Market Update: 8 February 2010 BMO
|
All it took was one massive down day to bear-down the whole week. What happened on Friday was freaky – we’ll be looking very closely at what happened on Friday after 1400 hours …
|
I would have preferred to have tanked instead of letting the PPT get back in the game.
Market Internals for Friday 5 February 2010 – 17:30
Leading Sectors: Financials (+1.22%), Tech (+1.10%), Telecom (+0.50%), Materials (+1.74%).
Leading Industries : Gold miners- GDX +5.4%, SPDRS metals/mining- XME +2.9%, Semis- SMH +2.5%, IGW +2.3%, nat gas- UNG +1.7%, iShares REITS & real estate- ICF +1.9%, IYR +1.9%, Basic materials- XLB +1.9%, IYM +1.25%, iShares US broker/dealers- IAI +1.8%.
Lagging Sectors: Health Care (-0.22%), Consumer Staples (-0.08%), Consumer Discretionary (-0.47%), Industrials (-0.56%), Energy (-0.12%),
Lagging Industries: RBOB gas- UGA -2.2%, Heating oil- UHN -2.2%, Commods- GSG -2.0%, Base metals- DBB -1.7%, Global shippers- SEA -1.5%, Crude/WTI oil- USO -1.7%, During OIL -1.7%, DBC -1.3%, India- INP -1.3%, iShares S Korea- EWY -1.2%.
NYSE :
Higher than avg volume @ 1562 vs closing avg of 1220
Decliners outpacing Advancers (adv/dec): 1326/1740
New highs outpacing new lows (hi/lo): 26/25
NASDAQ :
Higher than avg volume @ 2818 vs 2133
Advancers outpacing Decliners (adv/dec): 1433/1214
New lows outpacing new highs (hi/lo): 16/49
Other Market Moving Factors:
• Late day short-covering rally coincides with pullback in the dollar from 6-month highs
• January payrolls fall unexpectedly, but unemployment rate moves lower
COMMENTARY
|
I take that back … never underestimate the power of the dark side … er … I mean the PPT … waitaminit, they one in the same! 
___________________________________________
TECHNICAL UPDATE – MONDAY 08 FEBRUARY, 2010 – BMO
DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,012.23 +10.05 (+0.10%)
Volume: 308,320,075 (+1.34%)
Range: 9,835.09 – 10,031.96 (196.87 points)
The DOW and almost everything else in the U.S. market finished with impressive Hammers, implying an end to the downtrend and a strong possibility of a reversal on Monday. The DOW barely kept its head above 10,000 to give some hope to the purist technician. But it remains rooted below the 100DSMA for a second straight day.
NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,141.12 +15.69 (+0.74%)
Volume: 823,186,454 (+1.14%)
Range: 2,100.17 – 2,142.27
S&P 500 INDEX (SPX: CBOE)
1,066.19 +3.08 (+0.29%)
Volume: 5,400,868,400 (+5.21%)
Range: 1,044.50 – 1,067.13
|
I wrote that about the previous Friday’s (29 Jan) action. Last week, the Decliners swung into action at 1400 hours and drastically changed the numbers. Volumes picked up and prices tanked.
Last Friday, 5 February, it pretty much looked like a mirror. The Advancers swung into action by 1400 hours and changed the numbers while all the internals pointed to a bullish commitment by 1500 hours. The intraday recovery was an impressive 172 point rally.
The VIX dropped, total volumes (black) picked up, up volumes (blue) spiked and down (green) volumes stalled …
… the Tick and Trin reversed without any doubt … Just check out the swing on the internals in the last hour of trading …
Decliners outpaced Advancers by an average 1.07 to 1 on higher volumes (+30.63%) on Friday (avg +0.38%).
I just cannot be convinced that the market actually returned on its own merit. There is still something very wrong with this picture and I can’t put a finger on it. If you simply add up the hour-on-hour volumes, there is no way the last two hours of up volumes could outweigh the day’s down volumes between 0930 and 1400 hours.
In time, I guess we’ll find out.
COMMODITIES & BONDS – Summary for Monday 01 to Friday 05 February, 2010
Natural Gas Outperforms Commodity Complex; Precious Metals Worst Performers, While Ags Outperformed
Commodities were mixed this week, with metals turning out to be the worst performers and agriculture the best performers. Crude fell 2.3% on the week, while natural gas managed to gain 7.5%, while most other commodities were suffering. Silver was the worst performer with a loss of 8.1% on the week. Gold fell 2.8%. Copper futures posted a sizable loss of -6.4%, while the Baltic Dry Index fell 5.7%. The US Dollar Index was one of the largest contributors to weakness as it put in its highs for the week on Friday, after pushing into positive territory on Wednesday.
Looking more closely at energy, February crude oil futures extended last week’s loss of 1.8% by losing another 2.3% this week to close at $71.19 per barrel. Crude traded in positive territory for the first half of the week, hitting highs overnight on Wednesday and then showing a muted reaction to Wednesday’s inventory data (build of 2317K vs. consensus of a build of 400K). However, crude began to fall sharply ahead of the open of floor trading on Thursday, losing over $3 and pushing crude back to the unchanged line. In trading on Friday, losses extended and crude actually fell sharply for over $3 again, hitting a low not seen since Dec. 15, 2009. To end the week, crude closes just above its low for the week.
Natural gas was choppy all week but managed to stay in positive territory, despite late-week strength in the dollar. Inventory data (draw 115 bcf vs. consensus of a draw of 121 bcf) pushed natural gas to its lowest levels of the week on Thursday of around $5.273. However, natural gas bounced off that low to put in session highs on Friday around $5.60, closing just under those levels on the week.
Precious metals were pretty flat for the first half of the week, with only one volatile trading session, which occurred on Thursday when gold and silver fell sharply and into negative territory. Both precious metals extended losses on Friday and put in fresh lows for the week (Gold $1044.50, silver 14.65).
In industrial metals, March copper lost 6.4% the week to $2.86, while aluminum prices lost 1.7% to $2055.25/ton, now well under its recently hit 15-month high of $2370.50/ton hit on December 6.
Ag commodities outperformed the overall commodity complex, excluding natural gas futures. Wheat and soybeans were flat this week, while corn futures fell 1.4% primarily on strength in the dollar. The ag market is currently waiting to see how the South American soybean harvest ends up because it will have a large affect on corn and soybeans futures. For now, the next notable catalyst driving the ag market is the next USDA supply/demand report released on Feb. 9.
The dry bulk shipping sector, the Baltic Dry Index (the cost of renting ships) fell 11.1% to 3204, as indicated by the benchmark Baltic Dry Index (BDI).
Treasuries finished the week on a high note with the market getting back the past couple weeks in fairly dramatic fashion as stocks crashed, concern over the European situation and general uncertainty in increasingly volatile markets. The day’s payrolls report was still given much currency, but the sovereign debt risk issues weighing on the continent continue to suck out riskier business as the flight-to-quality trade rules. The possibility that some jitters will be soothed along with likely corrective action could add drag come Monday (as well as the end of a potentially tumultuous weekend).
The week ahead has a light calendar with the bonds big events being the $40B 3-yrs Tuesday, $25B 10-yrs Wednesday and $16B 30-yrs Thursday. There will also be the mid-week circus of Bernanke’s testimony on unwinding all the bailout schemes without blowing up the markets. Could be interesting, but the players should choose their words very carefully and Bernanke likely to do some fancy dancing to avoid being painted in to a policy or concrete plan corner. The curve was worked flatter in the late session with the 2-10-yr yield spread running 279.5.
The dollar was backed off its best levels late but the index is holding near July levels, the yen near its year’s best on the euro which was just whacked down generally, holding near its worst level since May on the buck.
Treasury Yields :
• 2 Year Note 0.76% -0.04
• 5 Year Note 2.23% -0.07
• 10 Year Note 3.56% -0.04
• 30 Year Bond 4.52% -0.02
2/30 Spread : 376bps (+2) … 2/10 Spread : 280bps (unch)
Two straight days of massive running into bonds as the dollar-equity carry trade becomes more apparent.
Gold (CMX ) April 10 ($US per Troy oz.) : 1,053.50 ( -9.50 )
Light Crude (NYM ) March 10 ($US per bbl.) : 71.19 ( -2.94 )
Earnings Highlights for week Monday 08 to Friday 12 February 2010
Monday:
BWP, CVS, ERTS, ESLR, FWRD, LNC, and TWTC.
Tuesday:
BIIB, BJS, KO, CTSH, CVH, TAP, NYX, WMG, NTGR, and DIS.
Wednesday:
MT, CCE, DF, DISCA, ELN, ICE, LVLT, S, WYN, ALL, BSX, PL, PRU, and SWIR.
Thursday:
ALU, EXPE, FLIR, JASO, MAR, PEP, PM, STRA, VIA.B, ACL, AB, BJRI, NILE, BWLD, CEPH, CAKE, CMG, CSTR, MFE, and PNRA.
Friday:
ALE, HCP, PAS, and UPL.
Events for week Monday 08 to Friday 12 February 2010
Monday:
None
Tuesday:
10:00 am Wholesale Inventories
Wednesday:
08:30 am Trade Balance
10:30 am Crude Inventories
14:00 am Treasury Budget
Thursday:
08:30 am Initial Claims
08:30 am ContinuingClaims
08:30 am Retail Sales Jan
08:30 am Retail Sales ex-auto
10:00 am Business Inventories
10:30 am Natural Gas Inventories
Friday:
09:55 am Mich Sentiment
Conferences and Shareholder/Analyst Meetings of Interest
for week Monday 08 to Friday 12 February 2010
Monday:
- WAG, HUM, UAM, WLP at UBS Global Healthcare Services Conference
- $24 bln 3-month and $27 bln 6-month Treasury Bills Auctions
- LINC, FFIV, PENN, RAX at Deutsche Bank Securities Small and Mid Cap Conference
Tuesday:
- ODSY, MHS, AET, SUNH at UBS Global Healthcare Services Conference
- RHT, SAP, ADBE, ENTR at Thomas Weisel Technology & Telecom Conference
- $40 bln 3-yr Treasury Notes Auction
Wednesday:
- AMTD, BAC, COF, WFC at Credit Suisse Financial Services Conference
- AMSC, FLO, FMC, POWI at Deutsche Bank Securities Small and Mid Cap Conference
- Fed’s Tarullo
Thursday:
- ZION Analyst Meeting
- AMP, LNC, MET, NYX at Credit Suisse Financial Services Conference
- $16 bln 30-yr Treasury Bond Auction
Friday:
- AXAS at NAPE Expo 2010
NOTE: Monday 15 February 2010 is President’s Day. The markets will be closed.
__________________________
SUMMARY
This week is going to be tough to call as the second week of February is always never consistent. It should be a fairly bullish week considering we have the eve of a three-day weekend on Friday and two of the most historically bullish February days within the week.
Technicals and the psychological 10,000 should also provide some upside impetus as the market takes a breather from too much tanking over the last three weeks. Upside should be limited to 10,300 while 10,000 should continue to provide some form of support.
However, if I get it wrong, we’re getting down to those 9,730 and 9,620 levels in a hurry and if we do, this will be a catalyst for worst things to come.
If you enjoyed this post, please consider to visit Pattern Trader Tools, leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Sorry, the comment form is closed at this time.