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IB Traders' Insight

Global market commentary from IBG traders and market participants.

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2015-02-27 16:05:10

Posted by
Kevin Kastner
Washington Deputy Bureau Chief for Economic Data Operations
MNI News
Contributor

Macro

MNI US DataWatch

The March 2 week will include all of the early-month data, from manufacturing ISM on Monday to employment on Friday. Nonfarm payrolls are expected to rise by 245,000 in the February, with private payrolls also seen up 245,000 and the unemployment rate expected to fall back to 5.6%. Previous misses in February over the last 10 years have tended to be small and most recently to the low side. Other data for the week will include personal income, vehicle sales, and international trade.

Here is a closer look at the key data in the coming week:

NONFARM PAYROLLS FOR FEBRUARY, FRIDAY, MARCH 6, AT 8:30 A.M. ET

Nonfarm payrolls are forecast to rise by 245,000 in February after larger-than-expected gains in the previous three months. The unemployment rate is expected to decline to 5.6% after rising to 5.7% in January. Hourly earnings are forecast to rise 0.2%, while the average workweek is expected to hold steady at 34.6 hours for another month. If the payrolls forecast were realized and there was no major revision to the January reading, the 1Q average would remain well below the 4Q average most recently recorded as a 324,000 gain.

Over the last 10 years of forecasts for February payrolls, there were three overestimates and seven underestimates, including each of the last three years, a clear indication of a trend. The absolute average miss of 33,900 over that 10-year period was smaller than the 66,500 average over the same 10-year period for January payrolls. Given that there have also been underestimates in four of the last five months, the data suggest another modest underestimate for this month’s release.

The 257,000 payrolls gain in January marked a third straight underestimate and followed sharp upward revisions to the previous two months that intensified the market impact. After incorporating the annual benchmark revisions, there was still only one downward revision from the first estimate to the most recent published estimate over the last year, and that one was by only 2,000 in June 2014.

PERSONAL INCOME AND PCE FOR JANUARY, MONDAY, MARCH 2 AT 8:30 A.M. ET

Personal income is expected to rise 0.4% in January, as payrolls rose 257,000 and hourly earnings surged 0.5%. The average workweek was unchanged at 34.6 hours. Nominal PCE is expected to fall 0.1% as retail sales down 0.8% and were down 0.9% excluding motor vehicles and up only 0.2% also excluding gasoline. The core PCE price index is forecast to rise 0.1% after flat readings in the previous two months.

CONSTRUCTION SPENDING FOR JANUARY, MONDAY, MARCH 2 AT 10:00 A.M. ET

Construction spending is expected to rise 0.3% in January after a smaller-than-expected gain in December. Housing starts fell in the month, but remained on an upward trend, suggesting that private residential construction will post another increase in the current month.

ISM MANUFACTURING INDEX FOR FEBRUARY, MONDAY, MARCH 2, AT 10:00 A.M. ET

The ISM manufacturing index is expected to decline to a reading of 52.9 in February, which would be a fourth straight decline. Regional conditions were generally softer in the month due to harsh winter weather, but the flash estimate for the Markit Manufacturing index rose modestly from the previous month.

Over the last 20 years, analysts have overestimated manufacturing ISM in February eight times, with an average miss of 1.36. There were 12 underestimates by a slightly larger 1.37 average. The overall absolute average miss was 1.37, much smaller than 1.77 in January. When sign is considered, the average miss was -0.28. Looking at just the last ten years, when there were three overestimates and seven underestimates, the absolute average miss was 1.41, much smaller than 2.45 average in January. February 2014 ISM was underestimated, likely payback for a large overestimate in the previous month, when the economy was impacted by a severe storm in the Northeast.

DOMESTIC MOTOR VEHICLE SALES FOR FEBRUARY, TUESDAY, MARCH 3

Domestic-made light vehicle sales are expected rebound modestly after dipping slightly to 13.2 million in January, with some downside risk due to the harsh weather seen in much of the Northeast. Seasonal adjustment factors are still accommodative in February, though not as much as in January, so unadjusted sales would be expected to post modest gains.

NONMANUFACTURING ISM FOR FEBRUARY, WEDNESDAY, MARCH 3 AT 10:00 A.M. ET

The ISM non-manufacturing index is expected to fall very slightly to a reading of 56.5 in February after a small increase in January. Regional services conditions data pointed to stronger growth in activity, which was confirmed by a sharp increase in the Markit Services index.

WEEKLY JOBLESS CLAIMS FOR FEBRUARY 28 WEEK, THURSDAY, MARCH 5 AT 8:30 A.M. ET

The level of initial jobless claims is expected to retreat by 18,000 to 295,000 in the February 28 week after rising by 31,000 in the previous week. The four-week moving average rose by 11,500 to 294,500 in the February 21 week after four straight declines. The January 31st week’s 279,000 level will roll off the four-week average calculation as the current week's is added, which would result in a further increase of 4,000 in the moving average if the MNI forecast is realized, all else being equal.

Seasonal adjustment factors expect unadjusted claims to rebound in the February 28 week after a 2,096 rise in the February 21 week. In the comparable week a year ago, unadjusted claim rose by 5,167. Seasonal factors had expected a larger rebound, the reverse of the previous week, so claims fell by 26,000 that week.

FINAL PRODUCTIVITY FOR FOURTH QUARTER, THURSDAY, MARCH 5, AT 8:30 A.M. ET

Nonfarm productivity is expected to be revised down to a 2.4% annual rate for the fourth quarter from the 1.8% decline in the preliminary estimate. Output growth is expected to be revised down based on the GDP data released on February 27. Unit labor cost growth is expected to be revised up to a 3.3% rate of growth from the 2.7% growth pace in the preliminary estimate.

FACTORY ORDERS FOR JANUARY, THURSDAY, MARCH 5 AT 10:00 A.M. ET

Factory new orders are expected to fall by 0.1% in January, maintaining the recent string of declines. Durable goods orders rose 2.8% in the month, but nondurable goods orders are forecast to fall sharply on a price-related drop in petroleum and coal products.

INTERNATIONAL TRADE FOR JANUARY, FRIDAY, MARCH 6, AT 8:30 A.M. ET

The international trade gap is expected to narrow to $40.6 billion in January following a sharp widening of the gap in the previous month. Boeing reported a drop in aircraft deliveries to foreign buyers while manufacturing industrial production was up only modestly, suggesting soft exports. At the same time, import prices fell 2.8% and were still down 0.7% excluding petroleum products.

CONSUMER CREDIT FOR JANUARY, FRIDAY, MARCH 6, AT 3:00 P.M. ET

Consumer credit usage is forecast to rise $15.5 billion in January, a stronger gain than those seen in November and December. Retail sales fell 0.8%, while sales were down 0.9% excluding motor vehicles and were up only 0.2% also excluding gasoline station sales. Nonrevolving credit use growth in December was the smallest in nearly three years, but could improve in January.

 

MNI is a wholly owned subsidiary of Deutsche Börse Group.

This article is from Market News International (MNI) and is being posted with MNI’s permission. The views expressed in this article are solely those of the author and/or MNI and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-02-27 15:28:03

Posted by
Steven Levine
Fixed Income Reporter
MNI News
Contributor

Fixed Income

MNI's U.S. Risk-O-Meter

Investment-grade debt sales this past week more than tripled the previous week’s level, with a modest rise in sector diversity, and with  more shades of credit quality. However, deals were still more heavily skewed towards the single-’A’ category, a continued trend from prior week.  Several multi-part offerings were on the menu, led by a  six-part issuance from Chevron Corp.  Average deal size rose to nearly $758.50 million compared to $545 million in the prior week, and U.S. based issuers continued to outweigh overseas borrowers by a large margin.   

 

Keep pace with the latest corporate news with MNI's US Risk-O-Meter, a weekly recap of credit risk appetite! For more information and a full version of the US Risk-O-Meter, email Steven Levine. Click here for more About MNI.

 

This article is from Market News International (MNI) and is being posted with MNI’s permission. The views expressed in this article are solely those of the author and/or MNI and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-02-27 14:26:52

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Waverly Advisors Summary Stats

%Chg: percent change from the previous day’s close

SigmaSpike: the day’s change expressed as a standard deviation of the last 20 trading days. Values inside +/- 1.0σ are generally insignificant, +/- 2.5σ are large (for the volatility of the particularly instrument), and +/-4.0σ are very large.

C/DayRng: the current price as the pipe “|” within the day’s range. Can easily see at a glance if trading near high or low of the day. The day’s open is “:”. You can read more about this indicator in my book.

For sectors: analysis is done using the State Street Sector SPDRs (XLE, XLF, etc.) %Chg is the day’s change for the SPDR, and Excess is the Excess Return for the day (the SPDR’s return – the S&P 500 return).

 

For more information about Waverly Advisors please click here.

2015-02-27 14:23:41

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Waverly Advisors Update: Largest Advances / Declines

The individual stock tables are simply ticker lists showing the largest values for the following criteria:

SigmaSpike: Largest volatility-adjusted moves. (Note that this measure, though we might call it a “standard deviation spike”, does not assume that anything is normally distributed. You’ll see a handful of +/-4.0σ moves on many days, and +/- 10σ do happen.)

GapOpen: The stock’s opening gap, expressed as a SigmaSpike.

FromOpen: Stocks often reveal stronger trending character by their relationship to their opening print, rather than to the previous day’s close. This screen evaluates the move off the open as a SigmaSpike.
 

For more information about Waverly Advisors please click here.

2015-02-27 13:59:41

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Waverly Advisors Afternoon Update

Largest Rel Volume: Stocks with the largest multiple of their 20 day average volume. Note that the “average” value for this number will change as the trading day progresses, but the relative position of a stock within this list should show some persistence. These are likely stocks in the news, or stocks experiencing a sharp flow of new information.

Largest Rel Ranges: First, we express each stock’s daily range as a % of the 20 day average range, and then choose the 10 with the largest values of that measure. These are the stocks with the largest daily ranges, relative to their own typical daily ranges.

Gap Analysis shows stocks with open gaps (today’s high < yesterday’s low or today’s low > yesterday’s high) remaining.

Stocks with Open Gaps (for the Day): ARUN, BBD, GPS, GPRO, KND, ROST, HZNP, TOT, GM, ADSK, FDX, CA, GMCR, SNE, DKS, MTZ

 

For more information about Waverly Advisors please click here.

2015-02-27 12:19:21

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Potential breakdown underway in the euro

This breakdown has potential to continue: good downside momentum following a long weekly bear flag.

 

For more information about Waverly Advisors please click here.

 

This article is from Waverly Advisors and is being posted with Waverly Advisors' permission. The views expressed in this article are solely those of the author and/or Waverly Advisors and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-02-27 11:42:35

Posted by
John Carter
President
Simpler Stocks
Contributor

Stocks

Simpler Stocks: Thursday Movers

US oil slid 4% on Thursday, and stocks finished slightly lower. Energy stocks were broadly lower in sympathy, and consumer prices showed their first annual decline in roughly six years, tied to lower gas prices. That was trumped in part by NASDAQ moving ever closer to the psychologically important 5000 level.

Cowen Group Inc. (Ticker: COWN)

Trading at 0.8x book value, this broker posted strong results Thursday morning. The company has shown a 31% increase in assets under management year-over-year (January) to more than $12 billion, while the broker deal revenues grew 44% year-over-year.  An increase in book value should come alongside continued net income boosts (estimated by consensus to grow by roughly 50% this year) and also share repurchases, which are currently authorized to accommodate 6% of the float. 

NorthStar Realty Finance Corp. (Ticker: NRF)

NorthStar Realty shares popped Thursday on the news that the real estate firm would be spinning out its European operations into a separately traded vehicle.  The news comes alongside a health care business that is growing and significant holdings in commercial real estate debt. The latest results will be posted Friday, February 27th, which should give some further clarity on European outlook. The stock yields an attractive 8%.

Gencorp Inc. (Ticker: GY)

This $1.2 billion market-cap company operates in aerospace/defense and real estate. The propulsion systems help aircraft get off the ground, literally, and the real estate segment operates primarily in California. Though sales have been steady at 4% growth projected through the fiscal year scheduled to end in November 2016, the EPS is growing by 50%, say analysts, and the forward PE is half that rate.  Price to sales ratio is also below 1x, while the free cash flow yield is 11%. 

Quality Systems Inc. (Ticker: QSII)

After posting a return to growth in its most recent results posted in January, EPS revisions have been trending upward for the fiscal year ending next March. The newly revised estimates have the bottom line growing at 18% next year, with some leverage on the revenue growth of about 7% through the same period. Key to results is the continued automation of health care and information tech tied to patient records.

Blackhawk Network Holdings, Inc. (Ticker: HAWK)

The gift and prepaid card company posted results that topped the Street, but the shares slumped just the same, to the tune of 12% intraday. The drop may be tied to heightened expectations on guidance, but given the downdraft in the stock, a lot is being priced in. The shares now trade for 17x forward EPS, while the Street is looking for as much as 41% growth. It would take a big downtrend in estimates to make the shares look pricey at these levels. 

Hewlett-Packard Co. (Ticker: HPQ)

Following the recent breakdown in the share price, could HPQ be on the way to value territory?  The stock is trading now at less than 0.6x sales, and even on recent cash flows, the yield is 12%. In addition, the recent news that the tech behemoth is in talks to buy Aruba Networks (Ticker: ARUN) may not have been enough to buoy the shares. But striking a deal here means that HPQ is transitioning away from core “box” business and looking more toward wi-fi buildouts, which would help move away from core hardware tech.

 

About the author: John Carter has been a full time trader for 15 years, serving over 100,000 subscribers in over 100 countries.  For more analysis on high growth stocks visit www.SimplerStocks.com.

 

This article is from Simpler Stocks and is being posted with Simpler Stocks’ permission. The views expressed in this article are solely those of the author and/or Simpler Stocks and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-02-27 10:36:19

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Small cap OUTperformance?

Is this the market tell that no one is talking about yet? Continued improvement in this spread may point to a shift in market dynamics and a resumption of smaller cap leadership.

 

For more information about Waverly Advisors please click here.

 

This article is from Waverly Advisors and is being posted with Waverly Advisors' permission. The views expressed in this article are solely those of the author and/or Waverly Advisors and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-02-27 09:18:06

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Macro

US GDP less impacted by inventories

The first revision to the level of fourth quarter growth confirmed that the initial report was too rosy, but failed to dent the view that the economy continues on its merry way forward. Gross domestic product was revised down to 2.2% at an annualized pace from the original 2.6%, feeling the weight of lighter consumer spending and a stronger drag from net trade. However, it was a smaller increase in stockpiles that weighed most. Inventories did not rise by the first-reported $113-billion, but by $88-billion instead. The impact was to add just 0.1% to the overall growth reading rather than a previously recorded 0.8%. The economy is likely to continue slowly building momentum as jobs are created at a time when falling gasoline prices are freeing-up disposable income. Both export and import activity were revised higher in the revision, but the faster pace of growth in the latter served to deprive the core GDP reading of 1.2% rather than an initially reported 1.0%.

Chart – Inventories rose at a lesser pace on reflection, boosting growth by less

2015-02-27 00:06:19

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor

Technical Analysis

WTI Crude (CL) Gives Back Post Inventory Gains

CL sold off yesterday on the initial rally that followed Thursday's inventory figures, and is back to near the low immediately following the inventory release.  As a result of yesterday's lower high, the week long downchannel resistance line (on the 4hr chart) has been redrawn, and another more gradually downsloping and wider channel has been drawn suggesting next support around 48.  The weekly, daily and 4hr RSI, Stochastics and MACD have become fairly mixed after yesterday's selloff.

 

WTI Crude (CME CL Apr15) Weekly/Daily/4hr/Hourly

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 

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