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14Dec2015 Market Update: Morning Lows Turn To Reversal As Short Sellers Are Squeezed Out Of Action, More Market Losses Expected However

Written by Gary

US markets opened down and at first glance they were going to dive further, but I suspect their was an abundance of short sellers that got squeezed sending the averages back up to mixed status. WTI crude short sellers were really squeezed at the opening bell when the premarket price was 34.55 and has short up to $35.85. The key word is volatility for the next few session I suspect; be careful.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in Brazil off the most. The Bovespa is down 0.93% while Mexico's IPC is off 0.78% and U.S.'s S&P 500 is lower by 0.24%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 45%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 26%
Investors Intelligence sets the breath Above 50 bullish 40.5%
StockChart.com 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.

-80.82

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 25.54%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 44.28%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 53.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.09
StockChart.com 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 77.85
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,968

What Is Moving the Markets

Here are the headlines moving the markets.

Oil tumbles towards 11-year lows on worsening glut

LONDON (Reuters) - Oil prices tumbled 4 percent on Monday, coming close to their 11-year low, on growing fears that the global oil glut would worsen in the months to come in a pricing war between leading OPEC and non-OPEC producers.

Fed weighs merits of jumbo portfolio in post-crisis era

NEW YORK/SAN FRANCISCO (Reuters) - Once the Federal Reserve lifts interest rates from near zero, likely this week, the focus will turn to the other legacy of the crisis-era policies: the Fed's bloated balance sheet.

Newell Rubbermaid to buy Jarden for about $13 billion

(Reuters) - Newell Rubbermaid Inc, the maker of Sharpie markers and Parker pens, agreed to buy diversified consumer products company Jarden Corp for $13.22 billion, adding brands such as Sunbeam kitchen appliances and Coleman outdoor gear.

Boeing sees no impact on production from fire at Everett factory

NEW YORK (Reuters) - Boeing Co said on Monday that a weekend fire at its factory in Everett, Washington, would have no impact on aircraft production.

More modest year for global stock markets; Europe to lead: poll

BENGALURU (Reuters) - Stock markets in developed economies are expected to continue outperforming emerging markets next year, but optimism among hundreds of market strategists polled by Reuters in the past week has faded compared with just a few months ago.

India's Mahindra agrees to buy Italian car designer Pininfarina for $36 million

MUMBAI (Reuters) - India's Mahindra group, with interests in automobiles, finance and IT services, has agreed to buy Italian car designer Pininfarina for about 33 million euros ($36 million) to boost its design capabilities.

Wall Street expects single-digit S&P 500 gain in 2016: poll

NEW YORK (Reuters) - A weak ending to 2015 and the expectation of improving profit growth in 2016 will set the stage for a single-digit gain in U.S. stocks next year, a modest forecast at least by recent standards, according to strategists polled by Reuters.

Deja Vu All Over Again

Submitted by Jim Quinn via The Burning Platform blog,

Janet Yellen will increase interest rates for the first time in nine years on Wednesday. She isn't raising them because the economy is strengthening. The economy just happens to be weakening rapidly, as global recession takes hold. The stock market is 3% lower than it was in December 2014, and has basically done nothing since the end of QE3. Wall Street is throwing a hissy fit to try and stop Janet from boosting rates by an inconsequential .25%. Janet would prefer not to raise rates, but the credibility and reputation of her bubble blowing machine is at stake. The Fed has enriched their Wall Street benefactors over the last six years, while destroying the real economy and the middle class.

The quarter point increase will be reversed in short order as soon as we experience market collapse part two. It will be followed with negative interest rates and QE4, as these academics have only one play in their playbook - print money. They created the last financial crisis and have set the stage for the next - even bigger collapse. John Hussman explains how their zero interest rate policy has driven speculators into junk bonds as the only place to get any yield.

Over the past several years, yield-seeking investors, starved for any "pickup" in yield over Treasury securities, have piled into the junk debt and leveraged loan markets. Just as equity valuations have been driven to the second most extreme point in history (and the single most ...

Camera-On-A-Stick Goes Full Kodak - Crashes 16% To Record Lows

Camera-on-a-stick is down 83% from its October 2014 (the end of QE3) highs (and down 75% since Jim Cramer said it was "bargain" in July). GoPro is down 33% from its IPO price... and down 16% today as more analysts realize now is the time to downgrade before it goes full Kodak.

How To Determine If Your Fund Is At Risk Of Runs, Gating And Liquidation, In One Chart

In light of surging concerns about mutual and hedge fund fixed income (and soon other asset classes) "gating", "runs" or outright liquidation, Deutsche Bank has prepared the following infographic which summarizes the main choke points which predispose both open and closed-end funds to runs or outright shutdown.

And some DB's commentary on the difference between open-end and closed-end funds:

Differences between open-end and closed-end investment trusts

The biggest difference between open-end investment trusts and closed-end investment trusts is in whether or not assets under management can be reduced and surrendered to individual redemption requests.

For open-end investment trusts, investors buy in with new money, and fund managers use the funds to increase purchases of corporate bonds and other assets for investors. When investors surrender the funds, corporate bonds and other assets are sold to raise funds to cover the redemptions (although some funds have cash pools).

For closed-end investment trusts, a certain amount of funds are collected when trusts are established and invested from the outset. Unless there are additional offerings, redemptions, or other changes, there are no fund inflows or outflows (except dividends received, cash distributions, etc). Consequently, closed-end investment trusts can have low liquidity assets. However, they provide sales opportunities via listing at exchanges (ETFs, etc.) or setting redemption targets.

No risks from closed-end fun ...

S&P 500 Breaks Below Key 2,000 Level, Lowest In 2 Months

For the first time October 15th, S&P 500 cash has broken below the key "everything is awesome" 2,000 level...

Junk Bonds Resume Sharp Selloff

The U.S. junk-bond rout deepened Monday, with the bonds of dozens of low-rated companies falling anew and the shares of some large fund-management firms tumbling as well.

Oil Prices Lift Off Multiyear Lows

The global crude benchmark neared its financial-crisis low Monday as a historic oil rout deepened.

Stocks Slip as Commodities Slump Continues

Stocks fell Monday amid an ongoing slump in commodity prices and concerns about the health of the high-yield debt market.

Market Snapshot: U.S. stocks flirt with gains after S&P 500 briefly dips below 2,000

U.S. stocks pared some of its early losses as crude-oil prices staged a modest rebound after settling lower in six consecutive sessions.

London Markets: FTSE 100 drops to lowest closing level in 3 years

U.K. stocks flip into the red Monday, with the benchmark FTSE 100 unable to withstand a further selloff in oil prices that in turn weighed on energy producers.

Economic Preview: Pitfalls aplenty for Fed as it prepares to raise rates

Why some feel trepidation even though a Federal Reserve interest-rate hike has been widely telegraphed.

Earnings Summary for Today

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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