Macro Market · Market Commentary · Newsletter

Daily Commentary – US Dollar in the Spotlight Again

Another day, another breakout in the US Dollar, as the Dollar Index (DXY) broke to new highs since March, creating a short-term parabolic move in the process. The main catalyst of the day was the release of the FOMC minutes, during which it was revealed that “U.S. central bankers debating the merits of raising interest rates last month described the decision as a close call, with several saying a rate hike was needed “relatively soon,””

20161013-DX.jpg

http://www.bloomberg.com/news/articles/2016-10-12/fed-says-several-fomc-members-saw-rate-rise-relatively-soon

Treasury Bonds, which had been under pressure since the beginning of the quarter, erased earlier losses and posted a potential bullish reversal. The TLT has been able to hold the Sept lows and yesterday created a bullish hammer candle, setting the stage for a relief rally.

20161013-TLT.png

Major US equity indices including SPX and Dow were flat on the day, while Nasdaq was slightly red, dragged down mainly by the beleaguered Biotechs (IBB) once again. Utilities (XLU) and REITs (IYR) were outperforming sectors of the day on stabilizing interest rates, which we had been anticipating.

The IYR is particularly bullish with a bullish engulfing candle launched off the 200DMA, and should have follow-through towards the 20DMA.

20161013-IYR.png

The Biotechs once again could not get a break, as IBB broke through recent consolidation and threatens to close under 20WMA, which has been a critical pivot in recent years. Absent a rally back above, 200WMA will be a magnet on the downside.

20161013-IBB.png

Switching gears, oil fell under 50 after OPEC reports rising output. Per CNBC, “Traders said oil markets had come under pressure after Organization of the Petroleum Exporting Countries (OPEC) reported a rise in production, despite the producer cartel having plans, potentially with non-OPEC producer Russia, to cut output in a bid to rein in a global supply overhang.”

http://www.cnbc.com/2016/10/12/oil-prices-fall-after-opec-reports-rising-output-us-crude-inventories-rise.html

The ST technical picture looks shaky after closing below bullish channel in the 4-hour chart, and on the weekly chart, all gains were wiped out this week and it will be a failed breakout unless oil rallies back into Friday.

20161013-CLDaily.png

While stock market today was able to stop the bleeding by closing near flat on the day, it is on shaky grounds especially with technical damage inflicted on SPX and Dow by closing under the previously much documented triangle wedge. The Nasdaq (QQQ), which has been the top performer during the rally off post-Brexit lows, is still clinging onto 50DMA and breakout area. But things maybe turning for the worse, as the Nasdaq futures overnight plunged through bullish trendline off June lows, and support is few and far between until 4760. S&P futures similarly crumbled through its respective bullish trendline.

20161013-NQ.png

Upcoming earnings could potentially provide a spark to the market. On Friday, three major banks in Citigroup (C), JP Morgan (JPM) and Wells Fargo (WFC) will be reporting. It appears only more than stellar reports can save the market from further turmoil.

 

 

 

Daily Market Snapshot

Sector ETFs by Daily Return %

SYMBOL NAME CLOSE DAILY (%) MTD % YTD %
IYR iShares Dow Jones U.S. Real Estate Index Fund 77.26  

1.03

1.34%

-4.19% 2.90%
XLU SPDR Select Sector Fund – Utilities 47.43  

0.46

0.97%

-3.18% 9.59%
XRT SPDR S&P Retail ETF 43.68  

0.33

0.76%

0.30% 1.02%
XLP SPDR Select Sector Fund – Consumer Staples 52.35  

0.29

0.56%

-1.62% 3.68%
XLY SPDR Select Sector Fund – Consumer Discretionary 79.27  

0.37

0.47%

-0.96% 1.42%
XLI SPDR Select Sector Fund – Industrial 57.13  

0.11

0.19%

-2.14% 7.77%
XLK SPDR Select Sector Fund – Technology 47.49  

0.08

0.17%

-0.61% 10.88%
XLG Rydex Russell Top 50 ETF 151.67  

0.23

0.15%

-0.72% 4.90%
SPY SPDR S&P 500 213.71  

0.28

0.13%

-1.20% 4.83%
DIA Dow Jones Industrial Average ETF 181.37  

0.17

0.09%

-0.77% 4.30%
XLFS S&P SmallCap Financials Portfolio 30.83  

0.02

0.06%

1.25% -0.16%
SMH HOLDRS Merrill Lynch Semiconductor 67.97  

0

0%

-2.16% 27.57%
IWM iShares Russell 2000 121.93  

-0.1

-0.08%

-1.84% 8.27%
QQQ PowerShares QQQ Trust 117.42  

-0.1

-0.09%

-1.10% 4.97%
XLF SPDR Select Sector Fund – Financial 19.52  

-0.02

-0.10%

1.14% 2.42%
KRE SPDR KBW Regional Banking ETF 42.83  

-0.07

-0.16%

1.32% 2.17%
XLB Materials Select Sector SPDR 46.41  

-0.09

-0.19%

-2.81% 6.89%
XLE SPDR Select Sector Fund – Energy Select Sector 70.6  

-0.3

-0.42%

-0.01% 17.04%
XLV SPDR Select Sector Fund – Health Care 70.06  

-0.33

-0.47%

-2.84% -2.73%
PFF iShares S&P US Preferred Stock Fund 38.71  

-0.22

-0.57%

-2% -0.36%
IBB iShares Nasdaq Biotechnology 270.13  

-6.87

-2.51%

-6.68% -20.16%

 

Commodity & Bond ETFs

SYMBOL NAME CLOSE DAILY  (%) MTD % YTD %
GDX Market Vectors TR Gold Miners 23.07  

0.49

2.15%

-12.71% 68.15%
SLV iShares Silver Trust 16.65  

0.09

0.54%

-8.52% 26.23%
GLD SPDR Gold Trust 119.74  

0.19

0.16%

-4.70% 18.02%
LQD iBoxx $ Investment Grade Corporate Bond Fund 121.89  

0.16

0.13%

-1.05% 6.91%
TLT iShares Barclays 20 Year Treasury Bond Fund 132.96  

0.13

0.10%

-3.13% 10.27%
AGG iShares Barclays Aggregate Bond Fund 111.4  

0.04

0.04%

-0.91% 3.14%
HYG iShares iBoxx $ HY Corp Bond Fund 86.88  

-0.03

-0.03%

-0.44% 7.82%
DBA PowerShares DB Agriculture Fund 19.94  

-0.08

-0.40%

-0.20% -3.25%
USO United States Oil Fund 11.43  

-0.15

-1.30%

4.57% 3.91%

Country ETFs

SYMBOL NAME CLOSE DAILY (%) MTD % YTD %
EWT iShares MSCI Taiwan Index Fund 15.73  

0.17

1.09%

0.19% 23.18%
EWA iShares MSCI Australia Index Fund 20.73  

0.14

0.68%

-0.81% 9.34%
EWH iShares MSCI Hong Kong Index Fund 21.74  

0.14

0.65%

-1.23% 9.69%
DXJ WisdomTree Japan Total Dividend Fund 43.91  

0.21

0.48%

2.33% -12.32%
EWC iShares MSCI Canada Index Fund 25.27  

0.05

0.20%

-1.63% 17.53%
EWY iShares MSCI South Korea Index Fund 56.09  

0.06

0.11%

-3.51% 12.93%
EWU iShares MSCI United Kingdom Index Fund 15.2  

0

0%

-4.04% -5.82%
EWM iShares MSCI Malaysia Index Fund 8  

0

0%

-1.36% 3.36%
EWP iShares MSCI Spain Index Fund 26.18  

-0.02

-0.08%

-2.39% -7.39%
EWN iShares MSCI Netherlands Index Fund 24.51  

-0.02

-0.08%

-2.19% 2.81%
FXI iShares FTSE/Xinhua China 25 Index Fund 37.83  

-0.05

-0.13%

-0.47% 7.20%
EWJ iShares MSCI Japan Index Fund 12.36  

-0.02

-0.16%

-1.44% 1.98%
EEM iShares MSCI Emerging Index Fund 37.15  

-0.07

-0.19%

-0.80% 15.41%
EWI iShares MSCI Italy Index Fund 10.86  

-0.03

-0.28%

-1.45% -20.96%
EWW iShares MSCI Mexico Index Fund 50.48  

-0.15

-0.30%

4.13% 1.30%
EWO iShares MSCI Austria Index Fund 16.07  

-0.05

-0.31%

-1.53% 2.68%
EWQ iShares MSCI France Index Fund 23.73  

-0.08

-0.34%

-1.78% -1.98%
EWX SPDR S&P Emerging Markets Small Cap ETF 42.74  

-0.15

-0.35%

-0.97% 13.34%
EWZ iShares MSCI Brazil Index Fund 35.45  

-0.13

-0.37%

5.10% 71.42%
EWL iShares MSCI Switzerland Index Fund 29.78  

-0.12

-0.40%

-2.52% -4.06%
EWK iShares MSCI Belgium Index Fund 18.41  

-0.08

-0.43%

-2.39% 1.94%
EWG iShares MSCI Germany Index Fund 25.78  

-0.19

-0.73%

-1.87% -1.57%
EWS iShares MSCI Singapore Index Fund 10.42  

-0.1

-0.96%

-4.05% 1.36%
EWD iShares MSCI Sweden Index Fund 28.24  

-0.33

-1.16%

-2.86% -3.22%

 

 

 

 

 

Days Ahead – Events and Economic Data

10/13 Thursday

Time Event / Data
8:30am Initial Jobless Claims
12:15pm FOMC Member Harker Speaks

 

10/14 Friday

Time Event / Data
8:30am PPI, Retail Sales
10:00am Michigan Consumer Expectation
1:30pm Fed Chair Yellen Speaks

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s