(JPM) US Equity index Technical




US Equity Index Technical Strategist: There are plenty of warning signals, but until the market reacts to them, the broader rally stays in gear



  • S&P 500 Index

    : There are plenty of technical indications that suggest the index is setting up for a sizable correction in the months ahead, but until the market reacts, we favor a tentative bullish outlook. One of two things would shift our bias to negative: a break below the 2031-2040support area or a more preferable bearish reversal pattern formation that follows a break above 2120-2125 range resistance. We view the recent global yield rise as a warning signal for the US equity market. While the initial bond backup did not materially shift Fed expectations, we think a subsequent move will. Early 2004 and early March 2015 provide good examples of that dynamic. In both cases, equity-interest rate correlations broke down and both markets sold off together...…pg. 2 

  • Russell 2000 Index

    : The market holds an initial test of key support at the 1212-1213 2014 range highs and 1206 Mar 10 trough. The corrective tone of the recent rebound keeps a negative medium-term bias as long as the market is trading below the 1247 Apr 30 gap and 1248 Apr 17 low. Bears would gain significant traction with closes below 1200, marking a Feb-May head-and-shoulders reversal pattern breakdown. That would open the door for a decline to the 1135-1151 support layer....……pg.4

  • The Nasdaq 100 Index

    consolidates after the Apr 27 rejection of the 4538-4594 resistance zone. Like the other indexes, bearish divergences on multiple timeframes and a multi-month ending diagonal pattern raise the odds for an eventual correction. However, the resilient nature of the market in the first quarter in the face of that setup and the forward shift of Fed tightening expectations favor trailing stop-loss type strategies. In that regard, breaks below the 4281 Mar 26 low would be problematic for the broader bull trend........pg.5

FT : New Oil Order

New Oil Order
The New Oil Order

Saudi Arabia says its strategy of squeezing high-cost rivals such as US shale producers is succeeding, as the world’s largest crude exporter seeks to reassert itself as the dominant force in the global oil market.
The kingdom’s production rose to a record high of 10.3m barrels a day in April and there is no sign that it plans to reverse its policy at next month’s meeting of Opec, the producers’ cartel, in Vienna.

“There is no doubt about it, the price fall of the last several months has deterred investors away from expensive oil including US shale, deep offshore and heavy oils,” a Saudi official told the Financial Times in Riyadh, giving a rare insight into the kingdom’s thinking on oil strategy.
The International Energy Agency, the world’s leading energy forecaster, on Wednesday released data backing up the Saudi position. The agency said that with the number of rigs running in the US plunging by 60 per cent in response to lower oil prices, US shale oil production had “buckled” in April, “bringing a multiyear winning streak to an apparent close”.
But the IEA also cautioned that it would be “premature” to suggest that Opec had “won the battle for market share”. It said global crude supply was growing, even from high-cost areas such as Brazil, as well as from other Opec member states such as Iran and Iraq.
However, the Saudi official said he expected the kingdom to maintain its dominance of global energy, despite the growth of alternatives to fossil fuels and competition from rival oil producers within Opec and beyond. “Saudi Arabia wants to extend the age of oil,” he said. “We want oil to continue to be used as a major source of energy and we want to be the major producer of that energy.”
The official was speaking nearly six months after Opec, which is led by Saudi Arabia, took its landmark decision to keep output steady in the face of rising supply from rivals, rather than play its traditional role of cutting production to support prices.
The decision triggered a fresh fall in the oil price, throwing the budgets of the poorest exporter countries into disarray and forcing international energy companies to slash spending, drilling and jobs.
Saudi-oil-chart
Saudi officials later explained that the policy was designed to put pressure on producers that require a higher oil price to be economic such as US shale drillers and companies operating in Brazil’s offshore fields. These they believed would be the first to collapse in a survival of the fittest as prices plunged.
Expectations are already rising that the market could soon start to tighten by midyear. The IEA said on Wednesday that was one of the reasons for the recent rally in the oil price: having crashed from $115 a barrel last June to almost $45 in January, Brent, the international crude benchmark, is now back up at around $68.
The Saudi official said the price of oil had now “reached a bottom” and it “doesn’t look like it is going back”.
But experts say it is too soon to say whether Saudi Arabia is succeeding in increasing its market share. Data from 2011-14 show that while its share of imports to India and Japan has grown, in China it has lost out to Opec peers Iran and Iraq.

US shale producers would also disagree that Saudi Arabia has succeeded in squeezing them. The US oil industry has slowed down: but EOG Resources, the country’s largest shale oil producer, has forecast a return to “double-digit” production growth if the US benchmark, West Texas Intermediate, rises to $65 per barrel or higher. It is currently trading at around $61.
The Saudi official admitted “increased efficiencies” were likely as US shale and other producers adjusted to lower prices. He also said the impact of the price rebound was still “unknown” and “there is not yet any clarity on the US supply curve and drivers”.
The comments from Riyadh come with the Saudi oil sector facing deep uncertainty in the wake of sweeping changes to the governance of the oil ministry and the state energy company Saudi Aramco by King Salman, who ascended to the throne in January.
Some oil sector observers in Saudi Arabia say that King Salman’s accession increased pressure on veteran oil minister Ali Al Naimi and the advocates of his oil production strategy to reaffirm their position.

>>> US Close Dow-0,04% S&P-0,03% Nasdaq +0,11%Russell-0,07%

Closing Market Summary: Stocks End Flat Following Disappointing Retail Sales Report

The stock market ended the midweek session on a flat note after sliding from its opening high. The S&P 500 settled just below its flat line to register its third consecutive decline while the Nasdaq Composite (+0.1%) outperformed throughout the day.

Prior to the open, the Retail Sales report for April (0.0%; consensus 0.2%) missed expectations for the fifth consecutive month. The economic disappointment helped Treasuries extend their overnight gains with the benchmark 10-yr yield hitting a morning low at 2.19%; however, Treasuries reversed from their morning highs and spent the day in a steady retreat (10-yr yield +3 bps to 2.28%) while the stock market followed suit.

Only four sectors registered gains, but the top-weighted technology sector (+0.5%) held the lead throughout the session and prevented the S&P 500 from registering a larger loss. In addition, the sector fueled the Nasdaq's outperformance with large cap names like Intel (INTC 32.64, +0.39), Microsoft (MSFT 47.62, +0.27), and Qualcomm (QCOM 69.73, +0.95) climbing between 0.6% and 1.4%.

Elsewhere among cyclical sectors, the industrial space (+0.2%) also spent the day in the green even as transport stocks lagged notably. The Dow Jones Transportation Average lost 1.1%, widening its year-to-date decline to 6.4% as 17 of its 20 components ended in the red. Delta Air Lines (DAL 46.78, +0.68) was a notable standout, adding 1.5% after announcing a $5 billion buyback program and boosting its dividend 50% to $0.135.

On the downside, the utilities sector (-1.1%) spent the session behind its peers while the consumer discretionary space (-0.6%) was the second-weakest performer. Sector heavyweight Comcast (CMCSA 56.28, -1.05) fell 1.8% while retailers also struggled following the disappointing economic data. The SPDR S&P Retail ETF (XRT 98.30, -0.29) lost 0.3%.  

Also of note, the energy sector (-0.3%) was among the early leaders, but the growth-sensitive group was pressured by crude oil, which fell 0.4% to $60.46/bbl. The energy component could not rally even as the Dollar Index (93.72, -0.81) lost 0.9%.

Today's participation was in-line with Monday and Tuesday as roughly 700 million shares changed hands at the NYSE floor.

Economic data included Retail Sales, Import/Export Prices, Wholesale Inventories, and MBA Mortgage Index:
  • Retail sales were flat in April after increasing an upwardly revised 1.1% (from 0.9%) in March while the consensus expected retail sales an increase of 0.2% 
    • Auto manufacturers reported a steep decline in the number of units sold in April (16.5 million SAAR from 17.1 million SAAR). That translated into a 0.4% decline at motor vehicle and parts dealers, down from a prior 2.9% increase 
    • Excluding motor vehicles, retail sales increased a modest 0.1% after increasing an upwardly revised 0.7% (from 0.4%) in March while the consensus expected an increase of 0.4% 
    • In the first quarter, the added income that was derived from lower oil prices was used to stockpile additional savings instead of boosting consumption. Now that gasoline prices are again on the rise, consumers are not only not liquidating their savings to pay for the higher gasoline costs, but they are adding more to their savings stockpile
  • Export prices, excluding agriculture, decreased 0.7% in April after increasing 0.2% in the prior reading 
    • Excluding oil, import prices fell 0.4%, which followed last month's 0.4% decline 
  • Business inventories increased 0.1% in March after increasing a downwardly revised 0.2% (from 0.3%) in February while the Consensus expected an increase of 0.2% 
    • The changes in inventories for manufacturers (-0.2%) and merchant wholesalers (0.1%) were known prior to the release. The only new information was that retailer inventories increased 0.3% in March, down from a 0.5% increase in February 
  • The weekly MBA Mortgage Index fell 3.5% to follow last week's 4.6% decline 
Tomorrow, weekly Initial Claims ( consensus 275K) and April PPI (consensus 0.2%) will be released at 8:30 ET.
  • Nasdaq Composite +5.2% YTD 
  • Russell 2000 +2.4% YTD 
  • S&P 500 +1.9% YTD 
  • Dow Jones Industrial Average +1.3% it's

WSJ : Glencore, Barrick Gold Looking to Sell Tanzania Nickel Project

Glencore, Barrick Gold Looking to Sell Tanzania Nickel Project
While Kabanga’s ore is of a high grade, a sale may be difficult given the size of the field of potential buyers

Mining giants Glencore PLC and Barrick Gold Corp. are looking to sell a joint nickel development project in Tanzania, according to people familiar with the matter, in a sales process that may struggle amid volatility in the pricing of this metal.

The two mining giants each own half of the Kabanga nickel project in northwest Tanzania and have been touting the property for several months, according to the people familiar with the matter. Neither company has hired a bank to sell the property, according to two of these people.

The asset is one of many that have been put up for sale in recent years as miners rejig their portfolios and raise money to mend battered balance sheets.

Glencore Chief Executive Ivan Glasenberg has repeatedly said he is focused on purchasing developed mines and that he isn't interested in so-called greenfield projects, which require hefty cash outlays.

Barrick Gold is selling assets as it looks to reduce its debt pile by $3 billion before the end of the year. The Toronto-based gold miner tried to sell its stake in Kabanga two years ago and hired a bank to tout the asset.

Some bankers believe that, while Kabanga’s ore is of a high grade, the sale will be as difficult this time around. Given the size of the nickel market the field of potential buyers remains smaller than in other metals, from gold to iron ore. Kabanaga is also considered in a remote location with little infrastructure.

In addition, the price of the metal remains volatile, which some bankers believe could put investors off the asset.

While nickel has been rising in recent weeks, it is down 5.3% this year and is off 31% from two-year highs reached last May. Many traders and analysts think that nickel’s long period of price falls is nearing its end and prices will turn higher as supply struggles to keep up with demand.

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Mr. Glasenberg said on a March 3 earnings call that he expects nickel prices to rise amid expectations that demand outpaces supply later this year.

“Exactly when the price will move, we cannot predict, but the market is looking good” in commodities such as nickel, he said on the call.
The project began in 2007 as a joint project between Barrick and Xstrata PLC, which was taken over by Glencore in 2013.

FT Alphaville : US telco RAW alert: nTelos targeted by Shentel?

Rumours are reaching FT Alphaville that nTelos, a US regional wireless company, is a takeover target for Shenandoah Telecommunications.

Shenandoah (better known as Shentel) has been putting together a knockout $200m offer for the Virginia-based mobile broadband provider, a nearly 50 per cent premium to Tuesday’s closing value, according to people claiming direct knowledge of the negotiations. A price of around $9.25 a share has been all but agreed, they said, against Tuesday’s close of $6.20.

Plans could still change, talks may yet collapse and nothing in this life is ever certain, one of the people cautioned. They suggested we put our traditional RAW warning on the story, so here it is.

A deal, while small in scale and local in context, could be seen as another small step in the worldwide trend towards fixed and mobile broadband convergence. Shentel (market cap: $760m) specialises in providing rural internet connections in the eastern states of Virginia, West Virginia and Maryland, which NTelos lists as its three biggest markets.

Adele Skolits, Shentel’s CFO and VP of finance, said the company doesn’t respond to speculation and wouldn’t comment further. A spokesman for NTelos wasn’t answering his phone.

The 12-month share price graph for nTelos looks like this.

>>> VIP US : Responds to allegations by short sellers - Vipshop believes these a

Responds to allegations by short sellers 

- Vipshop believes these allegations are unfounded and contain numerous errors, unsupported speculation, and a general misunderstanding of the Company's business model. The Company has made its board of directors and its independent auditors aware of the reports, and will continue to review and address the allegations as appropriate, but today the Company would like to clarify certain key errors contained in the allegations