the interest rate this September. This might give the market the catalyst to break out.
China bounce back after the government intervention and limit short-selling in the market. Greece is going to have the EU meeting this weekend and the government also submitted an economic reform plan. Both China and Greece are not out of the woods yet and that is another key to watch out next week.
Market is at the verge of break lower of the trading range since March. I suppose we are going to see more volatility coming in as the bulls will do what they can to defend the price. However I am seeing a downtrend in the market with lower highs, I think it will be hard to win over the bears.
Fed Chairperson Yellen will be speaking on Friday noon 12.30pm ET. Most likely traders will be still looking at whether the Fed is raising the interest rate this September. This might give the market the catalyst to break out.
China bounce back after the government intervention and limit short-selling in the market. Greece is going to have the EU meeting this weekend and the government also submitted an economic reform plan. Both China and Greece are not out of the woods yet and that is another key to watch out next week.
Direction for Friday 10 July, 2015: Down
2015 Daily Directional Accuracy: 64/105 (60.95%)
2015 Weekly Directional Accuracy: 15/24 (62.50%)
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