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29Dec2015 Market Update: US Averages Trading Higher In What Could Be A Santa Claus Rally, WTI Oil Prices Higher, Investors Remain Anxious In New Year

Written by Gary

US markets opened higher and have been trading sideways in the 'green' zone. The small caps are trading above one percentage point and the large caps are in the high 0.9%. Today's session is a nice beginning for the long awaited Santa Claus rally, time will tell if it has any longevity. Short-term indicators are moderately bullish, however, volume has dropped to near anemic levels.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.97% while the IPC gains 0.22%. The Bovespa is even.

(From SA) What about the global economic view for 2016? Investor anxiety is definitely growing around the world, but the question is will it also hit the United States. Japan's faith in the radical reforms of Abenomics is failing, while China's growth is slowing. Latin America is also a mess - from Brazil's massive corruption scandal to Argentina's efforts to turn around its government. The mood doesn't get better in Europe, as the continent faces an economic and refugee crisis, and Britain threatens to leave the EU. On the political and security front, the implosion of the Middle East continues.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 48%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 50$
Investors Intelligence sets the breath Above 50 bullish 39.5%
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.

+32.11

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 31.94%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 44.94%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 57.20%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.93
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 79.40
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,285

What Is Moving the Markets

Here are the headlines moving the markets.

Tech rally drives indexes; S&P 500 positive for year

(Reuters) - U.S. stock indexes were higher on Tuesday, with the S&P 500 logging a small gain for the year, as tech stocks rallied and energy stocks reflected a recovery in crude prices.

Barclays in $13.75 million U.S. settlement over mutual funds

(Reuters) - Barclays Plc will pay more than $13.75 million to settle U.S. regulatory charges that it let retail brokerage customers make unsuitable mutual fund transactions, including more than 6,100 fund switches, over a five-year period.

U.S. home prices rise slightly in October, top forecast

NEW YORK (Reuters) - Annualized U.S. single-family home prices rose in October at a slightly faster pace than in September and above market expectations, a closely watched survey showed on Tuesday.

Oil up over 2 percent on cold; glut worry persists longer-term

NEW YORK/LONDON (Reuters) - Oil prices jumped about $1 a barrel on Tuesday, as prospects of colder weather in coming weeks inspired buying a day after prices slid 3 percent, but slowing global demand and abundant supplies from OPEC members kept energy markets bearish.

Stabilizing oil lifts European shares and bond yields

LONDON (Reuters) - European stocks rose and euro zone bond yields edged up on Tuesday as oil prices stabilized above 11-year lows on the back of prospects for lower temperatures on both sides of the Atlantic.

Deutsche Bank to sell stake in China lender for up to $4 billion

FRANKFURT/HONG KONG (Reuters) - Deutsche Bank has agreed to sell its entire 20 percent stake in Beijing-based Hua Xia Bank to Chinese insurer PICC Property and Casualty Co - a deal worth up to $4 billion that will help lift its capital ratios.

China December official PMI likely to show fifth month of contraction

BEIJING (Reuters) - Activity in China's manufacturing sector is expected to have contracted for a fifth straight month in December, a Reuters poll showed, likely consigning the world's second-largest economy to its slowest annual growth in a quarter of a century.

Adidas not facing shareholder pressure to sell Reebok: FT

FRANKFURT (Reuters) - Adidas is not facing pressure from activist shareholders to offload more assets, like fitness brand Reebok, the German sporting goods group's finance chief told the Financial Times.

Toshiba says to seek new $2.5 billion credit line for restructuring

TOKYO (Reuters) - Toshiba Corp , reeling from a $1.3 billion accounting scandal, said it intends to ask for a new 300 billion yen ($2.49 billion) credit line by the end of January to fund a large-scale restructuring.

The Dark Side Of A Record $5 Trillion In Mergers: Hundreds Of Thousands Of Imminent Layoffs

Yesterday afternoon, Dealogic announced the for the first time in history, global announced M&A volume in 2015 would surpass $5 trillion. This record eclipses by 9% the previous all time high of $4.6 trillion set during the previous market bubble year of 2007.

The report adds that there were 10 $50 billion M&A transactions announced in 2015 worth a combined $798.9bn. That's five deals more than the previous record high activity set in 1998, 1999, and 2014. US targeted M&A ($2.5tr) accounts for half of 2015 volume and seven of the top 10 transactions.

Breaking down by total by sector, Healthcare ($723.7bn) and Technology ($713.1bn) were the leading sectors. The biggest deals announced in 2015 were Pfizer and Allergan's pending $160bn merger, followed by Anheuser-Busch InBev's $117.4bn bid for SABMiller, two of only eight $100bn+ transactions announced on record.

Below we show the table of the Top 10 deals is below, as well as a simplified chart:

Many have debated what has unleashed this unprecedented merger frenzy, even if the answer is simple: record low costs of debt have been used by management teams not only as a source of funding for record buybacks (pushing the acquiror's stock as a merger "currency" to all time highs), but also to fund ever greater portions of t ...

"Fed Policy Is Toxic," Michael Burry Warns "The Little Guy Will Pay" For The Next Crisis

We are sure, just as many of the so-called "smartest men in the room" ignored him last time, so every status-quo-maintaining, asset-gathering, commission-taker will be quick to dissonantly shrug off Michael Burry's (the economic soothsayer from Michael Lewis' book "The Big Short") warnings this time.

As NYMag.com reports, in an email, which readers of the book will recognize as his preferred method of communication, the real-life head of Scion Asset Management answered some of questions about the state of the financial system, his ominous-sounding water trade, and what, if anything, we can feel hopeful about...

The movie portrays all of you as kind of swashbuckling heroes in some ways, but McKay suggested to me that you were very troubled by what happened. Is that the case?

I felt I was watching a plane crash. I actually had that dream again and again. I knew what was happening, but there was nothing I, or anyone else, could do to stop it. The last day of 2007, I couldn't come home. I was in the office till late at night, I couldn't calm down. I wrote my wife an email and just said, "I can't come home; it's just too upsetting what's happening, and I didn't want to come home to my kids like this." As for punishment of those responsible, borrowers were punished for their overindulgences — they lost homes and lives. Let's not forget that. But the executives at the lenders simply got rich.

Were you surpri ...

This Is The "Big Weather Pattern Change" That Is Sparking NatGas' Massive Rally

Having collapsed to record lows last week, NatGas futures have soared almost 40% as record warm temperatures in the Northeast (and a record glut) have given way to forecasts of a "big weather pattern change" in January.

As The European Centre for Medium-Range Weather Forecasts notes, January will see a huge flip in temperatures compared to December...

From 'Hot' to 'Not'

h/t @DanLeonard_wx

And it appears February Nattie is pricing that demand in...

In fact, as WLKY reports, in past El Ninos that peaked early like this year and had the core the warm water in the Pacific out in the central part of the ocean... like this year... the last half of winter was much colder than the first half of winter 90% of the time.

Bye Bye Q1 GDP!!

U.S. Stocks Rise as Investors Eye Beaten-Down Shares

U.S. stocks gained Tuesday as investors snatched up shares of some of this year's biggest decliners.

Oil Prices Rise Ahead of Supply Data

Oil prices rose on Tuesday ahead of potentially bullish inventory data and as investors moved to close out bearish bets before year's end.

New Fannie, Freddie Bonds Aim to Shift Taxpayer Risk

The government is trying to get taxpayers off the hook for billions of dollars of potential losses if another mortgage crisis arrives and plans to ramp up sales of new securities that transfers potential losses to private investors.

Median Household Income Back at Level When Great Recession Began in November 2015.

from Sentier Research

According to new estimates derived from the monthly Current Population Survey (CPS) median annual household income in November 2015 was $56,746. This is comparable to the median income level of $56,714 in December 2007 when the Great Recession began. It compares to $56,688 for October 2015 and $54,172 for November 2014. The Sentier Household Income Index stands at 98.9 (January 2000 = 100.0) indicating that median household income in November 2015 was 1.1 percent lower than January 2000.

Amazon, Alphabet pegged as next Dow additions after Apple

Alphabet and Amazon might be the next two companies to join the Dow Jones Industrial Average, but they'd likely both have to split their stocks first

Matthew Lynn's London Eye: 5 black swans that could rock markets in 2016

Matthew Lynn lists five potential black swans -- inherently unpredictable events -- that could rock financial markets in 2016.

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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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