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03Feb2016 Market Update: US Major Averages Slip, Small Cap Fall 1.5%, Crude Gains 5%, Short-Term Indicators Bearish

Written by Gary

U.S. major indexes slipped after opening in the green and turned negative today after this mornings financial reporting showed that the economy's service sector expanded at a slower-than-expected rate, to a near two-year low in January.

Oil rose 5 percent today after investors took advantage of a drop in the U.S. dollar, despite weekly data showing a large rise in U.S. inventory.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 1.88% while the IPC gains 0.19%. The S&P 500 is off 0.78%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 46%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 22$
Investors Intelligence sets the breath Above 50 bullish 27.1%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 18.96
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 20.78%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 30.68%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 36.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

18.53

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 72.33
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors

9,404

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St. pares losses as oil rally boosts energy stocks

(Reuters) - U.S. stocks pared some of their losses in early afternoon trading on Wednesday as energy and materials stocks rose, driven by a 6 percent rally in crude oil prices.

Comcast revenues beat Street; records big boost in video customers

NEW YORK (Reuters) - Comcast Corp posted better-than-expected fourth-quarter revenue and added the most video customers in any quarter in eight years, even as viewers gravitate toward online offerings.

U.S. services sector slows; private payrolls solid

NEW YORK (Reuters) - Activity in the vast U.S. services sector slowed to a near two-year low in January, suggesting that economic growth weakened further at the start of the first quarter even as the labor market remains resilient.

China seeks food security with $43 billion bid for Syngenta

BASEL, Switzerland (Reuters) - China made its boldest overseas takeover move when state-owned ChemChina agreed a $43 billion bid for Swiss seeds and pesticides group Syngenta on Wednesday, aiming to improve domestic food production.

GM posts record profit in 2015, driven by North American sales

DETROIT (Reuters) - General Motors Co rode sales of SUVs and pickup trucks in North America to a record profit in 2015, and reaffirmed its forecast to do better this year despite signs that vehicle sales are hitting a peak.

Oil bounces 5 percent after U.S. data sparks short-covering

LONDON (Reuters) - Oil rose by as much as 5 percent on Wednesday after investors took advantage of a drop in the U.S. dollar and of earlier weakness in the crude price, despite weekly data showing a surprisingly large rise in U.S. inventory.

Fed's Dudley to MNI: Tightening financial conditions a concern

NEW YORK (Reuters) - Financial conditions have tightened considerably in the weeks since the U.S. Federal Reserve raised interest rates and monetary policy makers will have to take that into consideration should that phenomenon persist, a top Fed official said on Wednesday.

Ford cuts jobs to sustain European profits as GM lags

BERLIN (Reuters) - Ford revealed plans on Wednesday to cut hundreds of white-collar jobs in Europe and revamp its model range to keep it profitable in the region after turning a corner in 2015.

Toyota pulls the plug on Scion small car brand

(Reuters) - Toyota Motor Corp said it will wind down its Scion brand in the United States, retreating from a 12-year effort to create a separate identity for small cars aimed at young buyers.

"We're Nearing The End" David Stockman Warns, Retail Investors Are "Heading For The Slaughter"

Submitted by Greg Hunter via USAWatchdog.com,

Former Reagan White House Budget Director David Stockman says retail investors are going to take, yet, another very big hit. Stockman explains,

"The retail investor waded in again. The sheep lined up and, unfortunately, are heading for the slaughter one more time. I think it is very hard to see how this Baby Boom generation, with 10,000 of them retiring a day, can afford one more devastating crash in their stock holdings. That is, unfortunately, what we are heading for. That's why I say it's dangerous. When the bubble breaks, it will spill and flow throughout the Main Street economy."

Stockman warns the next crash will be bigger than any other in history. Stockman, the best-selling author of "The Great Deformation," says,

"I think we have been building a bubble year by year since the early 1990's. The earlier crashes that we are so familiar with, Dot Com and the Housing Crash, were only interim corrections that were not allowed to work their way clear.

The rot was not effectively purged from the system because central banks jumped back in within months of the corrections and doubled down in terms of the stimulus and liquidity that they pumped into the market."

Stockman contends that "you simply cannot fake your way in this market any longer." Stockman explains,

Central Bank Currency Wars Have Engaged The "Nuclear Option"

By former FX trader and current Bloomberg commentator Richard Breslow

The Evil One

An enduring curse of this financial crisis is the inability of markets to disengage from the clutches of the correlation of one. We see it ad seriatim, often day to day: everything is wonderful, all hail the central bank (Friday); the world is crashing, these empty suits are running us over the cliff (Tuesday).

Having gone on long enough, this phenomenon has turned traders into inveterate cynics who know the price of everything, and the value of nothing.

Markets function effectively only when relative value among assets has some measure of reality. Discounting future returns in a world of zero and negative interest rates is a Sisyphean task in the theater of the absurd. In today's world, we reduce everything to buy or sell the lot.

You hear the term œsafe haven constantly. It is meaningless in a negative-rate induced carry trade world. No one is buying safety in JPY on bad days. They are busy getting blown out of the high risk stuff they funded with minus 0.1% rates

Currency wars can be nasty and don't always have a winner. When they are waged with increasingly negative rates, it becomes the nuclear option.

Central banks embracing uncontrollable volatility and the evil of one.

When œforecasters tell you oil is going to go up or down by 50% this year, they are not just trying to hit a home run, they will be able to dine out on for the next five years. Nor do they have a better understanding of supply and demand than everyone else. They don't and don't have to. Hate the world and it's collapsing. Feeling less dyspeptic and it's due for a rally

Of course with oil trading at 70% implied volatility on a $30/bbl handle, making bold prediction ...

U.S. Stocks Pare Early Losses

U.S. stocks pared earlier losses amid a surge in energy and materials companies, but weakness in financial shares muted gains.

Oil Prices Rise on Weak Dollar, Despite Daunting Supply Data

Oil prices erased some gains Wednesday as U.S. crude inventories rose to a record high but then quickly rebounded on a weaker dollar.

Wells Fargo to Pay $1.2 Billion Over Faulty Mortgages

Wells Fargo said it has agreed to pay $1.2 billion to settle a long-running suit that accused the company of œreckless lending and leaving a federal insurance program to pick up the tab.

January 2016 ISM Services Index Declines But Remains in Expansion

Written by Steven Hansen

The ISM non-manufacturing (aka ISM Services) index continues its growth cycle, but declined from 55.8 to 53.5 (above 50 signals expansion). Important internals likewise declined, however, and remain in expansion. Market PMI Services Index was released this morning, also is in expansion, and also declined.

Strong start for first two IPOs of the year could ease some concerns

BeiGene, Ltd. and Editas Medicine both started trading today, marking the first two IPOs of 2016.

Europe Markets: European stocks end lower for third session in a row

European stocks struggle after losses in Asian stocks. Financials help lead the way lower.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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