Monday, 12 Oct 2015 - AMC

Dow +47.30 at 17131.79, Nasdaq +8.17 at 4838.64, S&P +2.54 at 2017.43

Given the bond market was closed today in celebration of Columbus Day, the market was trending with a very tight range. Volume was light due to holiday but market managed to stay in the upside. 

Europe saw mostly red on Monday while Asia remain mixed. However Shanghai Composite continue to show strength with more than 3% gain to start the week.  
  

Market Summary

Industry Watch

Strong: Consumer Discretionary, Consumer Staples, Technology, Utilities

Weak: Energy, Financials, Materials

Other Market Moving Factor:

• Quiet session expected with the bond market closed for Columbus Day
• EMC (EMC) to be acquired by Dell for $67 billion in cash and stock

[BRIEFING.COM] The stock market began the trading week on a sleepy note with a Monday session that saw the S&P 500 bounce around an eight-point range. The benchmark index settled higher by 0.1% while the Nasdaq Composite (+0.2%) outperformed slightly. 

With the bond market closed for Columbus Day, a fair share of participants elected to forego the Monday session. The subdued activity was highlighted by below-average trading volume as fewer than 700 million shares changed hands at the NYSE floor. 

Eight sectors finished the day with gains while commodity-sensitive energy (-1.1%) and materials (-0.9%) underperformed throughout the session. The energy sector finished at the bottom of the leaderboard, narrowing its October gain to 10.9% while crude oil surrendered 5.2% to settle at $47.19/bbl. Similar to the sector, WTI crude continues holding a solid month-to-date gain (+4.7%) despite today's dive. 

Staying on the cyclical side, the consumer discretionary space (+0.5%) displayed relative strength since the start while the remaining growth-sensitive groups spent the day closer to their flat lines. Homebuilders contributed to the strength in the discretionary space with iShares Dow Jones US Home Construction ETF (ITB 27.94, +0.09) climbing 0.3%. 

Elsewhere, the top-weighted technology sector (+0.2%) hovered just above its flat line throughout the day. Large sector components like Apple (AAPL 111.58, -0.54), Microsoft (MSFT 47.00, -0.11), Alphabet (GOOGL 676.43, +5.19), and Facebook (FB 94.26, +1.02) traded in mixed fashion while EMC (EMC 28.35, +0.49) spiked 1.8% after agreeing to be acquired by Dell for $67 billion in cash and stock. 

Moving to the countercyclical side, consumer staples (+0.2%) and utilities (+0.9%) held gains throughout the day while the health care sector (+0.2%) eked out a slim advance despite a 7.8% slide in the shares of Eli Lilly (LLY 79.44, -6.70) after the company halted the development of a cholesterol drug. 

Investors did not receive any economic data today, but tomorrow, the Treasury Budget for September will be reported at 14:00 ET (Briefing.com consensus $95.00 billion).

Global Market

ASIA
Most markets in the Asia-Pacific region started the week on a winning note, none more so than China’s Shanghai Composite (+3.3%), which was bolstered by reports highlighting efforts to expand bank lending and to curb high frequency trading, as well as some upbeat commentary on the economy and the stock market’s standing from a deputy PBOC governor. Australia (-0.9%) and India (-0.7%), which fell prone to profit taking, were the notable laggards in the region. Japan was closed for a holiday.

Economic data

• None

Equity Markets

• Japan’s Nikkei: closed for holiday (Health Sports Day)
• Hong Kong’s Hang Seng increased 1.2% and closed near its highs for the day. The Hang Seng followed a bullish lead set by the mainland market. Gains were led by Lenovo Group (+7.7%), China Unicom Hong Kong (+5.5%), and China Resources Enterprise (+4.1%). On the flip side, Sands China (-3.4%), Galaxy Entertainment Group (-2.9%), and Cheung Kong Property Holdings (-1.8%) were the biggest losers. Out of the 50 index members, 40 ended higher, 8 finished lower, and 2 were unchanged.
• China’s Shanghai Composite ended up 3.3% after gaining 4.3% earlier in its session. The strong outing was driven primarily by enthusiasm over a plan by the PBOC to expand a pilot bank lending program, which is currently running in two provinces, to nine other provinces, including Shanghai and Beijing. There were separate reports highlighting efforts to curb high frequency trading and a deputy PBOC governor’s view that the economy is holding up well in the face of the stock market correction that he thinks is almost over. Over the last three sessions, the Shanghai Composite has risen 8.2%.
• India’s Sensex declined 0.7% and closed near its lows for the day in front of the latest reports for industrial production and consumer price inflation. The losses were led by the technology (-2.1%), health care (-1.9%), and financials (-0.8%) sectors. Infosys (-3.8%), Lupin Ltd (-2.2%), and Cipla Ltd (-1.9%) were the worst-performing issues. Vedanta (+7.1%), Hindalco Industries (+5.6%), and GAIL India (+2.3%) topped the list of winners. Out of the 30 index members, 12 ended higher and 18 finished lower.
• Australia’s S&P/ASX 200 declined 0.9% and ended near its lows for the day. The losses were paced by profit taking in the energy sector (-2.3%), as well as declines in the utilities (-1.7%) and healthcare (-1.7%) sectors. Out of the 200 index members, 46 ended higher, 141 finished lower, and 13 were unchanged.
• Regional advancers: South Korea +0.2%, Taiwan +1.5%, Malaysia +0.2%, Indonesia +0.9%, Singapore +1.1%, Vietnam +0.7%, Philippines +0.2%
• Regional decliners: Thailand -0.1%

FX

• USD/CNY -0.34% at 6.3235
• USD/INR +0.1% at 64.8200
• USD/JPY -0.1% at 120.13

EUROPE
Major European indices trade in mixed fashion with UK’s FTSE (-0.6%) trailing its peers. Elsewhere, European officials have begun looking at the possibility of recalling more than $2 billion in loans granted by the European Investment Bank to Volkswagen.

• France’s August Current Account swung from a deficit of EUR400 million to a surplus of EUR200 million.

Closing Prices

• UK’s FTSE: -0.7%
• Germany’s DAX: + 0.2%
• France’s CAC: -0.3%
• Spain’s IBEX: -0.5%
• Portugal’s PSI: -3.1%
• Italy’s MIB Index: -0.8%
• Irish Ovrl Index: + 0.0%
• Greece ASE General Index: + 0.6%

Macroeconomic Data

Economic Data

from Briefing.com

• No Economic Data

Market Internals

NYSE:

Lower Volumes than the day before – 716.4M vs 921.2M 


Advancers outpaced Decliners (adv/dec): 1592 / 1451

New Highs outpaced New Lows (highs/lows): 57 / 11

NASDAQ:

Lower Volumes than the day before – 1336.8M vs 1796.5M

Decliners outpaced Advancers (adv/dec): 1355 / 1455

New Highs outpaced New Lows (highs/lows): 74 / 29

VOLATILITY S&P500 (VIX)
16.17 -0.91 (-5.33%)

Nothing significant to infer from the internals as Monday was relatively quiet. But it seems that we are seeing some strength in the market as New Highs continue to stay strong. Also VIX broke below its 200MA which is signalling a rise in confidence in the market. Perhaps we might see another bull run soon?

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,131.86 +47.37 (+0.28%)

Volume: 72,501,083 (below average of 113,804,735)
Range: 17,064.58 - 17,139.21

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

4,838.64 +8.17 (+0.17%)
Volume: 316,993,876 (below average of 476,558,882)

Range: 4,818.17 - 4,846.74

S&P 500 INDEX (SPX: CBOE)

2,017.46 +2.57 (+0.13%)

Volume: 464,138,000 (below average of 639,228,088)

Range: 2,010.55 - 2,018.66

DOW could not break above the resistance at around 17,150 and that is a crucial resistance to overcome in order to keep the bull run active. NASDAQ formed a crucifix doji while it managed to stay above its support at 4,820. S&P remains below the resistance at 2,020 and it is forming a hanging man pattern. Maybe we should see some consolidation or a slight pullback before another rally.

Commodities

Closing Commodities: Oil Prices Get Slammed

• Oil prices sold off today. The OPEC report was one catalyst helping move oil prices
• In floor trade, Nov WTI crude oil finished the day off at $47.09/barrel, down 5.2%
• In electronic trade, Nov crude is climbing a little higher… now at $47.36/barrel
• In other energy, Nov natural gas rose 2% to $2.54/MMBtu.
• Grains were rather flat by the end of the day following Friday’s WASDE report
• Metals were flat to modestly higher today
• Dec gold rose +0.7% to $1164.50/oz, while Dec silver +0.3% at $15.87/oz
• Dec copper ended flat at $2.41/lb.

Energy Closing Prices

• November crude oil futures fell $2.58 (-5.2%) to $47.09/barrel
• November natural gas closed $0.04 higher (+1.6%) at $2.54/MMBtu
• RBOB Gasoline closed $0.07 lowerat $1.34/gallon
• Heating oil futures closed $0.09 lower at $1.50/gallon

Agriculture Closing Prices

• December corn closed $0.01 lower (-0.3%) at $3.81/bushel
• December wheat closed flat at $5.08/bushel
• November soybeans closed $0.02 higher (+0.2%) at $8.87/bushel
• Sugar #11 closed $0.10 cents lower at 14.24 cents/lb
• Note: Agricultural price action continued to be driven today, by data released Friday, within the USDA’s WASDE report

Metals Closing Prices

• December gold ended today’s session $8.30 higher (+0.7%) at $1164.50/oz
• December silver closed today’s session $0.04 higher (+0.3%) at $15.87/oz
• December copper closed flat at $2.41/lb

Currencies

Bonds

Preview for Tuesday 13 Oct, 2015

Economic Data

Tuesday (13 Oct) :

• Treasury Budget : $95.0 (Prior $105.8B)

Earnings Highlights 

Tuesday (13 Oct) :

BMO - ASML DFRG FAST JNJ PVTB
AMC - ADTN OZRK HAWK CSX HCSG IDT INTC JPM LLTC VOXX

Summary

It's been a rather quiet session but nonetheless the market started off the week with some upside. As the major indices are approaching their resistance levels, I think it is likely to see some profit taking here. With light economic data for the next 2 sessions, I suppose the market is going to be more towards sideway before we might see a breakout in S&P.

Direction for Tuesday 13 Oct, 2015: Down

2015 Daily Directional Accuracy: 102/161  (63.35%) 

2015 Weekly Directional Accuracy: 23/37 (60.53%)