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16Feb2016 Market UpdateDOW Up Over 200 Points WTI Crude Trading In The High 28's, Investors Remain Cautious

Written by Gary

US markets melted higher after the morning dip in spite of oil sliding 3% extending the rally from Friday's session.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 3.30% while U.S.'s S&P 500 is up 1.53% and Mexico's IPC is up 0.26%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 49%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 32%
Investors Intelligence sets the breath Above 50 bullish 24.4%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -4.70
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 19.54%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 29.49%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 34.80%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

17.95

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 71.43
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,370

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. GAO rejects Boeing protest of Northrop's bomber contract

WASHINGTON (Reuters) - The U.S. Government Accountability Office on Tuesday rejected a protest filed by Boeing Co and Lockheed Martin Corp against a new bomber contract awarded to Northrop Grumman Corp by the U.S. Air Force in October.

Apollo Global's ADT deal shows appetite for M&As still strong

(Reuters) - Private equity firm Apollo Global Management LLC will buy ADT Corp in the biggest leveraged buyout so far this year to create a business with nearly a third of North America's electronic security products market.

Saudis and Russia agree oil output freeze, Iran still an obstacle

DOHA (Reuters) - Top oil exporters Russia and Saudi Arabia agreed on Tuesday to freeze output levels but said the deal was contingent on other producers joining in - a major sticking point with Iran absent from the talks and determined to raise production.

Fed's newest member suggests breaking up Wall Street banks

WASHINGTON (Reuters) - The U.S. Federal Reserve's newest policymaker on Tuesday called on lawmakers to consider "bold, transformational" rules including the breaking up of the nation's largest banks to ensure taxpayers are no longer on the hook should they fail.

Oil down 3 percent as optimism over Saudi, Russia deal cools

NEW YORK (Reuters) - Brent oil fell 3 percent on Monday, erasing early gains after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output if other big exporters joined them.

Drinks can makers Ball, Rexam launch $3 billion asset sale ahead of merger: sources

FRANKFURT (Reuters) - Drinks can makers Ball Corp and Rexam Plc have begun the process of selling assets, potentially worth more than $3 billion, to meet antitrust regulations ahead of their planned merger, several people familiar with the matter said.

Wall Street up as bargain hunters snap up beaten-down stocks

(Reuters) - Wall Street was higher on Tuesday morning, extending a rally from Friday, as cautious investors looked for bargains among beaten-down stocks.

Fed to hike twice in 2016, undeterred by external risks: Reuters poll

BENGALURU (Reuters) - Growing concerns about weak global growth and inflation are unlikely to deter the U.S. Federal Reserve from tightening policy, according to a Reuters poll that suggested two interest rate hikes are likely this year.

Buffett to webcast Berkshire annual meeting on Yahoo

(Reuters) - Warren Buffett's Berkshire Hathaway Inc plans to webcast its annual meeting for the first time, enabling the largest U.S. shareholder gathering to reach a global audience through Yahoo Inc's finance page.

These Are The Stocks "The Big Short's" Michael Burry Owned As Of December 31

Combing through (45 days delayed) hedge fund 13F holdings reports used to be interesting work... before it became clear that hedge funds are just a herd of levered beta chasers, hobbled by years of central planning which has made a mockery of fundamental analysis, devoid of original ideas, and all rushing into the same idea dinner "special situations" with the result being the worst performance year for the "smart money" since the crisis.

Yet one person can be excluded from this group: Scion Capital's Michael Burry, the person who predicted the subprime crisis and also starred in the recent movie, "The Big Short."

Courtesy of his firm's just released 13F, we find that the investor was long some $80 million in 14 names as of December 31, with the breakdown as follows.

We can only hope that Burry managed to sell out of his CYH stake (and, ironically, his various bank holdings) which he held just days after the Big Short hit the theaters in December ahead of today's devastation, or there may not be a Big Short sequel.

One Third Of Energy Companies Could Go Bankrupt Deloitte Warns As Credit Risk Hits Record High

At 1600bps, the extra yield investors are demanding to take on US energy credit risk has never been higher. However, if a new report from Deloitte proves true, this is far from enough as they forecast roughly a third of oil producers are at high risk of slipping into bankruptcy this year as low commodity prices crimp their access to cash and ability to cut debt.

Record high US Energy credit risk...

The report, as Reuters reports, based on a review of more than 500 publicly traded oil and natural gas exploration and production companies across the globe, highlights the deep unease permeating the energy sector as crude prices sit near their lowest levels in more than a decade, eroding margins, forcing budget cuts and thousands of layoffs.

The roughly 175 companies at risk of bankruptcy have more than $150 billion in debt, with the slipping value of secondary stock offerings and asset sales further hindering their ability to generate cash, Deloitte said in the report, released Tuesday.

"These companies have kicked the can down the road as long as they can and now they're in danger of kicking the bucket," said William Snyder, head of corporate restructuring at Deloitte, in an interview. "It's all about liquidity."

Some oil producers ...

Don't Confuse Genius With A Bull Market - 10 Steps To Redemption

Submitted by Lance Roberts via RealInvestmentAdvice.com,

Individuals are consistently promised that investing in the financial markets is the only way to financial success. After all, it's so easy. Financial pundits across the country state the one simply buys a basket of mutual funds and they will make 8, 10 or 12% a year.

On a nominal basis, it is true that if one bought an index and held it for 20-years, they would have made money. Unfortunately, for most, it has not worked out that way.

Why? Because no matter how resolute people think they are about buying and holding, they usually fall into the same emotional pattern of buying high and selling low. Investors are human beings. Human beings naturally want to be in the winning camp when markets are rising and seek to avoid pain when markets are falling.

As Sy Harding says in his excellent book "Riding The Bear," while people may promise themselves at the top of bull markets that this time they'll behave differently:

"no such creature as a buy and hold investor ever emerged from the other side of the subsequent bear market."

Statistics compiled by Ned Davis Research back up Harding's assertion. Every time the market declines more than 10% (and "real" bear markets don't even officially begin until the decline is 20%), mutual funds experience net outflows of investor money. Fear is a stronger emotion than greed.

The research shows that It doesn't matter if the bear market lasts less than 3 months (like the 1990 bear) or less than 3 days (like the 1987 bear). People will still sell out, usually at t ...

What Saudi Arabia's Freeze Means for Oil Prices

Saudi Arabia, Russia, Qatar and Venezuela have agreed to freeze oil output at January's levels. The effect on the oil market is less than meets the eye.

Oil Prices Turn Negative as Saudi, Russia Deal Disappoints

Oil prices gave up their early gains on Tuesday, after investors expressed doubt that a preliminary agreement by four of the largest producers to steady output would ease the supply glut.

Saudi, Russia, Qatar, Venezuela Agree to Freeze Oil Output

Saudi Arabia, Russia, Qatar and Venezuela said they wouldn't increase crude-oil output above January's levels if Iran and Iraq also agree to halt production increases. An Iranian official, however, reiterated that Tehran intends to boost output to levels before sanctions were imposed.

Market Snapshot: U.S. stocks rally higher despite drop in oil prices

U.S. stocks trade near fresh highs Tuesday, providing a rare day of the recent trend of trading in lockstep with oil prices.

The Tell: 5 key reasons oil is sinking after oil-output freeze

On the surface, the announcement marks a major step toward instilling a modicum of confidence in the beaten-down oil market, but the devil is in the details and the agreement is far from perfect, according to analysts.

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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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