Enis’s Macro Wrap – Bouncing between 1400 and 1420

by Enis October 25, 2012 7:42 am • Commentary

We’re back in familiar territory in the SPX index, between 1400 and 1420.  During the second half of March, and practically the whole of August, the index bounced around between those 2 levels , before breaking down in April, and breaking up in August.  Here is chart showing how individual sectors have performed in the last 2 months, a period in which the SPX was basically flat:

 

 

Forget the jumble of lines in the middle.  Most sectors are close to unchanged.  There are 2 standouts on the upside, health care and financials (both up 5% with the index flat).  On the downside, technology is down almost 5%, the clear underperformer.

AAPL and AMZN report after the close today.  The reactions to these 2 reports will be a clear signal as to whether the technology underperformance of the last 2 months was a head fake, or a sign of more weakness to come.

Markets overnight:

  • Asia continues to be the best performing region, as all major regions were higher with the exception of the Shanghai index.  Japan has been especially strong the last 2 weeks as the yen has weakened (USD/JPY now above 80.00)
  • Europe opened in the red, but is now trading up 0.5%, in a quiet session.  The performance gap between Europe and the U.S. is down to 4%, near the lows since March (due to U.S. underperformance in the last month)
  • SPX futures are up 0.6%, testing the upper end of the 1400-1420 range in SPX cash this morning.  The dollar and Treasury bonds are lower, and commodities are higher, with the exception of copper.
  • Durable Goods and Jobless Claims released at 8:30 am.  Economists’ consensus estimate of Durable Goods is for a 7.5% increase (to make up for the 12% fall last month)
  • PG beat estimates, CL matched estimates but missed on revenues, and Ford announced that it is closing 3 European plants as European demand is weak.