Friday, 14 Aug 2015 - AMC

Dow +69.15 at 17477.40, Nasdaq +14.68 at 5048.23, S&P +8.16 at 2091.56

I daresay market was rather volatile for most of the session, to be specific from the opening to the mid day. Eventually there was more buying to push the market higher but looking at the way market closed on Friday, I am skeptical about the strength of the pullback.

Europe market remains in red throughout while Asia market was doing slightly better amid mixed performance. 

Market Summary

Industry Watch

Strong: Financials, Industrials, Technology, Materials

Weak: Consumer Staples, Energy, Health Care

Other Market Moving Factor:

• Major averages little changed for the week: S&P 500 +0.3% week-to-date, Nasdaq -0.2% week-to-date, entering Friday
• July PPI surpasses expectations (+0.2%; Briefing.com consensus 0.1%)

[BRIEFING.COM] The stock market ended a volatile week on a modestly higher note with the S&P 500 adding 0.4%. The benchmark index extended its weekly gain to 0.7% while the Nasdaq Composite (+0.3%) underperformed, ending the week higher by 0.1%.  

The first four trading days of the week were jam-packed with macroeconomic events, but the Friday affair was very quiet with fewer than 700 million shares changing hands at the NYSE floor. 

Equity indices began the final session of the week near their flat lines and spent the first two hours of action alternating between gains and losses. However, heavily-weighted sectors like financials (+0.7%) and industrials (+0.6%) displayed relative strength from the early going while the top-weighted technology sector (+0.5%) contributed to the afternoon strength.  

The financial sector continued its rebound off Wednesday's low with today's move lifting the influential sector to a weekly gain of 0.3%. Meanwhile, industrials received support from transport stocks, evidenced by a 0.7% increase in the Dow Jones Transportation Average. The bellwether complex gained 0.8% for the week with 19 of 20 components contributing to today's advance. Freight carrier Con-way (CNW 37.45, +0.71) was the top performer, climbing 1.9% while shipper Matson (MATX 40.79, -0.05) shed 0.1%.  

Elsewhere, the technology sector overcame relative weakness among high-beta chipmakers with large cap components like Apple (AAPL 116.00, +0.85), Google (GOOGL 689.37, +2.86), and Microsoft (MSFT 47.00, +0.27) gaining between 0.4% and 0.7% while the PHLX Semiconductor Index lost 0.6% and contributed to the underperformance in the Nasdaq.  

Similarly, biotechnology names also weighed on the Nasdaq, but iShares Nasdaq Biotechnology ETF (IBB 364.06, -2.33) was able to narrow its loss to 0.6% by the close. The ETF surrendered 1.3% for the week while the health care sector added 0.3% today, ending the week flat. 

On the downside, the energy sector (-0.2%) was among the early leaders, but retreated as crude oil slid from its morning high. The energy component added 0.5% and settled at $42.47/bbl, but still lost 3.6% for the week. Meanwhile, the energy sector climbed 3.2% during the week, ending ahead of the remaining nine groups.

Treasuries registered slim losses after slipping in reaction to a July PPI report that came in just ahead of expectations. The 10-yr note ended just below its flat line with the benchmark yield adding one basis point to 2.20%. 

Also of note, today's eurogroup meeting with Greek representatives produced an agreement, which puts Greece on track to receive EUR13 billion in bailout funds next week.

Economic data included PPI, Industrial Production, and the Michigan Sentiment Index: 

• Producer prices increased 0.2% in July after increasing 0.4% in June while the Briefing.com consensus expected an increase of 0.1% 
  • Energy prices, which provided the bulk of the gain in June, fell 0.6% in July. Gasoline prices increased 1.5%, but that was offset by big declines in the prices of home heating oil (-9.5%), liquefied petroleum (-4.3%), diesel fuel (-2.6%), and residential natural gas (-2.4%) 
  • Food prices fell 0.1% in July after increasing 0.6% in June 
  • Excluding food and energy, core prices increased 0.3% for a second consecutive month in July while the consensus expected an increase of 0.1% 
    • The entire increase in core prices resulted from a 0.4% increase in services prices 
• Industrial production increased 0.6% in July after increasing a downwardly revised 0.1% (from 0.2%) in June while the Briefing.com consensus expected an increase of 0.3% 
  • That was the largest increase since a 0.9% increase in November 2014 
  • Manufacturing production increased 0.8% in July after declining 0.3% in June 
  • Nearly the entire increase in industrial production resulted from historic gains in the auto industry. Excluding autos, total industrial production was flat in July and manufacturing production increased only 0.1% 
• The University of Michigan Consumer Sentiment Index declined to 92.9 in the preliminary August reading from 93.1 in July while the Briefing.com consensus expected an increase to 93.7 
  • Concerns over a downward trending stock market were offset by improvements in labor market conditions, as shown by the historic lows in the initial claims level, and lower gasoline prices 
  • Both the Current Conditions (107.1 from 107.2) and Expectations (83.8 from 84.1) Indices were virtually unchanged in August 

On Monday, the Empire Manufacturing Index for August will be released at 8:30 ET while the August NAHB Housing Market Index will be reported at 10:00 ET. 

• Nasdaq Composite +6.6% YTD 
• S&P 500 +1.6% YTD 
• Russell 2000 +0.6% YTD 
• Dow Jones Industrial Average -1.9% YTD 

Week in Review: China Seizes the Spotlight 

The stock market began the trading week on a sharply higher note with the S&P 500 spiking 1.3% while the Dow (+1.4%) and Nasdaq (+1.2%) bookended the benchmark index. Equity indices surged out of the gate after the overnight session featured a 4.9% spike in China's Shanghai Composite after below-consensus trade data from China was viewed as an argument in favor of more policy easing. The overnight strength carried over to the European session as regional indices rallied amid reports suggesting Greek officials and eurozone negotiators are nearing a final agreement on a third bailout package for Greece. Once the opening bell rang on Wall Street, U.S. stocks perked up with the S&P 500 charging above its 50-day (2,096) and 100-day (2,098) moving averages. The benchmark index overtook both those levels during the opening hour, and inched to new highs during afternoon action with nine sectors ending in the green.  

Global equity markets retreated on Tuesday as investors responded to an overnight devaluation of China's yuan. Specifically, the People's Bank of China lowered the yuan fix by the largest amount on record, sending the USD/CNY pair higher by 1.9% to 6.3249. The move invited renewed trepidations about the pace of economic growth in China while also feeding concerns that China's trading partners may feel compelled to respond by weakening their own currencies. For instance, the Japanese yen was in focus during the session amid speculation the Bank of Japan may be forced to step up its easing efforts to support the country's exporters. As a result, the dollar/yen pair climbed 0.4% to 125.07, nearing a 13-year high. The major European indices lost between 1.1% and 2.7% with the retreat paced by exporter stocks while the S&P settled lower by 1.0% and retraced the bulk of its advance from Monday. The day's selling sent the benchmark index back below its 50-day (2,096) and 100-day (2,098) moving averages with eight sectors registering losses. To little surprise, cyclical groups paced the slide, but the energy sector (-0.2%) spent the day in a steady rally off its opening low. The sector fought its way back to Monday's high even as crude oil plunged 4.2% to $43.08/bbl, settling at a six-year low.  

The market ended Wednesday on a slightly higher note despite showing considerable weakness at the start of the trading day. The S&P 500 added 0.1% while the Nasdaq Composite (+0.2%) settled just ahead. Equity indices faced selling pressure at the start after the overnight session featured another move to devalue China's yuan. Specifically, the People's Bank of China fixed the yuan 1.6% lower and then stepped in to support the currency late in the session. Following the intervention, the USD/CNY pair ended higher by 1.0% at 6.3870 while the continued tinkering with the exchange rate by the PBoC fueled a continuation of Tuesday's risk-off move across global markets. The selling pressure persisted until the end of the European session with major equity indices across the old continent losing between 1.4% and 3.4%. Regional markets notched their session lows not long before the close, after Germany's Bild reported that the German government views the third Greek bailout package as insufficient. This was a noteworthy shift, considering the market had believed the bailout agreement was all but complete. Once equity markets in Europe closed, U.S. indices rallied steadily off their lows with the S&P 500 swiftly returning above its 200-day moving average (2,075). Thanks to the intraday recovery, seven sectors registered gains while three groups finished in the red, but above their early lows. 

The stock market ended the Thursday session on a modestly lower note after spending some time on both sides of the unchanged level. The S&P 500 shed 0.1% while the Dow Jones Industrial Average eked out a slight gain (+0.03%). Overnight, the People's Bank of China tried to calm investor fears by holding a press conference, during which bank officials said the yuan adjustment "is almost complete" and called the rumors of a 10.0% devaluation "nonsense." Markets across Asia posted gains while European indices ended mostly higher. Once the U.S. session got going, stocks slipped from their opening levels, but the early weakness was largely isolated to the energy sector (-1.4%), which retreated alongside crude oil. The energy component faced selling pressure throughout the day, notching a fresh six-year low under $42.00/bbl during intraday action before inching up to settle lower by 2.3% at $42.25/bbl.

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei -0.4%; Hong Kong’s Hang Seng -0.1%; China’s Shanghai Composite +0.3%
Overall, it was a mixed performance for equity markets in the Asia-Pacific region on Friday. Investors’ nerves were calmed a bit when the People’s Bank of China set the midpoint for the yuan slightly lower than the previous day’s close, creating an opening of sorts for this week’s devaluation trend to be broken. Even so, broader economic concerns that have manifested themselves in the slump in commodity prices kept buying efforts mostly in check, with India (+1.9%) being the exception on that front.

Economic data

• Hong Kong
• Q2 GDP +0.4% quarter-over-quarter (prior +0.7%); +2.8% year-over-year (prior +2.4%)
• India
• July WPI Inflation -4.05% year-over-year (expected -2.8%; prior -2.4%)
• July WPI Food -1.16% year-over-year (prior +2.9%)
• July WPI Fuel -12.81% year-over-year (prior -10.0%)
• Singapore
• June Retail Sales +0.6% month-over-month (prior +2.2%); +6.9% year-over-year (prior +5.9%)
• New Zealand
• Q2 Retail Sales +0.1% quarter-over-quarter (expected +0.5%; prior +2.3%)
• Q2 Core Retail Sales +0.1% quarter-over-quarter (expected +0.7%; prior +2.5%)

Equity Markets

• Japan’s Nikkei declined 0.4%, pressured by weakness in the industrials (-1.4%) and energy (-1.0%) sectors. Comsys Holdings (-4.0%), Amada Holdings (-3.9%), and Kubota Corp (-3.8%) were the worst-performing issues. On the flip side, Furukawa (+5.3%), Nippon Paper Industries (+4.0%), and Oji Holdings (+3.9%) topped the list of winners. Out of the 225 index members, 64 ended higher, 153 finished lower, and 8 were unchanged. For the week, the Nikkei declined 1.0%.
• Hong Kong’s Hang Seng declined 0.1% in a slow fade from a modest opening gain. Lenovo Group (-5.8%), Want Want China Holdings (-4.5%), and China Resources Power Holdings (-3.5%) paced the laggards while Citic (+6.6%), BOC Hong Kong Holdings (+3.0%), and MTR Corp (+2.1%) paced the winners. Out of the 50 index members, 20 ended higher, 26 finished lower, and 4 were unchanged. For the week, the Hang Seng declined 2.3%.
• China’s Shanghai Composite increased 0.3% in a cautious affair that didn’t see a whole lot of conviction from buyers or sellers. The modest gain followed a decision by the PBOC to set the midpoint of the yuan slightly lower than the previous day’s close, which interrupted this week’s devaluation pattern. USD/CNY was down 0.1% to 6.3912. For the week, the Shanghai Composite A Share increased 5.9%.
• India’s Sensex rallied 1.9%, closing above the 28,000 level in the wake of some weaker than expected WPI inflation data. Gains were led by the communications (+2.7%), financials (+2.5%), and materials (+2.3%) sectors. ICICI Bank (+3.7%), Reliance Industries (+3.6%), and Vedanta (+3.6%) topped the list of winners. Dr Reddy’s Laboratories (-0.8%) and Infosys (-0.8%) were the only stocks to lose ground. Out of the 30 index members, 28 ended higher and 2 finished lower. For the week, the Sensex declined 0.6%.
• Australia’s S&P/ASX 200 declined 0.6%, led lower once again by its gold (-4.2%), energy (-3.7%), and resources (-2.1%) sectors. Out of the 200 index members, 73 ended higher, 103 finished lower, and 24 were unchanged. For the week, the S&P/ASX 200 declined 2.2%.
• Regional advancers: South Korea +0.4%, Indonesia +0.02%, Singapore +0.7%, Thailand +0.7%
• Regional decliners: Taiwan -0.1%, Malaysia -1.5%, Vietnam -0.9%, Philippines -0.4%

FX

• USD/CNY -0.1% at 6.3912
• USD/INR -0.2% at 64.9688
• USD/JPY -0.2% at 124.16

EUROPE

Major European indices trade lower across the board with France’s CAC (-0.6%) showing the largest decline. Elsewhere, the Greek parliament has approved the conditions associated with a bailout package in the amount of EUR85 billion, which will be discussed among eurozone finance ministers at today’s eurogroup meeting in Brussels.

• Eurozone preliminary Q2 GDP +0.3% quarter-over-quarter (expected 0.4%; prior 0.4%); +1.2% year-over-year (consensus 1.3%; last 1.0%). Separately, July CPI -0.6% month-over-month, as expected, and Core CPI +1.0% year-over-year, as expected
• Germany’s preliminary Q2 GDP +0.4% quarter-over-quarter (expected 0.5%; prior 0.3%); +1.6% year-over-year (expected 1.5%; last 1.1%)
• France’s preliminary Q2 GDP 0.0% quarter-over-quarter (consensus 0.2%; prior 0.7%) while Q2 Nonfarm Payrolls +0.2% quarter-over-quarter (expected 0.1%; prior 0.0%)
• Italy’s preliminary Q2 GDP +0.2% quarter-over-quarter (expected 0.3%; prior 0.3%); +0.5% year-over-year, as expected (previous 0.1%)

Closing Prices

• UK’s FTSE: -0.3%
• Germany’s DAX: -0.3%
• France’s CAC: -0.6%
• Spain’s IBEX: -0.6%
• Portugal’s PSI: -0.1%
• Italy’s MIB Index: -0.5%
• Irish Ovrl Index: + 0.3%
• Greece ASE General Index: -1.8%

Macroeconomic Data

Economic Data

from Briefing.com

• PPI : 0.2% vs 0.1% (Prior 0.4%)
• Core PPI : 0.3% vs 0.1% (Prior 0.3%)
• Industrial Production : 0.6% vs 0.3% (Prior 0.1% - Down)
• Capacity Utilisation : 78.0% vs 78.0% (Prior 77.7% - Down)
• Michigan Sentiment : 92.9 vs 93.9 (Prior 93.1)

PRODUCER PRICE INDEX

Highlights

• Producer prices increased 0.2% in July after increasing 0.4% in June. The Briefing.com Consensus expected the PPI to increase 0.1%.
• Excluding food and energy, core prices increased 0.3% for a second consecutive month in July. The consensus expected these prices to increase 0.1%.

Key Factors

• Energy prices, which provided the bulk of the gain in June, fell 0.6% in July. While gasoline prices increased 1.5%, that was offset by big declines in the prices of home heating oil (-9.5%), liquefied petroleum (-4.3%), diesel fuel (-2.6%), and residential natural gas (-2.4%).
• Food prices fell 0.1% in July after increasing 0.6% in June. After several months of large gains due to shortages from bird flu epidemic, egg prices declined 24.8% in July.
• The entire increase in core prices was the result of a 0.4% increase in services prices. Core goods prices were flat in July after increasing 0.4% in June.
• Most of the gain in services was attributed to a 9.9% increase in guestroom rental prices.
• Trade costs increased 0.4% in July, up from a 0.2% increase in June.
• Excluding food, energy, and trade, producer prices increased 0.2% in July, down from a 0.3% increase in June. Year-over-year, these prices are up only 0.9%.
• There is unlikely to be a strong acceleration in price growth in the near future. Looking down the producer pipeline, pressures weakened in July.
• Core processed goods prices for intermediate demand increased only 0.1% in July, down from a 0.2% increase in June. Prices of core unprocessed goods declined 0.5% in July after a 0.3% increase in June.
• Prices of intermediate services demand increased only 0.2% in July, down from a 0.4% increase in June.

Big Picture

• There are no pricing pressures down the producer pipeline. This should keep both consumer and producer price growth in check.

INDUSTRIAL PRODUCTION

Highlights

• Industrial production increased 0.6% in July after increasing a downwardly revised 0.1% (from 0.2%) in June. The Briefing.com Consensus expected industrial production to increase 0.3%.

Key Factors

• That was the largest increase in industrial production since a 0.9% gain in November 2014.
• Manufacturing production increased 0.8% in July after declining 0.3% in June. That was the largest increase in manufacturing production since a 0.9% gain in November 2014.
• Nearly the entire increase in industrial production was the result of historic gains in the auto industry. Excluding autos, total industrial production was flat in July and manufacturing production increased only 0.1%.
• Motor vehicle assemblies increased to 13.61 mln SAAR in July from 11.81 mln SAAR in June. To put that number in perspective, July assemblies were the most since 13.89 mln SAAR were assembled in November 1978, and assemblies have only exceeded the July level twice since data started being collected in January 1967. The level of July assemblies also explain the large increase in the Chicago PMI Production Index, which rose to 61.8 from 49.8 in June.
• Auto assemblies increased to 4.80 mln SAAR in July from 4.05 mln SAAR in June. Truck assemblies increased to 8.71 mln SAAR from 7.76 mln SAAR.
• Overall, total motor vehicle and parts production increased 10.6% in July after declining 4.3% in June.
• In other sectors, mining production increased 0.2% in July after a 0.7% gain in June. A return to normal weather conditions reduced the need for utilities in July, and production declined 1.0% after increasing 2.3% in June.

Big Picture

• A historic increase in motor vehicle assemblies caused a surge in industrial production growth.

MICHIGAN SENTIMENT

Highlights

• The University of Michigan Consumer Sentiment Index declined to 92.9 in the preliminary August reading from 93.1 in July. The Briefing.com Consensus expected the index to increase to 93.7.

Key Factors

• Concerns over a downward trending stock market were offset by improvements in labor market conditions, as shown by the historic lows in the initial claims level, and lower gasoline prices.
• Both the Current Conditions (107.1 from 107.2) and Expectations (83.8 from 84.1) Indices were virtually unchanged in August.
• Despite the slightly softer sentiment reading, consumption growth trends remain firm. Consumption relies on income and not sentiment. As long as income continues to grow, consumption trends should follow.

Big Picture

• Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.

Market Internals

NYSE:

Lower Volumes than the day before – 654.7M vs 768.0M 


Advancers outpaced Decliners (adv/dec): 2076 / 977

New Lows outpaced New Highs (highs/lows): 47 / 101

NASDAQ:

Lower Volumes than the day before – 1471.3M vs 1624.2M

Advancers outpaced Decliners (adv/dec): 1726 / 1117

New Lows outpaced New Highs (highs/lows): 59 / 101

VOLATILITY S&P500 (VIX)
12.83 -0.66 (-4.89%)

Volume remained significant low. Internals did reflect some bullishness but there is no upward reaction in New Highs. VIX broke below its support from the ascending trend line indicating the underlying confidence is still strong in the market. With the lack in volume, there is not much to suggest in the market on where it might be heading. Judging from VIX, it looks to me that the market is likely to go up...

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,477.40 +69.15 (+0.40%)

Volume: 82,118,120 (below average of 92,771,323)
Range: 17,394.06 - 17,492.90

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,048.24 +14.68 (+0.29%)
Volume: 343,628,280 (below average of 432,213,099)

Range: 5,012.61 - 5,051.89

S&P 500 INDEX (SPX: CBOE)

2,091.54 +8.15 (+0.39%)

Volume: 448,636,000 (below average of 532,279,323)

Range: 2,080.61 - 2,092.45

DOW went up to test its resistance at around 17,470 and that remains a crucial level to pay attention. NASDAQ remained outside of the channel and test its resistance at around 5,050. S&P continue to sit on its ascending trend line and went up to test its resistance at 2,093. The 3 indices are facing a strong resistance going forward. Given they are somewhat rejected by the resistance level and the lack in volume supporting, I reckon the chances of getting bullish is rather low.  

Commodities

Closing Commodities: WTI Oil Holds Above $42/Barrel

• The dollar index is trading modestly higher, which is helping provide a little pressure on commodities in afternoon trading.
• Silver and gold futures are trading near today’s lows, while copper is back near the unchanged line.
• Silver is currently down 1.3% in electronic trade at $15.21/oz, after closing -1.2% at $15.21/oz. Dec gold finished the session -0.3% at $1112.60/oz
• WTI crude oil is holding above $42/barrel, but just now fell back into the red in electronic trade, currently at $42.19/barrel
• Sept crude oil closed its pit trading session 0.5% at $42.47/barrel
• Sept natural gas is up 0.6% at $2.80/MMBtu, closing its pit trading session +0.4%.

Energy

• September crude oil futures rose $0.22 (+0.5%) to $42.47/barrel
• September natural gas closed $0.01 higher (+0.4%) at $2.80/MMBtu
• RBOB Gasoline closed $0.03 lower at $1.69/gallon
• Heating oil futures closed $0.01 lower at $1.56/gallon

Agriculture

• December corn closed $0.01 higher at $3.76/bushel
• September wheat closed $0.04 higher at $5.07/bushel
• November soybeans closed $0.10 lower to $9.16/bushel
• Sugar #11 closed $0.19 cents higher at 10.68 cents/lb

Metals

• December gold ended today’s session $3.10 lower (-0.3%) at $1112.60/oz
• September silver closed today’s session $0.19 lower (-1.2%) at $15.21/oz
• September copper closed flat at $2.35/lb

Currencies

Euro Sinks on Economic Slowdown

• EUR/USD: -0.32% to $1.1117
  • GDP growth in the eurozone fell to 0.3% versus 0.4% growth in Q1
  • The eurozone's CPI (both headline and core) came out as expected. The Consumer Price Index rose 0.2% y/y in July (the same increase as June's) and the Core Consumer Price Index (which excludes food and energy) grew a more robust 1.0% y/y, also the same rate as the prior month
  • The Greek parliament approved the country's third bailout worth 85 bln euro
• U.S. Dollar Index: +0.09% to 96.53
  • Both headline and Core Producer Price Indices grew faster than expected in July. The headline number increased 0.2% versus the Briefing.com consensus of +0.1% and the June reading of +0.4%
  • Core prices rose 0.3% versus the consensus of +0.1% and the prior reading of +0.3%
  • Industrial production rose 0.6% in July after increasing a downwardly-revised 0.1% (from 0.2%) in June. The Briefing.com consensus was for +0.3%
• GBP/USD: +0.24% to $1.5648
• USD/CHF: +0.19% to 0.9776
• USD/JPY: -0.12% to 124.27
• USD/CAD: -0.03% to 1.3068
  • Manufacturing Production in Canada grew 1.2% m/m in June, faster than the 0.2% growth in May
  • Overnight, the New Housing Price Index showed growth of 0.3% m/m in June, better than expectations and the 0.2% reading in May
• AUD/USD: +0.05% to $0.7377
• NZD/USD: -0.15% to 0.6544
  • In New Zealand, Retail Sales grew 0.1% q/q for the second quarter, worse than expected and far worse than the 2.3% growth from Q1

Bonds

Treasuries End Mixed After Strong Data

• Government notes and bonds lost ground today as the U.S. equity indices moved back into positive territory in the afternoon. The economic data released this morning showed upside surprises on both Industrial Production and the Producer Price Index for July
• Yield Check:
  • 2-yr: +2 bps to 0.73%
  • 5-yr: +3 bps to 1.60%
  • 10-yr: +1 bp to 2.20%
  • 30-yr: -1 bp to 2.84%

• News:
  • Producer prices rose 0.2% in July after increasing 0.4% in June. The Briefing.com consensus expected the PPI to increase by 0.1%
  • Excluding food and energy, core prices increased 0.3% for a second consecutive month in July. The consensus expected these prices to increase 0.1%
    • The entire increase in core prices was the result of a 0.4% increase in services prices. Core goods prices were flat in July after increasing 0.4% in June
      • Most of the gain in services was attributed to a 9.9% increase in guestroom rental prices
  • Industrial production increased 0.6% in July after rising a downwardly-revised 0.1% (from 0.2%) in June. The Briefing.com consensus expected industrial production to increase 0.3%
    • The gain in industrial production was the largest in 9 months and came almost entirely from robust vehicle sales
  • Capacity Utilization held steady at 78.0% in July, in line with expectations
  • The University of Michigan's Consumer Sentiment Index fell to 92.9 in the preliminary August reading from 93.1 in July. The Briefing.com consensus expected the index to increase to 93.7
    • Both the Current Conditions (107.1 from 107.2) and Expectations (83.8 from 84.1) Indices were virtually unchanged in August
  • The Greek parliament approved the country's third bailout overnight

• Commodities:
  • WTI crude: +0.26% to $42.34/bbl.
  • Gold: -0.21% to $1,113.30/troy oz.
  • Copper: -0.13% to $2.35/lb.

• Currencies:
  • EUR/USD: -0.32% to 1.1118
  • USD/JPY: -0.12% to 124.27

• Week Ahead:
  • Monday: August Empire Manufacturing (08:30 ET); August NAHB Housing Market Index (10:00 ET); June Net Long-Term TIC Flows (16:00 ET)
  • Tuesday: July Housing Starts (08:30 ET); July Building Permits (08:30 ET)
  • Wednesday: MBA Mortgage Index for the week ended 8/15 (07:00 ET): July CPI and Core CPI (08:30 ET); Crude Inventories for the week ended 8/15 (10:30 ET); FOMC Minutes for the July meeting (14:00 ET); Minneapolis Fed President Kocherlakota (non-FOMC voter) (20:20 ET)
  • Thursday: San Francisco Fed President Williams (FOMC voter) (02:45 ET); Initial Jobless Claims for the week ended 8/15 and Continuing Jobless Claims for the week ended 8/8 (08:30 ET); July Existing Home Sales (10:00 ET); August Philadelphia Fed (10:00 ET); July Leading Indicators (10:00 ET); Natural Gas Inventories for the week ended 8/15 (10:30 ET); $16 bln 5-year TIPS auction (reopening, results at 13:00 ET)

Treasury Yields:

• 2 Year Note 0.73% +0.01
• 5 Year Note 1.61% +0.03
• 10 Year Note 2.20% +0.01
• 30 Year Bond 2.84% -0.02

2/30 Spread: 211 bps ( -3 ) …  2/10 Spread: 147 bps ( UNCH )

Preview for the week Monday 17 August to 21 August, 2015

Economic Data

Monday (17 Aug) :

• Empire Manufacturing : 5.0 (Prior 3.9) 
• NAHB Housing Market Index : 61.0 (Prior 60.0)
• Net Long-Term TIC Flows : (Prior $93.0B)

Tuesday (18 Aug) :

• Housing Starts : 1200K (Prior 1174K)
• Building Permits : 1257K (Prior 1343K)

Wednesday (19 Aug) : 

• MBA Mortgage Index : (Prior 0.1%)
• CPI : 0.2% (Prior 0.3%)
• Core CPI : 0.2% (Prior 0.2%)
• Crude Inventories : (Prior -1.682M)
• FOMC Minutes 

Thursday (20 Aug) :

• Initial Claims : 272K (Prior 274K) 
• Continuing Claims : 2265K (Prior 2273K)
• Existing Home Sales : 5.42M (Prior 5.49M)
• Philadelphia Fed : 7.0 (Prior 5.7)
• Leading Indicators : 0.2% (Prior 0.6%)
• Natural Gas Inventories : (Prior 65 bcf)

Friday (21 Aug) : 

• No Economic Data

Earnings Highlights

Monday (17 Aug) :
BMO - CYRN EL
AMC - ANW A HTHT FN IVR MTZ PSEC RELY URBN

Tuesday (18 Aug) :
BMO - CMCM DANG DKS EROS HAIN HD TJX TSL VPG WMT
AMC - ADI DV LZB PLAB RPD SINA TEDU WB

Wednesday (19 Aug) :
BMO - AEO EARS BZUN CTRN EV HRL IDRA LOW MBUU SOL SPLS TGT
AMC - ARCW GLPW GLYC HGR JMEI KEYS LB MOMO NTAP PLKI SMTC SPTN SNPS YOKU

Thursday (20 Aug) :
BMO - AMWD ANN BONT BKE CATO CYBX SNOW DATE JKS KIRK LANC LITB MSG NM OSIS PERY QIWI RGS SHLD SSI SMRT TECD TTC
AMC - WUBA ARAY CRMT BRCD GPS HPQ INTU JBSS MRVL MENT UEPS NWY NDSN NQ QUNR ROST CRM SCSC TFM TUES

Friday (21 Aug) : 
BMO - DE FL HIBB DSKY
AMC - None

Summary
Market does not want to be beaten down easily. It seems that the indices held on to their support levels and looking to reverse soon. However I feel that might not be too convincing given volume has been significantly lower lately and the indices were rejected by their respective resistance. If they manage to break above with volume returning to the market, I reckon the upside is said to be more genuine.

Crude oil remains bearish as it reaches a fresh low below $42.00. The situation from Japan's weakening GDP and a rise in number of oil rigs are likely to continue dampen the oil price. This might worried the oil producers as their breakeven price are comparatively higher.

We are going to see some important economic data - building permits on Tuesday, FOMC minutes on Wednesday, unemployment claims and leading indicators on Thursday. I suppose most traders will be paying attention to Fed's minutes to obtain information on the raise of interest rate.

Direction for Monday 17 Aug, 2015: Down

Direction for the week Monday 17 Aug to Friday 21 Aug, 2015: Down

2015 Daily Directional Accuracy: 81/127  (63.78%) 

2015 Weekly Directional Accuracy: 18/30 (60.00%)