Intraday Market Update
US equities are posting slight gains on lackluster volumes as US bond markets and banks are closed for the Columbus Day federal holiday. With light news flows and no economic data to report, traders are jockeying for position ahead tomorrow's release of the minutes from the FOMC's September meeting. The economic calendar begins to heat up on Thursday with PPI and Jobless Claims and on Friday with key readings on inflation (CPI), retail sales, manufacturing (Empire State Survey), and consumer sentiment. Q3 earnings season begins in earnest tomorrow after the bell with Intel and CSX reporting results. We hear from JP Morgan before the bell on Wednesday, Google after the bell on Thursday, and General Electric before the bell on Friday. All of these reports have the potential to be market moving events.
After flashing to new lows not seen since January, the US Dollar has firmed up into positive territory, bouncing +0.80% off of its lows. However, the greenback still remains below Friday's highs and until its slide abates equities and commodities will most likely continue to drift higher. According to a report from the US Commodities Futures Trading Commission (CFTC) released over the weekend speculative dollar short positions have reached their highest levels since mid 2008 before the financial crises. Trying to pick a bottom in the US Dollar and a top in US equities is a tricky proposition but this data suggests the inversely correlated trade could be ripe for a reversal (i.e. a short squeeze in the dollar and a healthy correction in equities). Since the June lows in the equity markets (as measured by the SPX 1,042 level) the value of the US Dollar has lost -13.5%, while stocks have gained +12%. The dollar has support near $77.00, but if it breaks $77.00 then $76.20 and $74.20 are the next levels to watch.
Weekly chart of the US Dollar:
Gold has gained +$9 to $1,355 per ounce. This is still below Thursday's all-time high print of $1,366 per ounce, but if it closes at this level it will represent an all-time closing high. Crude oil is nearly unchanged and has stalled near its three month highs. Corn futures pulled a repeat of Friday by trading to limit up again at the CBOT. Reports of strong demand and dry soils have helped agriculture commodities in recent weeks. Stocks in the agriculture and fertilizer space have also fared well today and are adding to their steep gains from Friday.
In equities, Chesapeake Energy (CHK) gapped more than +5% higher after China's CNOOC (CEO) agreed to purchase a 33.3% undivided interest in CHK's acreage in the Eagle Ford oil and natural gas project in South Texas for $1.08 billion in cash. Further, CNOOC agreed to fund 75% of CHK's share of drilling and completion costs until an additional $1.08 billion has been paid. CHK is well off of its highs but is still posting more than +2% gains, while CEO is also up better than +2%. Gymboree (GYMB) announced Bain Capital is purchasing the company for $1.8 billion, or $64.40 per share in cash, which is more than a +23% premium compared to Friday's closing price. GYMB has a 40 day "go shop" period which could garner additional interest in the name. Competitor Children's Place (PLCE) has gained +4.5% on the news, but it's well off of its early gains of +8%.
Core Sector List:
Overall reading: 15 sectors advancing, 5 sectors declining
Strongest Sectors: Semi's, Coal Miners, Nat Gas, Internet
Weakest Sectors: Home Construction, Biotech's, Broker Dealers
S&P 500 - Daily and Hourly Charts:
Dow Jones - Daily and Hourly Charts:
NASDAQ - Daily and Hourly Charts:
Russell 2000 - Daily and Hourly Charts: