TODAY’S S&P 500 SET-UP – May 21, 2014
As we look at today's setup for the S&P 500, the range is 22 points or 0.63% downside to 1861 and 0.54% upside to 1883.
CREDIT/ECONOMIC MARKET LOOK:
- YIELD CURVE: 2.19 from 2.18
- VIX closed at 12.96 1 day percent change of 4.35%
MACRO DATA POINTS (Bloomberg Estimates):
- 7am: MBA Mortgage Applications, May 16 (prior 3.6%)
- 10am: Fed’s Dudley speaks in New York
- 10:30am: DOE Energy Inventories
- 11am: Fed’s Yellen speaks in New York
- 12:50pm: Fed’s George speaks in Washington
- 1:30pm: Fed’s Kocherlakota speaks in Minneapolis
- 2pm: FOMC releases minutes from April 29-30 meeting
- President Obama visits Interior Dept, signs proclamation on new national monument in N.M., holds ambassador credentialing ceremony in Oval Office
- Nunn aided by Georgia Republicans forced into Senate runoff
- Senate to vote on confirmation of Stanley Fischer for Fed; likely to hold separate vote later making Fischer vice chairman
- 10am: Senate Finance Cmte hears from Social Security Admin. chief actuary Stephen Goss on strengthening Social Security
- 10am: CFTC’s Global Markets Advisory Cmte holds meeting, considers regulatory treatment of foreign-based swap clearinghouses
- 10am: 2 House Homeland Security Subcmtes hold joint hearing on emerging cyberthreats to U.S.
- 2pm: House Financial Services Financial Institutions and Consumer Credit Subcmte will review legislation on transparency, accountability at CFPB
- 2pm: Senate Finance Cmte votes on nomination of Sylvia Mathews Burwell for HHS Sec.
WHAT TO WATCH:
- FOMC minutes preview: exit strategy, employment view
- Netflix enters Germany, France in biggest expansion since 2011
- Woodside scraps $2.6b Israeli gas deal as talks fail
- ‘Surprised’ Microsoft works w/China after Windows 8 exclusion
- Senate confirmation vote on Fischer for Fed scheduled today
- BNP drops as U.S. said to seek $5b in sanctions probe
- Google says it needs up to $30b cash overseas for deals
- Nasdaq hunting Alibaba after ‘hundreds’ of smooth IPOs: CFO
- China’s JD.com seeks Jeff Bezos treatment with $1.7b IPO
- KCG joins Liquidnet in quest for more dark pool transparency
- Batista bases insider-trading defense on Mubadala share deal
- Target releases first earnings since firing CEO
- Skanska moves engineers to California as Apple work helps
- First Solar, India developers oppose dumping findings in court
- U.K. retail sales surged in April as discounting boosts food
- American Eagle Outfitters (AEO) 8am, $0.00 - Preview
- Booz Allen Hamilton (BAH) 6:30am, $0.31
- Eaton Vance (EV) 8:38am, $0.55
- Hormel Foods (HRL) 6:30am, $0.56
- Lowe’s Cos (LOW) 6am, $0.60 - Preview
- PetSmart (PETM) 7am, $1.02
- Raven Industries (RAVN) 9am, $0.33
- Sears Canada (SCC CN) 7am, NA
- Target (TGT) 7:30am, $0.71 - Preview
- Tiffany & Co (TIF) 6:45am, $0.78
- Giant Interactive (GA) 4:05pm, NA
- L Brands (LB) 4pm, $0.52
- NetApp (NTAP) 4:01pm, $0.79
- Renren (RENN) 6pm, $0.09
- Semtech (SMTC) 4:30pm, $0.30
- Sina (SINA) 4:30pm, $0.15
- Synopsys (SNPS) 4:05pm, $0.60
- Williams-Sonoma (WSM) 4:05pm, $0.44
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
- Goldman Widens Iron Ore Surplus Forecast on China Steel Slowdown
- WTI Crude Rises to One-Month High on Supply Drop; Brent Advances
- Copper Reaches One-Week Low as Chinese House Sales Seen Slowing
- Palladium at Highest Since 2011 With Fund Holdings Near Record
- Wheat Climbs as Slide Seen Attracting Buyers With Russia Heat
- Cocoa Extends Longest Rally Since January in London; Sugar Falls
- China’s Nickel Ore Imports From Indonesia Slump 67% in April
- China’s Imports of U.S. Corn Plummet as Curbs on GM Seed Tighten
- Gold Demand in Vietnam Seen Declining by Half as Inflation Slows
- Tranquility in Crude Repels Chaos-Loving ETP Investors: Energy
- Ex-Millennium Trader Rosengren Joins Modity Energy in Sweden
- Christmas Comes Early to LME on China Holidays: Chart of the Day
- Argentina Shale Has Geological Potential for U.S.-Like Surge
- Steel Rebar Rises From Record Low After Iron Ore Futures Rebound
The Hedgeye Macro Team
Here's a short excerpt of a wide-ranging conversation Hedgeye CEO Keith McCullough had with portfolio manager Jim Lacamp of Macroportfolio Advisors as part of HedgeyeTV's Real Conversations series. Stay tuned for the full interview.
Daily Trading Ranges
20 Proprietary Risk Ranges
Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.
Takeaway: 72% said 1000; 28% said 1200
Hedgeye CEO Keith McCullough noted in today’s Morning Newsletter: “The Russell 2000 bounced on no-volume to yet another lower-high of 1114 yesterday and at -4.3% YTD, the Russell 2000 is still bearish on both our immediate-term TRADE and intermediate-term TREND durations.” But we wanted to know what you think.
Today’s poll question was: What's the next stop for the Russell 2000?
At the time of this post, 72% said the next stop would be 1000; 28% said it would be 1200.
Those who believe it will drop to 1000 say it’s “the next area of support.” One voter explained, “$RUT has been the gift that keeps on giving if you're on the put side. It's entering bear market territory and once that happens... swoosh!”
Additionally, as another voter said, “The last leg up in Feb felt blow-off which usually means a larger drawdown is coming. Also, leverage gets risky and expensive if the market isn't making higher highs and the longer IWM sells off the more pressure is put on the S&P. I'm thinking at least support at $1050.”
In the opposite camp, voters who chose 1200 said:
- “Don’t think it hits either 1000 or 1200 in next few months but down 9% from high with SPX near all-time high, the easy trade is RUT trades lower but Mr. Market likes to penalize the easy trade...so higher.”
- “Shorting the $RUT seems like a too-obvious trade now. Wouldn't be surprise, it squeezes higher and traps more people before turning lower again.”
- “Been down so long it looks like up to me.”
SUBSCRIBE TO HEDGEYE.
Takeaway: This is the kind of accountability we like to see from companies we invest in.
URBN 1Q15 Earnings
TAKEAWAY FROM HEDGEYE’S BRIAN MCGOUGH:
Definitely a disappointing quarter for Urban Outfitters, and as everybody knows, it's all about weakness in the URBN concept. One thing we give management all the credit in the world for is that it did not use weather as an excuse -- even though everyone else is. They noted that great companies perform regardless of the weather -- as Anthropologie and Free People did. They expect the same from Urban, which is dragging because of its own problems, not Mother Nature's. That's the kind of accountability we like to see from companies we invest in.
* * * * * *
Editor's Note: This is a research excerpt from Hedgeye Retail sector head Brian McGough. Follow Brian on Twitter @HedgeyeRetail.
Subscribe to Hedgeye.
Takeaway: We’ve been hitting you with this DOWN-volume-UP-day thing square in the head this year.