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23Feb2016 Miday Market Commentary: WTI Crude Falls, US Averages Down One Percentage Point, Further Losses Today Will Be Slight To None

Written by Gary

US markets opened lower and slipped further when materials and financial stocks started to melt down. Consumer confidence fell more than expected, but home prices in 20 major U.S. metro areas remained unchanged in December. WTI crude is currently trading in the high 31's and the US dollar is trading mostly sideways in the 97's. Volume levels have fallen to almost anemic levels signaling the end of volatile trading for the day.


Here is the current market situation from CNN Money

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 30%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 50%
Investors Intelligence sets the breath Above 50 bullish 36.1%
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.

73.39

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 25.95%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 40.02%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 51.20%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 17.35
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 74.09
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,510

What Is Moving the Markets

Here are the headlines moving the markets.

Macy's in talks for real estate deals, sales fall less than feared

(Reuters) - Macy's Inc's sales fell less than expected for the first time in four quarters, helped by a last-minute blast of cold weather in January, and the department store operator said there was a "high degree" of interest among parties it approached for real estate deals.

U.S. government, Apple take encryption case to court of public opinion

(Reuters) - Apple Inc on Monday urged the creation of a government panel on encryption, the latest salvo in a standoff over a locked iPhone linked to the San Bernardino shooting that has escalated into a public relations battle between the revered technology company and the U.S. Federal Bureau of Investigation.

Wall Street falls more than 1 percent as crude extends losses

(Reuters) - Wall Street fell on Tuesday, led by materials and financial stocks, as yet another rally failed to take off in what has been a turbulent year for financial markets.

J&J must pay $72 million for cancer death linked to talcum powder: lawyers

(Reuters) - Johnson & Johnson was ordered by a Missouri state jury to pay $72 million of damages to the family of a woman whose death from ovarian cancer was linked to her use of the company's talc-based Baby Powder and Shower to Shower for several decades.

JPMorgan gets ready for more energy losses, postpones profit goal

(Reuters) - JP Morgan will increase provisions for expected losses on bad energy loans by more than 60 percent in the first quarter as a sharp drop in the price of oil looks set to further ravage the sector, and it gave itself another year to meet one its most important profit goals as hopes of interest rate rises fade.

Mars recalls candy in 55 countries after plastic found

FRANKFURT/LONDON (Reuters) - Mars Inc has recalled chocolate bars and other products in 55 countries, mainly in Europe, after bits of plastic were found in a Snickers bar in Germany, the U.S. chocolate maker said on Tuesday.

Home Depot sales beat on housing recovery, outdoor demand

(Reuters) - Home Depot Inc , the world's largest home improvement chain, reported better-than-expected sales, boosted by an improving housing market and mild weather in the holiday quarter that encouraged customers continue outdoor activities and home renovations.

VW CEO expects to win back customers despite cheating: DPA agency

BERLIN (Reuters) - Volkswagen's chief executive expects the carmaker to win back the trust of its customers following the emissions test-rigging scandal after its core autos division swung back to growth in January, German news agency DPA reported on Tuesday.

Mars recalling products in 55 countries: AP

LONDON (Reuters) - U.S. chocolate company Mars Inc is recalling candy bars and other items in 55 countries after plastic was found in one of its products, the Associated Press reported on Tuesday.

One Trader Explains Why He Did Not Chase Yesterday's Buying Panic

Yesterday, we reported that at least one prominent money manager, Geneva Swiss Bank, had called "time" on the bear market rally, and after scooping up a 7% profit following the post-February 11 short squeeze, cashed out.

This followed another post of ours from yesterday morning, in which we showed quite vividly that while stocks are surging on the latest algo-driven stop hunt and CTA squeeze, bonds could care less.

It appears at least one trader read between the lines of what was happened. As Bloomberg's Richard Breslow wrote in his overnight note, he was one of the few who were not fooled by yesterday's price action. Below he explains why.

Don't Chase Parked Cars

There was such a strong emotional pull yesterday to get swept up in the feel-good atmosphere. Equities were flying, oil prices looked robust, top line credit spreads looked to be tightening after a horrible week and China had a new securities regulator to sort everything out. G-20 is coming and they are promising global cooperation. Sure, the U.K. might be blowing up the European Union, but that's four months off.

What kept me from totally losing my heart was, yet again, the bond market. If animal spirits are alive, and the underlying fundamentals improving, how come bond yi ...

What The Pundits Don't Get About Trump

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The class war is already underway, and the petit bourgeois media is clueless.

The typical bourgeois mainstream media pundit is confused and alarmed by Donald Trump's ascendancy. The typical pundit is a member of the petit bourgeois who has zero contact with the working class in America, other than saying "hello" to his/her auto mechanic, hair salon employee, etc.

The standard-issue pundit has an overweening sense of their own insight due to their academic/media success; nobody gets air time for confessing "I'm clueless."

Their failure to grasp Trump's appeal has revealed their absolute lack of insight and understanding of the real world beyond the media, Wall Street and D.C.

The conventional MSM pundit compares Trump to the politicos of the past and finds him wanting. He's no FDR, Reagan, etc., they pout.

The pundits are outraged by Trump's success as a candidate because in their blindered view of the political/economic landscape, he shouldn't be successful and so something is amiss with the Universe.

The standard petit bourgeois media hack is comfortable with the conventional politico stereotype: Slick Willy I feel your pain small-town mayor gone bigtime, check; ambitious, duplicitous Lady Macbeth (Hillary), check:

Lady Macbeth suppresses her instincts toward compassion, motherhood, and fragility — associated with femininity — in favour of ambition, ruthlessness, and the singleminded pursuit of power.

frat-boy fly-boy, got a nickname for everybody, just put one over on you grin G.W. Bush, tail-end of a dy ...

"Suicidal" Trader Loses Everything, Launches Online Begging Site

Back in November, when Martin Shkreli had just unleashed his ill-fated manipulation of Kalobios stock, one trader got crushed. As we reported then, one "E-trader", Joe Campbell, decided to go $35,000 short KBIO the night before the massive ramp in the stock following the Shkreli press release and ended up owing ETFC "a wonderful $106K" margin call.

His response was to launch a GoFundMe website opening up his plight to generous online donors. Surprisingly, many appeared on short notice, providing several thousand in online donations to help him fill his margin hole.

Now another trader finds himself in a comparable predicament, this time it is 24 year old Matt Reed, who yesterday suffered a massive loss after he decided to bet it all on FitBit calls (on margin) and lost everything, as the following Fidelity screengrab from his P&L indicates:

Here is his narrative as documented last night on the momentum trading website StockTwits:


I'm down 200k aka basically everything and pretty much suicidal right now

kept buying on margins as it went up. Held too long as it went down

started small then after it did well I took figured why not put more in. Got behind kept trying to break even. Never did

Put just about what I had left in 15.5 calls here...my life is totally fucked right no; what I have left is fit 15.5 calls which will most likely be worthless on the open tomorrow
< ...

"Mind The Gap" BofAML Warns The S&P Is At Crucial Support

"To double bottom or not to double bottom" asks BofAML's Stephen Suttmeier...

S&P 500 closes in on the big 1950 level

The S&P 500 gapped up once again and is knocking on the door of key resistance at 1947-1950 with the falling 50-day moving average near 1951. There are plenty of similarities between now and early-to-mid October, which was when the S&P 500 rallied sharply and broke out from a double bottom off the late-August and late-September 2015 lows on the move above 2020. The key level now is 1950 and a decisive push above 1950 is required for another double bottom in the S&P 500.

Mind the S&P 500 gap; below would suggest exhaustion

The S&P 500 has gapped up three times in the last five sessions. Continue to mind the upside price gaps, as they are nearby supports. Yesterday's gap offers initial support at 1924-1918 and it would take a break below this gap to suggest upside exhaustion. The next gap supports come in at 1899-1895, which held on Friday, and 1871-1864.

And we are testing that gap now...

But this double bottom does not project the SPX to new highs

Unlike the double bottom off the late-August and late-September 2015 lows, a double bottom off the January and February 2016 lows would not project the S&P 500 to new highs.

Saudi Arabia Oil Minister: Production Won't Be Cut

Ali al-Naimi, Saudi Arabia's petroleum minister, said oil producers won't cut production to reduce a global supply glut that has sent oil prices plunging over the past 18 months.

Stocks Waver on Slide in Bank Stocks, Commodity Prices

U.S. stocks edged lower Tuesday as bank stocks slumped and commodity prices retreated.

J.P. Morgan Sounds Fresh Warning on Energy Losses

J.P. Morgan Chase expects to further build reserves related to potential energy losses in the first quarter.

February 2016 Chemical Activity Barometer Slips

from the American Chemistry Council

The Chemical Activity Barometer (CAB) slipped 0.1 percent in February following flat performance in January and two months of revised gains in November and December 2015

January 2016 Existing Home Sales Improved.

Written by Steven Hansen

The headlines for existing home sales say "existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015". Our analysis of the unadjusted data shows that home sales did improve, and the rolling averages improved.

In One Chart: 10 cities with the worst quality of life

Ohio has four cities on the list.

London Markets: FTSE 100 closes lower as BHP Billiton, oil prices lose ground

U.K. stocks finished lower Tuesday, as losses for market heavyweights BHP Billiton PLC and Standard Chartered PLC underscored festering worries about the health of mining and financial companies.

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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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