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05Feb2016 Market Update: Wall Street Falls Sharply After Opening, Tech Stocks In The Red, WTI Remains Steady At The Mid 31 Level

Written by Gary

US markets opened lower as expected and swiftly headed south after jobs growth slows, unemployment rate at eight-year low and appeared to keep alive the prospect of a Fed rate hike this year. Tech stocks sold off heavily and LinkedIn Corp's shares plunged as much as 43 percent this morning, wiping out nearly $11 billion of market value. Short-term indicators are neutral.


Here is the current market situation from CNN Money

North and South American markets are mixed to lower. Shares in U.S. are off as the S&P 500 drops 1.36%. The IPC is down 0.64% while the Bovespa in Brazil is unchanged.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 47%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 20%
Investors Intelligence sets the breath Above 50 bullish 29.1%
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.

45.08

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 22.28%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 32.49%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 38.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

18.65

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 70.91
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,432

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. job growth slows, unemployment rate at eight-year low

WASHINGTON (Reuters) - U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.

LinkedIn shares drop 43 percent as weak forecast spooks investors

(Reuters) - LinkedIn Corp's shares plunged as much as 43 percent on Friday, wiping out nearly $11 billion of market value, after the social network for professionals shocked Wall Street with a revenue forecast that fell far short of expectations.

Wall St. falls sharply after jobs data, tech stock selloff

(Reuters) - Wall Street was sharply lower on Friday after the January U.S. jobs report appeared to keep alive the prospect of a Fed rate hike this year and tech stocks sold off heavily.

Market view of next U.S. rate hike shifts into 2016 after jobs data

(Reuters) - The U.S. Federal Reserve is increasingly likely to raise interest rates this year, traders bet on Friday, as a long-awaited surge in wages finally materialized and the unemployment rate dropped to an eight-year low.

Tyson Foods raises full-year profit forecast as costs fall

(Reuters) - Tyson Foods Inc , the biggest U.S. meat processor, raised its full-year profit forecast, helped by a sharp drop in feed and livestock costs, sending its shares to a record high on Friday.

VW delays 2015 results, AGM as scandal effects unclear

BERLIN (Reuters) - Volkswagen has postponed publication of its financial results for 2015 and delayed its annual shareholders' meeting as the German carmaker struggles to put an exact price on its diesel emissions scandal.

LinkedIn set to lose $8 billion in market value after weak forecast

(Reuters) - LinkedIn Corp will need to improve its profile to reconnect with investors after the social network for professionals shocked the market with a full-year revenue forecast that fell far short of expectations.

J.C. Penney looking to sell headquarters in Texas

(Reuters) - Department store operator J.C. Penney Co Inc said it is pursuing a potential sale and partial leaseback of its headquarters in Plano, Texas.

The Chart Of Doom: When Private Credit Stops Expanding...

Submitted by Charles Hugh-Smith of OffTwoMinds blog,

Once private credit rolls over in China and the U.S., the global recession will start its rapid slide down the Seneca Cliff.

Few question the importance of private credit in the global economy. When households and businesses are borrowing to expand production and buy homes, vehicles, etc., the economy expands smartly.

When private credit shrinks--that is, as businesses and households stop borrowing more and start paying down existing debt--the result is at best stagnation and at worst recession or depression.

Courtesy of Market Daily Briefing, here is The Chart of Doom, a chart of private credit in the five primary economies:

Why is this The Chart of Doom? It's fairly obvious that private credit is contracting in Japan and the Eurozone and stagnant in the U.K.

As for the U.S.: after trillions of dollars in bank bailouts and additional liquidity, and $8 trillion in deficit spending, private credit in the U.S. managed a paltry $1.5 trillion increase in the seven years since the 2008 financial meltdown.

Compare this to the strong growth from the mid-1990s up to 2008.

This chart makes it clear that the sole prop under the global "recovery" since 2008-09 has been private credit growth in China. From $4 trillion to over $21 trillion in seven years--no wonder bubbles have been inflated globally.

Combine this expansion of private credit in China with the expansion of local government and other state-sector debt (state-owned enterprise ...

Even With the Market Rolling Over, This Is What Bears Are Worried About

With faith in "growth" faltering and the momo leaders rolling over...

JPMorgan warns there are still worries for the bears in the intermediate term...

For the SPX overall the ceiling remains clear: since its hard to foresee sustained upside to either '16 EPS ests (~$120 is best case for the SPX) or the multiple (16x) then any move towards the mid-1900s should still be faded.

Sentiment is very gloomy fundamentally but investors in the last few days have been reluctant to sell/press shorts aggressively ahead of Yellen's testimony (2/10 and 2/11) while over the intermediate term bears worry about:

1) a burst of brief but aggressive intervention by China to quell the deafening anti-yuan rhetoric (this may have already begun if the recent CNH strength is any indication);

2) further oil strength driven by additional "grand bargain" chatter (while an imminent OPEC/non-OPEC output deal seems unlikely there clearly is movement among some of the major oilproducing countries);

3) "shock-and-awe" from Draghi on 3/10 (although, incidentally, it is becoming increasingly apparent that stocks won't be nearly as impressed by central bank largess going forward as was the case in the past and in fact the global adoption of negative interest rates seems to be doing nothing but hurting bank earnings and no stock market can sustain a rally if its banks aren't participating in the strength. The historical &ldq ...

An Update On The Waiter And Bartender Recovery

Since the US manufacturing sector is unofficially in a recession, and since the US service sector is allegedly growing like gangbusters, we are updating our favorite chart showing the bifurcation in the New Abnormal US economy: the job gains by U.S. manufacturing workers on one hand, and by waiters and bartenders on the other.

Here is the cumulative job gains for manufacturers vs waiters and bartenders in the past 12 months...

... and since December 2007.

May the minimum wage waiter and bartender recovery live long and continue to prosper.

U.S. Stocks Drop After Jobs Report

Stocks fell, the dollar strengthened and Treasury yields rose as U.S. data showed employment growth slowed in January after a surge at the end of last year.

January Jobs: Right Number at Wrong Time for the Fed

There were positives and negatives in the January employment report, but the Federal Reserve isn't going to take any chances.

Why European Banks Keep Getting Clobbered

After years of lackluster results, financial scandals, painful share sales, disruptive management changes, onerous regulations and strategic U-turns, many European bank investors are throwing in the towel.

29 January 2016: ECRI's WLI Growth Index Continues Its Descent

ECRI's WLI Growth Index which forecasts economic growth six months forward - declined marginally and remains in negative territory. This index now spent 27 consecutive weeks in negative territory. ECRI also released their future inflation guage this week.

Capitol Report: Super Bowl ad or not, it's pretty hard to get a mortgage in 8 minutes

Quicken Loans' Rocket Mortgage claims to offer an 8-minute mortgage, but it will probably take longer than that - and that's okay.

This dog walker probably makes more money than you do

Plus: 5 tips to become a better dog owner.

Bad buybacks and nine other money stories you may have missed

Negative bond yields and Apple's virtual-reality foray were among topics covered by MarketWatch this week.

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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