Macro Market · Market Commentary · Newsletter

Daily Commentary – Tug-o-War

Back against the wall, the bulls defended a vital support and charged higher towards bears’ stronghold on strong earnings and anemic inflation data. The Dow, S&P 500 and Nasdaq futures’ charts illustrate the tug-of-war, as they all synchronously backtested broken trendlines, though failed to stay above as selling pressure prevailed. In essence, the trading range remains intact.

20161018-NQclose.png

The main driver for today’s positive market came from stronger than expected earnings. Netflix jumped 20% on the heels of previous night’s blowout report, followed with this morning, when UnitedHealth Group and Goldman Sachs both reported having a stellar quarter. Meanwhile, CPI met expectations as “U.S. consumer prices, which Tuesday showed inflation slowly rising, will play a part in that decision. The consumer-price index, which measures what Americans pay for everything from cars to dentistry, rose a seasonally adjusted 0.3% in September from a month earlier, according to the Labor Department.”

http://www.wsj.com/articles/stocks-recover-ahead-of-inflation-data-1476776901

With inflation under control for now, it is perceived that the Fed would not need to rush into hiking and as a result aided the risk sentiment. Bonds continued its recovery, with TLT testing the 200DMA before closing with a bullish engulfing candle, suggesting there are some more legs to the upside in the near-term

20161019-TLT.png

Today’s top sectors were the embattled health care (XLV) and biotechs (IBB), with UnitedHealth Group (UHS)’s strong earnings catalytic in the former’s resurgence. Today’s strong close back above 200DMA in the former suggests its fortune may have turned at least in the near-term. Technically, we expect a rally towards 20DMA and top of bearish channel near 72 area.

20161019-XLV.png

We have covered IBB extensively, as we expected an oversold bounce yesterday. Likely some more upside towards 200DMA at 274 area before meeting formidable resistance.

20161019-IBB.png

Every sector was green but the weakling was once again the retail sector (XRT), up a miniscule 0.1% and is the most vulnerable sector to break through the floodgate support that we noted yesterday.

Switching gears, gold was up 6 dollars and nothing to see yet as we have been in a tight consolidation since the cliff dive from 1310. Meanwhile GDX is quietly squeezing higher as it finally pulled away from the 200DMA. That being said, layers of heavy resistance lie ahead which may present good selling opportunities.

20161019-GDX.png

Tomorrow we will have more earnings on deck, but the main spotlight will be the final Presidential Debate at 9pm.  With markets and bookies already pricing in a Clinton victory, will tomorrow seal the fate or are we in for a surprise? Don’t forget markets and bookies also “priced in” a Bremain days before the Brexit more. Just sayin’

 

“A prominent bookmaker on Tuesday declared the U.S. election a foregone conclusion, opting to pay out more than $1 million to gamblers who have bet on victory by Democratic nominee Hillary Clinton over Republican rival Donald Trump on Nov. 8.”

http://www.marketwatch.com/story/irish-bookie-already-paying-out-on-hillary-clinton-victory-bets-2016-10-18

 

Daily Market Snapshot

Sector ETFs by Daily Return %

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
IBB iShares Nasdaq Biotechnology 269.43  

3.71

1.39%

1.26% -6.92%
XLV SPDR Select Sector Fund – Health Care 70.22  

0.83

1.19%

0.86% -2.62%
SMH HOLDRS Merrill Lynch Semiconductor 68.1  

0.76

1.12%

0.71% -1.97%
KRE SPDR KBW Regional Banking ETF 42.12  

0.41

0.98%

0.29% -0.35%
XLB Materials Select Sector SPDR 46.78  

0.42

0.90%

0.99% -2.03%
QQQ PowerShares QQQ Trust 117.86  

1.04

0.89%

0.61% -0.72%
XLU SPDR Select Sector Fund – Utilities 48.42  

0.41

0.85%

1.40% -1.16%
XLF SPDR Select Sector Fund – Financial 19.49  

0.16

0.82%

0.36% 0.98%
PFF iShares S&P US Preferred Stock Fund 39.19  

0.32

0.82%

0.82% -0.78%
XLFS S&P SmallCap Financials Portfolio 30.76  

0.25

0.82%

0.10% 1.02%
IYR iShares Dow Jones U.S. Real Estate Index Fund 78.06  

0.53

0.68%

0.81% -3.20%
XLY SPDR Select Sector Fund – Consumer Discretionary 78.76  

0.52

0.66%

-0.16% -1.60%
SPY SPDR S&P 500 213.71  

1.33

0.62%

0.28% -1.20%
IWM iShares Russell 2000 120.98  

0.69

0.57%

0.46% -2.60%
XLK SPDR Select Sector Fund – Technology 47.53  

0.26

0.55%

0.34% -0.52%
XLG Rydex Russell Top 50 ETF 151.53  

0.69

0.46%

0.12% -0.81%
XLE SPDR Select Sector Fund – Energy Select Sector 69.74  

0.28

0.40%

-0.09% -1.23%
DIA Dow Jones Industrial Average ETF 181.37  

0.65

0.36%

0.04% -0.77%
XLP SPDR Select Sector Fund – Consumer Staples 52.28  

0.16

0.31%

-0.17% -1.75%
XLI SPDR Select Sector Fund – Industrial 57.2  

0.12

0.21%

-0.05% -2.02%
XRT SPDR S&P Retail ETF 42.75 0.05

0.12%

-0.86% -1.84%

 

 

 

 

Commodity & Bond ETFs

SYMBOL NAME CLOSE DAILY  (%) WTD % MTD %
GDX Market Vectors TR Gold Miners 24.2  

0.86

3.62%

5.26% -8.44%
SLV iShares Silver Trust 16.72  

0.15

0.90%

0.97% -8.13%
USO United States Oil Fund 11.45  

0.08

0.70%

0.09% 4.76%
GLD SPDR Gold Trust 120.42  

0.74

0.62%

0.89% -4.15%
HYG iShares iBoxx $ HY Corp Bond Fund 87.09  

0.35

0.40%

0.26% -0.19%
TLT iShares Barclays 20 Year Treasury Bond Fund 132.86  

0.43

0.32%

0.97% -3.21%
LQD iBoxx $ Investment Grade Corporate Bond Fund 122.32  

0.3

0.25%

0.58% -0.70%
AGG iShares Barclays Aggregate Bond Fund 111.74  

0.18

0.16%

0.33% -0.60%
DBA PowerShares DB Agriculture Fund 20.27  

-0.01

-0.05%

0.45% 1.45%

Country ETFs

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
EWW iShares MSCI Mexico Index Fund 51.54  

1.33

2.61%

3.12% 6.31%
EWZ iShares MSCI Brazil Index Fund 37.36  

0.89

2.41%

3.63% 10.76%
EWI iShares MSCI Italy Index Fund 11.14  

0.2

1.81%

2.48% 1.09%
EEM iShares MSCI Emerging Index Fund 37.49  

0.65

1.75%

1.65% 0.11%
EWT iShares MSCI Taiwan Index Fund 15.72  

0.27

1.73%

1.68% 0.13%
EWY iShares MSCI South Korea Index Fund 56.6  

0.93

1.66%

2.24% -2.63%
FXI iShares FTSE/Xinhua China 25 Index Fund 37.86  

0.61

1.62%

0.72% -0.39%
EWX SPDR S&P Emerging Markets Small Cap ETF 43.35  

0.68

1.58%

1.40% 0.44%
EWM iShares MSCI Malaysia Index Fund 8.02  

0.12

1.51%

1.01% -1.11%
EWP iShares MSCI Spain Index Fund 26.62  

0.39

1.48%

1.68% -0.75%
EWU iShares MSCI United Kingdom Index Fund 15.2  

0.21

1.39%

0.66% -4.04%
EWA iShares MSCI Australia Index Fund 20.9  

0.26

1.25%

0.97% 0%
EWO iShares MSCI Austria Index Fund 16.28  

0.2

1.24%

1.37% -0.25%
EWD iShares MSCI Sweden Index Fund 28.48  

0.33

1.17%

0.99% -2.03%
EWH iShares MSCI Hong Kong Index Fund 21.74  

0.23

1.06%

0.56% -1.23%
EWQ iShares MSCI France Index Fund 23.96  

0.24

1.01%

0.97% -0.83%
EWN iShares MSCI Netherlands Index Fund 24.51  

0.24

0.98%

0.86% -2.19%
EWC iShares MSCI Canada Index Fund 25.74  

0.25

0.98%

1.26% 0.19%
EWG iShares MSCI Germany Index Fund 25.89  

0.22

0.85%

0.47% -1.45%
EWL iShares MSCI Switzerland Index Fund 29.75  

0.23

0.78%

0.10% -2.62%
EWK iShares MSCI Belgium Index Fund 18.56  

0.14

0.76%

0.65% -1.59%
EWS iShares MSCI Singapore Index Fund 10.47  

0.06

0.57%

0.87% -3.59%
EWJ iShares MSCI Japan Index Fund 12.42  

0.07

0.57%

0.65% -0.96%
DXJ WisdomTree Japan Total Dividend Fund 43.97  

0.22

0.50%

0.46% 2.47%

 

Week Ahead – Events and Economic Data

10/19 Wednesday

Time Event / Data
8:30am Housing Starts
10:30am Crude Oil Inventories
9:00pm Final Presidential Debate

 

10/20 Thursday

Time Event / Data
8:30am Initial Claims
10:00am Existing Home Sales

 

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