Tuesday, 3 Nov 2015 - AMC

Dow +89.39 at 17918.15, Nasdaq +17.98 at 5145.13, S&P +5.74 at 2109.79

Well market continue to squeeze higher on Tuesday. It looks like a similar session to yesterday. But I think we definitely see more weakness in the bullishness with the profit-taking in the last 2 hours. However TRIN was staying well below 1 throughout the session. So I suppose the market is still generally bullish. 

Mixed performance across the global markets with Asia market seeing a slight downside and little gain in the Europe markets. 
  

Market Summary

Industry Watch

Strong: Consumer Discretionary, Energy, Technology

Weak: Consumer Staples, Financials, Health Care, Utilities

Other Market Moving Factor:

• Disappointing earnings from AIG (AIG), Archer-Daniels (ADM), and Sprint (S) contribute to initial weakness

[BRIEFING.COM] The stock market registered its second consecutive gain on Tuesday with the S&P 500 climbing 0.3%. The benchmark index settled a bit behind the Nasdaq Composite (+0.4%) and the Dow Jones Industrial Average (+0.5%) with cyclical sectors pacing the advance. 

Equity indices saw modest losses at the start of the trading day, but the market was able to overcome the early weakness thanks to continued leadership from the energy sector as the growth-sensitive group charged higher by 2.5% to extend this week's gain to 5.0%. Today's rally was powered by a 3.8% spike in crude oil, which settled at $47.90/bbl, while top-weighted components like Chevron(CVX 98.14, +3.18) and Exxon Mobil (XOM 86.83, +1.55) posted respective gains of 3.4% and 1.8%. 

Similar to energy, most of the remaining cyclical sectors ended the day in positive territory with the influential technology (+0.6%) space showing relative strength. The top-weighted tech sector was underpinned by some of its largest members with Apple (AAPL 122.57, +1.39), IBM (IBM 141.88, +1.51), and Microsoft (MSFT 54.15, +0.91) gaining between 1.1% and 1.7% while Visa (V 77.87, +2.65) surged 3.5% to erase the entirety of yesterday's earnings-driven drop. 

Elsewhere among cyclical sectors, the industrial space settled on its flat line as transport stocks lagged. The Dow Jones Transportation Average lost 0.4% with freight carriers struggling. On the earnings front, Expeditors International (EXPD 49.75, -1.05) surrendered 2.1% after reporting a two-cent beat on below-consensus revenue. 

Over on the countercyclical side, the utilities sector (+0.3%) settled in-line with the market while health care (-0.3%), telecom services (-0.4%), and consumer staples (-0.5%) lagged throughout the session. The health care sector struggled despite a modest uptick among biotech names, evidenced by a 0.3% gain in iShares Nasdaq Biotechnology ETF (IBB 339.08, +1.02). 

That leaves the consumer staples sector (-0.5%), which finished behind the remaining nine groups with Archer-Daniels Midland (ADM 43.15, -3.13) falling 6.8% in reaction to disappointing results. 

Today's quiet advance in stocks occurred alongside a modest slide in the bond market with the 10-yr yield rising five basis points to 2.22%. 

Investor participation was ahead of average with more than 900 million shares changing hands at the NYSE floor. 

Economic data was limited to the Factory Orders report for September, which showed a decrease of 1.0% while the Briefing.com consensus expected a decrease of 0.9%. 

The report showed new orders for durable goods declined 1.2%, which was in-line with the advance release in the prior week's Durable Orders report. Excluding transportation, durable goods orders declined 0.6%, which was weaker than the 0.4% decline reported in the advance release. 

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while October ADP Employment Change (Briefing.com consensus 180,000) and September Trade Balance (consensus -$43.00 billion) will be reported at 8:15 ET and 8:30 ET, respectively. The day's data will be topped off with the 10:00 ET release of the ISM Services report for October (expected 56.6).

Global Market (currently unavailable)

Macroeconomic Data

Economic Data

from Briefing.com

• Factory Orders : -1.0% vs -0.9% (Prior -2.1% - Down)
• Auto Sales : (Prior 5.8M)
• Truck Sales : (Prior 8.9M)

FACTORY ORDERS

Highlights

• Factory orders declined 1.0% in September on top of a downwardly revised 2.1% decline (from -1.7%) in August. The September reading was slightly weaker than the Briefing.com consensus estimate, which called for a 0.9% decline.

Key Factors

• The report showed new orders for durable goods declined 1.2%, which was in-line with the advance release in the prior week's Durable Orders report. 
• Excluding transportation, durable goods orders declined 0.6%, which was weaker than the 0.4% decline reported in the advance release.
• Nondurable goods orders declined 0.8% after declining 1.3% in August.
• Orders for nondefense capital goods excluding aircraft -- a proxy for business investment -- declined 0.1%. That was up from the 0.3% decline reported in the advance release. Shipments of these goods, which factor into GDP computations, increased 0.5% after declining 0.8% in August. That was unchanged from the advance release.

Big Picture

• The weakness in the manufacturing sector continues to reflect the headwinds generated by a strong dollar, which has crimped export demand, and the drop in oil prices which has reduced demand for drilling equipment.

Market Internals

NYSE:

Higher Volumes than the day before – 936.4M vs 860.9M 


Advancers outpaced Decliners (adv/dec): 1799 / 1273

New Highs outpaced New Lows (highs/lows): 103 / 20

NASDAQ:

Higher Volumes than the day before – 2010.4M vs 1998.0M

Advancers outpaced Decliners (adv/dec): 1701 / 1137

New Highs outpaced New Lows (highs/lows): 89 / 30

VOLATILITY S&P500 (VIX)
14.54 +0.39 (+2.76%)

Internals are not getting somewhat bullish despite we saw a sharp rise in the New Highs. Volume was slightly better compared to the day before. VIX was showing some upside which reflects the lack of conviction in bullishness actually. It actually looks like we might see an upticks in VIX soon.

Technical Updates

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)

17,918.15 +89.39 (+0.50%)

Volume: 92,285,187 (below average of 117,422,079)
Range: 17,796.02 - 17,977.85

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)

5,145.13 +17.98 (+0.35%)
Volume: 446,936,265 (below average of 478,439,103)

Range: 5,109.68 - 5,163.47

S&P 500 INDEX (SPX: CBOE)

2,109.79 +5.74 (+0.27%)

Volume: 588,205,000 (below average of 656,967,560)

Range: 2,097.51 - 2,116.48

I think the 3 indices are forming the topping pattern. The respective indices were somewhat rejected by their upper bound of the Bollinger Bands. This is a sign of overbought in the market. S&P was also rejected by its resistance level and this concurs with the weakness we saw in the price actions. I will be looking for a correction in the market before we could see a year-end rally...

Currencies

Greenback Finds Footing 

• The U.S. Dollar Index regained its footing today, rising 0.36% to 97.27. The rally snapped a three-day losing streak and continues to be supported by expectations for divergence between U.S. and eurozone monetary policy (the single currency is about 58% of the index). The December FOMC meeting is a toss-up for a rate hike and eurozone sovereign debt investors have been pricing in the possibility of a deposit rate cut from the European Central Bank or an expansion/extension of its EUR 1.1 tln asset purchase program 
  • U.S. factory orders fell by 1.0% in September, missing the Briefing.com consensus for a decline of 0.9%
• EUR/USD: -0.57% to $1.0951
  • Spanish unemployment climbed by a greater-than-expected 82,327 in October
    • Unemployment in Spain (21.18%) is the second-highest of the eurozone behind Greece 
• GBP/USD: +0.03% to $1.5423
  • The U.K.'s purchasing managers' index for the construction sector as in line with expectations for October at 58.8, down from 59.9 in September. The reading still indicated rapid expansion and marked the 29th straight month of growth in construction activity
• USD/CHF: +0.45% to 0.9915 
• USD/JPY: +0.26% to 121.15
• USD/CAD: -0.37% to 1.3049
• AUD/USD: +0.55% to 0.7193
  • The Reserve Bank of Australia kept its main policy rate at 2.00%, a record low. Some economists, albeit a minority, had forecast another cut
• NZD/USD: 
  • New Zealand's ANZ Commodity Price Index rose by 6.9% m/m in October after climbing 5.5% in September
• USD/BRL: -2.69% to 3.7695
  • Brazil's manufacturing PMI, complied by Markit, fell more than expected to 44.1 in October from 47.0 in September

Bonds

Treasuries Decline for Fourth Session in Last Five

• U.S. Treasuries lost ground today in a session light on economic data, as the market trends established with the release of the October FOMC statement last Wednesday continued to put pressure on government debt. The August and October lows in the 10 and 30-year yields are beginning to look like "higher lows," the first lows having occurred earlier in the year. WTI crude made strong progress higher and the S&P 500 rallied 0.40% to 2,112.48, neither of which helped inspire buyers in Treasuries. Tomorrow will see a raft of Fed speakers including Fed Chair Yellen's testimony before the House Financial Services Committee on bank regulation and supervision
• Yield Check:
  • 2-yr: +1 bp to 0.76%
  • 5-yr: +4 bps to 1.59%
  • 10-yr: +5 bps to 2.22%
  • 30-yr: +5 bps to 3.00%

• News:
  • U.S. factory orders fell by 1.0% in September, worse than the Briefing.com consensus for a decline of 0.9%
    • The weakness in manufacturing reflects the headwinds generated by a strong dollar, which has hindered growth in demand for exports, and the decline in oil prices which has reduced demand for drilling equipment
  • The European Central Bank released a report that said its asset purchase program is working
    • "Overall, the improved credit conditions in the euro area have helped push the monetary policy accommodation through the intermediation chain to reach households and firms"

• Commodities:
  • WTI crude: +3.64% to $47.82/bbl.
  • Gold: -1.64% to $1,117.30/troy oz.
  • Copper: +0.71% to $2.34/lb.

• Currencies:
  • EUR/USD: -0.46% to $1.0965
  • USD/JPY: +0.14% to 121.01

• Data Out 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)
• Fed Speakers:
  • Fed Governor Brainard (FOMC voter) participates in "Financial Stability" panel at ECB Forum on Banking Supervision (05:30 ET)
  • Philadelphia Fed President Harker (non-FOMC voter) (08:45 ET)
  • Fed Chair Yellen testifies before House Financial Services Committee on Fed action and plans for bank regulation and supervision (10:00 ET)
  • New York Fed President Dudley (FOMC voter) participates in briefing, "Looking Beyond the Macroeconomy" (10:00 ET)
  • Fed Vice Chair Fischer (FOMC voter) (18:00 ET)

Treasury Yields:

• 2 Year Note 0.80% +0.03
• 5 Year Note 1.59% +0.02
• 10 Year Note 2.23% +0.03
• 30 Year Bond 3.00% +0.05

2/30 Spread: 220 bps ( +2 ) …  2/10 Spread: 143 bps ( UNCH )

Preview for Wednesday 4 Nov, 2015

Economic Data

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) 

Earnings Highlights 

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

Summary

Market has been moving to the upside without much volume. That is not really convincing to me. Possibly it was influenced by the rise in oil price. However I am starting to see some profit-taking before market closed today. So maybe we might see a follow through tomorrow.

We will be getting the numbers for ADP employment and crude inventories next day. Also there are going to be many Fed members speaking throughout the day including Fed Chair Yellen's testify at 10am ET. I suppose that is going to volatility to the market.

Direction for Wednesday 4 Nov, 2015: Down

2015 Daily Directional Accuracy: 111/174  (63.79%) 

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