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28Oct2015 Market Update: U.S. Stocks Rise After Crude Oil Prices Skyrockets, US Dollar Continues To Slide, Investors Seemingly In 'Risk On' Before FOMC Meeting This Afternoon

Written by Gary

Big news this morning was WTI skyrocketing price increase of $2.30 per barrel. Right after the opening. U.S. stocks also climbed this morning led by a surge in energy and materials shares following the sharp rise in crude oil prices.

The FOMC minutes to be released at 2 pm may upset the bullish apple cart, but volatility is assured. Fasten seat belts.

Here is the current market situation from CNN Money

North and South American markets are higher today with shares in U.S. leading the region. The S&P 500 is up 0.65% while Brazil's Bovespa is up 0.63% and Mexico's IPC is up 0.36%.

Crude-oil prices CLZ5, +5.95% jumped nearly 6% after the U.S. Energy Information Administration reported that weekly supplies rose less than expected.

"We are not seeing any fundamental reasons for oil prices to jump this much, but crude prices had been volatile for a while and energy shares are benefiting," said Brian Fenske head of sales trading at ITG.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 69%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 67%
Investors Intelligence sets the breath Above 50 bullish 44.2% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -8.45 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 33.53% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 51.28% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 64.00% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.65 Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 80.27 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,508

What Is Moving the Markets

Here are the headlines moving the markets. xxxxxxxxxxx

GE to spend $200 million on two factories for jet engine parts

(Reuters) - General Electric Co said on Wednesday it will spend more than $200 million to build two factories in Alabama to expand its capacity to make high strength materials for jet engines and power plant turbines.

U.S. third-quarter GDP forecasts raised after trade data

WASHINGTON (Reuters) - U.S. third-quarter economic growth could surprise on the upside after government data on Wednesday showed the goods trade deficit narrowed sharply to a seven-month low in September.

Walgreens: can't assess divestitures needed for Rite Aid deal

(Reuters) - Walgreens Boots Alliance Inc said it did not want to speculate on the number of drugstores it would need to divest to get regulatory approval for its deal to buy smaller rival Rite Aid Corp .

Wall St. higher on Apple, energy stocks; Fed awaited

(Reuters) - Wall Street was boosted by gains in Apple and energy stocks on Wednesday, ahead of the Federal Reserve's policy statement later in the day.

Icahn asks AIG to split to avoid 'too-big-to-fail' tag

(Reuters) - Activist investor Carl Icahn disclosed a "large stake" in American International Group Inc and urged the company to spin off its life and mortgage insurance units into public companies to shed the U.S. government's "too-big-to-fail" tag.

Diageo's India unit eyes high-end spirits to reverse market share loss

MUMBAI (Reuters) - India's United Spirits Ltd will scale back its roster of more than 150 brands and focus on the faster-growing top end, hoping to bolster its fortunes in a market dominated by cheaper, local names.

Exclusive: Bombardier to book major writedowns, outline cash infusion from Quebec - sources

WASHINGTON/MONTREAL (Reuters) - Canada's Bombardier is set to book a writedown on its CSeries program and announce that the government of Quebec will be investing in the narrowbody jet program, according to several sources familiar with the matter.

Apple defies China slowdown fears with strong iPhone sales

Apple Inc reported blockbuster iPhone sales in China, suggesting that worries about the company's growth trajectory in the world's second-largest economy are overdone.

NIRP Panic: Over Half Of European 2-Year Bonds Trade At Record Negative Yields; Italy Paid To Issue Debt

Last week it was Mario Draghi's promise that he would push European deposit rates even further into NIRP territory from their current -0.20% level, something which market not only believed but has already priced in and then some, pushing German 2Y yields to a record -0.35%...

... but then earlier today, as predicted here previously, in a panic response Sweden's Riksbank did the only thing it can do to halt the "money tsunami" that Draghi is unleashing as he makes money even more unwanted, by expanding its QE for the 4th time this year since it was unveiled in February in hopes of making the SEK even more worthless than the Euro.

In short, Europe has unleashed yet another monetary panic, and nowhere is it more visible than in what happened today across the short end of Europe's government curve.

As the table below shows, more than half of European sovereign issuers just saw the yield on their 2 Year Notes trade not only below zero, but hit never before seen negative yields!

This reminds us of a post we did in January when the impact of NIRP was first felt on Europe's bond market, and when we wrote that
"in the aftermath of the ECB's NIRP policy, and subsequently QE, an unprecedented €1.4 trillion in European debt with a maturity of more than 1 year traded down to subzero, as in negative, yields."

Is FX Manipulation Back? Dollar Spikes At London Fixing

Across the entire 'currency' complex a sudden USDollar buying scramble into the London Close fix has sparked weakness across everything from Swiss Francs to Bitcoin...

What are the fixes?

There are loads of different types of fixes, but the main ones are at 11 a.m. and 4 p.m. London time.

That's not the only thing fixes are used for. Some asset managers, for example, use them purely to mark their foreign-currency-denominated holdings to market. It's just a reference point. But some trade on them.

To trade on them, effectively you tell your bank in advance of the relevant time that you would like to buy X amount of euros at, say, the 4 p.m. fix.

As WSJ notes, everyone in this market knows there's often a little extra volatility in exchange rates around fix times. But that's largely because traders have to hedge themselves in advance of flows, and because while fix-based flows account for only 1-2% of the overall market, they are shoved through a very small trading window of one minute. they all take place in a one-minute trading window. It's like everyone trying to squeeze through a doorway at the same time.

Icahn Takes 'Large Stake' in AIG, Calls for Three-Way Split

Activist investor Carl Icahn said he has accumulated a “large stake†in AIG and called for the insurer to split into three public companies.

Carlyle-Owned Hedge-Fund Firm Hands Investors a Big IOU

Claren Road Asset Management won’t immediately pay back about two thirds of the nearly $2 billion that investors recently asked to withdraw.

SEC Wants Tighter Curbs Against J.P. Morgan

Federal regulators want to restrict J.P. Morgan Chase’s ability to raise funds for clients, in an effort to impose a broader range of consequences on financial firms accused of breaking the rules.

The Margin: One idea for Apple’s cash pile: its own non-profit university

Steve Jobs once said that, “I’d like the people teaching my kids to be good enough that they could get a job at the company I work for, making a hundred thousand dollars a year.†Now, some 20 years later, Apple can do something about it.

Europe Markets: European stocks end higher, break two-day losing run

European stocks closed higher Wednesday, helped by oil’s jump and the Swedish central bank’s decision to expand its bond-buying program.

Market Extra: These 3 thingsâ€"not the Fed decisionâ€"weighing on Treasury investors

The Federal Reserve’s two-day meeting on monetary policy ends Wednesday but the market has largely ruled out the possibility that the Fed will raise interest rates for the first time in nine years.

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