Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Tuesday May 5, 2015
For 2015 I would like to wish all of you discipline and patience in your trading!
TradeTheNews.com Weekly Market Update: Markets Unwind into May
Fri, 01 May 2015 16:03 PM ESTGlobal equities felt the pull of gravity this week as indices in Asia, Europe, and the US came off recent all-time highs. Meanwhile, in a development that caught investors’ attention, European and US sovereign bonds sold off hard on a confluence of factors. Talks between Greece and its creditors continued at a frustratingly slow pace. The first reading on US Q1 GDP was quite disappointing. The Fed acknowledged the weak first quarter by downgrading the economic conditions commentary in the FOMC policy statement, but continued to attribute the slow growth to transitory factors. Despite oil prices continuing to rebound, the BOJ reigned in its inflation outlook, pushing back the timing of achieving 2% inflation until early 2016. Speculation about more extraordinary Chinese stimulus that helped fuel recent rallies couldn’t stem the selling this week. For the week, the DJIA slipped 0.3%, the S&P500 fell 0.5% and the Nasdaq lost 1.7%.During Monday’s Asian session, financial press sources reported that the PBoC was mulling its own brand of QE asset purchase program that would let commercial banks swap local-government bonds they hold for loans from the central bank to help stave off a potential credit crunch. The Shanghai Composite rocketed up 3% on the report, but an official denial from the PBoC tempered Chinese equity gains. Beijing has already been trying to mop up the ballooning debts of local governments under a debt exchange program, without too much success. Later in the week, PBoC Deputy Governor Yi Gang said that the RRR rate was relatively high, leaving plenty of room for another cut.Markets appeared to be nervous ahead of Wednesday’s FOMC policy announcement, in which the Fed dropped its last calendar reference for forward guidance, as expected. The central bank noted that economic growth had slowed during the winter months and household spending declined, but continued to attribute this to transitory factors. The downgraded economic language may have lessened the chances of a June rate hike but there was no indication from the Fed that next month’s meeting is no longer a ‘live’ meeting.The first reading of US Q1 GDP was a bust, widely missing expectations thanks to sharp declines in nonresidential fixed investment (-3.4% v 4.7% Q4 final) and exports (-7.2% v 4.5% Q4 final). Import growth slowed considerably (+1.8 % v 10.4% Q4 final). Analysts caution that assumptions on the impact of the West Coast port strike and its resolution strongly influenced the GDP reading, and hard trade data for March could lead to big revisions in the second and final GDP readings. Unlike many other forecasters, the Atlanta Fed nailed the Q1 GDP in its GDPNow model (it had long been forecasting +0.2% growth in Q1), drawing attention for its bold call. The Atlanta Fed’s GDPNow model initiated its Q2 forecast this week at just +0.9%, considerably lower than BoA/Merrill Lynch’s +3.5% forecast and Goldman Sachs’s +3.0%.
A major rotation out of sovereign bonds began this week due to confluence of factors. Top money managers have been talking about the rich potential short position on European bonds for some time, including dethroned bond king Bill Gross, who called German bunds “the short of a lifetime.” In an interview published on Tuesday, Doubleline’s Gundlach speculated about a possible 100x levered short bet against the German bund. The same day, the euro zone March money supply report came in hotter than expected, with M3 growth rising more than expected to +4.6%, putting it back into the ECB’s comfort zone for the first time since April 2009 (the report also said euro zone private lending returned to growth for the first time in 35 months). These factors, plus a deluge of euro-denominated corporate issuance this week and a notable imbalance between eurozone government supply (€14 billion) and redemption of existing paper (€65 billion) made for a perfect storm for bonds.
Greek PM Tsipras reshuffled his team handling bailout talks with Europe and the IMF after finance minister Varoufakis was sharply criticized for his performance in the Eurogroup negotiations last week. Deputy foreign minister Tsakalotos was tapped to replace the flamboyant Varoufakis as the main Greek negotiator. Greece’s next big hurdle is coming up quickly, with another large IMF payment due on May 6th and insufficient funds available in Athens. Both sides keep saying a deal is just around the corner, with a preliminary deal possible on Sunday, May 3rd. However Eurogroup head Dijsselbloem hinted there may in fact be a “plan B” for Greece, stating that Europe is prepared for “various outcomes” in the Greek standoff.
A confusing dust-up in the Persian Gulf roiled global markets on Tuesday. Reports emerged Tuesday morning that Iran had seized a US cargo vessel, sending indices tumbling. Within an hour, a more complete picture emerged: apparently the Iranian Revolutionary Guard seized a Marshall Islands-flagged Maersk cargo ship in the Straits of Hormuz and the ship’s distress call was answered by a US Navy destroyer. Energy futures were volatile on this news, contributing to the week’s uptrend in crude oil – WTI nearly retook the $60 handle while Brent nearly took out $67.
Apple’s outstanding second-quarter results sent the company’s shares up to all-time highs around $136, although shares gave up the gains and sank to $126 through week’s end. Apple’s results were a parade of superlatives: profits rose more than 30% y/y, it sold 61.2 million iPhones, up 40% from the year-ago period, saw a 72% gain in the number of iPhones sold in China. Apple’s cash pile rose to a record $193.5 billion (up from $178 billion last quarter), and the board expanded its share repurchase authorization to $140 billion and boosted the dividend 11%.
Three big social media names had disastrous earnings reports this week. Twitter, Yelp, and LinkedIn saw their shares decline more than 20% a piece after investors found much that disagreed with them in quarterly numbers. Twitter only added four million users, and on the earnings call, the CFO explained that an “unforeseen bug” in Twitter’s integration with Apple’s iOS 8 caused it to lose four million users (“half of the company’s actual growth,” he said). LinkedIn gave a disappointing outlook for the second quarter, weighed on by its pending purchase of online learning company Lynda.com. Yelp’s revenue guidance was also a bit weak. Note that Facebook was not immune to the social slide: shares of FB were down 4% on the week.
In other earnings, Aetna, UPS, and Merck saw strong gains on very good quarterly results. UPS gained despite missing revenue targets as net income saw healthy gains and package volume growth continued at a healthy rate. Oil majors Exxon, Chevron, and Shell saw their profits cut in half on a y/y basis but still widely topped earnings expectations, thanks to strong downstream results. Conoco saw an even steeper decline in profits, and only managed to remain profitable due to a deferred tax benefit. Refiners Valero, Marathon, and Phillips 66 crushed earnings expectations thanks to cheap oil. A notable decliner was Wynn Resorts, with earnings and revenue widely missing expectations as the Macau business saw huge declines in business.
Shares of Salesforce.com spiked 16% on Wednesday on reports it had hired bankers to field takeover inquiries or possibly fend off takeover bid after receiving an approach. Speculation immediately turned to Oracle, Microsoft, and SAP, the only three firms with the heft to take on CRM’s $49B valuation. In the latest biotech M&A frenzy, Mylan spurned a takeover offer from Teva, and in turn Perrigo rebuffed Mylan’s latest offer. The $29 billion Applied Materials/Tokyo Electron merger was called off after regulators said the remedies proposed by the two firms were not enough to replace the competition lost. France’s Cap Gemini reached a deal to buy technology consultancy iGate for $4 billion.
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|Contract June 2015||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||June Gold||July Silver||June Crude Oil||June Bonds||June Euro|
|Resistance 3||1210.0||17.39||60.90||159 5/32||1.1314|
|Resistance 2||1201.1||17.08||60.32||158 21/32||1.1273|
|Resistance 1||1194.5||16.75||59.62||157 20/32||1.1212|
|Support 1||1179.0||16.11||58.34||156 3/32||1.1110|
|Support 2||1170.1||15.80||57.76||155 19/32||1.1069|
|Support 3||1163.5||15.47||57.06||154 18/32||1.1008|
|Contract||July Corn||July Wheat||July Beans||July SoyMeal||June Nat Gas|
|TueMay 5||2:45am||EUR||French Gov Budget Balance||-23.4B|
|3:00am||EUR||Spanish Unemployment Change||-64.8K||-60.2K|
|5:00am||EUR||EU Economic Forecasts|
|9:45am||USD||Final Services PMI||57.8||57.8|
|10:00am||USD||ISM Non-Manufacturing PMI||56.2||56.5|
|USD||IBD/TIPP Economic Optimism||50.6||51.3|
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