Mixed Apple results appear unable to save US indices from distribution
One of the clearest signs that an uptrend is over occurs when stocks fail to rally on good news. Despite generally positive earnings reports so fat this quarter, stocks haven’t been able to advance any further and some have declined, indicating traders are generally looking at results as an opportunity to take money off the table not for a reason to jump in. This reaction suggests that markets may have already priced in expectations of strong earnings and guidance plus a Clinton election win.
In recent days, indices have been peaking at lower highs and indices have seen early morning advances evaporate in the afternoons, both signs of distribution. Today, another sign of uptrend exhaustion emerged in the form of a bull trap reversal or buying climax that saw the NASDAQ 100 break out over 4,900 but then fall back under that level.
Late in the day the NASDAQ too another run at 4,900 following Apple’s earnings report, failed and then turned downward, a sign the index may have peaked. On a down day for the S&P, the only positive sectors were consumer staples and utilities while consumer discretionary underperformed a classic defensive rotation and sign of bearishness.
Earnings reports were more mixed than has been the case lately with significant bullish and bearish surprises. DuPont beat the street while Whirlpool missed and some companies put out mixed reports like Caterpillar who beat the street on earnings and then guided downward. Apple’s report was mixed beating the street by only a penny on earnings. Sales were a touch soft but IPhone shipments were strong and the company guided next quarter above expectations.
The US Dollar also appears to have peaked starting the day strong then falling back. US consumer confidence came in below expectations but the main culprits appear to have been technical exhaustion and a rebound in GBP after a selloff was quickly contained.
Crude oil has come under pressure this afternoon with WTI sliding back under $50.00 following a 4.8 mmbbl increase in API inventories. This is not a huge surprise given the big drawdowns of recent weeks but a bit discouraging. Crude oil may be active again Wednesday around the DOE inventory report. Materials underperformed in the US today and with oil in retreat, resource stocks could come under pressure today In Asia Pacific trading.
Apple $1.67 vs street $1.66, iPhone sales $28.1B vs street $27.7B, guides next Q sales to $76-$78B above street $74.9B
Chipotle same store sales (21.9%) vs street (18.2%)
Canadian National $1.25 vs street $1.22, raises financial outlook
Significant announcements released overnight include:
US API Crude oil inventories 4.8 mmbbls
US FHFA house process 0.7% vs street 0.4%
US consumer confidence 98.6 vs street 101.5
US Richmond Fed (4) as expected
Germany IFO business climate 110.5 vs street 109.6
Germany IFO current assessment 115.0 vs street 114.9
Germany IFO expectations 106.1 vs street 104.5
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
11:30 am AEDT Australia Q3 consumer prices street 1.1% vs previous 1.0%
4:00 pm AEDT Singapore industrial production street 1.0%
9:00 am BST Italy retail sales street 0.5%
8:30 am EDT US advance goods trade balance street ($60.5B)
9:45 am EDT US flash service PMI street 52.5
10:00 am EDT US new home sales street 600K
10:30 am EDT US DOE crude oil inventories street 2.0 mmbbls
10:30 am EDT US DOE gasoline inventories street (1.0 mmbbls)
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