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15Dec2015 Market Update: DOW Up 240 Points, Crude Up In High $37's, US Dollar Continues To Melt Up, Afternoon Session May Slide

Written by Gary

US averages trading mostly sideways with the DOW up 235 points and the SP500 up 1.50% and now testing its 2055 resistance. Crude is riding high, for now, in a rally that is pushing prices close to $38 bbl shaking out the low hanging shorts. Midday trading volume is moderate to high ahead to the Fed's proposed rate raising tomorrow. Afternoon session may start to slide Unable to penetrate solid resistance.

Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Mexico leading the region. The IPC is up 1.47% while U.S.'s S&P 500 is up 1.46% and Brazil's Bovespa is up 0.94%.

US stock indexes move higher in midday trading as the market emerges from a slump; oil rises

NEW YORK (AP) — Stocks are climbing in midday trading as buyers return to a market that has been mostly beaten down in recent days. Investors were also picking up high-yield corporate bonds Tuesday, which had been slumping over the last week. Energy stocks rose along with the price of crude oil. Satellite radio operator Sirius XM Holdings jumped 3 percent after announcing that it had signed Howard Stern to another five-year deal.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 46%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 35%
Investors Intelligence sets the breath Above 50 bullish 38.3% 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.

-92.65 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.

24.46% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 44.22% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 53.80% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.66 Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 79.41 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,130

What Is Moving the Markets

Here are the headlines moving the markets.

Exclsuive: EBRD puts Volkswagen Poland factory funding on hold - sources

LONDON (Reuters) - The European Bank for Reconstruction and Development has put the brakes on 250 million euros of funding it had approved to help build a new Volkswagen factory in Poland, according to two sources at the development bank.

Qualcomm decides against breakup, says current structure best

(Reuters) - Qualcomm Inc has decided not to split into separate chipmaking and technology licensing businesses, concluding a six-month strategic review instigated by hedge fund Jana Partners.

Wall Street up as oil recovers; Fed in focus

(Reuters) - Wall Street was on track for a second day of gains on Tuesday as energy stocks rose in tandem with recovering oil prices, and a day before a widely expected interest-rate hike by the Federal Reserve in nearly a decade.

Dow, DuPont eye big tax savings in rare merger of equals

NEW YORK (Reuters) - The tax-free treatment of the spin-offs Dow Chemical Co and DuPont plan to carry out after they merge their businesses is a prime driver of the deal, potentially saving tens of billions of dollars, industry experts said.

Steadily firming U.S. inflation supports Fed rate hike

WASHINGTON (Reuters) - Underlying U.S. inflation pressures rose in November, which could give the Federal Reserve more confidence to raise interest rates on Wednesday, even as renewed weakness in gasoline prices kept overall consumer prices in check.

Oil up 1 percent as support emerges before 11-year low

NEW YORK (Reuters) - Oil rebounded by 1 percent on Tuesday, halting a slide to 11-year lows, but traders said they expected no more than fleeting support for crude in an oversupplied market and ahead of a forecast U.S. rate hike that could send the dollar rallying.

Exclusive - Cuba's debt deal: Easy terms, but severe penalties if late again

HAVANA/PARIS (Reuters) - Paris Club creditor nations have forgiven $8.5 billion of Cuba's $11.1 billion debt and restructured payments on the remainder with easy terms but the deal imposes severe penalties if Cuba falls behind again, according to a copy of the accord seen by Reuters.

Volkswagen to shed 600 temporary jobs to tackle scandal costs

BERLIN (Reuters) - Volkswagen will shed about 600 temporary workers at a factory in Zwickau, Germany next year as it battles to cope with the fallout from its cheating of diesel emissions tests, labor representatives at the carmaker said.

Virgin America to lease 10 new Airbus A321neo aircraft

(Reuters) - Virgin America Inc said on Tuesday it will lease 10 Airbus A321neo planes starting in 2017, a move that could let the low-cost airline add flights from coast to coast in the mainland United States and to Hawaii.

Why Has The Labor Participation Rate Plunged?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Combine this regulatory burden with the decline of entrepreneurship, and you get a bubbling brew that is toxic to self-employment/small business.

Why has the percentage of the population that's in the work force declined so dramatically? It's a question many have asked, and Gordon T. Long and I attempt to answer in our most recent video program The Participation Rate Mystery--Solved.

Why does the Participation Rate matter? Intuitively, we all understand that the lower the participation rate (i.e. the percentage of the population with a job or actively looking for a job), the greater the tax burden on the remaining workers.

We all understand that as the number of workers supporting each retiree declines, the remaining workers will have less income to support their own families, as the rising costs of retirees must be paid with higher taxes in our pay-as-you-go social and healthcare programs such as Social Security and Medicare /Medicaid.

Where there were once around eight workers for every retiree, now the ratio is down to 2.5 workers per retiree--and the cost of providing healthcare for the elderly has soared.

For context, let's look at a few charts of the participation rate and related metrics. Let's start with the engine of wealth creation--productivity. The productivity of industrialized nations' work forces topped out in the cheap-oil boom years of the 1960s.

Not coincidentally, wages as a percentage of GDP (i.e. of all economic activity) top ...

What Happens When Stocks Catch Up With Commodities?

Since 2009, the global markets have been largely steered by Central Bank policy, NOT organic economic growth. With the debt-based monetary system dangerously close to shutting down during the 2008 meltdown, Central Banks stepped in as the "buyers of last resort" to provide a backstop to the system.

The problem is that the individuals running the Central Banks are prone to human hubris, specifically overconfidence in the validity of their opinions and abilities. Since most Central Bankers are Keynesian economists at heart, they believe that granting Central Banks MORE power is always a good thing.

Thus, rather than stepping back once the Crisis had passed (2011-2012), Central Banks continued to prop up the markets and push for greatest Centralization of the global economy.

As a result of this, the initial distortions in the capital markets induced by QE and Zero Interest Rate Policy (ZIRP) became systemic in nature. Investors no longer bought assets based on perceived value relative to the real economy. Rather, they bought based on perceived Central Bank actions and promises.

The most egregious example of this pertains to the sovereign bond market where investors began to front-run Central Bankers QE programs.

Indeed, the promise of "more QE" was one of the most powerful tools in Central Banks' belts. Mind you, it was the promise of QE, not the QE itself that had the biggest impact on bonds.

Consider what happened in 2010.

QE 1 ended in June 2010. Soon after, the Fed began to hint at launching a new program, QE 2. Bonds rallied hard throughout this period as investors bought bonds to front-run the upcoming program. Once QE 2 was actually launched, bonds FELL.

Copper's Dumping As Crude's Pumping

Dr. Copper and Captain Crude are in significant disagreement over the state of the world... or it is just algos gone wild once again?

Crude jumps back above $37 for no good reason whatsover in the face of a surging dollar.

Copper plunges to one-week lows.

Investors Beware - Credit Market Collapse Warning

Investors Beware - Credit Market Collapse Warning

Money Week editor John Stepek has looked at the recent mutual fund collapse in the junk bond market and correctly warns that it is a canary in the coal mine:


If you were around during the financial crisis, you might remember that fund closures became one of the canaries in the coal mine.

Various funds failed in the run-up to the crisis, as bad bets on risky assets went wrong and the economic backdrop became steadily less forgiving.

Why am I reminding you of this? Because we've just seen the biggest mutual fund failure in the US since 2008 ¦

The full Money Week article can be read here.

Today's Gold Prices: USD 1069.15, EUR 969.53 and GBP 705.31 per ounce.
Yesterday's Gold Prices: USD 1071.75, EUR 988.43 and GBP 714.79 per ounce.

GoldCore: Essential Guide to Storing Gold Offshore

Download Essential Guide To Storing Gold Offshore

Stocks Rise Ahead of Fed Decision

A rally in oil prices lifted battered energy stocks, propelling the market higher the day before the Federal Reserve is expected to raise rates for the first time since 2006.

Asset Managers Follow Rebound in Junk Bonds

Large asset management firms' shares rebounded Tuesday from their deepest selloff in years, bouncing back alongside the U.S. junk bond market.

Natural Gas Prices Continue Slump

Natural gas prices were on track Tuesday to settle at the lowest level since 1999 as concerns about weak demand continued to weigh on the market.

Capitol Report: SEC tinkers with liquidity fixes as issue of fund redemptions comes to the fore

The SEC has two proposals to improve mutual fund liquidity management but fixes may not come soon enough for investors running from surge of redemptions forcing some fire-sale liquidations

The Wall Street Journal: Los Angeles overreacted to school threat: NYPD chief

New York City received a threat that was generic and nearly identical to one sent to a number of school districts, including Los Angeles, Police Commissioner William Bratton said.

In One Chart: In one chart, here's how the economy looks to Trump supporters

Employment for white high-school grads has fallen even as it's more than recovered nationally, and that's one reason why Donald Trump retains his popularity.

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