Macro Market · Market Commentary · Newsletter

Daily Commentary – Earnings, Energy, Election

Those are the 3’Es that have helped propelled US stocks from recent lows. Starting with Earnings, it is “off to a bullish start as results from large US lenders have sparked fresh optimism over the sector and inspired hopes that America’s longest profit recession since the Great Recession may be coming to a close.”

https://www.ft.com/content/687616f4-9633-11e6-a80e-bcd69f323a8b

Per the FT, 80% have beaten estimates thus far, with the financials sector being the star so far. Justifiably, the XLF is the top performer, up 1.87% quarter-to-date. That being said, technically it is remains bounded within a descending wedge with strong resistance less than 1% away.

20161020-XLF.png

The other bright spot is the energy sector, thanks to the fresh YTD highs made in crude oil on tighter than expected inventory data.

http://www.cnbc.com/2016/10/18/oil-rises-on-reported-us-crude-inventory-draw-expected-opec-cut.html

As we have highlighted in the weekly chart previously, crude oil is on a confirmed bullish inverse H&S breakout with 60 the long-term target, and these positive headlines will continue to provide tailwind on the upside. Meanwhile, the energy sector (XLE), after holding above 20 and 50DMA, looks set to retest the top of bullish up channel near 72.

20161020-wtic20161020-xle

The weakest sectors on the day were Semiconductors (SMH) and Biotechs (IBB), down -1% and -0.7% respectively, which in the process dragged the Nasdaq (QQQ) into the red. The SMH has a very interesting candlestick pattern, with 6 doji candles formed in the past 6 trading sessions, indicating lack of conviction on either side. Similarly, while bullish trendline is broken, it is still holding the 50DMA. Stay out this sector until the dust settles is the best position.

20161020-SMH.png

Gold seemingly finally is getting loose to the upside after a tight multi-week consolidation near the lows, crunching above 1270 and bottom of descending channel as we speak. Next resistance is the top of descending channel just north of 1280. Gold Miners (GDX) roared above 20DMA and as mentioned yesterday, looks determined to fill the gap just under 26 which is also the right shoulder of a large H&S pattern.

20161020-GCClose.png

Last but the least, stocks are boosted by the prospect of a near certainty that Clinton would be victorious in the US Election. As we typed, the final Presidential Debate had just drawn to a close, and markets have already casted their vote of confidence with S&P 500 futures +5pts. Japan’s flagship index Nikkei, in particular, is in the midst of a breakout from multi-month consolidation and approaching May high.

20161020-NIKKClose.png

Plenty of rhetoric and drama from the debate such as Mr. Trump’s “Such a nasty woman” line, but there is little debate who the winner is according to Mr. Market, who wants to squeeze higher given the technical picture in short-term charts. The index to focus on is the small caps – Russell 2000 (IWM) which defended bullish trendline on the daily chart, and in the 4-hour chart a bullish inverse H&S breakout. Bigger picture still a compelling case to be bearish particular in QQQ, but stay long for the time being until Russell 2000 gives us a clean signal to flip to the other side.

20161020-iwm20161020-tf

Daily Market Snapshot

Sector ETFs by Daily Return %

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
KRE SPDR KBW Regional Banking ETF 42.95  

0.83

1.95%

2.26% 1.61%
XLE SPDR Select Sector Fund – Energy Select Sector 70.73  

0.99

1.41%

1.33% 0.17%
XRT SPDR S&P Retail ETF 43.16  

0.41

0.95%

0.09% -0.90%
XLF SPDR Select Sector Fund – Financial 19.66  

0.17

0.87%

1.24% 1.87%
XLFS S&P SmallCap Financials Portfolio 31.01  

0.25

0.81%

0.91% 1.84%
XLB Materials Select Sector SPDR 47.12  

0.34

0.72%

1.73% -1.32%
XLY SPDR Select Sector Fund – Consumer Discretionary 79.11  

0.35

0.44%

0.28% -1.16%
IYR iShares Dow Jones U.S. Real Estate Index Fund 78.39  

0.33

0.42%

1.24% -2.79%
IWM iShares Russell 2000 121.49  

0.51

0.42%

0.88% -2.19%
DIA Dow Jones Industrial Average ETF 182  

0.63

0.35%

0.39% -0.43%
XLI SPDR Select Sector Fund – Industrial 57.38  

0.18

0.31%

0.26% -1.71%
SPY SPDR S&P 500 214.28  

0.57

0.27%

0.54% -0.93%
XLK SPDR Select Sector Fund – Technology 47.62  

0.09

0.19%

0.53% -0.33%
PFF iShares S&P US Preferred Stock Fund 39.25  

0.06

0.15%

0.98% -0.63%
XLG Rydex Russell Top 50 ETF 151.63  

0.1

0.07%

0.19% -0.75%
QQQ PowerShares QQQ Trust 117.85  

-0.01

-0.01%

0.61% -0.73%
XLU SPDR Select Sector Fund – Utilities 48.31  

-0.11

-0.23%

1.17% -1.39%
XLV SPDR Select Sector Fund – Health Care 69.96  

-0.26

-0.37%

0.49% -2.98%
XLP SPDR Select Sector Fund – Consumer Staples 51.98  

-0.3

-0.58%

-0.74% -2.31%
IBB iShares Nasdaq Biotechnology 267.48  

-1.95

-0.73%

0.53% -7.59%
SMH HOLDRS Merrill Lynch Semiconductor 67.4  

-0.7

-1.03%

-0.33% -2.98%

 

Commodity & Bond ETFs

SYMBOL NAME CLOSE DAILY  (%) WTD % MTD %
GDX Market Vectors TR Gold Miners 24.87  

0.67

2.73%

8.18% -5.90%
USO United States Oil Fund 11.66  

0.21

1.82%

1.92% 6.68%
GLD SPDR Gold Trust 121.11  

0.69

0.57%

1.47% -3.61%
SLV iShares Silver Trust 16.79  

0.07

0.42%

1.39% -7.75%
HYG iShares iBoxx $ HY Corp Bond Fund 87.34  

0.25

0.29%

0.55% 0.09%
LQD iBoxx $ Investment Grade Corporate Bond Fund 122.48  

0.16

0.13%

0.71% -0.57%
TLT iShares Barclays 20 Year Treasury Bond Fund 132.97  

0.11

0.08%

1.05% -3.13%
AGG iShares Barclays Aggregate Bond Fund 111.8  

0.06

0.05%

0.39% -0.55%
DBA PowerShares DB Agriculture Fund 20.26  

-0.01

-0.05%

0.40% 1.40%

Country ETFs

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
EWW iShares MSCI Mexico Index Fund 52.36  

0.82

1.58%

4.76% 8%
EWY iShares MSCI South Korea Index Fund 57.04  

0.44

0.77%

3.03% -1.88%
EWA iShares MSCI Australia Index Fund 21.06  

0.16

0.76%

1.74% 0.77%
EWC iShares MSCI Canada Index Fund 25.92  

0.18

0.70%

1.97% 0.90%
EWP iShares MSCI Spain Index Fund 26.8  

0.18

0.67%

2.37% -0.07%
EWT iShares MSCI Taiwan Index Fund 15.82  

0.1

0.63%

2.33% 0.76%
EWM iShares MSCI Malaysia Index Fund 8.07  

0.05

0.62%

1.64% -0.49%
EEM iShares MSCI Emerging Index Fund 37.72  

0.23

0.61%

2.28% 0.72%
EWX SPDR S&P Emerging Markets Small Cap ETF 43.56  

0.21

0.48%

1.89% 0.93%
EWI iShares MSCI Italy Index Fund 11.19  

0.05

0.45%

2.94% 1.54%
EWS iShares MSCI Singapore Index Fund 10.51  

0.04

0.38%

1.25% -3.22%
EWU iShares MSCI United Kingdom Index Fund 15.25  

0.05

0.33%

0.99% -3.72%
EWJ iShares MSCI Japan Index Fund 12.46  

0.04

0.32%

0.97% -0.64%
EWH iShares MSCI Hong Kong Index Fund 21.81  

0.07

0.32%

0.88% -0.91%
EWL iShares MSCI Switzerland Index Fund 29.82  

0.07

0.24%

0.34% -2.39%
EWG iShares MSCI Germany Index Fund 25.94  

0.05

0.19%

0.66% -1.26%
FXI iShares FTSE/Xinhua China 25 Index Fund 37.9  

0.04

0.11%

0.82% -0.29%
EWQ iShares MSCI France Index Fund 23.98  

0.02

0.08%

1.05% -0.75%
EWO iShares MSCI Austria Index Fund 16.28  

0

0%

1.37% -0.25%
EWN iShares MSCI Netherlands Index Fund 24.51  

0

0%

0.86% -2.19%
DXJ WisdomTree Japan Total Dividend Fund 43.93  

-0.04

-0.09%

0.37% 2.38%
EWK iShares MSCI Belgium Index Fund 18.54  

-0.02

-0.11%

0.54% -1.70%
EWZ iShares MSCI Brazil Index Fund 37.27  

-0.09

-0.24%

3.38% 10.50%
EWD iShares MSCI Sweden Index Fund 28.4  

-0.08

-0.28%

0.71% -2.30%

 

 

Day Ahead – Events and Economic Data

10/20 Thursday

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

 

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