12 May 2016 – Apple falls, volatility increases

US equity was trading up pre-market but traded downward for the first half of the day. It rebounded in afternoon trading. Apple suffered a 2% loss on the day and that brought down the indices on market open. Oil sector recovery helped the indices to recover in afternoon trading. Jobless claims surged to 294K for the week which is a 14-month high and it impacted on the US dollar. The Dow Transportation, Russell 2000 and Nasdaq 100 showed the most weakness. Healthcare, biotech and materials were sold off and money rotated out of the sectors.

US import prices rise 0.3% for the month balanced by an increase in prices for US exporters. Oil futures were up for the day while gold dropped slightly. Dollar bounced up midday which caused gold and silver to drop. US dollar was up against the other major world currencies. Bonds did not make a significant move upward considering that the market was overall bearish.

The energy sector led the market rally after midday which was helped by a bounced in the price of oil.

Dow Transportation dropped on market open and traded downward till midday. It rallied in afternoon trading and sold off in the last hour of trading and closed with a bearish candle below its 200 SMA. Momentum remains downward. Daily volumetric buying pressure is at 0%.

Dow Industrial traded downward on market open till late morning. It rallied at midday and traded upward but sold off in the last hour of trading to close with a bearish candle. Momentum remains downward. Short term volumetric buying pressure is at 72.7%. The index is in a monthly Squeeze.

Russell 2000 sold off on market open and traded downward till after midday. It reversed and traded upward to close with a spinning top doji candle below its 200 SMA but above its 50 SMA. Momentum remains downward. Volumetric buying pressure is at 26.3%.

Nasdaq 100 sold off on market open and found its bottom at midday. It rallied upward in afternoon trading and closed with a hammer candle below its 50 SMA. Momentum remains downward. Volumetric buying pressure is at 42.4%. The index is in a monthly Squeeze.

S&P 500 sold off on market open till midday before bouncing upwards. It sold off in the last hour of trading and closed with a spinning top doji candle. Momentum remains downward. Volumetric buying pressure is at 70.2%. The index is in a monthly Squeeze.

Commodities
Oil (/CL) futures is at $46.24 per barrel. Gold (/GC) futures is at 1269.6. Silver (/SI) futures is at 17.025. Agriculture (DBA) ETF closed at 21.37. Commodities (DBC) ETF closed at 14.50.

Bonds
High Yield bond ETF (HYG) closed at 83.15. Bonds ETF (TLT) closed 131.01.

Currencies
USD/JPY is at 108.817. EUR/USD is at 1.1374. The dollar index (/DX) is at 94.115.

Relative Strength – Sectors
On a monthly lookback, the ETFs outperforming the S&P 500 are XLU, XLE, XLP, XLB, XLF, XLI and XLK respectively.

On a 3-month lookback, the relative strength order are XLE, XLB, XLF, XLY and XLI.

Market Internals
Vix closed down at 14.41. Vix futures is up slightly at 15.63. Skew is at 123.52. Market sentiment is slightly negative. Market breadth is sloping downward. Volumetric accumulation/distribution has flattened.

The Week Ahead
Our indicators are showing downward momentum but the Vix is not showing any fear in this move downward. Market fundamentals are deteriorating. The prognosis is that market has a bearish bias for the very short term and there is still little fear of a big move downward.

To YOUR wealth!