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02Mar2016 Market Update: Markets Trading Flat In Moderate Volatility As Investors Unsure What Mr. Market Is Going To Do Next

Written by Gary

US averages have done little today after sea-sawing into the red, a short burst into the green and now flat to mixed as gains in energy stocks were offset by declines in utilities and materials. Crude has been trending upwards and peaked in the low 35's at one point, now comfortably trading in the mid 34's. The US dollar is currently plunging from 98.60 to currently the low 98's. Gold is steady at the 1242 level.

Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 1.29% while the IPC gains 0.77%. The S&P 500 is even.

From SA

Moody's Investors Service has lowered the outlook on China's credit rating from stable to negative, citing a weakening of fiscal metrics and a continuing fall in foreign exchange reserves. "Without credible and efficient reforms, China's GDP growth would slow more markedly as a high debt burden dampens business investment," the ratings agency added. Moody's current Aa3 rating on China is still seven notches above junk, so even if the agency were to follow up on its warning, investors wouldn't have to suddenly start selling the country's bonds. The Shanghai Composite shrugged off the decision along with other Asian shares, climbing 4.3%, after yesterday's record run on Wall Street.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 65%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 65%
Investors Intelligence sets the breath Above 50 bullish

43.5% 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.

90.87 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 32.08% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 49.05% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 63.40% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 18.48 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 76.05 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,788

What Is Moving the Markets

Here are the headlines moving the markets.

Fed's Williams: View on right number of rate hikes little changed

SAN RAMON, Calif. (Reuters) - San Francisco Federal Reserve President John Williams said on Wednesday there has been no substantial change in his outlook on the U.S. economy or his opinion on the number of times the Fed should raise interest rates.

Exclusive: Texas fund EMG halts new deals with indicted McClendon

HOUSTON (Reuters) - Private equity fund Energy & Minerals Group told investors on Wednesday it will stop entering new deals with Aubrey McClendon, the former chief executive officer of Chesapeake Energy Corp , a day after the U.S. government charged him with breaking antitrust laws.

Volkswagen says did not breach market disclosure rules

FRANKFURT (Reuters) - Volkswagen said on Wednesday its management board did not violate financial market disclosure rules, responding to lawsuits claiming the German carmaker was too slow to inform investors about its rigging of diesel emissions tests.

Toyota adds 198,000 to recall of cars with Takata air bags

DETROIT (Reuters) - Toyota Motor Corp in the United States said on Wednesday it is expanding its recall of cars with Takata Corp air bag parts by 198,000.

Abercrombie's turnaround efforts boosts holiday sales, hits forecast

(Reuters) - Abercrombie & Fitch Co posted a surprise rise in sales at established stores in the holiday-shopping quarter, ending a streak of more than three years of declines, a sign that its efforts to revive sales growth is paying off.

U.S. retailer Sports Authority files for bankruptcy, seeks buyers

(Reuters) - Sports Authority Inc filed for Chapter 11 protection on Wednesday in the face of growing online competition, touching off a scramble to close weaker stores and find a buyer before the end of next month.

Privacy groups urge U.S. judge to support Apple in iPhone case

(Reuters) - Digital privacy advocates have called on a U.S. federal judge to approve Apple Inc's request not to be compelled to build software to help the FBI unlock an iPhone used by one of the shooters in the San Bernardino attack.

Wall Street little changed as energy stocks gain

(Reuters) - Wall Street was little changed on Wednesday as gains in energy stocks were offset by declines in utilities and materials.

Fed's Williams says 'gradual' is key message on rate hikes

SAN RAMON, Calif. (Reuters) - San Francisco Federal Reserve President John Williams said Wednesday that the key message from the U.S. central bank is that interest-rate hikes will be "gradual."

"Everything Is Awesome"

For now...

Fed's Williams says:


And reality says...

h/t @Not_Jim_Cramer

Isn't it amazing how easily 'we' can forget about the truly dismal state of the economy when stocks are rising...?

Understanding The Federal Reserve's Shell Game

Submitted by Dan Sanchez via The Mises Institute,

The Federal Reserve is a key component of the American Transfer State. Under the guise of "macroeconomic management," it redistributes vast amounts of wealth on an ongoing basis through inflation. The victims of these transfers are ordinary Americans. The beneficiaries are the government and its elite cronies.

The Fed masks the nature of this surreptitious taxation and corporate welfare by performing a simple shell game that is just complicated enough to confound the general public.

First, let's imagine the government performing this kind of inflationary transfer without the shell game.

Imagine Uncle Sam sitting at a desk, representing the Federal government. His right hand is the Treasury. It has the government's main bank account, represented by a ledger on the desk. Uncle Sam also has revenue collecting powers, represented by a gun resting on the desk, which he uses to extort taxes from the public. Whenever he confiscates money, the cash balances of the public decline, and Uncle Sam's ledger increases by the same amount.

Now let's say Uncle Sam wants to raise $200 million for current expenditures: bureaucrat salaries, weapons purchases, welfare payments, etc. The problem is, the public has a limited tolerance for overt taxation. So, at a certain point, if Uncle Sam simply gestures to his gun again to levy the funds, he might face a tax revolt.

So let's say instead of using his taxing power, Uncle Sam uses his fiat money power: his ability, based on the government's monopoly control over the money supply, to inflate (defined here as monetary expansion). As the God of the Bible could say "let there be light" (in Latin, fiat lux) and it was so, the m ...

Central Bankers Admit that Central Banks Have Failed to Fix the Economy

Between 2008 and 2015, central banks pretended that they had fixed the economy.

In 2016, they're starting to admit that they haven't fixed much of anything.

The current head of the Bank of England (Mark Carney) said last week:

The global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium. For the past seven years, growth has serially disappointed—sometimes spectacularly, as in the depths of the global financial and euro crises; more often than not grindingly as past debts weigh on activity ....

This underperformance is principally the product of weaker potential supply growth in virtually all G20 economies. It is a reminder that demand stimulus on its own can do little to counteract longer-term forces of demographic change [background] and productivity growth.


In most advanced economies, difficult structural reforms have been deferred [true, indeed]. In parallel, in a number of emerging market economies, the post-crisis period was marked by credit booms reinforced by foreign capital inflows

As A Frenzied Wall Street Buys Shale Equity Offering At A Record Pace, Exxon's CEO Has A Stark Warning

If Saudi Arabia is shocked at the relentless ability of the U.S. shale "marginal producers" to continue pumping even with oil prices below breakeven costs for many (which as reported recently have mysteriously tumbled from $70 to $40) at a time when the junk bond market - the traditional conduit of how energy companies have financed themselves - it should thank Wall Street, for one simple reason: investors have pumped a whopping $9.2 billion in new equity into energy companies year to date, the most since Bloomberg records began in 1999.

Even the experts are stunned by this unprecedented glut in stupidity of managers of other people's money: "Billions of dollars of dilutive equity continue to roll in with seemingly no end in sight," Houston-based oil investment bank Tudor, Pickering, Holt & Co. said in a research note.

Until only a few weeks ago, bankers, executives and investors had assumed the capital markets were closed to the energy sector, which is laboring under oil prices that have fallen almost 70 percent from the summer of 2014. Then, in early January, a handful of companies with assets in the prized Permian Basin in Texas successfully tested the waters. Now "the window is clearly open" for almost everybody, Tudor, Pickering, Holt & Co. said.

How is that possible? Simple: with the junk bond market clearly closed for virtually everyone because that particular subset of investors has gotten massively burned in recent months and in fact many distressed debt hedge funds have been forced out of business, the capital stucture has been pushed lower and has made equity the new "junk."

Some examples:

Hess Corp. and Devon Energy Corp ...

U.S. Stocks Pare Losses

U.S. stocks bounced around the flatline Wednesday, pausing after major indexes posted their biggest one-day gains since January.

Hedge Funds Turn Bullish on Oil Despite Glut

Several hedge funds are starting to bet that assets in the battered energy sector are through the worst of their dismal run.

Funds Make Hay on Argentina Bonds

Hedge funds that made a big bet on Argentina debt more than a decade ago will rake in gains of 900% of their original principal investment on some bonds, according to a court filing.

Elizabeth Warren: This report's 'a stunning indictment' of the Department of Education

The senator and other Dems slam feds' oversight of student loan companies.

Europe Markets: European stocks finish higher for 5th straight day

European stocks finish higher for a fifth straight session, drawing support from financials and miners, as markets consolidate after a string of winning sessions.

Market Extra: Doom-and-gloom Marc Faber thinks stocks are poised for short-term rally

Fund manager Marc Faber, known as Dr. Doom for his generally grim market calls, has turned bullish on stocks "in the short term in any case.

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