Macro Market · Market Commentary · Newsletter

Daily Commentary – Let the Countdown Begin

Just 10 days to go before the US election, and we can finally get over with the drama. Meanwhile on the equity market, still holding our breath on which way it’s breaking out. The Dow once again tried to climb over the descending trendline off Aug highs, but once again no dice.  It was a flip flop from previous day’s action, as we gapped up to begin the day on more M&A headlines – this time from the Semiconductors sector with “Qualcomm to buy NXP for $38 billion in biggest chip deal”

http://www.reuters.com/article/us-nxpsemiconductors-m-a-qualcomm-idUSKCN12R1AW

20161028-INDU.png

But gains could not hold, and this time it was the rout in bonds which got on the nerves of the market. The 30y yield got loose and spiked up 7bps above Oct highs. The TLT sold off to 50WMA as the 2015 sell-off pattern continues to play out ominously. Fundamentally, it appears investors are now trying to price in further rate hikes as well as prospect of QE tapering by ECB next year:

http://www.marketwatch.com/story/10-year-treasury-yield-holds-near-5-month-high-after-data-2016-10-27

20161028-TLT.png

Expectedly, the REITs (IYR) was the worst sector (-2.3%) as it followed the footsteps of the bond market to tumble below Oct lows and is on the verge of confirming a large H&S pattern that we highlighted yesterday. What’s worth noting is that it is not just the rate-sensitive sectors, but the Retail sector (XRT) was also hammered, down a whopping -2% to close below key swing point with no support until 41 area.

20161028-XRT.png

The decimation of the Russell 2000 small caps index (IWM) continues as it dropped another -1%, underperforming the large caps once more and edging close to breakout area at 117.5. With significant technical damage, even in the event of a broad market rally, bulls are advised to stay away from IWM and focus on the large caps (SPY, DIA and QQQ).

20161028-IWM.png

After hours, we had the much-anticipated earnings from AMZN and GOOGL, and the former was crushed -6% after-hours after missing expectations. Talk about being a victim of its own success, “For three straight quarters, Amazon posted a new record for profits, shooting fear into competitors who have mocked it for not making money. Well, the streak is over. Jeff Bezos’s company did post a profit in the third quarter — $252 million, or 52 cents per share — but it was both below analyst estimates of 78 cents a share and well below the record quarterly profit of $857 million that Amazon reached in the second quarter.”

http://www.recode.net/2016/10/27/13438946/amazon-q3-earnings-2016

On the other hand, a more positive tone in GOOGL’s earnings, as it beat on both earnings and revenue. “After the market close, the Google parent company reported adjusted earnings of $9.06 per share, topping analysts’ estimates of $8.63 per share.”

https://www.thestreet.com/story/13870796/1/alphabet-googl-stock-gains-in-after-hours-trading-on-q3-beat.html

Though all in all, it was a negative impact on Nasdaq futures as it completed a round trip to wipe out all gains from the squeeze up to new highs earlier this week. Pressure is now on the bulls to defend the bottom of channel or risk a more severe sell-off.

20161028-NQDaily.png

Seasonality may come to the rescue for the bulls, as according to McClellan’s weekly post, the SPX has been “following the dance steps of the 2nd term Presidential Cycle Pattern really well”, and it suggests today was the seasonal low and a rally is due into the election.

20161028-McClellan.gif

http://www.mcoscillator.com/learning_center/weekly_chart/the_post-election_stock_market/

 

 

 

 

 

Daily Market Snapshot

Sector ETFs by Daily Return %

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
KRE SPDR KBW Regional Banking ETF 44  

0.3

0.68%

1.88% 4.09%
XLV SPDR Select Sector Fund – Health Care 69.28  

0.32

0.46%

-0.62% -3.92%
XLFS S&P SmallCap Financials Portfolio 31.31  

0.08

0.26%

0.97% 2.82%
XLF SPDR Select Sector Fund – Financial 19.86  

0.05

0.25%

1.07% 2.90%
IBB iShares Nasdaq Biotechnology 265.47  

0.16

0.06%

-0.86% -8.29%
XLK SPDR Select Sector Fund – Technology 47.49  

-0.06

-0.13%

-0.08% -0.61%
XLB Materials Select Sector SPDR 46.61  

-0.06

-0.13%

-0.96% -2.39%
DIA Dow Jones Industrial Average ETF 181.53  

-0.24

-0.13%

0.17% -0.68%
XLG Rydex Russell Top 50 ETF 151.22  

-0.22

-0.15%

0.05% -1.01%
SPY SPDR S&P 500 213.17  

-0.57

-0.27%

-0.38% -1.45%
SMH HOLDRS Merrill Lynch Semiconductor 68.18  

-0.2

-0.29%

0.41% -1.86%
PFF iShares S&P US Preferred Stock Fund 39.19  

-0.14

-0.36%

-0.43% -0.78%
XLE SPDR Select Sector Fund – Energy Select Sector 69.56  

-0.26

-0.37%

-0.90% -1.49%
XLP SPDR Select Sector Fund – Consumer Staples 52.45  

-0.24

-0.46%

0.42% -1.43%
QQQ PowerShares QQQ Trust 117.84  

-0.54

-0.46%

-0.26% -0.74%
XLU SPDR Select Sector Fund – Utilities 48.31  

-0.29

-0.60%

0.65% -1.39%
XLI SPDR Select Sector Fund – Industrial 56.76  

-0.39

-0.68%

-0.40% -2.77%
XLY SPDR Select Sector Fund – Consumer Discretionary 78.22  

-0.66

-0.84%

-1.72% -2.27%
IWM iShares Russell 2000 118.36  

-1.37

-1.15%

-2.24% -4.71%
XRT SPDR S&P Retail ETF 41.91  

-0.82

-1.94%

-2.42% -3.77%
IYR iShares Dow Jones U.S. Real Estate Index Fund 75.37  

-1.77

-2.34%

-3.36% -6.54%

 

Commodity & Bond ETFs

SYMBOL NAME CLOSE DAILY  (%) WTD % MTD %
USO United States Oil Fund 11.21  

0.12

1.08%

-2.35% 2.56%
DBA PowerShares DB Agriculture Fund 20.7  

0.08

0.39%

2.07% 3.60%
GLD SPDR Gold Trust 121.01  

0.22

0.18%

0.15% -3.69%
SLV iShares Silver Trust 16.73  

0.02

0.12%

0.48% -8.08%
AGG iShares Barclays Aggregate Bond Fund 111.16  

-0.28

-0.25%

-0.60% -1.12%
HYG iShares iBoxx $ HY Corp Bond Fund 86.7  

-0.32

-0.37%

-0.77% -0.64%
LQD iBoxx $ Investment Grade Corporate Bond Fund 121.01  

-0.55

-0.45%

-1.22% -1.76%
TLT iShares Barclays 20 Year Treasury Bond Fund 130.74  

-1.44

-1.10%

-1.93% -4.75%
GDX Market Vectors TR Gold Miners 23.73  

-0.4

-1.67%

-3.61% -10.22%

Country ETFs

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
EWP iShares MSCI Spain Index Fund 27.38  

0.2

0.73%

1.18% 2.09%
DXJ WisdomTree Japan Total Dividend Fund 45.05  

0.3

0.67%

1.17% 4.99%
EWI iShares MSCI Italy Index Fund 11.34  

0.07

0.62%

1.16% 2.90%
EWQ iShares MSCI France Index Fund 23.9  

0.07

0.29%

-0.13% -1.08%
EWL iShares MSCI Switzerland Index Fund 29.09  

0.06

0.21%

-1.69% -4.78%
EWJ iShares MSCI Japan Index Fund 12.6  

0.02

0.16%

0.24% 0.48%
EWC iShares MSCI Canada Index Fund 25.51  

0.04

0.16%

-0.74% -0.70%
EWK iShares MSCI Belgium Index Fund 18.1  

0.01

0.06%

-1.36% -4.03%
EWG iShares MSCI Germany Index Fund 25.8  

0

0%

-0.15% -1.79%
EWN iShares MSCI Netherlands Index Fund 24.38  

0

0%

-0.53% -2.71%
EWO iShares MSCI Austria Index Fund 16.51  

-0.01

-0.06%

1.35% 1.16%
EWU iShares MSCI United Kingdom Index Fund 15.02  

-0.01

-0.07%

-1.25% -5.18%
EWW iShares MSCI Mexico Index Fund 51.03  

-0.05

-0.10%

-1.77% 5.26%
EWZ iShares MSCI Brazil Index Fund 37.77  

-0.07

-0.19%

0% 11.98%
EWS iShares MSCI Singapore Index Fund 10.37  

-0.03

-0.29%

-0.48% -4.51%
EWY iShares MSCI South Korea Index Fund 55.21  

-0.37

-0.67%

-1.74% -5.02%
EWX SPDR S&P Emerging Markets Small Cap ETF 43.09  

-0.29

-0.67%

-0.97% -0.16%
EEM iShares MSCI Emerging Index Fund 37.08  

-0.32

-0.86%

-1.38% -0.99%
EWH iShares MSCI Hong Kong Index Fund 21.76  

-0.19

-0.87%

-0.32% -1.14%
FXI iShares FTSE/Xinhua China 25 Index Fund 37.26  

-0.33

-0.88%

-1.51% -1.97%
EWD iShares MSCI Sweden Index Fund 27.73  

-0.3

-1.08%

-2.22% -4.61%
EWT iShares MSCI Taiwan Index Fund 15.62  

-0.21

-1.34%

-0.76% -0.51%
EWM iShares MSCI Malaysia Index Fund 7.97  

-0.12

-1.49%

-0.99% -1.73%
EWA iShares MSCI Australia Index Fund 20.26  

-0.35

-1.71%

-2.27% -3.06%

 

 

Day Ahead – Events and Economic Data

10/28 Friday

Time Event / Data
8:30am Q3 GDP (Advance), Employment Cost Index
10:00am Consumer Sentiment

Earning Schedule  (Source: EarningWhispers)

20161022-earnings

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