DOW 17729.21 -95.08 (-0.53%), NASDAQ 4726.01 -18.39 (-0.39%),
S&P500 2046.74 -8.73 (-0.42%)
We’re back at resistance levels and unless we receive a major catalyst to break us higher, it is unlikely that we make a higher move from here.
I reckon we should be taking a dip back to our support levels once again.
Direction for Monday 9 Feb 2015: DOWN▼
Curiously the market wasn’t as bearish as I expected, and it actually kept aloft for the first half of the session, before breaking lower in the 2nd half.
That seems to suggest that we’re having some optimism here going forward, for one reason or another.
Market Summary
from Briefing.com
Industry Watch
Strong: Energy, Materials, Technology, Telecom Services
Weak: Consumer Discretionary, Consumer Staples, Health Care, Financials
Other Market Moving Factors
‘Grexit’ chatter picks up over the weekend after Prime Minister Tsipras hardens his stance before Greek parliament
German Chancellor Angela Merkel to meet with President Obama to discuss lethal aid for Ukraine
[BRIEFING.COM] The stock market kicked off the new week on a sleepy note with the S&P 500 (-0.4%) spending the day in a 15-point range. The benchmark index settled ahead of the Dow (-0.5%), but that was a small victory considering the S&P 500 finished near its session low. Above all, today’s trading volume was well below average with just 760 million shares changing hands at the NYSE floor.
Equity indices faced some pressure at the start, brought on by lingering concerns about the eurozone. Yesterday, Greek Prime Minster Alexis Tsipras spoke in front of parliament, reiterating his intention to push back against eurozone’s austerity measures. The continued defiance towards requests of the troika has led to increased chatter about a forced Greek exit from the single currency bloc. Meanwhile, Germany’s Economic Affairs Minister Sigmar Gabriel called the tone of Mr. Tsipras’ speech ‘regrettable.’ Greece’s Athens General Index tumbled 4.8% in response while the Greek 10-yr note sold off to send its yield higher by 64 basis points to 10.75%.
The concerns contributed to a lower start, but the S&P 500 did not go down without a fight. The index tried to reclaim its flat line, and was able to do so briefly on the third attempt; however, the third time was hardly the charm as a slide to a fresh session low followed. Nine sectors registered losses with countercyclical health care (-1.1%) and utilities (-0.9%) ending at the bottom of the leaderboard. The utilities sector widened its February loss to 4.6% while health care lagged even as biotechnology names displayed intraday strength. The iShares Nasdaq Biotechnology ETF (IBB 313.35, -2.24) spent the bulk of the day in the green, but slumped during afternoon action to end lower by 0.7%.
Elsewhere, another countercyclical group—consumer staples (-0.7%)—also finished behind the broader market while the six cyclical groups settled in-line with or ahead of the S&P 500.
Most notably, the energy sector surrendered the bulk of its intraday gain during the final hour, but still ended ahead of others with crude oil underpinning the relative strength. The energy component gained 2.6% and finished the pit session at $52.99/bbl. On a related note, the Baltic Dry Index fell to a new all-time low, sliding below its worst level from August 1986.
Similar to energy, the technology sector (-0.2%) settled near its flat line. The largest sector by weight enjoyed support from a handful of influential components like Apple (AAPL 119.70, +0.77), Oracle (ORCL 43.40, +0.42), and Qualcomm (QCOM 67.11, +0.76) while chipmakers struggled, evidenced by a 1.1% decline in the PHLX Semiconductor Index.
Treasuries ended the day with slim gains after a daylong slide from overnight highs. The 10-yr yield slipped one basis point to 1.95%.
Global Markets
ASIA
Asian Markets Close: Nikkei +0.4%, Hang Seng -0.6%, Shanghai +0.6%
Asian markets ended the Monday session on a mostly lower note. In Australia, Prime Minister Tony Abbott withstood a leadership challenge by a 61-39 vote.
In economic data:
China’s trade surplus expanded to $60.03 billion from $49.60 billion (expected surplus of $48.90 biilion) as exports fell 3.3% year-over-year (consensus 6.3%; prior 9.7%) while imports dropped 19.9% (consensus -3.0%; previous -2.4%)
Japan’s Current Account surplus widened to JPY980 billion from JPY910 billion (expected surplus of JPY950 billion). Separately, Household Confidence rose to 39.1 from 38.8 (expected 39.4) while Economy Watchers Current Index improved to 45.6 from 45.2 (consensus 45.7)
India’s Q3 GDP rose 7.5% year-over-year (expected 5.5%; previous 5.3%)
——
Japan’s Nikkei gained 0.4%, but settled near its low. Industrials outperformed with Kubota and NTN Corp climbing 5.2% and 6.2%, respectively. Sony ended among the laggards, down 2.4%.
Hong Kong’s Hang Seng lost 0.6% amid pressure from gaming and consumer names. Galaxy Entertainment and Li & Fung lost 2.9% and 1.7%, respectively.
China’s Shanghai Composite rose 0.6% with brokerage names in the lead. SooChow Securities and Industrial Securities both gained near 9.5%.
India’s Sensex lost 1.7% amid expectations Aam Admi Party will win Delhi elections. Tata Motors, State Bankk of India, and Tata Steel fell between 3.0% and 5.8%.
Australia’s ASX shed 0.1%. Financials outperformed while miners lagged. Macquarie gained 1.0% while Rio Tinto fell 0.5%.
Regional Advancers: Indonesia +0.1%, Philippines +0.7%
Regional Decliners: Malaysia -0.1%, Singapore -0.4%, South Korea -0.4%, Taiwan -0.4%, Thailand -0.7%, Vietnam -0.1%
FX: USDCNY rose to 6.2488, USDINR climbed to 62.12, USDJPY is lower near 118.64, AUDUSD is higher near 0.7814
EUROPE
Major European indices trade lower across the board with Italy’s MIB (-2.2%) and Spain’s IBEX (-2.4%) at the bottom of the barrel. Greek Prime Minister Alexis Tsipras spoke in front of parliament yesterday, reiterating his intention to push back against eurozone’s austerity measures. The continued defiance towards requests of the troika led to increased chatter about a forced Greek exit from the single currency bloc. Meanwhile, Germany’s Economic Affairs Minister Sigmar Gabriel called the tone of Mr. Tsipras’ speech ‘regrettable.’ In Greece, the Athens General Index has tumbled 5.9% while the Greek 10-yr note has sold off, sending the yield higher by 43 basis points to 10.54%.
Eurozone Sentix Investor Confidence improved to 12.4 from 0.9 (expected 3.0)
Germany’s trade surplus widened to EUR21.80 billion from EUR17.90 billion (expected surplus of EUR18.30 billion) as imports declined 0.8% month-over-month (expected -0.4%; last 1.2%) while exports rose 3.4% (consensus 1.0%; prior -2.2%)
CLOSING PRICES
UK’s FTSE: -0.2%
Germany’s DAX: -1.7%
France’s CAC: -0.9%
Spain’s IBEX: -1.9%
Portugal’s PSI: -0.8%
Italy’s MIB Index: -1.9%
Irish Ovrl Index: -0.6%
Greece ASE General Index: -4.8%
Economic Data
from Briefing.com
Economic Data is listed as Actual vs Consensus. Prior Data is given in brackets. If Prior Data has been revised, revised data will be given instead, together with an indication whether it was revised upward or downward.
No Economic Data
Technical Analysis
DOW JONES INDUSTRIAL AVERAGE
17729.21 -95.08 (-0.53%)
Volume: 81,586,325 (below average of 92,659,291)
Range: 17,685.32 – 17,821.49
NASDAQ COMPOSITE
4726.01 -18.39 (-0.39%)
Volume: 411.4M (below average of 449.7M)
Range: 4,719.61 – 4,749.47
S&P500 INDEX
2046.74 -8.73 (-0.42%)
Volume: 502.3M (below average of 527.7M)
Range: 2,041.88 – 2,056.16
This sets us up for a possible 3rd candle reversal, but that remains to be seen.
We’re pretty much closer to highs than to lows, so the likelihood is a continued pullback.
Market Internals
NYSE:
Lower Volumes than the day before – 775.8M vs 908.9M
Decliners outpaced Advancers (adv/dec): 1263 / 1838
New Highs outpaced New Lows (highs/lows): 58 / 21
NASDAQ:
Lower Volumes than the day before – 1631.4M vs 1910.0M
Decliners outpaced Advancers (adv/dec): 1035 / 1744
New Highs outpaced New Lows (highs/lows): 46 / 29
VOLATILITY S&P500 (VIX)
18.55 +1.26 (+7.29%)
Decliners outpaced Advancers by 1.56 on lower volumes than the day before (-411.70M -14.60%).
Even the internals don’t suggest strong bearishness, with a lack of volumes supporting. However, the decline in the New Highs is interesting to note, and might suggest a turn in sentiment going forward.
Treasury Bonds, Currencies & Commodities
from Briefing.com
Treasury Bonds
A Big Dig:
We said in today’s first comment that the Treasury market was digging out from Friday’s hole. Well, it happens to be a big dig. The effort was arduous and some progress was made, yet there is still a lot of ground left to reclaim.
Yields along the curve were either unchanged or down one or two basis points
2-yr yield unch at 0.65% (intraday range 0.60% to 0.67%)
5-yr yield unch at 1.48% (intraday range 1.42% to 1.48%)
10-yr yield -1 bp at 1.95% (intraday range 1.885% to 1.95%)
30-yr bond -2 bps at 2.52% (intraday range 2.46% to 2.52%
Low yields for the day were all established in overnight trade, driven by some safe-haven trading precipitated by the following factors:
The Greek prime minister taking a defiant stand and reiterating his position that Greece will not agree to extend its bailout program
China’s January trade report contributing to slowdown concerns that bubbled up with a 3.3% year-over-year decline in exports and a 19.9% year-over-year decline in imports
The continued inability of Russia and Ukraine to reach a peace agreement
A weak showing from European stock markets and indications that the U.S. stock market was poised for a negative start
Notably, securities across the curve went out at, or near, their high yields for the day even while U.S. stocks were selling off to their worst levels of the day
Technical factors appeared to be in play as a market driver.
Following the attempt overnight to push the 10-yr yield back to the range it traded in from mid-January until Friday’s employment report, sellers stepped in to curb buyers’ enthusiasm and support did not hold.
U.S. Dollar Index dipped 0.2% as the greenback lost ground against the euro and the yen
EUR/USD +0.2% to 1.1332
USD/JPY -0.7% to 118.48
The weaker dollar and OPEC bumping up its 2015 world oil demand forecast by 1.17 million barrels per day helped keep a bid in oil prices
WTI crude settled up 2.6% at $52.99/bbl (up 19% since January 28)
There was no U.S. economic data today. Reports tomorrow include NFIB Small Business Optimism Index for January (09:00 ET); December Wholesale Inventories (10:00); and December JOLTS – Job Openings (10:00)
Overnight reports will feature China’s CPI report and industrial production data from Italy and the UK
2Yr 0.65 (unch), 5Yr 1.49 (+0.01), 10Yr 1.96 (+0.01), 30Yr 2.52 (+0.01)
2/10 Spread: 131bps (+1); 2/30 Spread: 187bps (+1)
Currencies
Currency Commentary: Markets Await EU Meetings
The Dollar Index is back to rolling around in the high end of 94. The currency continues to fall short of the 95 as resistance holds. However the DXY has shown signs of once again being able to hold the 94.40 area. It has been a very quiet morning on the economic data front. The primary focus is on G-20 and EU Finance Minister meetings later in the week. Following the strong jobs report last Friday, the U.S. monetary debate will center on Janet Yellen’s Humphrey Hawkins testimony on February 24.
The euro slipped back to the 1.12 area as markets watch Greece and the EU collide over the next steps in the Greek debt drama. Over the weekend, Greek PM Tsipras reiterated his government’s goals of reaching an extension agreement while rejecting the current bailout packages. The two sides will meet at an EU Finance Ministers meeting on Wed and a Leader’s Group meeting on Thursday in two highly anticipated events. The two sides will try and paint a picture of them closing in on an agreement. But it is unlikely that the two sides will come to an agreement this early, so investors will be watching closely to headlines and reaction to currencies. Germany showed it was performing well with the cheap euro as its trade balance posted a higher than expected surplus.
The pound has slipped to the low end of 1.52 but has held that level following its recent break out. The ability for sterling to hold 1.52 will be important as it attempts to recover early 2015 losses.
The yen is testing it’s 50 sma as we see it recover some of the post-jobs losses. Japan’s current account surplus came in higher than expected over the weekend. Focus will be on Machine Tool orders numbers which will be released Wednesday evening
Commodities
Closing Commodities: Baltic Dry Index Falls Back To All-Time Low; Crude Rallies
Baltic Dry Index falls 5 points to its all time low of 554, initially hit in August 1986
However, this collapse is different vs the 2008 collapse
The 2008 collapse was largely demand driven. This current collapse if both supply and demand driven, but more supply driven (oversupply of vessels)
Related stocks include
DRYS, GNK, PRGN, DSX, FREE, EGLE, NM, NMM, SBLK, KEX, SB, SINO, BALT, SHIP, DCIX.
WTI crude oil futures rallied today and rose as high as $53.99/barrel
By the end of today’s session, Mar crude has rallied $1.32 to $52.99/barrel
Natural gas futures were modestly higher all day after selling off from overnight low of $2.69/MMBtu
Apr gold and Mar silver ended the day with modest gains.
Energy Price Action
Mar crude oil futures rose $1.32/barrel to $52.99/barrel
Mar natural gas rose $0.02 cents to $2.60/MMBtu
RBOB Gasoline closed $0.02 higher (or +1.3%) at $1.58/gallon
Heating oil closed $0.04 higher (or +2.2%) at $1.88/gallon
Agricultural Price Action
Mar corn closed $0.05 higher at $3.91/bushel
Mar wheat closed $0.01 higher at $5.29/bushel
Feb soybeans ended $0.05 higher at $9.79/bushel
Ethanol closed $0.02 higher at $1.46/gallon
Sugar #11 closed 0.31 cents higher at 14.82 cents/lb
Metals Price Action
Apr gold ended today’s session $7.00 higher at $1241.60/oz
Mar silver ended $0.39 higher at $17.07/oz
Mar copper closed flat compared to yesterday at $2.58/lb
Preview: Tuesday 10 Feb
Economic Data
Economic Data is listed as Consensus by default. Prior data will be given in brackets. If Consensus Data is not available, Prior data will be given without brackets. If Prior Data has been revised, the revised data will be given together with an indication whether it was an upward or downward revision.
Wholesale Inventories – 10:00 : 0.2% (Prior 0.8%)
JOLTS – Job Openings – 10:00 : Prior 4.972M
Corporate Earnings
BMO : ACM ALR ALLT BILE CDW KO OFC CVS CYNO DF ENTG GWR HCP HNT IMN NSP KKR MLM TAP MWW OMC PCG REGN SALE RAI SEE SFUN SAVE HOT WYN
AMC : ATEN AKAM ANDE ACGL BLKB CAP CERN CRL ELON FRT FSRV FTI FWRD GHDX GNW HIW JIVE KFRC KGC LOCK MKTO NCR PAYC PAHC PXD RLOC RPXC RKUS SGMO SGEN SCI SKT TMH TSRA THOR TRMB USNA VSAT WU WSH XOOM
Other Events of Interest
Fed/Treasury/Political Events
Fed’s Lacker – 08:20
$24bln 3-Year Treasury Note Auction – 13:00
Economic Events
UK Manufacturing PMI – 04:00
USDA WASDE Report – 12:00
Commentary
The bearish sentiment isn’t exactly in play, and if we’re looking for a pullback back to support levels, we’re going to need a stronger bearish follow-through.
That’s what I’ll be looking for in Tuesday’s session.
Direction for Tuesday 10 Feb 2015: DOWN▼
Daily Directional Accuracy: 16/20 (80.00%)
Weekly Directional Accuracy: 3/5 (60.00%)