View From The Hill: August-27-2015

Posted on Posted in Views From The Hill

Commentary

Thursday’s trading session distinguished itself as equities spent the first half of the day in positive territory before proceeding to give back most of their gains. Then suddenly, during the final hour of trading, the bulls stampeded over bears with an unrelenting willingness to buy the dips in a manner that made me wonder if America was planning its own military parade in the not too distant future. (Conspiratorial cynicism leads me to believe that the Fed does not want to be outdone by China. Who knows and who really cares? The only thing that matters is that stocks closed up strongly in positive territory.)

The most remarkable thing about today’s continuation rally was that this time they really pumped up the volume! Almost 62% of the SP-500 components traded up on 25% or greater than average volume while 40% increased on 50% or greater volume. As of today, the SP-500, DJ-30, and Nasdaq-100 are in positive territory week-to-date. The Russell-2000 is almost at break even. Considering the severity of the sell-off, this is no small feat to accomplish. Now, my concern shifts to buyer exhaustion as the relatively low number of new 5-day highs leads me to conclude that the rally has yet to test any significant resistance levels. (Another test of its recent bottom for good measure would also instill more confidence.)

With respect to relative performance across various asset classes, Crude Oil was the real standout while the U.S Dollar, Treasury Bonds, and Gold experienced very little change in price. I suppose it would be remiss of me not to mention the surprisingly strong GDP report which was revised upward to 3.7%, so consider it henceforth done.

No further comments from Hillbent…

 

Market Breadth

Market breadth was overwhelmingly bullish but a larger number of new highs will soon be needed before momentum morphs into inertia.

  • Advancers (484) vs. Decliners (13).
  • New 5-day highs (43) significantly lagged the number of New 5-day lows (2)
  • New 52-week highs (1) also trailed new 52-week lows (206).
  • Bullish reversals (1) lagged Bearish reversals (8) today.

 

Performance Summary

Markets
Close
Chg
SP-500 1987.66 (+47.15 / +2.43%)
Nasdaq-100 4324.82 (+105.22 / +2.49%)
Russell-2k 1153.61 (+21.42 / +1.89%)
VIX 26.10 (-4.22 / -13.92%)
10-Yr Rates 21.68 (-0.04 / -0.18%)
US Dollar Index 95.77 (+0.52 / +0.55%)
Gold (Cash) 1122.60 (-2.00 / -0.18%)
WTI Crude (Cash) 42.56 (+3.96 / +10.26%)
DJ Real Estate 281.47 (+5.47 / +1.98%)
DJ Homebuilders 588.85 (+14.71 / +2.56%)

 

Volume Radar Alerts

Stock prices increasing on high volume
  • Cameron Int’l Corp (CAM) @ 63.21 (+5.47%) on 545% volume surge
  • St. Jude Medical Inc (STJ) @ 72.43 (+4.46%) on 418% volume surge
  • Freeport-McMoran Inc (FCX) @ 10.19 (+28.66%) on 358% volume surge
  • Columbia Pipeline Partners LP (CPPL) @ 19.88 (+4.63%) on 278% volume surge
  • Schlumberger Ltd (SLB) @ 73.85 (+5.36%) on 249% volume surge
  • Signet Jewelers Ltd (SIG) @ 138.82 (+14.45%) on 217% volume surge
  • Phillips-Van Heusen Corp (PVH) @ 118.17 (+6.04%) on 205% volume surge
Stock prices declining on high volume
  • Dollar General Corp (DG) @ 70.09 (-3.35%) on 397% volume surge
  • Tiffany & Co (TIF) @ 83.29 (-2.10%) on 369% volume surge
  • Patterson Companies Inc (PDCO) @ 45.94 (-6.30%) on 343% volume surge

 

Market Moving Events

Bullish

  • Economy / Growth / USA: GDP grew much stronger than expected during 2Q-2015 as actual results were revised upward to 3.7% vs. consensus @ 3.2% and prior @ prior revised @ 0.6% (Related link)
  • Economy / Employment / USA: Unemployment Claims for the week of Aug-22-2015 continue to indicate a healthy labor market. Actual results were @ 271k vs. consensus @ 270k and prior @ 277k. Today’s number was below the 4-week moving average @ 272.50. (Related link)
  • Central Banks / Monetary Policy / Europe: M3 Money Supply in July-2015 expanded in the EU @ 5.1% yr/yr rate vs. consensus @ 4.9% and previous 5.1%. (Related link)
  • Equities / China Stock Market: Shanghai’s Composite Index broke a 5-day losing streak as prices stabilized with the it closing up +5.34%. Some sources attribute the rally to government intervention intended to coincide with the upcoming military parade scheduled for September-3-2015 to commemorate the 70th anniversary of its victory over Japan in WWII.

Bearish

  • N/A

Neutral

  • Real Estate / Residential / USA: Pending Homes Sales for July-15 were up @ 0.5% vs. consensus @ 1.0% and prior revised @ -1.7%. While still positive, the report reflected moderate growth.  (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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