Friday, 30 Oct 2015 - AMC

Dow -92.26 at 17663.54, Nasdaq -20.53 at 5053.74, S&P -10.05 at 2079.36

Well I suppose the support could not hold as we saw more selling in the market after lunch. Maybe we should see more correction next week. I guess market were overbought previously. It would be good to see a small correction before another rally in the market. After all, we are starting into the best 6 months in the year i.e. November to April. 

Asia markets were showing plenty of red signs except for Nikkei. Economic data from Japan was rather heavy on Friday. Meanwhile Europe markets were mixed but mostly ended in a positive note. 
  

Market Summary

Industry Watch

Strong: Consumer Discretionary, Materials, Utilities

Weak: Consumer Staples, Energy, Financials

Other Market Moving Factor:

• S&P 500 enters final October session +8.9% month-to-date 
• Dow components Chevron (CVX) and ExxonMobil (XOM) report better than expected results

[BRIEFING.COM] The stock market ended the week on a lower note, but that did not stop the S&P 500 from posting its largest monthly gain since October 2011. The benchmark index lost 0.5% on Friday, but surged 8.3% for the month while the Nasdaq Composite (-0.4%) outperformed, spiking 9.4% in October. 

Broadly speaking, the Friday session was very quiet with the market showing a modest loss during morning action, which turned into a slim afternoon gain; however, a late slide from session highs ensured a lower finish for the S&P 500. 

Despite the lower finish, only five of ten sectors posted losses, but relative weakness in heavily-weighted groups like financials (-1.3%), technology (-0.8%), and consumer staples (-1.1%) was enough to keep the market pressured. 

The financial sector retreated throughout the day, narrowing its October gain to 6.1%. Meanwhile, the top-weighted technology space (-0.8%) also underperformed, but the influential sector surged 10.7% in October. Large cap names like Apple (AAPL 119.50, -1.03), Google (GOOGL 737.39, -7.46), and Microsoft (MSFT 52.64, -0.72) struggled on Friday, masking relative strength in the PHLX Semiconductor Index, which rose 0.9%. ON Semiconductor (ON 11.00, +0.72) was a notable standout, soaring 7.0%, in reaction to better than expected results. 

Elsewhere, the consumer staples sector (-1.1%) retreated amid disappointing earnings and/or guidance from Colgate-Palmolive (CL 66.35, -2.88), CVS Health (CVS 98.78, -5.02), and Boston Beer (SAM 219.42, -25.52). The three names lost between 4.2% and 10.4% while the broader sector narrowed its October gain to 5.6%. 

On the flip side, the energy sector (+0.7%) finished in the lead after struggling at the start. However, the sector climbed during the afternoon to extend its October gain to 11.3%. Crude oil contributed to the afternoon rally as WTI crude rose 1.2% to $46.60/bbl while earnings also played a part. To that point, Chevron (CVX 90.88, +0.99), ExxonMobil (XOM 82.74, +0.51), and Phillips 66 (PSX 89.10, +2.67) all delivered better than expected results. 

Unlike stocks, Treasuries spent the bulk of the day in the green with the 10-yr yield slipping three basis points to 2.15%. 

Today's participation was ahead of average with more than a billion shares changing hands at the NYSE floor with month-end flows contributing to the increased activity.

Economic data included Employment Cost Index, Personal Income/Spending data, Chicago PMI, and Michigan Sentiment: 

• Employment costs increased 0.6% in Q3 2015, up from a 0.2% increase in the second quarter while the Briefing.com consensus expected an increase of 0.5% 
  • Despite the big quarterly gain, year-over-year trends were unchanged with total compensation increasing only 2.0% in the third quarter, which matched the rate of increase from the second quarter 
• Personal income increased 0.1% in September after increasing an upwardly revised 0.4% (from 0.3%) in August while the Briefing.com consensus expected an increase of 0.2% 
  • Personal spending rose 0.1% in September after increasing 0.4% in August while the consensus expected an increase of 0.2% 
• The Chicago PMI increased to 56.2 in October from 48.7 in September while the Briefing.com consensus expected an increase to 49.0 
  • That was the best reading in the Chicago PMI since reaching 59.4 in January 
  • The Production Index increased to 63.4 in October from 43.6 in September, representing the largest one-month gain since August 2014 
• The University of Michigan Consumer Sentiment Index was revised down to 90.0 in the final October reading from 92.1 in the preliminary report while the Briefing.com consensus expected a revision up to 92.6 
  • Despite the downward revision, sentiment remains stronger than the final September (87.2) level 
  • The Current Conditions Index was revised down to 102.3 in the final October reading from 106.7 while the Expectations Index was revised down to 82.1 from 82.7 

Monday's economic data will be limited to the 10:00 ET release of September Construction Spending and the October ISM Index. 

• Nasdaq Composite +6.7% YTD 
• S&P 500 +1.0% YTD 
• Dow Jones Industrial Average -0.9% YTD 
• Russell 2000 -3.5% YTD 

Week in Review: Stocks Register Fifth Consecutive Weekly Gain

The stock market began the week on a quiet note with the S&P 500 (-0.2%) spending the session inside a nine-point range. The benchmark index settled right above the midpoint of that range while the Nasdaq Composite (+0.1%) outperformed throughout the session. Generally speaking, the Monday affair was very quiet and free of noteworthy earnings. Accordingly, the benchmark index opened with a two-point loss and traded in sideways fashion until the closing bell. Seven sectors registered losses between 0.2% (consumer staples and industrials) and 2.5% (energy) while consumer discretionary (+0.8%), health care (+0.5%), and telecom services (+0.1%) outperformed. 

The market endured its second consecutive retreat on Tuesday, but the overall trading dynamic was very similar to the range-bound affair from Monday. The S&P 500 lost 0.3% while the Nasdaq Composite (-0.1%) outperformed throughout the session. In some ways, the cautious posture was not all that shocking considering investors were on hold ahead of Wednesday's release of the October FOMC policy directive from the FOMC. Nine sectors ended the Tuesday affair in negative territory with cyclical groups showing relative weakness across the board. The energy sector (-1.2%) spent its second consecutive day behind the remaining nine groups as lower oil prices weighed. To that point, WTI crude fell 1.8% to $43.22/bbl. Similar to energy, the industrial sector (-1.0%) surrendered close to 1.0% while the remaining cyclical sectors posted slimmer losses. 

Equity indices snapped their two-day skid on Wednesday, but not before seeing some intraday volatility. The S&P 500 added 1.2% while the Russell 2000 (+2.9%) outperformed. The key indices rallied out of the gate in response to a batch of mostly better than expected earnings. That lengthy list was headlined by Apple (AAPL 119.28, +4.73) with the top-weighted stock spiking 4.1% in reaction to better than expected earnings and revenue. For its part, the broader technology sector (+1.5%) settled ahead of the broader market while most other cyclical sectors also showed relative strength. None more so than the energy space (+2.2%), which spent the day in the lead after struggling over the past two days. After rallying through the first two hours of the session, the market hovered near its high until the 14:00 ET release of the latest policy statement from the Federal Reserve, which called for no change to the current policy stance. That being said, the Federal Reserve took out a key line from its statement, which referred to global developments having the potential to restrain economic growth in the U.S. With that line being left out of the October statement, the Fed has opened the door to a potential rate hike in December. 

The stock market spun its wheels through the bulk of the Thursday affair, but a final-hour charge helped the S&P 500 end little changed while the Nasdaq Composite (-0.4%) underperformed throughout the session. Equities followed Wednesday's roller-coaster ride with a range-bound Thursday session that saw weakness in heavily-weighted cyclical sectors while health care (+0.5%) surrendered the bulk of its gain into the close; however, the market maintained its range through the afternoon as technology (-0.3%) cut its opening loss in half while energy (+0.5%) and consumer discretionary (+0.3%) outperformed. Most notably, the technology sector struggled from the start and the bulk of its weakness could be found in the semiconductor group where NXP Semiconductor (NXPI 73.00, -17.92) plunged 19.7% after below-consensus revenue and concerns about the company's inventories overshadowed a bottom-line beat and an expanded share buyback. Also of note, STMicroelectronics (STM 6.79, -0.42) fell 5.8% after issuing disappointing guidance and denying interest in Fairchild Semiconductor (FCS 16.56, -0.99).

Global Market

ASIA
Markets in the Asia-Pacific region ended Friday mostly lower. Japan (+0.8%) was the notable exception, setting aside some early disappointment over some weak CPI and household spending data and the decision by the Bank of Japan to leave its monetary policy unchanged. A report suggesting the government might introduce some fiscal stimulus with a supplementary budget helped bolster investor sentiment. Separately, the yuan made its biggest gain since 2005 on reports the PBOC is considering a reduction in capital controls in the Shanghai free trade zone.

Economic data

• Japan
• Bank of Japan leaves uncollateralized overnight call rate unchanged at 0.10%, as expected, and maintains size of asset purchase program September
• Household Spending -1.3% month-over-month (expected +0.3%; prior +2.5%); -0.4% year-over-year (expected +1.2%; prior +2.9%)
• September National CPI 0.0% year-over-year (expected +0.1%; prior +0.2%)
• October Tokyo CPI +0.1% year-over-year (expected 0.0%; prior -0.1%)
• September National Core CPI -0.1% year-over-year (expected -0.2%; prior -0.1%)
• October Tokyo Core CPI -0.2% (expected -0.1%; prior -0.2%)
• September Unemployment Rate 3.4% (expected 3.4%; prior 3.4%)
• September Housing Starts +2.6% year-over-year (expected +6.6%; prior +8.8%)
• September Construction Orders +6.7% year-over-year (prior -15.6%)
• Australia
• Q3 PPI +0.9% quarter-over-quarter (prior +0.3%); +1.7% year-over-year (prior +1.1%)
• September Housing Credit +0.6% (prior +0.6%)
• September Private Sector Credit +0.8% month-over-month (expected +0.5%; prior +0.6%)
• South Korea
• September Industrial Production +1.9% month-over-month (expected +0.4%; prior +0.2%); +2.4% year-over-year (expected +0.6%; prior +0.1%)
• Retail Sales +0.5% month-over-month (prior +2.1%)
• Singapore
• Q4 Business Expectations -16.0 (prior +2.0)
• New Zealand
• October ANZ Business Confidence +10.5% (expected -10.0%; prior -18.9%)

Equity Markets

• Japan’s Nikkei increased 0.8%. The Nikkei had been modestly lower earlier in the day in the wake of the Bank of Japan’s decision to leave its monetary policy unchanged and some unsatisfying CPI and household spending data. It rallied back in the afternoon, however, amid media reports the government might introduce a supplementary budget in excess of JPY 3 trln with some emphasis on improving urban infrastructure. Gains were led by the health care (+2.9%), consumer discretionary (+1.5%), and consumer staples (+1.5%) sectors. The top-performing issues were Tokuyama (+11.9%), Shionogi (+11.4%), and Nichirei (+6.6%). The biggest laggards were GS Yuasa (-11.2%), Konica Minolta (-9.5%), and Mitsui Engineering & Shipbuilding (-8.8%). Out of the 225 index members, 163 ended higher, 56 finished lower, and 6 were unchanged. For the week the Nikkei gained 1.4%.
• Hong Kong’s Hang Seng declined 0.8% and finished at its lows in a seesaw session. Trading in the afternoon was accented by a steady downtrend in the market, with losses in the financial and energy groups weighing. AIA Group (-3.0%), China Life Insurance (-2.3%), and Sands China (-2.3%) were the worst-performing issues while China Mengniu Dairy (+3.4%), Li & Fung (+3.3%), and Lenovo Group (+2.3%) topped the list of winners. Out of the 50 index members, 14 ended higher, 33 finished lower, and 3 were unchanged. For the week the Hang Seng declined 2.2%.
• China’s Shanghai Composite declined 0.1% after being down 1.2% shortly after the start of trading. Participants bought the dip, although some selling pressure emerged in the final hour to tip the market back into negative territory. Separately, the yuan had its biggest move against the dollar since 2005 on reports the PBOC is entertaining a reduction in capital controls in the Shanghai free trade zone. For the week the Shanghai ‘A’ Shares declined 0.9% while the Shanghai ‘B’ shares increased 2.1%.
• India’s Sensex declined 0.7% and ended near its lows for the day with selling interest picking up in the afternoon trade. The losses were paced by the industrials (-4.0%), materials (-1.7%), and consumer staples (-1.4%) sectors. Vedanta (-6.7%), ITC (-4.4%), and Larsen & Toubro (-4.1%) led individual decliners while NTPC Ltd (+3.8%), ICICI Bank (+2.0%), and Dr Reddy’s Laboratories (+1.4%) led individual winners. Out of the 30 index members, 10 ended higher and 20 finished lower. For the week the Sensex declined 3.0%.
• Australia’s S&P/ASX 200 declined 0.5%, but pared an earlier loss that had it down 1.2%. The weakest links in Friday’s trade were the gold (-2.8%), metals & mining (-2.0%), and consumer staples (-1.8%) sectors. Out of the 200 index members, 115 ended higher, 71 finished lower, and 14 were unchanged. For the week the S&P/ASX 200 declined 2.1%.
• Regional advancers: Thailand +0.2%, Vietnam +0.4%
• Regional decliners: South Korea -0.2%, Taiwan -0.2%, Malaysia -0.1%, Indonesia -0.4%, Singapore -0.1%, Philippines -0.8%

FX

• USD/CNY -0.6% at 6.3174
• USD/INR +0.05% at 65.3350
• USD/JPY -0.6% at 120.36

EUROPE
Major European indices trade lower across the board, but their losses have been contained for the most part. Meanwhile, the euro has inched up against the dollar to erase the bulk of this week’s decline. Currently, the single currency is on course to end the week near 1.1018 after returning into the neighborhood of last week’s settlement at 1.1025.

• Eurozone October CPI 0.0% year-over-year (expected 0.1%; prior -0.1%), Core CPI +1.0% year-over-year (consensus 0.9%; prior 0.9%), and September Unemployment Rate ticked down to 10.8% from 10.9% (expected 11.0%)
• Germany’s September Retail Sales 0.0% month-over-month (expected 0.4%; prior -0.7%); +3.4% year-over-year (consensus 4.2%; last 2.1%)
• France’s September Consumer Spending 0.0% month-over-month (consensus 0.2%; prior 0.1%) and September PPI +0.1% month-over-month (last -0.9%)
• Spain’s preliminary Q3 GDP +0.8% quarter-over-quarter, as expected
• Italy’s October CPI +0.2% month-over-month (expected 0.1%; prior -0.4%) and September PPI -0.2% month-over-month (prior -0.6%)
• Swiss October KOF Leading Indicators slipped to 99.8 from 100.3 (consensus 100.0)

Closing Prices

• FTSE100 -0.54%
• DAX +0.46%
• CAC40 +0.25%
• IBEX35 -0.35%
• Stoxx600 -0.19%

Macroeconomic Data

Economic Data

from Briefing.com

• Personal Income : 0.1% vs 0.2% (Prior 0.4% - Up)
• Personal Spending : 0.1% vs 0.2% (Prior 0.4%)
• PCE Prices - Core : 0.1% vs 0.1% (Prior 0.1%)
• Employment Cost Index : 0.6% vs 0.5% (Prior 0.2%)
• Chicago PMI : 56.2 vs 49.0 (Prior 48.7)
• Michigan Sentiment - Final : 90.0 vs 92.6 (Prior 92.1)

PERSONAL INCOME & SPENDING


Highlights

• Personal income increased 0.1% in September after increasing an upwardly revised 0.4% (from 0.3%) in August. The Briefing.com Consensus expected personal income to increase 0.2%.
• Personal spending rose 0.1% in September after increasing 0.4% in August. The consensus expected personal spending to increase 0.2%.

Key Factors

• The personal income and spending data were already incorporated in yesterday’s advance estimate of Q3 2015 GDP. This data will not impact future revisions.
• Wages and salaries were flat in September, which was slightly better than the 0.2% decline that was implied in the September employment report. The better-than-expected wage data may foreshadow an upward revision to the September employment data.
• On the spending side, goods spending declined 0.5% in September after increasing 0.1% in August. A 0.8% gain in durable goods spending, which was mostly the result of strong auto sales, was offset by a 1.2% decline in nondurable goods spending.
• Services spending increased 0.4% in September, down from a 0.5% increase in August.
• The personal savings rate ticked up to 4.8% in September from 4.7% in August.
• Inflation rates were subdued in September. Headline PCE prices declined 0.1% in August and are up only 0.2% year-to-year.
• Stripping out food and energy, core PCE prices were up only 1.3% y/y. That was the same yearly growth rate as August and well below the Fed’s 2.0% target level.

Big Picture

• Inflation trends remain well below the Fed’s target level.

EMPLOYMENT COST INDEX

Highlights

• Employment costs increased 0.6% in Q3 2015, up from a 0.2% increase in the second quarter. The Briefing.com Consensus expected employment costs to increase 0.5%.

Key Factors

• Despite the big quarterly gain, year-over-year trends were unchanged. Total compensation increased only 2.0% in the third quarter, which was the same rate of increase as the second quarter.
• Wages and salaries increased 0.6% in the third quarter, up from a 0.2% increase in Q2 2015.
• Benefits spending increased 0.5%, up from a 0.1% gain in the second quarter.
• Private industry costs accelerated. Total compensation increased 0.6% in Q3 2015 after being unchanged in the second quarter. Year-over-year growth remained at 1.9% for a second consecutive quarter.
• Private wages and salaries increased 0.7% after increasing 0.2% in the second quarter. Private benefits spending increased 0.5% after declining 0.2% in the second quarter.
• State and local government compensation increased 0.6% for a second consecutive quarter in the third quarter. Wages and salaries slowed, up 0.3% in Q3 2015 after a 0.6% increase in the second quarter. Benefits spending increased 0.7% in the third quarter, down from a 0.8% increase 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 56.2 in October from 48.7 in September. The Briefing.com Consensus expected the Chicago PMI to increase to 49.0.

Key Factors

• That was the best reading in the Chicago PMI since reaching 59.4 in January.
• The Production Index increased to 63.4 in October from 43.6 in September. That was the largest one-month gain since August 2014.
• The contraction in new orders ended after one month as the related index increased to 59.4 in October from 49.5 in September. Backlogs, however, remained weak. That index, which has been in as steady contraction since January, declined to 45.5 in October from 46.5 in September.
• The Employment Index declined to 50.6 in October from 52.3 in September.

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 90.0 in the final October reading from 92.1 in the preliminary report. The Briefing.com Consensus expected the index to be revised up to 92.6.

Key Factors

• Despite the downward revision, sentiment remains stronger than the final September (87.2) level.
• The Current Conditions Index was revised down to 102.3 in the final October reading from 106.7. The Expectations Index was revised down to 82.1 from 82.7.
• The downward revisions come during a time that the initial claims level has reached multi-decade lows and gasoline prices remain relatively weak. These trends suggest that volatility in the equity markets has been influential in reducing sentiment levels.
• Regardless of the decline, the impact on consumption trends will likely be minimal. Consumption relies on income and not changes in sentiment. As long as the employment sector 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 – 1140.8M vs 871.5M 


Advancers outpaced Decliners (adv/dec): 1650 / 1400

New Highs outpaced New Lows (highs/lows): 65 / 49

NASDAQ:

Higher Volumes than the day before – 1998.0M vs 1900.7M

Decliners outpaced Advancers (adv/dec): 1184 / 1678

New Lows outpaced New Highs (highs/lows): 50 / 84

VOLATILITY S&P500 (VIX)
15.07 +0.46 (+3.15%)

Internals are still pointing to some bullishness and the volume is also suggesting the bulls are somewhat in control. However there is a room for thought on the decreasing New Highs. VIX has been testing the resistance level at 15.00 lately. This is showing the uncertainty in the market. If the resistance is broken, I reckon we are likely to see more pullback.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,663.54 -92.26 (-0.52%)

Volume: 149,246,272 (above average of 117,321,486)
Range: 17,662.87 - 17,799.96

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,053.75 -20.53 (-0.40%)
Volume: 509,292,237 (above average of 477,286,565)

Range: 5,053.75 - 5,085.22

S&P 500 INDEX (SPX: CBOE)

2,079.36 -10.05 (-0.48%)

Volume: 789,097,000 (above average of 655,435,242)

Range: 2,079.34 - 2,094.32

DOW formed a reversal after it did not managed to stay above its resistance at 17,750. NASDAQ also went down after it formed a similar inside candlestick pattern. S&P dropped to its support level at 2,080 as it was unable to break higher. From what we have seen in the technical, I think we should still see more downside in the market. I am looking at the respective support level at 17500, 5000 and 2,060 for the 3 indices.

Commodities

Closing Commodities: Natural Gas Extends Rally Late; Copper Trades Mellow Ahead of Chinese Manufacturing Data

• The dollar trended flat overnight, before seeing an extended sell-off that lasted the entire session.
• Drivers of dollar price action today included commentary from Fed President Jeff Lacker, positive US PMI data and an underwhelming Michigan Sentiment reading
• The dollar index bounced mid-afternoon from the 96.6 level and is now -0.4% to 97.01
• Crude and natural gas both closed positive, with crude sustaining early positive momentum on news of a Baker Hughes rig-count decline (12 rigs to 775).
• Natural gas meanwhile, saw an extended reversal of yesterday’s losses, as over-supply sentiment waned relative to the past few weeks.
• Crude closed up 1.2% to $46.60/barrel and natural gas finished the session at +1.3% to $2.32/MMBtu
• Gold sustained moderate losses amidst a weakening dollar, as mid-day Fed commentary gave credence to the notion that December is a ‘live’ FOMC meeting.
• Silver traded more industrial, and similar to Copper ahead of this weekend’s Chinese Manufacturing data release.
• Gold closed -0.5% to $1141.50/oz, with silver at -0.1% to $15.54/oz. Copper closed flat at $2.32/lb

Energy Closing Prices

• December crude oil futures rose $0.57 (+1.2%) to $46.60/barrel
• December natural gas closed $0.03 higher (+1.3%) at $2.32/MMBtu
• RBOB Gasoline closed flat at $1.34/gallon
• Heating oil futures closed $0.01 higher at $1.51/gallon

Agriculture Closing Prices

• December corn closed $0.02 higher at $3.82/bushel
• December wheat closed $0.07 higher at $5.23/bushel
• November soybeans closed $0.05 higher at $8.83/bushel
• Sugar #11 closed $0.04 cents lower at 14.52 cents/lb

Metals Closing Prices

• December gold ended today’s session $6.00 lower (-0.5%) at $1141.50/oz
• December silver closed today’s session $0.02 lower (-0.1%) at $15.54/oz
• December copper closed flat at $2.32/lb

Currencies

Dollar Falls against All Majors

• The U.S. Dollar Index fell 0.37% to 96.92, having recovered some early losses throughout the session 
• EUR/USD: +0.15% to $1.1006
  • The eurozone's unemployment rate fell to 10.8% in September, its lowest level since January 2012. The August reading was revised down to 10.9% from 11.0%
  • The eurozone's headline consumer price index was flat y/y in October, falling short of economists' expectations
    • Core prices in the eurozone were flat in the year to October, missing expectations but beating the 0.1% fall in September
    • German retail sales were flat in the month to September, badly missing analyst estimates. August's print was revised down to -0.7% from -0.4%
    • The Spanish economy grew 0.8% q/q in the third quarter, according to preliminary data. The growth was in line with estimates but worse than the 1.0% growth from Q2. Record spending by tourists supported the gain
• GBP/USD: +0.73% to $1.5435
• USD/CHF: -0.15% to 0.9880
  • Switzerland's KOF Leading Indicators fell to 99.8 in October, missing expectations. The index printed a downwardly-revised 100.3 in September
• USD/JPY: -0.19% to 120.72
  • The Bank of Japan sat on its hands today and did not announce further monetary easing, as roughly half of analysts had expected. The BoJ current buys $665 of assets per year (JPY 80 tln)
    • The current round of unconventional monetary easing began in April of 2013 and failed to achieve its stated goal of getting inflation up to 2% within two years
      • The central bank now says that it aims to reach that target between October 2016 and March 2017
    • The bank continues to express confidence in its policy, but it has downgraded its growth and inflation forecasts for the year to April 2016 to 1.2% and 0.1%, respectively
    • Household spending in Japan unexpectedly fell 1.3% m/m in September, reversing a 2.5% jump in August
• USD/CAD: -0.70% to 1.3070
• AUD/USD: +0.73% to $0.7136
  • Australia's producer price index grew grew 0.9% q/q in the third quarter after climbing only 0.3% in Q2
  • Private sector credit grew a better-than-expected 0.8% m/m in September after growing 0.6% in August
• NZD/USD: +1.16% to $0.6777
  • Building consents in New Zealand unexpectedly fell 5.7% m/m in September. Consents declined 4.9% in September
• USD/RUB: -0.89% to 63.62
  • The Bank of Russia kept its main policy rate at 11.0% in light of substantial inflation risks. About half of analysts expected a 50 bp cut
    • The bank said in its statement that as inflationary pressures ease, it will stand ready to provide more monetary accommodation 

Bonds

Yield Curve Flattens 

• U.S. Treasuries rallied today and the yield curve flattened as the U.S. economic data releases were slightly worse than expected (excepting a strong jump in the Chicago Purchasing Managers' Index). The somewhat weaker data also sent the U.S. Dollar Index down 0.30% to 97.00 and the S&P 500 declined 0.21% to 2,085.02. Wall Street strategists are talking up the greenback against the euro as the ECB and the Fed appear to have highly divergent directions for monetary policy
• Yield Check:
  • 2-yr: unch at 0.73%
  • 5-yr: -1 bp to 1.52%
  • 10-yr: -3 bps to 2.14%
  • 30-yr: -4 bps to 2.93%

• News:
  • Personal income grew 0.1% in September after climbing an upwardly-revised 0.4% in August. The Briefing.com consensus was for a gain of 0.2%
  • Personal spending rose 0.1% in September, also short of the Briefing.com consensus of +0.2%. Personal spending jumped 0.4% in August
    • On the spending side, goods spending declined 0.5% in September after increasing 0.1% in August. A 0.8% gain in durable goods spending, which was mostly the result of strong auto sales, was offset by a 1.2% decline in nondurable goods spending
    • The personal savings rate ticked up to 4.8% in September from 4.7% in August
    • Inflation rates were subdued in September. Headline PCE prices declined 0.1% in August and are up only 0.2% year-to-year
    • Stripping out food and energy, core PCE prices were up only 1.3% y/y. That was the same yearly growth rate as August and well below the Fed's 2.0% target level
  • The Employment Cost Index grew 0.6% q/q in Q3 after rising only 0.2% in Q2. The Briefing.com consensus was for +0.5%
  • The Chicago PMI increased to 56.2 in October from 48.7 in September. The Briefing.com Consensus expected the Chicago PMI to increase to 49.0
    • Octobers's reading was the best since January
    • The contraction in new orders ended after one month as the related index increased to 59.4 in October from 49.5 in September. Backlogs, however, remained weak. That index, which has been in as steady contraction since January, declined to 45.5 in October from 46.5 in September
  • The University of Michigan Consumer Sentiment Index was revised down to 90.0 in the final October reading from 92.1 in the preliminary report. The Briefing.com Consensus expected the index to be revised up to 92.6
    • The Current Conditions Index was revised down to 102.3 in the final October reading from 106.7. The Expectations Index was revised down to 82.1 from 82.7

• Commodities:
  • WTI crude: +0.65% to $46.36/bbl.
  • Gold: -0.58% to $1,149.70/troy oz.
  • Copper: -0.30% to $2.314/lb.

• Currencies:
  • EUR/USD: +0.09% to $1.1000
  • USD/JPY: -0.20% to 120.71

• Week Ahead:
  • Monday: October ISM Index (10:00 ET); September Construction Spending (10:00 ET)
    Tuesday: September Factory Orders (10:00 ET); October Auto and Truck Sales ( 17:00 ET)
    Wednesday: MBA Mortgage Index for the week ending 10/31 (07:00 ET); October ADP Employment Change (08:15 ET); September Trade Balance (08:30 ET); October ISM Services (10:00 ET); Crude Inventories for the week ending 10/31 (10:30 ET); Philadelphia Fed President Harker (non-FOMC voter) (11:45 ET); Fed Chair Yellen testifies before House Financial Services Committee on Fed action and plans for bank regulation and supervision; Fed Vice Chair Fischer (FOMC voter) (19:00 ET)
    Thursday: October Challenger Job Cuts (07:30 ET); Initial Jobless Claims for the week ending 10/31 and Continuing Jobless Claims for the week ending 10/24 (08:30 ET); Q3 Productivity and Unit Labor Costs – Preliminary (08:30 ET); Philadelphia Fed President Harker (non-FOMC voter) gives welcome remarks (09:30 ET); Natural Gas Inventories for the week ending 10/31 (10:30 ET); Chicago Fed President Evans (FOMC voter) gives introductory remarks before 18th Annual International Banking Conference (11:40 ET); Atlanta Fed President Lockhart (FOMC voter) (14:30 ET)
    Friday: October Employment Situation Report (08:30 ET); September Consumer Credit (15:00 ET); Fed Governor Brainard (FOMC voter) participates in forum at IMF conference (17:15 ET)

Treasury Yields:

• 2 Year Note 0.75% UNCH
• 5 Year Note 1.52% -0.01
• 10 Year Note 2.16% -0.03
• 30 Year Bond 2.93% -0.03

2/30 Spread: 218 bps ( -3 ) …  2/10 Spread: 141 bps ( -3 )

Preview for the week Monday 2 Nov to Friday 6 Nov, 2015

Economic Data

Monday (2 Nov) :

• ISM Index : 50.0 (Prior 50.2)
• Construction Spending : 0.4% (Prior 0.7%)

Tuesday (3 Nov) :

• Factory Orders : -0.9% (Prior -1.7%)
• Auto Sales : (Prior 5.8M)
• Truck Sales : (Prior 8.9M)

Wednesday (4 Nov) :

• MBA Mortgage Index : (Prior -3.5%)
• ADP Employment Change : 180K (Prior 200K)
• Trade Balance : -$43.0B (Prior -$48.3B)
• ISM Services : 56.6 (Prior 56.9)
• Crude Inventories : (Prior 3.38M) 

Thursday (5 Nov) :

• Challenger Job Cuts : (Prior 93.2%)
• Initial Claims : 262K (Prior 260K)
• Continuing Claims : 2145K (Prior 2144K)
• Productivity - Prel : -0.2% (Prior 3.3%)
• Unit Labour Costs - Prel : 2.2% (Prior -1.4%)
• Natural Gas Inventories : (Prior 63 bcf)

Friday (6 Nov) : 

• Nonfarm Payrolls : 181K (Prior 142K)
• Nonfarm Private Payrolls : 160K (Prior 118K)
• Unemployment Rate : 5.1% (Prior 5.1%)
• Hourly Earnings : 0.2% (Prior 0.0%)
• Average Workweek : 34.5 (Prior 34.5)
• Consumer Credit : $18.0B ($16.0B) 

Earnings Highlights 

Monday (2 Nov) :

BMO - AAON ACW AEGN BWP CAH CCJ CEVA CHD CLX CNA CRNT CTB D DO ECL EDR EIGI EL ETR EVR GAS GVA HNT KBR KOS L MCY NBL NSP SALT SYY TVPT TW V
AMC - ADUS AEIS ARE ALL ALJ ALDW AMC AIG AVD ANH AMCC AHL CAR BCRH CBT CHGG CHSP CDE CGNX CYH CFMS CUTR DWRE PLOW DNB DXPE ELNK ENH ES FN FIT RAIL GGP BRSS GPRE IMPR ININ IVAC KONA LMNX LMOS MIC MDU MDAS MCEP MR NSTG NGHC NLS NPTN OLN OHI ONDK OTTR PKY PQ PXD PPS PRAH QLYS RYN RNG RSPP RTEC SANM SSW SSNC SGY INN SKHY SYKE TTOO TDOC THC TXRH TNET UIL UNXL VGR VIAV VNO WSTC WPG ZIOP

Tuesday (3 Nov) :

BMO - FLWS AYR ALE AMAG AMSC AFSI ANAC ANIP ADM ARNA ARIA AUDC AXLL BLMN CBM CDK CIT CIE CPPL CNNX CEQP DISCA DW EMR EXPD EXLP EXH FSS FIS FI FTR GCAP GEL GLT GTN GLDD HYH HRS HCP HW HTH H INCY IART K KMT KVHI LPX MMP HZO MLM MHFI MPG MBLY MOS NNN NSM NMM NRZ NXST NI NTi NCLH DNOW NS NWN NXTM OZM ODP OESX OXFD PERI RRGB SALE RDC RHP SGNT SMG SRE SERV S STFC SRI SUM SSH SUP NGLS TASR TGH MDCO TICC TWI TRP TZOO UNT UAM VSH VPG VMC WPC WNR WNRL WLK WLKP ZBRA ZTS
AMC - ACHC AKR ATVI ABCO Y AFG AWR AMSG ANAD AIV WTR ARR ARWR ASH BW BIO BKH CVC CSU CSV CTLT CBS CERN CKP CHEF CIM CBPO CHUY XEC DAC DVA DKL DK DENN DVN DHT FANG DPLO DEI ECYT ENPH ENSG EPIQ ERA ETSY EVRI FARO FFG FIVN FLTX FOGO FTAI FMI GHDX GMED GRPN HHS HCI HL HLF HRZN IAG IPHS IOSP IVR IRWD ITRI XXIA JCOM KTWO KEG KFRC KRNT LLNW MCUR MTZ MXL MPO MYGN NVGS NYMT NFX OAS OCLR OKE OKS ORA OFIX PACD PZZA PKD PAYC PCTI PAA PAGP PBPB QUAD RLOC RP REGI RPAI RXN RIGL SSNI SLW SUPN TMH TX TSLA TSRA TDW TSLX TRUP X UNTD USNA VNDA WBMD WR XOXO ZAGG ZEN ZG ZNGA

Wednesday (4 Nov) :

BMO - FOXA DDD AXAS AGN AMRN ARCO ARCC ARQL ARRY AVA AVP BTE BDX BIOS BSFT CSTE CCG CECO CRZO CDW CRL CHK CBB CLH CTSH CRK CRTO CST EE EMES EFOI DAVE FOR GDP GTE HAE HSIC HEP HMC HSNI INXN KELYA FSTR LGIH LINC LL MWE MEMP MFA KORS MNTA MSI NAVB NCT NEWP NRG NYLD OIIM OMAM PPP REGN SPNS STNG SNH SHOP SBGI SODA ONCE SE SSYS SCMP SCAI TMHC GLBL TESO THR TWX USAK VIRT VRTU VSI VG VOYA WD WEC WCG WEN WMC WILN WIX
AMC - ACXM HIVE MITT ALB ALR ALNY UHAL ACAS AEL ARPI AWK ANDE NLY AREX ARC AHT ATO AVG ACLS BNFT BMR BKCC BOJA BKD BRKR BWXT CJES CABO CAA CPE CSII CSLT CDI CLDX CTL CF CDXS COHR CODI CSC CNAT CXO CBPX CLR CVG CXW BREW CCRN CSGS CVT DPM DXCM DCO DYN EGAN RDEN EOX ETP ETE ENVA EPAM EQC EVTC EPM EXAM FB FRT FOE FEYE FPRX FLT FOXF FC FTD BGC G GTY GDDY GSIG GUID GPOR HABT HASI HR HRTG HOLX AWAY HDP HUBS INOV XENT IL IO JKHY JRVR JONE KAI KAR KW KIM KND KING LADR LCI LDRH LGCY LXRX LHCG LPSN EVAR MHLD MNTX MRO MCHX MRIN DOOR MTDR MTRX MATX MBI MELI MET MCHP MIDD MB MOSY MWA MUSA MYRG NK NP NNBR NOG NFBK NWPX OME OSUR PEIX FRSH PE PDLI PFSI PMT PFMT PGTI PHH POWR PRI PRA PSEC PRU QCOM STR QUOT RNR RENT RJET REXR RLJ FUEL RST SD SBAC SWM SCSS SQNM SBY SF SGM RGR SLF SXL SUN TEP TS TERP TXMD RIG RIGP TCAP TSE TROX TUMI TWO VEC VVUS VTVT WTI WPRT WRK WSR WFM WPX WMGI XNPT XPO

Thursday (5 Nov) :

BMO - ACIW ACTA WMS AES AGIO AGU ALSK AFAM AMCX AMED AMRC ANSS APA AINV ACRE AZN AAWW ATHM BCE BCRX NILE BDBD BBEP BR CCC CNQ CRME CECE FUN CELG CNP CSG CLDT CC CNK CWEI CCOI SCOR CNSL CSTM CORE COTY CROX CONE DNR DUK DVAX ENB ENDP ENOC EGL EVA ESNT IT GLOG GEO GLP GOGO HGG HRC HFC HMHC HWCC HII IDRA IPCC IRC INSY SNOW ITG ITC ESI KATE KOP LAMR LPI LXP LBY LCUT LINE MSG MGA MSO MZOR MEG MPW MPEL VIVO MVIS MITL TAP MSGN NHI NGS NRP NTWK NWHM NDLS OGE ZEUS OMED OPK ORN PDCE PWE PRFT PBH PRIM PGNX PWR RDUS RL ROLL RLGY RGEN RVLT RWLK RICE RMP RGLD RRD SRPT SEAS MCRB SSTK SFUN SJI SPAR SRC SFM STN STWD STCK BEE SNSS SFY SYMC TEDU TE TK TNK TU TDC TIME TRXC TLP THS TPUB GTS USPH USAC VER VC VWR WAC WPP WIN
AMC - ACAD ACET ACHN AEGR AL AIRM ATSG ALDR ALEX ALIM LNT MDRX AMBR AMH AHS AMRS AMTG AGTC AAOI PETX ANET ASPN AGO ATHX ABTL AVNW RATE BEBE BBG WIFI BCEI BBRG BPI BFAM BRS BRKS BLDR CALD CPST CTRE CBI CCS CERS ECOM CLNE CLVS ED CTCT CORT CSOD CUBE CMLS CYBR CYTX DMD DEPO DRH DIOD DWA DRYS ELON EFC EBS ENTA ECPG EGN ERII EXXI ENTL ETM EVC EOG EAC EVH EXAR FICO FNGN FTEK FRM FXCM GST GERN GSAT GLOB GSM GLUU GSBD GXP GDOT HAIN HK HNSN HTGC HIL HBM ICUI IRG INFI INWK PODD ICPT INAP SNAK NVTA JJSF KMPR KHC KTOS LBTYA MAIN MASI MCFT MED MDVN MTD MSCC MITK MHK MNST MRC MFLX NFG NAVG NKTR NNI UEPS NEWR EGOV NVAX NVDA ORIG ONTY OREX OUT PRGN PGRE PCTY PKI PXLW PLNR PLT PRAA PRO QRVO QUMU RPTP RMAX RWT RLYP RBA RRTS RRMS RBCN SEMG SREV SHAK SWIR SSRI SKUL SWKS SLH SPPI STMP SRDX DATA TTWO TNGO TCPI TEAR TCRD TRMR TRIP TRUE TCX TRQ TPC UBNT UEIC OLED VRNS VVC VCYT VTL WAGE DIS WTW WG WING WK XOMA YUME ZGNX

Friday (6 Nov) : 

BMO - AEE MT BAM CI CIO EBIX SATS ERF HMSY HZNP HUM HTCH IMN LMIA LXU MHR MOG.A OSIR PMC DOC SSP TTI TC TPH TNP EGY VSAT WLH
During Mkt Hrs - YORW
AMC - BRK.B KRO

Summary

I think the bulls are certainly running out of steam here. As we are seeing in the market, the pullback is likely to continue. I suppose we should expect more profit-taking here as market is becoming overbought. With the bulls taking a break from the market, I reckon the bears is going to come in to bring the market down further for the short-term.

Next week we will be getting the unemployment number which could be a market mover and influence the Fed's decision on raising the interest rate in December.

Direction for Monday 2 Nov, 2015: Down

Direction for the week Monday 2 Nov to Friday 6 Nov, 2015: Down

2015 Daily Directional Accuracy: 111/172  (64.53%) 

2015 Weekly Directional Accuracy: 25/40 (62.50%)