Friday, 31 July 2015 - AMC

Dow -55.52 at 17690.46, Nasdaq -0.50 at 5128.28, S&P -4.79 at 2103.84

It looks like market is almost done with the pullback and it is getting uncertain on whether we are going to see some downside or market could continue higher. I feel the market at the moment is neither here or there. Looking at the divergence in the market, I reckon the upside is rather unlikely.

We have saw the market bounced back this week and traders might want to profit take as we head into the weekend.

Direction for Friday 31 July, 2015: Down

NASDAQ was strongest out of the 3 indices. Market on Friday was like a roller coaster ride. We saw some selling at the first 30 minutes and quickly recovered to the opening price before another selling that took the market down to red. I wouldn't say the session was bullish though. I suppose we continue to see more profit taking from the pullback. 

Asia markets was somewhat mixed while Europe markets closed with a gain. 

Market Summary

Industry Watch

Strong: Consumer Discretionary, Health Care, Industrials, Utilities

Weak: Energy, Financials, Materials, Technology

Other Market Moving Factor:

• Q2 Employment Cost Index disappoints (+0.2%; Briefing.com consensus 0.6%): Treasuries and futures rally, dollar slides
• Dow components Chevron (CVX) and ExxonMobil (XOM) pressure energy sector in reaction to disappointing results
• S&P 500 +2.2% in July, entering Friday

[BRIEFING.COM] The stock market ended July on a cautious note with the S&P 500 shedding 0.2%. Despite today's downtick, the benchmark index added 1.2% for the week, ending the month higher by 2.0%. Meanwhile, the Nasdaq Composite ended flat, locking in a 2.8% gain for July.  

Equities held modest gains at the start thanks to a pre-market jump in the futures market after it was reported that the Employment Cost Index increased just 0.2% in the second quarter while the Briefing.com consensus expected an increase of 0.6%. The lack of strong wage growth was viewed as an argument in favor of the Federal Reserve delaying its first rate hike, which gave a boost to equity futures and Treasuries. The 10-yr note surged immediately after the report was released, and remained near its high into the close, sending the benchmark yield lower by six basis points to 2.20%.  

Meanwhile, stocks climbed during the first three hours of action, but relative weakness among several cyclical sectors acted as a drag on the broader market, pulling the S&P 500 to new lows during the afternoon. 

Most notably, the energy sector tumbled 2.6%, widening its July decline to 7.8% after Dow components Chevron (CVX 88.48, -4.55) and ExxonMobil (XOM 79.21, -3.80) reported disappointing results. The two names posted respective losses of 4.9% and 4.6% while crude oil slid 2.9% to $47.12/bbl. For the month, the energy component plunged more than 21.0%, returning to its January low. 

Elsewhere among growth-sensitive sectors, financials (-0.4%) and technology (-0.5%) lagged throughout the day with high-beta chipmakers pressuring the technology sector. The PHLX Semiconductor Index lost 1.2%, ending the month lower by 5.0% while KLA-Tencor (KLAC 53.05, +0.99) bucked the trend, rallying 1.9%, in reaction to a bottom-line beat.  

Typically, underperformance in the technology sector tends to be consistent with weakness in the Nasdaq, but the tech-heavy index outperformed today thanks to gains in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 382.53, +3.73) gained 1.0% after Amgen (AMGN 176.59, +4.90) beat estimates and raised its guidance. Shares of AMGN spiked 2.9% while the broader health care sector (+0.5%) ended among the leaders, drawing secondary support from the likes of Molina Health (MOH 75.28, +7.28), and Universal Health Systems (UHS 145.23, +3.79) after the two reported better than expected results.  

Similar to health care, the three other countercyclical groups settled ahead of the broader market. The utilities sector spiked 1.0% while consumer staples (+0.1%) and telecom services (+0.1%) posted slimmer gains. 

Today's participation was ahead of recent averages with more than 915 million shares changing hands at the NYSE floor.  

Economic data included Employment Cost Index, Chicago PMI, and Michigan Sentiment: 

• Employment costs rose 0.2% in Q2 2015 after a 0.7% increase in the first quarter while the Briefing.com consensus expected an increase of 0.6% 
  • That was the smallest increase in employment costs since the index was created in 2001 
• The Chicago PMI increased to 54.7 in July from 49.4 in June while the Briefing.com consensus expected an increase to 54.7 
  • The reading represented the first increase in three months 
  • There was a large improvement in production as the related index increased to 61.8 in July from 49.8 in June. The production gain came on the heels of strengthening growth in the new orders index, which rose to 58.5 from 51.7 
• The University of Michigan Consumer Sentiment Index was revised down to 93.1 in the final June reading from 93.3 in the preliminary report while the Briefing.com consensus expected an increase to 94.0 
  • The index is down from 96.1 in June, which was the best reading since January 
  • The Expectations Index was revised down from 85.2 in the preliminary reading to 84.1 while the Current Conditions Index was revised up to 107.2 from 106.0

On Monday, June Personal Income/Spending data and Core PCE Prices will be reported at 8:30 ET while June Construction Spending and July ISM Index will both be reported at 10:00 ET. 

• Nasdaq Composite +8.3% YTD 
• S&P 500 +2.2% YTD 
• Russell 2000 +2.8% YTD 
• Dow Jones Industrial Average -0.7% YTD 

Week in Review: Technical Levels in Focus 

The stock market began the trading week on a cautious note with the S&P 500 (-0.6%) settling just above its 200-day moving average (2,064) while the Nasdaq Composite (-1.0%) underperformed. Equity indices spent the entire day in negative territory after the overnight session was highlighted by an 8.5% plunge in China's Shanghai Composite, which endured its largest one-day decline in more than eight years. The index widened its slide from June highs to 28.0%, falling to lows during the final hour of action after the International Monetary Fund voiced concerns about the degree of recent government intervention in the market. The overseas weakness weighed on investor sentiment in Europe and the U.S. while German Bunds (10-yr yield -6 bps to 0.65%) and U.S. Treasuries (10-yr yield -4 bps to 2.23%) advanced. Nine sectors finished the day in negative territory with all six cyclical groups ending in the red. Furthermore, five of six growth-sensitive groups settled behind the broader market while the industrial sector (-0.4%) ended just ahead. Similar to the sector, high-beta transport stocks fared better than the broader market with the Dow Jones Transportation Average shedding 0.2%.  

Equities snapped their five-day losing streak with a daylong Tuesday rally that sent the S&P 500 higher by 1.2%. The benchmark index tested its 100-day moving average (2,095) during afternoon action while the Nasdaq Composite (+1.0%) underperformed throughout the day. The key indices rebounded from losses registered over the past week, starting the day on an upbeat note after the overnight session saw more volatility in Asia. Specifically, China's Shanghai Composite was down as much as 5.1% at the start of the trading day, but narrowed its loss to 1.7% by the close. The turnaround off session lows coincided with a spike in S&P 500 futures in the wee hours of the morning. All ten sectors posted gains with some of the recent underperformers leading the market higher. To that point, the energy sector surged 2.9% after sliding 4.3% over the past five days. The growth-sensitive sector was lifted by the shares of BP (BP 37.29, +1.24) after the industry giant reported a bottom-line miss on better than expected revenue. Another large sector member, LyondellBasell (LYB 92.46, +2.61) spiked 2.9% in reaction to a bottom-line beat. On a related note, crude oil rose 1.3% to $47.98/bbl, providing added support. 

The market registered its second consecutive advance on Wednesday with the S&P 500 climbing 0.7% to extend its weekly gain to 1.4%. The benchmark index overtook its 100- (2,095) and 50-day moving averages (2,100) during morning action while the tech-heavy Nasdaq (+0.4%) struggled to keep pace with the broader market. Equity indices began the day with slight gains after China's Shanghai Composite spiked 3.4% overnight, which improved risk tolerance among global investors. The Dow and S&P 500 rallied throughout the session while the Nasdaq hovered near its opening levels into the afternoon before setting new highs ahead of the close. The tech-heavy index was pressured by biotechnology as iShares Nasdaq Biotechnology ETF (IBB 377.43, -5.41) lost 1.4% despite better than expected earnings from Gilead Sciences (GILD 115.71, +2.64). Shares of GILD spiked 2.3% while the broader health care sector (+0.2%) settled among the laggards. Elsewhere, Twitter (TWTR 31.24, -5.30) sank 14.5% after the company's bottom-line beat was overshadowed by cautious commentary regarding user growth outlook. 

The stock market ended the Thursday session on a slightly higher note after rebounding off its opening low. The S&P 500 settled just above its flat line while the Nasdaq Composite (+0.3%) outperformed. Equities faced some early weakness after the overnight session saw renewed selling in China that sent the Shanghai Composite lower by 2.2%. Furthermore, index futures dropped to new lows ahead of the opening bell after the advance reading of Q2 GDP pointed to an expansion of 2.3%, while the Briefing.com consensus expected a reading of 2.5%. Meanwhile, the first quarter reading was revised up to 0.6% from -0.2%. The GDP report was met with a rally in the Treasury market as the 10-yr note spiked off its low and continued advancing into the afternoon, dropping its yield three basis points to 2.26%.

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei +0.3%; Hong Kong’s Hang Seng +0.6%; China’s Shanghai Composite -1.1%
Most markets in the Asia-Pacific region closed the week on a winning note and with strong gains in the case of smaller markets like Indonesia (+1.9%) and Thailand (+1.8%). China’s Shanghai Composite was an exception as it closed out a terrible month with a 1.1% decline.

Economic data

• Japan
• June Household Spending -3.0% month-over-month (expected -0.5%; prior +2.4%); -2.0% year-over-year (expected +1.7%; prior +4.8%)
• June National CPI +0.4% year-over-year (expected +0.3%; prior +0.5%)
• July Tokyo CPI +0.2% year-over-year (expected +0.2%; prior +0.3%)
• June National Core CPI +0.1% (expected 0.0%; prior +0.1%)
• July Tokyo Core CPI -0.1% (expected 0.0%; prior +0.1%)
• June unemployment rate 3.4% (expected 3.3%; prior 3.3%)
• June Construction Orders +15.4% year-over-year (prior -7.4%)
• June Housing Starts +16.3% year-over-year (expected +2.9%; prior +5.8%)
• Hong Kong
• June Retail Sales -0.4% year-over-year (prior -0.1%)
• South Korea
• June Industrial Production +2.3% month-over-month (expected +0.1%; prior -1.6%); +1.2% year-over-year (expected -1.0%; prior -3.0%)
• Retail Sales -3.7% month-over-month (expected -0.1%; prior -0.1%)
• August Manufacturing BSI Index 73 (prior 67)
• Australia
• Q2 PPI +0.3% quarter-over-quarter (expected +0.6%; prior +0.5%); +1.1% year-over-year (prior +0.7%)
• June Housing Credit +0.6% (prior +0.5%)
• June Private Sector Credit +0.4% month-over-month (expected +0.5%; prior +0.5%)

Equity Markets

• Japan’s Nikkei increased 0.3% and closed at its highs for the day. The modest gains followed a large batch of economic reports that included some disappointing household spending data for June. The technology (+1.4%) financials (+0.7%), and industrials (+0.4%) sectors provided leadership. NEC Corp (+9.1%), Kansai Electric Power (+8.0%), and FUJIFILM Holdings (+7.9%) topped the list of individual winners. Nicherei Corp (-9.0%), Sumitomo Heavy Industries (-6.4%), and Mitsubishi Motors (-5.0%) paced the decliners. Out of the 225 index members, 137 ended higher, 76 finished lower and 12 were unchanged. For the week, the Nikkei gained 0.2% and for the month it was up 1.7%.
• Hong Kong’s Hang Seng jumped 0.6%, scoring the bulk of its gains in a closing volley of buying interest that left it near its highs for the session. Galaxy Entertainment (+5.6%), Sands China (+4.3%), and Power Assets Holdings (+3.1%) were the best-performing stocks while Lenovo Group (-2.7%), Li & Fung (-2.6%), and Cathay Pacific Airways (-1.9%) were the worst. Out of the 50 index members, 31 ended higher, 17 finished lower, and 2 were unchanged. For the week, the Hang Seng declined 2.0% and for the month it was down 6.2%.
• China’s Shanghai Composite declined 1.1%, suffering most of its losses in the final hour of action. Securities regulators are reportedly looking into the influence of automated trading on market activity, according to Reuters. For the month, the Shanghai Composite declined 13.4%.
• India’s Sensex increased 1.5% and finished near its highs for the day. The gains were paced by the health care (+3.3%), consumer discretionary (+1.7%), energy (+1.3%), and financials (+1.1%) sectors. State Bank of India (+5.2%), Coal India (+4.5%), and Lupin (+4.3%) topped the list of winners. Bharat Heavy Electricals (-3.0%), NTPC (-0.6%), and Tata Steel (-0.5%) paced a handful of losers. Out of the 30 index members, 25 ended higher and 5 finished lower. For the week, the Sensex was flat and for the month it was up 1.2%.
• Australia’s S&P/ASX 200 increased 0.5%, scoring its third consecutive gain on the back of gains in the financial sector. For the week, the S&P/ASX 200 increased 2.4% and for the month it was up 4.3%.
• Regional advancers: South Korea +0.6%, Taiwan +0.2%, Malaysia +1.4%, Indonesia +1.9%, Thailand +1.8%, Philippines +0.5%.
• Regional decliners: Singapore -1.5%, Vietnam -0.9%

FX

• USD/CNY unch at 6.2097
• USD/INR +0.1% at 64.1125
• USD/JPY +0.1% at 124.26

EUROPE

Major European indices trade in mixed fashion with Spain’s IBEX (-0.8%) trailing the region. The International Monetary Fund will not take part in another Greek bailout unless the package includes an explicit agreement regarding debt relief, according to reports.

• Eurozone July CPI +0.2%, as expected, while core CPI +1.0% (consensus 0.8%; prior 0.8%). Separately, the Unemployment Rate held at 11.1%, as expected
• Germany’s June Retail Sales -2.3% month-over-month (expected 0.3%; prior 0.4%); +5.1% year-over-year (consensus 4.0%; last -1.0%)
• France’s June Consumer Spending +0.4% month-over-month (consensus 0.6%; last 0.1%) while June PPI -0.2% month-over-month (last -0.5%)
• Italy’s June PPI -0.2% month-over-month (prior 0.2%); -2.3% year-over-year (last -1.9%). Separately, July CPI -0.1% month-over-month (consensus 0.0%; prior 0.2%); +0.2% year-over-year (expected 0.3%; last 0.2%). Also of note, June Unemployment Rate rose to 12.7% from 12.5% (expected 12.3%)
• Spain’s Business Confidence slipped to -0.9 from -0.1 (expected 1.5)

Closing Prices

• UK’s FTSE: + 0.4%
• Germany’s DAX: + 0.5%
• France’s CAC: + 0.7%
• Spain’s IBEX: + 0.1%
• Portugal’s PSI: -0.4%
• Italy’s MIB Index: + 0.6%
• Irish Ovrl Index: + 1.1%
• Greece ASE General Index: CLOSED

Macroeconomic Data

Economic Data

from Briefing.com

• Employment Cost Index : 0.2% vs 0.6% (Prior 0.7%)
• Chicago PMI : 54.7 vs 50.5 (Prior 49.4)
• Michigan Sentiment - Final : 93.1 vs 94.0 (Prior 93.3)

EMPLOYMENT COST INDEX

Highlights

• Employment costs rose 0.2% in Q2 2015 after a 0.7% increase in the first quarter. The Briefing.com Consensus expected employment costs to increase 0.6%.

Key Factors

• That was the smallest increase in employment costs since the index was created in 2001.
• Despite what many consider to be a tightening labor market, employers still have the upper hand when it comes to compensation. There seems to be very little competition to attract employees, which would drive up wages and benefits spending.
• Year-over-year, employment costs are up only 2.0%, which is in-line with the Fed’s inflation target. In other words, real expected compensation growth is flat.
• Wages and salaries increased 0.2% in Q2 2015, down from a 0.7% increase in the first quarter. Benefits spending also slowed, up 0.1% after a 0.6% increase in Q1 2015.
• Private industry cost growth was much weaker than the public sector.
• Overall private compensation was flat after increasing 0.7% in the first quarter. Wages and salaries rose 0.2% in the second quarter, down from a 0.7% gain in Q1 2015. Benefits spending declined 0.2% after increasing 0.6% in Q1 2015.
• State and local government compensation increased 0.6% in Q2 2015, up from a 0.5% gain in the first quarter. Both wages and salaries (0.6% from 0.4%) and benefits (0.8% from 0.5%) accelerated in the second quarter.

Big Picture

• Employment costs are the major component of business costs. The trend in these data therefore have important implications for cost-push inflationary pressures and for profit margins.

CHICAGO PMI

Highlights

• The Chicago PMI increased to 54.7 in July from 49.4 in June. The Briefing.com Consensus expected the Chicago PMI to increase to 54.7.

Key Factors

• That ended two consecutive months of contractions.
• There was a large improvement in production, as the related index increased to 61.8 in July from 49.8 in June. The production gain came on the heels of strengthening growth in the new orders index (58.5 from 51.7).
• Future production growth will remain reliant on new orders. Order backlogs, while better in July (47.9) than they were in June (41.0), remained in a contraction period for the sixth consecutive month.
• Employment levels contracted for a third consecutive month as the related index increased to 46.2 in July from 45.7 in June.

Big Picture

• The Chicago PMI has little overall economic value, and is only watched by the financial markets because it is usually released one day in advance of the similar national ISM manufacturing survey. A significant move in this regional survey will therefore sometimes be seen as having predictive value for the ISM index.

MICHIGAN SENTIMENT

Highlights

• The University of Michigan Consumer Sentiment Index was revised down to 93.1 in the final June reading from 93.3 in the preliminary report. The Briefing.com Consensus expected the Consumer Sentiment Index to increase to 94.0.

Key Factors

• The index is down from 96.1 in June, which had been the best reading since January.
• The Expectations Index was revised down from 85.2 in the preliminary reading to 84.1. The Current Conditions Index was revised up to 107.2 from 106.0.
• Like the Conference Board's Consumer Confidence Index, the drop in sentiment was likely caused by negative economic reports out of Europe which offset positive indicators such as improved labor market conditions and lower gasoline prices.
• The drop in sentiment is unlikely to impact consumption trends. Consumption growth relies on income growth. As long as income continues to improve, consumption growth 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:

Higher Volumes than the day before – 977.6M vs 795.6M 


Advancers outpaced Decliners (adv/dec): 1942 / 1141

New Highs outpaced New Lows (highs/lows): 118 / 69

NASDAQ:

Higher Volumes than the day before – 1903.1M vs 1897.3M

Advancers outpaced Decliners (adv/dec): 1623 / 1230

New Highs outpaced New Lows (highs/lows): 99 / 83

VOLATILITY S&P500 (VIX)
12.12 -0.01 (-0.08%)

Internals are still pointing to some bullishness. Volume is rather strong in this session. New Highs also increases while New Lows remains more or less constant. These are indicating the underlying confidence in the market. Meanwhile I would say VIX is relatively unchanged and remains near its support/resistance at around 12.10.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,689.86 -56.12 (-0.32%)

Volume: 106,116,132 (above average of 92,219,150)
Range: 17,671.59 - 17,783.59

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,128.28 -0.50 (-0.01%)
Volume: 517,898,022 (above average of 432,306,085)

Range: 5,122.37 - 5,155.02

S&P 500 INDEX (SPX: CBOE)

2,103.84 -4.79 (-0.23%)

Volume: 639,716,000 (above average of 525,983,569)

Range: 2,102.07 - 2,114.24

DOW remains under its 200MA and rejected by the resistance at 17,780 for the second time in this week. It seems that the head and shoulder is formed. That could lead to more downside. NASDAQ tried to test its resistance at around 5,160 but failed and eventually ended the day with a slight loss. S&P also could not break above its resistance at 2,115 and went down for the session. I think the market at the moment does not have the confidence to bring the market higher and if the support from the previous day low does not hold, I reckon that is probably the end of the pullback. 

Commodities

Closing Commodities: Energy Weak, WTI Crude Falls Below $47/Barrel In Electronic Trade

• The dollar remained in the red all day, which helped weigh on commodities
• The index climbed slowly higher all session following the morning sell-off, but is still down 0.4%.
• WTI crude oil futures have been weak all day and just now hit a new low for today in electronic trade
• During today’s pit session, Sept crude oil lost -2.9% to finish at $47.11/barrel. It’s now $46.82/barrel.
• Sept nat gas fell -2.2% to end at $2.71/MMBtu
• Metals were mixed with precious metals higher and copper down again
• Aug gold rose +0.6% to $1095.00/oz, while Sept silver gained +0.3% to $14.74/oz
• Sept copper dropped -0.8% to end at $2.36/lb

Energy

• September crude oil futures fell $1.41 (-2.9%) to $47.11/barrel
• September natural gas closed $0.06 lower (-2.2%) at $2.71/MMBtu
• RBOB Gasoline closed flat at $1.77/gallon
• Heating oil futures closed $0.02 lower at $1.59/gallon

Agriculture

• December corn closed $0.03 lower at $3.81/bushel
• September wheat closed $0.04 higher at $5.00/bushel
• November soybeans closed $0.10 lower to $9.40/bushel
• Sugar #11 closed $0.14 lower at 11.13 cents/lb

Metals

• December gold ended today’s session $6.70 higher (+0.6%) at $1095/oz
• September silver closed today’s session $0.04 higher (+0.3%) at $14.74/oz
• September copper closed $0.02 lower (-0.8%) at $2.36/lb

Currencies

Dollar Index Loses on ECI

• The greenback lost against all majors but the Canadian dollar today after the Employment Cost Index for the second quarter showed sluggish wage growth. Markets speculated that the low ECI reading (+0.2% versus the Briefing.com consensus of +0.6%) would delay liftoff in interest rates
  • U.S. Dollar Index: -0.29% to 97.28
• EUR/USD: +0.33% to $1.0974
  • The euro rallied today as the alternative reserve currency to the U.S. dollar. The weak ECI number sent the euro up roughly 150 pips over the hour after its release
  • Earlier in the morning, Core CPI for the eurozone surprised on the upside. It jumped to a 1.0% gain y/y in July versus 0.8% growth in June
  • Headline CPI for July was +0.2% y/y, as expected. The unemployment rate for June was unchanged at 11.1%, in line with expectations
• GBP/USD: +0.15% to $1.5621
• USD/JPY: -0.15% to 123.96
  • Household Spending in Japan dropped a worse-than-expected 3.0% m/m in June. While the National Core CPI unexpectedly grew 0.1% y/y in June, the Tokyo region's Core CPI unexpectedly dropped 0.1% y/y in July
• USD/CHF: -0.12% 0.9676
  • The Swiss National Bank has taken 50 bln francs of losses on its purchases of euro, due to the Swiss franc's sharp appreciation
• USD/CAD: +0.67% to 1.3092
  • Canadian GDP declined 0.2% m/m in May, worse than expected and worse than the 0.1% fall in April
• AUD/USD: -0.01% to $0.7291
  • The Australian PPI rose 0.3% q/q in the second quarter, less than expected. The PPI increased 0.5% in Q1
• NZD/USD: -0.24% to $0.6584
  • ANZ Business Confidence fell 15.3% in July
  • In June, Private Sector Credit  in New Zealand grew 0.4% m/m, short of expectations

Bonds

Governments Pop on ECI

• U.S. Treasuries rallied sharply today after the Employment Cost Index showed the smallest gain since the index's creation in 2001. 2's/30's widened by 3 bps in a counter-trend move to the dominant theme of late
• Yield Check:
  • 2-yr: -6 bps to 0.67%
  • 5-yr: -8 bps to 1.54%
  • 10-yr: -7 bps to 2.19%
  • 30-yr: -2 bps to 2.92%

• News:
  • The Employment Cost Index rose 0.2% in Q2 2015 after a 0.7% increase in the first quarter. The Briefing.com consensus expected employment costs to rise 0.6%
    • The big change from Q1 to Q2 was in bonuses for "sales and related" positions
    • Benefits growth was very sluggish and was affected by special factors. The predominant one was the redefinition to retirement pension plans
  • The Chicago PMI unexpectedly jumped to 54.7 in July from 49.4 in June. The Briefing.com consensus estimate was only 50.5
    • The gain ended two consecutive months of contractions
    • There was a large improvement in production, as the related index increased to 61.8 in July from 49.8 in June. The production gain came on the heels of strengthening growth in the new orders index (58.5 from 51.7)
  • The final estimate for Michigan Consumer Sentiment in July was 93.1, lower than the Briefing.com consensus of 94.0 and the reading of 93.3 from the preliminary report
    • The index is down from 96.1 in June, which had been the best reading since January
    • The Expectations Index was revised down from 85.2 in the preliminary reading to 84.1. The Current Conditions Index was revised up to 107.2 from 106.0
    • Like the Conference Board's Consumer Confidence Index, the drop in sentiment was likely caused by negative economic reports out of Europe which offset positive indicators such as improved labor market conditions and lower gasoline prices

• Commodities:
  • WTI Crude: -3.54% to $46.80/bbl.
  • Gold: +0.47% to $1,093.80/troy oz.
  • Copper: -1.18% to $2.349/lb.

• Currencies:
  • EUR/USD: +0.43% to $1.0985
  • USD/JPY: -0.18% to 123.92

• Data out Next Week:
  • Monday: June Personal Income and Personal Spending (08:30 ET); June PCE Prices -- Core (08:30 ET); July ISM Index (10:00 ET); Fed Governor Powell (FOMC voter) speaks on The Structure and Liquidity of Treasury Bond Markets (10:50 ET); June Construction Spending (10:00 ET); July Auto and Truck Sales (17:00 ET)
  • Tuesday: June Factory Orders (10:00 ET)
  • Wednesday: MBA Mortgage Index for the week ending 8/1 (07:00 ET); July ADP Employment Change (08:15 ET); June Trade Balance (08:30 ET); July ISM Services (10:00 ET); Crude Inventories for the week ending 8/1 (10:30 ET)
  • Thursday: July Challenger Job Cuts (07:30 ET); Initial Jobless Claims for the week ending 8/1 and Continuing Jobless Claims for the week ending 7/25 (08:30 ET); Natural Gas Inventories for the week ending 8/1 (10:30 ET)
  • Friday: July Employment Situation Report (08:30 ET); June Consumer Credit (15:00 ET)

Treasury Yields:

• 2 Year Note 0.67% -0.05
• 5 Year Note 1.54% -0.08
• 10 Year Note 2.20% -0.08
• 30 Year Bond 2.92% -0.04

2/30 Spread: 225 bps ( +1 ) …  2/10 Spread: 153 bps ( -3 )

Preview for the week Monday 3 August to Friday 7 August, 2015

Economic Data

Monday (3 Aug) :

• Personal Income : 0.3% (Prior 0.5%)
• Personal Spending : 0.2% (Prior 0.9%)
• PCE Prices - Core : 0.2% (Prior 0.1%)
• ISM Index : 53.7 (Prior 53.5)
• Construction Spending : 0.6% (Prior 0.8%)
• Auto Sales : (Prior 5.6M)
• Truck Sales : (Prior 8.0M)

Tuesday (4 Aug) :

• Factory Orders : 1.8% (Prior -1.0%)

Wednesday (5 Aug) : 

• MBA Mortgage Index : (Prior 0.8%)
• ADP Employment Change : 220K (Prior 237K)
• Trade Balance : -$42.7B (Prior -$41.9B)
• ISM Services : 56.3 (Prior 56.0)
• Crude Inventories : (Prior -4.203M) 

Thursday (6 Aug) :

• Challenger Job Cuts : (Prior 9.3%)
• Initial Claims : 271K (Prior 267K)
• Continuing Claims : 2238K (Prior 2262K)
• Natural Gas Inventories : (Prior 52 bcf)

Friday (7 Aug) : 

• Nonfarm Payrolls : 227K (Prior 223K) 
• Nonfarm Private Payrolls : 223K (Prior 223K)
• Unemployment Rate : 5.3% (Prior 5.3%)
• Hourly Earnings : 0.2% (Prior 0.0%)
• Average Workweek : 34.5 (Prior 34.5)
• Consumer Credit : $17.0B (Prior $16.1B)

Earnings Highlights

Monday (3 Aug) :
BMO - ARCB ARRY BWP BSFT CDW CLX CNA CPPL DO FTR GWR NSP KOS L MCY NEE NI NBL ON PERI PPL TREX TSN
AMC - ADUS AEIS ALL ALJ ALDW AIG APU ANH CAR BNFT BMRN BKD CKP CHGG CGNX CYH CTRP DAC DKL DK DENN DPLO PLOW EXP ELNK ELGX ENH EPIQ FIVN GGP GERN HIL IDTI ININ IVAC KAR KBR KONA TREE LLNW LMNX MIC MDU MDWD MCHP MCEP MRC MTSC NGHC NLS NVGS NEFF OHI ONDK ORA OTTR PKY PPS QEP QLYS RBC RSPP RTEC SGMS INN SUM SNHY SYKE THC TSRA TXRH TNET UGI VNR VECO VNO WSTC WPG XL

Tuesday (4 Aug) :
BMO - CAS ABMD AET AFMD ALR ALE ALLT AME AFSI ANIP ADM ARCC AXTA BZH BLMN BPI CBT CRCM FUN CHTR CHD COH CIE SCOR CRTO CVS DWRE DW EMR EIGI ETR EXPD EXLP EXH FRM GEO GLT GLDD HYH HAR HCP HW HCN HNT HEP H IDRA IIVI INCY LRN K KLIC KVHI FSTR LXP LPX MBUU MNK MLM MDC MPW MPG MFA MGM MNTA MOS NAO NTi NCLH NRG NYLD NWN OZM ODP OXFD PH REGN RRD RHP SABR SGNT SMG SNI SRE SERV S STWD STE SCAI ELOS NGLS TGH TICC TIME TDG TVPT TRS TWIN UNT UAM USAK VTG VSH VPG VMC WPC WRES WNR WNRL WLK WLKP ZBRA ZTS
AMC - ACHC ATVI ABCO Y MDRX AFG AWR AHS AMSG WTR ARC AGII ACLS BW BKH BOOT BFAM CZR CSU CENT CERN ECOM CHUY XEC CWEI CDE CBPX CVG DVA DVN DWA EOX ECYT ENPH ENSG EPAM EPR ERA ETSY EXAR FWM FFG FSLR GHDX G GNW GLUU GLYC GDOT HCI HIW AWAY HRZN INAP INVN XXIA JCOM JIVE KTWO KFRC KRNT LF LC LBTYA LGND LMNS MCUR MHLD MASI MTDR MATX MBI MRCY MPO MB NBR NSTG NYMT NFX NEWP NWSA OAS OCLR OKE OKS OFIX PZZA PKD PAYC PCTI PQ PXD PAA PAGP PTLA PBPB POWL PRMW QTS QUAD QNST RLOC REGI RPAI REXX RXN RIGL RNET RMTI SBRA SMCI SUPN SYNC TTOO SKT TISI TMH TTGT TX THOR TSLX TRMB TSE TRIV TROX TRUP TWO UNXL UNTD USNA VSAR VTAE DIS WR WG ZAGG ZEN Z

Wednesday (5 Aug) :
BMO - AMSC ANSS ARIA ARQL ATRO ATHM AVA AVT AVOL BLT CSTE CCG CRME CLDT CHK CLH CTSH CRK CNNX CFMS CSTM CEQP CMLP CONE DNR DISCA DISH D EPC EE ENBL DAVE FI GLPG GDP GTN GSIG HSC HCA HFC ICON ICE INXN SNAK ITG KATE KELYA KERX LG LDOS LGIH LINC LIOX LPLA LL MWE MSO MEMP MSI DNOW PRGO RL PCLN PPP PWR SALE RDC SPNS SBGI SODA ONCE SPAR SE SPB STCK SCMP SUP SRDX TMHC THR TWX USAC VLP VIRT VC VSI VOYA WD WCG WEN WIX
AMC - FOXA ACXM AEGR HIVE MITT AGU ATSG ALB ALDR LNT AYA UHAL ACAS AWK ANDE NLY AMTG AAOI AREX ARCW ARNA ATO AVG AXLL AXON BWXT BZUN ABX BIOS BLUE BPMC BRKR CJES CPE CSII CSLT CBS CDI CLDX CTL CFCLNE CODI CNAT CLR CORT CXW COUP BREW CCRN CSGS CUTR DPM DXCM FANG DCO DNB ECHO ETP ETE ENS EQC EVTC FRT FGL FNGN FIT FLT FMC FOXF RAIL FTD BGC GKOS GDDY GBDC GPOR HABT HGR HR HLF HRTG HI HDP IAG INOV ICPT XENT IILG IL IVR IO IRWD ITRI JACK JRVR JAZZ JONE KAI KW GMCR KND LADR LDRH LGCY LHCG LMOS MNTX MRO MCHX MRIN DOOR MED MELI MG MFLX MUSA MYRG NHI NP NKTR NNBR NOG NWPX OME OPK OSUR PACB PRXL PDLI PNNT PFSI PMT PFMT PGTI PHH PRAA PSIX POWR PRI PRU QLTY STR RYN RLD RP REG REXR RLJ FUEL RST RGLD SD SGMO SWM SQNM MCRB SHOR SGI SBY SSNI SF SGY BEE SLF SEMI SXL SUN TTEC TS TSLA TSO TLLP TTPH TC TRNX RIG TCAP TTMI TUMI TRQ UIL ECOL VVC VEC WTI WTW WGL WSR WK WPX XNPT XPO ZGNX ZU

Thursday (6 Aug) :
BMO - DDD AAON AXAS ACTA AGIO AYR AGI AGN AMCX APA AINV AGO BCE BECN BDX BDRBF BDBD BBEP EAT BBW CCC CNQ CRZO CECE CSG CC CNK CNXC CCOI CNSL CTB CORE CRIS HILL DUK DX SATS RDEN EMES EBS ENTA EXK ENR ENOC ETM EXTR FSV FOGO FSYS GCAP GLOG GNRC ROCK GLP GOGO GTXI GWPH HL HGG HCLP ONE HMHC HWCC HSNI HII ICD INFI IPCC IRC INSY SNOW KOP LAMR LPI LXRX LCUT LQDT MMP MFC MMS MEG MPEL KORS MITL MBLY TAP MYL NGS NWHM NRZ NYT NCT NXST NRF NVO NXTM OGE ZEUS OMED OA OWW ORN PHMD PLUG PBH PRIM PGNX QIWI RDUS ROLL RGEN RVLT RWLK RICE RMP RSTI SBH SRPT SEAS SNH SSTK LEAF STN SGM SPH SUNE SFY TECH TK TNK TDC TESO TLP TA THS GTS USPH VER VIAB WPP WRK WIN
During Mkt Hours - YORW
AMC - TWOU ACAD AL AIRM ALEX ALNY AMRN AMBR AMH ASEI ASYS AMRS ANAC ANAD PETX ANET AHT ASPN ATHX ABTL RATE BBG BIO BEAT BITA WIFI BOJA BRS BRKS CPST CARA CECO CVCO CENX CCS CERS CLVS CDXS ED CSOD CUBE CUB CVT CYTX TRAK DMD DIOD DRYS ELON LOCO EFC EGN ERII EGL ENTL EVC EOG EAC ESPR FPRX FLTX FLDM FXEN FXCM GALE GNMK GEOS BRSS GSBD GXP HNSN HAYN HTGC HHC HUBS IRG IMPV SAAS INWK PODD IMI NVTA JMBA KMPR KTOS LGF MAIN MDCA MDVN MIDD MTX MHK MNST NCMI NFG NRP NAVG NNI NPTN NEWR EGOV NDLS NVAX NUS NUAN NVDA ORIG ONTY OEC OUT OSTK PACD PGRE PSEM PLNR POST PRA PRO PRSC QUMU RPTP RMAX RWT RLYP RJET RBA RRMS RBCN SEM SEMG SREV SWIR SSRI SKUL SEDG SPPI SRC SFM STMP SHO TNGO TCPI TEAR TSRO TCRD TRXC RIGP TRMR TRUE TCX TPC UBNT UEIC OLED UTI EGY VRNS VSAT WAIR WING XOXO XOMA ZIOP ZNGA

Friday (7 Aug) : 
BMO - BCRX NILE BR BAM CVC CST DRH EBIX ERF ESNT GRPN HRS HSY HRC HIMX HMSY HZNP ZINC JD LMIA LXU MGA MHR PMC DOC SSP SIRO BID SFUN SJI TU TTI WWAV WLH
AMC - BRK.B GST KRO SN

Summary
I am feeling some divergence in the market between the price action and the internals. Maybe that is why market has been uncertain lately. Yield curve continues to flatten as more investors are shifting their investment to bonds. This is not helping the market in terms of the confidence level.

This week we are seeing the Nonfarm payroll on Friday and some other economic data that are likely to influence the market. I am not surprised to see another up-and-down in the market given we have been rather consolidating since early this year.

We had a DFDM last week. Are we going to see one this week as well?

Direction for Monday 3 Aug, 2015: Down

Direction for the week Monday 3 Aug to Friday 7 Aug, 2015: Down

2015 Daily Directional Accuracy: 73/119  (61.34%) 

2015 Weekly Directional Accuracy: 17/28 (60.71%)