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30Dec2015 Market Update: Markets Opened Fractionally Lower, Oil Glut Continues, US Dollar Trends Higher

Written by Gary

US markets opened lower as expected, but the spooz (SP500) refuses to go below the 2070 resistance. Good news for the bulls in the crowd. WTI oil declined somewhat after reports of an unexpected rise in inventories this morning. Market volume is on the decline, not surprising this time of year, but be alert for additional fractional losses today.

Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.14%, while the Bovespa is leading the S&P 500 lower. They are down 0.78% and 0.39% respectively.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 47%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 49%
Investors Intelligence sets the breath Above 50 bullish

40.1% 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.

51.67 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. +34.10% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 45.15% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 57.20% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 23.14 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 79.24 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,261

What Is Moving the Markets

Here are the headlines moving the markets.

Apple to pay Italy 318 million euros, sign tax deal

MILAN (Reuters) - U.S. tech giant Apple will pay Italy's tax office 318 million euros ($348 million) to settle a dispute and sign an accord next year on how to manage its tax liabilities from 2015, a source with direct knowledge of the matter said on Wednesday.

Puerto Rico Governor to address debt crisis as deadline looms

NEW YORK/SAN JUAN (Reuters) - Puerto Rico Governor Alejandro Garcia Padilla will address the island's debt crisis at a press conference Wednesday, as it nears a Jan. 1 deadline for a near-$1 billion debt payment.

Oil down 3 percent on surprise U.S. crude build; Brent near 2004 low

NEW YORK (Reuters) - Crude prices fell 3 percent on Wednesday, with Brent sliding toward 11-year lows, after an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut.

KaloBios Pharmaceuticals files for bankruptcy in wake of Shkreli arrest

(Reuters) - KaloBios Pharmaceuticals Inc , a biotechnology company that fired Chief Executive Martin Shkreli earlier this month after his arrest on charges of securities fraud, filed for Chapter 11 bankruptcy on Tuesday.

Wall Street lower as Brent retreats, Apple drags

(Reuters) - Wall Street was lower on Wednesday as Brent crude slid back towards the 11-year low it hit last week and Apple weighed on all three major indexes.

Year's best U.S. global stock fund sees emerging markets rallying in 2016

NEW YORK (Reuters) - The year's top-performing U.S.-listed global equities fund as rated by Morningstar sees Asian and emerging market stocks as undervalued and primed to outperform in 2016.

Icahn to buy Pep Boys for $1 billion after Bridgestone bows out

(Reuters) - Carl Icahn's Icahn Enterprises LP has agreed to buy Pep Boys-Manny Moe & Jack for about $1 billion, the companies said on Wednesday, hours after Bridgestone Corp quit the race for the U.S. auto parts retailer.

Fidelity boosted pre-IPO value of Twilio by 31 percent in November

BOSTON (Reuters) - Fidelity Investments, one of the largest investors in pre-IPO companies, boosted the value of Twilio Inc by 31 percent in November, as speculation builds that the provider of mobile messaging platforms may go public in 2016.

U.S. pending home sales fall in November

WASHINGTON (Reuters) - Contracts to buy previously owned U.S. homes fell in November for the third time in four months, a signal that growth in the U.S. housing market could be cooling.

The Bail-Ins Are Back! Portugal Slaps Senior Bank Bondholders With A 2 Billion Loss

A little over a week ago, Portugal announced that for the second time in less than two years, Lisbon would be forced to bailout a large lender.

This time around it was Banif, the country's seventh-largest banking group which ran into trouble when it couldn't repay a previous government cash injection (so really, this was a bailout of a bailout).

Ultimately, the issue had to be resolved ahead of the new year, when new rules on bank resolutions that would have imperiled uninsured depositors go into effect across Europe. The ‚¬2.2 billion cash injection for Banif is set to add at least one percentage point to the country's budget deficit which is already well wider than Brussels' target thanks in part to the fact that the cost of last year's Banco Espirito Santo (BES) capital injection had to be placed on the government's books after Portugal failed to sell Novo Banco (the œgood part of BES) in order to pay back the taxpayer money spent on the bailout.

The auction process for Novo Banco - which at one point drew the interest of œChina's Warren Buffett - fell apart late in the summer after Chinese bidders became cautious in the wake of the country's market meltdown and US private equity was reluctant to bid for an entity with a mountain of NPLs and an uncertain future. In short, it wasn't clear if Novo Banco would need more capital. Well, it turns out that under the ECB's œadverse scenario , the bank would need to plug a ‚¬1.4 billion hole and so, out of options, Lisbon has decided to effectively bail-in senior bondholders.

Some ‚¬2 billion in bonds will be t ...

The Cultural Contradictions That Have Crippled The Great American Middle Class

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The decline of middle class capital is partly self-inflicted.

Conventional explorations of why the middle class is shrinking focus on economic issues such as the decline of unions and manufacturing, the increasing premiums paid to the highest-paid workers and the rising costs of higher education and healthcare.

All of these factors have a role, but few comment on the non-economic factors, specifically the values that underpin the accumulation of capital that is the one essential project of middle class households.

Daniel Bell's landmark 1976 book The Cultural Contradictions of Capitalism held that "capitalism--and the culture it creates--harbors the seeds of its own downfall by creating a need among successful people for personal gratification--a need that corrodes the work ethic that led to their success in the first place."

I would phrase this in the language of values and capital:

The primary cultural contradiction of the Great American Middle Class is the disconnect between the values needed to build capital and those of gratification via debt-based consumption.

Accumulating capital--not just financial capital but human and social capital-- requires a distinct set of values and soft skills:

1. Sacrifice of current consumption in favor of accumulating capital to be invested.

2. Thrift: repairing broken items, buying used replacements, waiting for deep discounts, etc.

3. Personal integrity and trustworthiness above all else. One's word is one's bond.

4. ...

Brazilian Real Crashes Most In 4 Years As Hope Fades

Following recent strength on the heels of hope for a new finance minister, news that Ruosseff has sent the minimum-wage-hike Bill to Congress appears to have crushed the hype of any fiscal rectitude and sent Real tumbling. Down over 4% - the most since September 2011 - BRL is back above 4.00 per USD, giving up all the recent gains.

Broad weakness in EMFX...

Seems to have been exacerbated by:


A Bill that could cost BRL 4.77 billion, wrecking hopes of any improvment in the fiscal situation. As Bloomberg reports,

Brazil's bigger-than-estimated minimum wage increase and potential credit expansion make it harder for govt to control around 11% on year inflation and cut budget gap, Marcelo Schmitt, portfolio manager at investment firm Sul America, says in a phone interview.

These initial policy steps after Barbosa replacing Levy as finance minister are concerning, says Schmitt.

And so...

This is the biggest drop in BRL since September 2011.

Charts: Bloomberg

Oil Prices Fall on Saudi Comments, Oversupply Anxiety

Oil prices tumbled Wednesday after data showed an unexpected increase in U.S. crude supplies and Saudi Arabia reiterated its commitment to keeping oil production high.

Global Stocks Dip

Global stocks dipped on Wednesday along with oil prices. The S&P 500 is on track to eke out a small gain for 2015.

The Market's Latest Comeback Story: Biotech Stocks

After an autumn selloff, the Nasdaq Biotechnology Index has rallied 18% from its 2015 low in September, and is now up 13% for the year.

November 2015 Pending Home Sales Index Weakens.

Written by Steven Hansen

The National Association of Realtors (NAR) seasonally adjusted pending home sales index declined - and was well under expectations. Our analysis of pending home sales shows improvement - but does forecast relatively weak December existing home sales. The quote of the day from this NAR release:

Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months ...

Tesla on track to meet its delivery goals for fourth quarter and year

Bullish analyst note says Elon Musk's electric car company has already delivered more than 300 of its new Model X SUVs.

ETF Investing: China: Best country for investors in 2015 may be the best in 2016 too

If you remember this past summer's stock-market swoon in China, you might be surprised to see Chinese plays ranking above all others in this end-of-year list.

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