Tuesday, 1 Sept 2015 - AMC

Dow -469.68 at 16058.35, Nasdaq -140.40 at 4636.10, S&P -58.32 at 1913.86

There we have it. Another heavy downside in the market. However it seemed that Rule 48 was violated again and that somehow tanked the market at the opening. The rest of the session was more of a sit and watch kind scenario. Nonetheless, Tuesday has shown us the market is still weak. 

Markets around the world were dragged down partly due to the weaker PMI in China. We saw Europe and Asia markets mostly closed in red.  
  

Market Summary

Industry Watch

Strong:

Weak: Energy, Financials, Industrials, Technology, Materials

Other Market Moving Factor:

• Soft manufacturing data from China and Europe weighs on sentiment
• Crude oil reverses after surging nearly 30.0%

[BRIEFING.COM] The stock market began September on a defensive note with a broad-based retreat that sent the S&P 500 lower by 3.0%. The benchmark index widened its Q3 loss to 7.0% while the Dow (-2.8%) and Nasdaq Composite (-2.9%) spent the day just ahead of the S&P 500. 

Equity indices slumped at the start, responding to the overnight weakness in the futures market. To that point, index futures began retreating shortly after yesterday's closing bell and extended their losses during the Asian session with disappointing manufacturing data from China contributing to the cautious posture. Specifically, the official Manufacturing PMI slipped to 49.7 from 50.0 while the Caixin Manufacturing PMI ticked up to 47.3 from 47.2, but both readings came in below 50.0, which signifies contraction. The Shanghai Composite began the month with a 1.2% slide while the disappointing data from China reminded global investors about the persistent growth concerns. 

Investor sentiment saw little improvement during the European session as Germany's DAX, France's CAC, and UK's FTSE retreated throughout the day, posting losses between 2.4% and 3.0%. Once the U.S. session got going, equity indices retreated with dip-buyers showing little willingness to step into the fold. The second-largest sector by weight—financials (-3.5%)—underperformed throughout the day, which short-circuited any and all attempts at a rebound. 

Similar to financials, the energy sector (-3.7%) displayed relative weakness since the opening bell. Crude oil continued its wild ride, which contributed to the daylong underperformance in the sector. The energy component plunged 7.7% to $45.41/bbl on Tuesday after soaring nearly 30.0% during the previous three sessions. 

Elsewhere, the top-weighted technology sector (-3.4%) traded ahead of the broader market during morning action, but slipped behind the S&P 500 during the final hour as stocks headed to new lows for the day. The late selling was met with new highs in the CBOE Volatility Index (VIX 32.29, +3.86), which climbed into the 32.0% area as investors piled into downside protection. 

With the key indices losing close to 3.0% apiece, more than 2700 NYSE-listed stocks ended the day with losses while only 428 issues registered gains. 

The sell-off invited above-average trading volume as more than a billion shares changed hands at the NYSE floor. 

Interestingly, Treasuries set their highs during overnight action and spent the day just below those highs while equities retreated. As a result, the 10-yr yield fell five basis points to 2.17%. 

Economic data was limited to Construction Spending and ISM:

• Construction spending increased 0.7% in July after increasing an upwardly revised 0.7% (from 0.1%) in June while the Briefing.com consensus expected an increase of 0.5% 
  • Private residential construction increased 1.1% in July, up from a 0.9% increase in June 
  • Private nonresidential construction spending rebounded in July, rising 1.5% after declining 0.7% in June
    • Big reversals were recorded in the manufacturing (4.7% from -0.5%) and power (2.1% from -0.7%) sectors while spending on lodging (-1.1%) and commercial (-1.0%) buildings declined 
• The ISM Manufacturing Index declined to 51.1 in August from 52.7 in July while the Briefing.com consensus expected a decline to 52.6 
  • The August decline came during a period where multiple regional Federal Reserve manufacturing surveys showed sizable contractions in manufacturing activities 

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the August ADP Employment Change survey (Briefing.com consensus 203K) will cross the wires at 8:15 ET. Q2 Productivity and Unit Labor Cost data will follow at 8:30 ET while the Factory Orders report for July (Briefing.com consensus 0.9%) will be reported at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the Federal Reserve's September Beige Book.

Global Market

ASIA

Asian Markets Close: Japan’s Nikkei -3.8%; Hong Kong’s Hang Seng -2.2%; China’s Shanghai Composite -1.2%

It was a sea of red across equity markets in the Asia-Pacific region as a round of weaker than expected economic data, highlighted by China’s official manufacturing PMI report for August showing a contraction for the first time in six months, triggered a wave of selling interest.

Economic data

• China
• August Manufacturing PMI 49.7 (expected 49.7; prior 50.0)
• August Non-Manufacturing PMI 53.4 (prior 53.9)
• August Caixin Manufacturing PMI revised to 47.3 (expected 47.2; prior 47.1)
• August Caixin Services PMI 51.5 (expected 53.9; prior 53.8)
• Japan
• August Manufacturing PMI 51.7 (expected 51.9; prior 51.9)
• Q2 Capital Spending +5.6% year-over-year (expected +9.0%; prior +7.3%)
• South Korea
• August Nikkei Manufacturing PMI 47.9 (prior 47.6)
• August CPI +0.2% month-over-month (expected +0.2%; prior +0.2%); +0.7% year-over-year (expected +0.7%; prior +0.7%)
• August Trade Balance KRW 4.30 bln (expected KRW 6.07 bln; prior 7.70 bln)
• Exports -14.7% year-over-year (expected -10.0%; prior -3.4%)
• Imports -18.3% year-over-year (expected -14.9%; prior -15.3%)
• India
• August Nikkei Manufacturing PMI 52.3 (prior 52.7)
• Q2 GDP +7.0% (expected +7.4%; prior +7.5%)
• Australia
• RBA holds interest rate steady at 2.00% (expected 2.0%)
• August AIG Manufacturing Index 51.7 (prior 50.4)
• July Building Approvals +4.2% month-over-month (expected +2.5%; prior -5.2%)
• Q2 Current Account AUD -19.0 bln (expected AUD -15.8 bln; prior AUD -13.5 bln)
• Q2 Net Exports Contribution -0.6% (expected -0.3%; prior +0.5%)
• July Private House Approvals -3.0% (prior +3.7%)
• Commodity Prices -20.9% year-over-year (prior -19.1%)

Equity Markets

• Japan’s Nikkei dropped 3.8% and finished on its lows for the day following some weaker than expected capital spending and manufacturing PMI data. In turn, disappointing manufacturing PMI data out of China ignited concerns about Japan’s economic prospects. Losses were paced by the health care (-5.8%), consumer staples (-5.1%), consumer discretionary (-4.4%), and materials (-4.0%) sectors. Tosoh Corp (-10.1%), Yokohama Rubber Co. (-9.1%), and Eisai Co. (-7.5%) topped a very long list of losers. Out of the 225 index members, only two — Pioneer Corp (+2.7%) and Meidensha Corp (+1.3%) — ended the day higher.
• Hong Kong’s Hang Seng declined 2.2%, pulled lower by the disappointment surrounding weaker than expected economic data throughout the region. The Hang Seng closed near its lows for the day after falling 1.4% in the final hour of trading. China Mengniu Dairy (-6.8%), Tingyi Cayman Islands Holding Corp (-5.5%), and BOC Hong Kong Holdings (-5.5%) led the losers. Out of the 50 index members, only two — Hang Lung Properties (+0.9%) and Link REIT (+0.4%) — ended the day higher.
• China’s Shanghai Composite declined 1.2%, recovering a significant portion of an early 4.8% loss. The decline followed on the heels of the government’s official manufacturing PMI report showing a drop into contraction territory for the month of August. That’s the first drop below 50 in six months and the weakest reading since August 2012, according to reports. Separately, the Caixin manufacturing PMI for August, which covers smaller-sized firms, was revised up to 47.3 from 47.1, yet that still the weakest reading since March 2009.
• India’s Sensex declined 2.3%, reacting negatively to the report that Q2 GDP decelerated from the prior quarter. Losses were led by the financials (-3.8%), communications (-3.3%), and industrials (-3.0%) sectors. Punjab National Bank (-6.9%), Bank of Baroda (-6.6%), and Kotak Mahindra Bank (-5.8%) were the worst-performing issues. Bajaj Auto (+0.8%) led a short list of winners. Out of the 30 index members, 3 ended higher and 27 finished lower.
• Australia’s S&P/ASX 200 declined 2.1% on the heels of some weaker than expected current account data and in response to the disappointing data elsewhere in the region. Separately, the RBA held interest rates steady at 2.00%, as expected. Losses in the S&P/ASX 200, which closed near its low for the day, were led by the financials (-2.5%), information technology (-2.4%), and energy (-2.3%) sectors.
• Regional advancers: None
• Regional decliners: South Korea -1.4%, Taiwan -1.9%, Malaysia -0.2%, Indonesia -2.2%, Singapore -1.3%, Thailand -1.9%, Vietnam -0.4%, Philippines -0.2%

FX

• USD/CNY -0.2% at 6.3642
• USD/INR -0.3% at 66.3087
• USD/JPY -0.9% at 120.14

EUROPE

Major European indices trade lower across the board with Germany’s DAX (-2.6%) leading the slide. Elsewhere, Greece has extended a short-selling ban on stocks for another month, but lifted its ban on shorting derivatives.

• Eurozone July Unemployment Rate 10.9% (expected 11.1%; prior 11.1%) while August Manufacturing PMI 52.3 (expected 52.4; prior 52.4)
• Germany’s August Manufacturing PMI 53.3 (expected 53.2; prior 53.2) while Unemployment Rate held at 6.4%, as expected
• UK’s August Manufacturing PMI 51.5 (expected 52.0; prior 51.9) while July Mortgage Approvals 68,760 (expected 68,000; prior 67,070)
• France’s August Manufacturing PMI 48.3 (expected 48.6; prior 48.6)
• Italy’s Q2 GDP +0.3% quarter-over-quarter (expected 0.2%; prior 0.3%); +0.7% year-over-year (consensus 0.5%; last 0.7%). Separately, July Monthly Unemployment Rate 12.0% (expected 12.6%; prior 12.5%) and August Manufacturing PMI 53.8 (expected 54.8; last 55.3)
• Spain’s August Manufacturing PMI 53.2 (expected 53.2; last 53.6)
• Swiss August SVME PMI 52.2 (expected 49.7; last 48.7)

Closing Prices

• UK’s FTSE: -3.0%
• Germany’s DAX: -2.4%
• France’s CAC: -2.4%
• Spain’s IBEX: -2.8%
• Portugal’s PSI: -2.6%
• Italy’s MIB Index: -2.2%
• Irish Ovrl Index: -2.4%
• Greece ASE General Index: -0.4%

Macroeconomic Data

Economic Data

from Briefing.com

• ISM Index : 51.1 vs 52.6 (Prior 52.7)
• Construction Spending : 0.7% vs 0.6% (Prior 0.7% - Up)
• Auto Sales : (Prior 5.8M)
• Truck Sales : (Prior 8.4M)

ISM INDEX

Highlights

• The ISM Manufacturing Index declined to 51.1 in August from 52.7 in July. The Briefing.com Consensus expected the index to fall slightly to 52.6.

Key Factors

• That was the lowest reading in the national index since it fell to 50.1 in May 2013.
• The August decline came during a period where multiple regional Federal Reserve manufacturing surveys showed sizable contractions in manufacturing activities.
• Most of the key components of the national ISM Index softened in August. The Production Index fell to 53.6 in August from 56.0 in July. The drop came as new orders growth slowed (51.7 from 56.5) and a contraction in backlogs (46.5 from 42.5) extended for a third consecutive month.
• The Employment Index fell to 51.2 in August from 52.7 in July.

Big Picture

• This is a highly overrated index. It is merely a survey of purchasing managers. It is a diffusion index, which means that it reflects the number of people saying conditions are better compared to the number saying conditions are worse. It does not weight for size of the firm, or for the degree of better/worse. It can therefore underestimate conditions if there is a great deal of strength in a few firms. The data have thus not been either a good forecasting tool or a good read on current conditions during this business cycle. It must be recognized that the index is not hard data of any kind, but simply a survey that provides broad indications of trends.

CONSTRUCTION SPENDING

Highlights

• Construction spending increased 0.7% in July after increasing an upwardly revised 0.7% (from 0.1%) in June. The Briefing.com Consensus expected construction spending to increase 0.5%.

Key Factors

• Private construction spending increased 1.3% in July after increasing 0.1% in June.
• Private residential construction increased 1.1% in July, up from a 0.9% increase in June. Spending on new structures increased 1.2% in July, down from a 1.4% increase in June. Spending has been increasing by roughly 1.3% each month since April. Home improvement project spending increased 0.9% after declining 0.1% in June.
• Private nonresidential construction spending rebounded in July. Spending rose 1.5% after declining 0.7% in June. Big reversals were recorded in the manufacturing (4.7% from -0.5%) and power (2.1% from -0.7%) sectors. Spending on lodging (-1.1%) and commercial (-1.0%) buildings declined in July.
• After several months of outsized gains, public construction spending turned negative in July. Spending declined 1.0% after increasing 2.2% in July. The pullback was led by a sharp 3.0% decline in educational and a 1.1% decline in transportation.

Big Picture

• Construction spending remained robust in July.

AUTO SALES & TRUCK SALES

Highlights

• Motor vehicle sales in 2015 remained red hot in July. Sales increased from 17.0 mln SAAR in June to 17.6 mln SAAR in July.
• With the exception of May, when sales reached a little more than 17.6 mln SAAR, the month of July saw the most vehicles sold since January 2006.
• Sales have now topped 17.0 mln SAAR during four of the seven months thus far this year. That hasn’t happened since 2000.
• A large pickup in truck sales (9.75 mln SAAR from 9.38 mln SAAR) provided the bulk of the increase in vehicle sales. 
• That gain was likely the result of a combination of falling gas prices, strong job security – evidenced by the fact that layoffs have virtually ceased – and low interest rates. All of these components make trucks more affordable at the point of purchase and cheaper to use for the life of the vehicle.
• Car sales increased to 7.80 mln SAAR from 7.62 mln SAAR.
• Domestic vehicle sales increased to 14.2 mln SAAR in July from 13.5 mln SAAR in June. Domestic car sales increased to 5.8 mln SAAR from 5.5 mln SAAR and domestic truck sales increased to 8.4 mln SAAR from 8.0 mln SAAR.
• Sales of imports declined in July, from 3.5 mln SAAR to 3.4 mln SAAR. Import truck sales were virtually unchanged at 1.4 mln SAAR and imported car sales fell to 2.0 mln SAAR from 2.1 mln SAAR.

Key Factors

• Year-over-year, motor vehicle sales increased 5.3%. 
• While there wasn’t necessarily a clear winner for the month, Toyota (TM) was a clear loser by far. Sales rose only 0.6% y/y in July, which was the worst performance among the largest nine manufacturers.
• General Motors (GM, 6.4%) and Fiat Chrysler (FCAU, 6.0%) both gained market share in July. For a second consecutive month, the bulk of Fiat Chrysler gains came from its Jeep brand (+22.9% in July).
• Sales at Ford (F, 5.0%) remained robust, but it wasn’t enough to increase its share of the market.With the notable exception of Toyota, the remaining large Japanese automakers had strong months. Sales rose 7.8% at Nissan and 7.7% at Honda (HMC).
• Other market share winners included Hyundai-Kia (6.7%) and Volkswagen Group (8.5%).
• Luxury automakers had a difficult month. Sales at BMW Group declined 0.2% in July while Daimler sales declined 2.0%.Tesla (TSLA) sales increased 13.3% y/y.
• Year-to-date, sales are up 4.5% to 9.600 mln. 

Big Picture

• Sales are on pace to reach 17.2 mln in 2015, which would be the most vehicles sold since 2000.

Market Internals

NYSE:

Higher Volumes than the day before – 1154.2M vs 1105.6M 


Decliners outpaced Advancers (adv/dec): 432 / 2679

New Lows outpaced New Highs (highs/lows): 6 / 95

NASDAQ:

Higher Volumes than the day before – 2232.4M vs 1823.1M

Decliners outpaced Advancers (adv/dec): 575 / 2306

New Lows outpaced New Highs (highs/lows): 13 / 63

VOLATILITY S&P500 (VIX)
31.40 +2.97 (+10.45%)

Internals were showing the bears are firmly in control of the market as we saw the Decliners and New Lows swing higher. VIX broke above its resistance level around 30.00 and if it keeps going up, we are going to see an extreme fear and volatility in the market.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

16,058.35 -469.68 (-2.84%)

Volume: 171,388,222 (above average of 106,509,735)
Range: 15,979.95 - 16,528.03

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,636.11 -140.40 (-2.94%)
Volume: 582,683,283 (above average of 462,368,756)

Range: 4,614.91 - 4,722.13

S&P 500 INDEX (SPX: CBOE)

1,913.85 -58.33 (-2.96%)

Volume: 870,125,000 (above average of 594,919,656)

Range: 1,903.07 - 1,970.09

All 3 indices broke below their 61.8% Fib level suggesting a strong play from the bears. This also indicated the end of pullback. As DOW continue to head lower, it is likely to find a support at 15,700 area or its previous low at 15,360. NASDAQ had a huge gap down and formed a support near 4,610. Next support level is likely to be 4,480 area. S&P found a support at 1,900 after previous support at 61.8% Fib level fails to hold. It might go down to the next support at its previous low i.e. 1,860/1,870. With the market broke out of the consolidation range in 2015 and forming a downtrend, I reckon there is no room for the market to revert back up in the short-term. 

Commodities

Closing Commodities: WTI Oil Drops Following 3-Day Run, Extends Losses In After-Hours

• After rallying over $10/barrel in the past three sessions, WTI crude oil sold off today, losing 8% (or -$3.78), closing the day at $45.41/barrel
• A number of catalysts continue to hit the oil market, including recent items such as U.S. oil production data and OPEC news
• Ultimately, a decent part of the 3-day surge was short-covering
• In electronic trade, oil is extending losses even further
• In other energy, Oct natural gas rose $0.01 today to $2.70/MMBtu
• Precious metals posted modest gains today, while copper fell again
• Dec gold +0.7% to $1139.40/oz, while Dec silver +0.2% to $14.61/oz
• Dec copper -1.7% to $2.30/lb

Energy

• October crude oil futures fell $3.78 (-7.7%) to $45.41/barrel
• October natural gas closed $0.01 higher (+0.3%) at $2.70/MMBtu
• RBOB Gasoline closed $0.07 lower at $1.39/gallon
• Heating oil futures closed $0.12 lower at $1.57/gallon

Agriculture

• December corn closed $0.06 lower at $3.69/bushel
• December wheat closed $0.01 higher at $4.85/bushel
• November soybeans closed $0.12 lower to $8.75/bushel
• Sugar #11 closed $0.02 cents higher at 10.71 cents/lb

Metals

• December gold ended today’s session $7.70 higher (+0.7%) at $1139.40/oz
• December silver closed today’s session $0.03 higher (+0.2%) at $14.61/oz
• December copper closed $0.04 lower (-1.7%) at $2.30/lb

Currencies

Safe Haven Currencies Rally

• The Japanese yen, Swiss franc, and euro all rallied today on renewed risk aversion after China's Manufacturing PMI for August showed that country's factory sector to be in contraction (49.7 versus 50 in July)
• The U.S. Dollar index declined 0.53% to 95.32 as the greenback has proven to be a "risk-on" currency in the latest turmoil. In the near term, slower global growth reduces Treasury yields and thereby lessens its attractiveness to investors seeking higher returns
  • The U.S. ISM Index fell to 51.1 in August from 52.7 in July. The Briefing.com consensus was for 52.6
  • Construction Spending grew 0.7% in July, more than the Briefing.com consensus of 0.5% and the same as the reading from June
• EUR/USD: +0.77% to $1.1312
  • Manufacturing PMI's for August were released for several European countries
    • Eurozone: 52.3 versus 52.4 in July
    • France: 48.3 versus 48.6 in July
    • Germany: 53.3 versus 53.2 in July
    • Italy: 53.8 versus 55.3 in July
  • Eurozone unemployment fell to its lowest level since 2012 at 10.9% in July versus 11.1 in June
  • German unemployment unexpectedly fell by 7,000 in August versus a jump of 8,000 in July. The unemployment rate held steady at 6.4%, as expected
  • Italy's monthly unemployment rate fell to 12.0% in July from 12.5% in June. The consensus was for a rise
• GBP/USD: -0.35% to $1.5113
  • The U.K.'s Manufacturing PMI fell to 51.5 versus 51.9 in July
• USD/JPY: -1.24% to 119.69
  • Capital Spending grew 5.6% y/y in Q2 versus 7.3% growth in Q1
• USD/CHF: -0.50% to 0.9609
  • The SVME PMI unexpectedly jumped to 52.2 in August from 48.7 in July. Readings above 50 reflect growth in Switzerland's factory sector
• USD/CAD: +0.19% to 1.3167
  • Canadian GDP grew a better-than-expected 0.5% m/m in June, putting that country in a technical recession because growth was negative in both Q1 and Q2
• AUD/USD: -1.01% to $0.7048
  • The Reserve Bank of Australia kept its cash rate at 2.0% and provided no fresh guidance on the outlook for interest rates
  • Building Approvals rose a better-than-expected 4.2% m/m in July versus a 5.2% fall in June
  • Australia's current account deficit widened to 19.0 bln AUD in the second quarter versus 13.5 bln in Q1
  • The AIG Manufacturing Index rose to 51.7 in August from 50.4 in July
  • Commodity Prices fell 20.9% y/y in August versus a 19.1% decline in July
• NZD/USD: -0.20% to $0.6346

Bonds

Treasuries Rally on Lower Stocks and Crude

• U.S. Treasury coupon securities rallied today on global risk aversion and declining oil prices. The rally faded as the session progressed with rumors of Chinese selling in off-the-run Treasuries. Boston Fed President Rosengren (dove and non-voter) spoke at 13:10 ET and his remarks were followed by Treasury selling that was later reversed
• Yield Check:
  • 2-yr: -4 bps to 0.71%
  • 5-yr: -5 bps to 1.50%
  • 10-yr: -5 bps to 2.17%
  • 30-yr: -3 bps to 2.93%

• News:
  • The Institute of Supply Management reported that the U.S. manufacturing sector grew at its slowest rate in two years during August. The ISM index fell to 51.1 from 52.7 in July, lower than the Briefing.com consensus of 52.6. Reading above 50 indicate expansion in the sector
    • The Production Index fell to 53.6 in August from 56.0 in July. The drop came as new orders growth slowed (51.7 from 56.5) and a contraction in backlogs (46.5 from 42.5) extended for a third consecutive month
    • The Employment Index fell to 51.2 in August from 52.7 in July
  • Construction spending increased 0.7% in July after increasing an upwardly revised 0.7% (from 0.1%) in June. The Briefing.com Consensus expected construction spending to increase 0.5%
    • Private construction spending increased 1.3% in July after increasing 0.1% in June
    • Private residential construction increased 1.1% in July, up from a 0.9% increase in June. Spending on new structures increased 1.2% in July, down from a 1.4% increase in June. Spending has been increasing by roughly 1.3% each month since April. Home improvement project spending increased 0.9% after declining 0.1% in June
    • Private nonresidential construction spending rebounded in July. Spending rose 1.5% after declining 0.7% in June
    • After several months of outsized gains, public construction spending turned negative in July. Spending declined 1.0% after increasing 2.2% in July
  • Canada entered a technical recession, with GDP falling 0.1% in the second quarter following a 0.2% decline in Q1
  • Boston Fed President Rosengren (non-FOMC voter) spoke this afternoon, saying that the international economic slowdown and financial market volatility “might suggest a downward revision in the forecast that is large enough to raise concerns about whether further tightening of labor markets is likely”
    • Rosengren said that data surrounding inflation have not been "clear cut" and that confidence in inflation moving back toward the 2% target is one of the Fed's two conditions for hiking rates

• Commodities:
  • WTI crude: -7.97% to $45.28/bbl.
  • Gold: +0.60% to $1,139.30/troy oz.
  • Copper: -1.73% to $2.297/lb.

• Currencies:
  • EUR/USD: +0.60% to $1.1292
  • USD/JPY: -1.14% to 119.82

• Equities: 
  • S&P 500: 02.71% to 1,918.64

• Data Out Wednesday:
  • MBA Mortgage Index for the week ended 8/29 (07:00 ET)
  • August ADP Employment Change (08:15 ET)
  • Q2 Productivity and Unit Labor Costs – Rev. (08:30 ET)
  • July Factory Orders (10:00 ET)
  • Crude Inventories for the week ended 8/29 (10:30 ET)
  • September Fed Beige Book (14:00 ET)

Treasury Yields:

• 2 Year Note 0.70% -0.04
• 5 Year Note 1.49% -0.05
• 10 Year Note 2.17% -0.04
• 30 Year Bond 2.93% -0.02

2/30 Spread: 223 bps ( +2 ) …  2/10 Spread: 147 bps ( UNCH )

Preview for Wednesday 2 Sept, 2015

Economic Data

Wednesday (2 Sept) : 

• MBA Mortgage Index : (Prior 0.2%)
• ADP Employment Change : 201K (Prior 185K)
• Productivity - Rev : 2.7% (Prior 1.3%)
• Unit Labor Costs - Rev : -0.8% (Prior 0.5%)
• Factory Orders : 0.9% (Prior 1.8%)
• Crude Inventories : (Prior -5.452M)
• Fed's Beige Book

Earnings Highlights

Wednesday (2 Sept) :
BMO - WMS DANG GIII ISLE LITB NAV VRA
AMC - ABM AGTC CTLT FIVE GLPW GLYC HGR NCS OOMA NXM SEAC STB VRNT

Summary
I have to emphasize again that the bears are still largely in control judging from the response in the market this week. Meanwhile I will be monitoring the yield curve to determine the extent of bearishness. If we see an inverted yield curve, that is going to be really shit. I reckon we might see some short-covering on Wednesday as futures managed to recover in the after-hours session.

Watch out for tomorrow ADP number and Fed's Beige book as they are potential catalysts to move the market. Given the recent spike in volatility, how low can the market continue to fall?

For those who doesn't believe we are approaching/in a bearish market, take a good read on "10 Signs a Stock Market Downtrend Started" by Steve Burns.

After Hours Report (Briefing)
Futures are higher after hours: S&P 500 futures are +4.75 from fair value of 1911.00 and Nasdaq100 futures are +17.00 from fair value of 4141.00.

Tomorrow morning before the open, there are four economic reports scheduled to be released: MBA Mortgage Index at 7am ET, ADP Employment Change at 8:15am ET, Productivity-Rev. at 8:30am ET, Unit Labor Costs -Rev. at 08:30am ET.

Tomorrow before the open the following companies are scheduled to report earnings: ISLE, GIII, NAV, VRA, WMS.

Direction for Wednesday 2 Sept, 2015: Up

2015 Daily Directional Accuracy: 88/139  (63.31%) 

2015 Weekly Directional Accuracy: 19/32 (59.38%)