View From The Hill: August-26-2015

Posted on Posted in Views From The Hill

Commentary

Today’s rally mirrored the antithesis of Monday’s capitulation. However, before embarking upon the path of irrational exuberance, I would caution all that the stock market still needs to surmount key resistance levels. It takes time to heal from a mauling like the one recently exacted by bears.

Although economic data and market news events were light, they clearly punched above their weight. Durable Goods Orders indicated a 2nd consecutive month of strong results and comments issued by the Fed Reserve reduced investor uncertainty when it announced that the need for a September rate increase is “less compelling”. It was just that simple.

No further comments, but do keep Hillbent for the Market Direction…

 

Market Breadth

To no one’s surprise, the rally in stocks produced some bullish market breadth for the SP-500 components. However, the lack of new 5-day highs or new 52-week highs underscores the damage of the recent selloff and we will need to see patterns of positive breadth in these categories before taking this rally seriously.

  • Advancers (488) vs. Decliners (11).
  • New 5-day highs (5) significantly lagged the number of New 5-day lows (54)
  • New 52-week highs (1) also trailed new 52-week lows (206).
  • Bullish reversals (172) lagged Bearish reversals (0) today.

 

Performance Summary

Markets
Close
Chg
SP-500 1940.51 (+72.90 / +3.90%)
Nasdaq-100 4219.602 (+203.28 / +5.06%)
Russell-2k 1132.19 (+28.09 / +2.54%)
VIX 30.32 (-5.70 / -15.82%)
10-Yr Rates 21.72 (+0.39 / +1.83%)
US Dollar Index 95.25 (+1.28  / +1.36%)
Gold (Cash) 1124.60 (-13.70 / -1.20%)
WTI Crude (Cash) 38.60 (-0.71 / -1.81%)
DJ Real Estate 276.00 (+6.98 / +2.59%)
DJ Homebuilders 574.48 (+18.47 / +3.32%)

 

Volume Radar Alerts

Stock prices increasing on high volume
  • Cameron Int’l Corp (CAM) @ 59.93 (+41.11%) on 1683% volume surge
  • Nasdaq OMX Group Inc (NDAQ) @ 49.69 (+1.74%) on 185% volume surge
  • Monsanto Co (MON) @ 97.08 (+8.57%) on 291% volume surge
  • Intuit Inc (INTU) @ 83.29 (+4.28%) on 277% volume surge
  • CBRE Group Inc (CBRE) @ 32.15 (+1.84%) on 277% volume surge
Stock prices declining on high volume
  • Schlumberger Ltd (SLB) @ 70.09 (-3.35%) on 630% volume surge
  • Freeport-McMoran Inc (FCX) @ 7.92 (-3.88%) on 135% volume surge
  • Transocean Ltd (RIG) @ 11.60 (-4.92%) on 129% volume surge
  • Wynn Resorts Ltd (WYNN) @ 74.29 (-1.88%) on 78% volume surge
  • Newmont Mining  corp (NEM) @ 15.81 (-2.23%) on 60% volume surge

 

Market Moving Events

Bullish

  • Real Estate / Residential / USA: MBA Mortgage Applications for the week of Aug-21-2015 saw a 2.0% weekly increase in Purchase Applications vs. previous week @ -1.0%. Refinancing applications contracted to -1.0% vs. previous week @ 7.0%. The average rate for 30-year fixed mortgages on conforming loans dropped to 4.08% vs. 4.11%. (Related link)
  • Economy / Manufacturing / USA: Despite weaker exports suffering from a stronger U.S. Dollar, Durable Goods Orders in July-2015 increased 2.0% m/m vs. consensus @ -0.4% and prior revision @ 4.1%. (Related link)
  • Central Banks / Interest Rates / USA: Comments by Federal Reserve New York President, William Dudley, that a rate increase for September is now “less compelling”, thus providing temporary relief to investor’s uncertainty. (Related link)
  • Equities / Mergers & Acquisitions / Energy: Schlumberger (SLB) announced plans to buy Cameron Int’l (CAM) at a 56% premium or $66.36 per share. Given the rich valuation SLB has assigned to CAM, some analysts speculate this to be a sign that an end to the  bear market in energy prices may not be too distant. (Related link)

Bearish

  • N/A

Neutral

  • Commodities / Energy: According to the latest EIA report for the week of Aug-21-2015, Crude Oil inventories in the U.S. declined -5.42mm which was below the projected surplus of +1.02mm and the previous week’s buildup @ 2.62mm. (Related link)

 

Disclaimer

Hillbent does not provide individualized market advice. The information we publish regards securities in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification. Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements. Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

 

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