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03Mar2016 Pre-Market Commentary: WTI Crude Is Trading At Resistance Levels As Is Gold, Markets Will Open Fractionally Lower

Written by Gary

U.S. futures are slipping past the unchanged line into negative territory as investors debate whether recent bullish sentiment will continue ahead of today's so-so U.S. jobs report. Markets are poised to take a breather after it two-day advance and slightly oversold conditions.


Here is the current market situation from CNN Money

European markets are lower today with shares in France off the most. The CAC 40 is down 0.50% while Germany's DAX is off 0.27% and London's FTSE 100 is lower by 0.21%.

From a technical standpoint and near-term outlook, the various purveyors of reading tea-leaves feel the SP500 Macd has now entered the upswing phase and we can expect to see the markets rise along with the Spooz to at least 2044. Crude may actually start to slip if the prices do not push through the resistance level ($35) just above where it now trades.

For now the trend is higher so that is where the benefit of doubt is, but should it clip the under-side trend-line then a decline is likely in order...interesting timing with the S&P up near resistance in the 1990/2010 area.

"We think the market is still overvalued at current levels and expect it to resume its decline shortly," said Chuck Self, chief investment officer at iSectors. Other market watchers feel differently. "I've been encouraged by the economic numbers," declared Gary Bradshaw, portfolio manager of Hodges Capital Management.

U.S. stock futures point to a muted open, putting the market on track to catch its breath after a two-day advance. Investors await fresh readings for jobless claims, a non-manufacturing index and factory orders.

Investors await fresh readings for jobless claims, a non-manufacturing index and factory orders as they contemplate the backdrop for what have been largely lackluster earnings and uncertain interest rate policy.

"The S&P 500 index has broken above 1963, which is a bullish near-term development," said Sam Stovall, a strategist at S&P Capital IQ, in a note. He said the benchmark could run into resistance at 1,990 and 2,044, but the area between 1,937 and 1,963 is likely to provide support on any pullback. "There is no reason to consider downside or bearish scenarios unless the index falls back below this zone," Stovall said.

Full Story

What Is Moving the Markets

Here are the headlines moving the markets.

Iran hopes to raise March oil exports on higher European sales: sources

NEW DELHI/DUBAI (Reuters) - Iran, OPEC's No. 3 producer, is expected to raise its oil exports in March to around 1.65 million barrels per day from 1.5 million bpd a month earlier on the back of higher crude shipments to Europe, two industry sources told Reuters on Thursday. State-run National Iranian Oil Co.

Energy pioneer McClendon dies in Oklahoma car crash a day after indictment

OKLAHOMA CITY (Reuters) - Aubrey McClendon, a brash risk-taker who led Chesapeake Energy Corp to become one of the world's biggest natural gas producers, died in a single-car crash on Wednesday, a day after being charged with breaking federal antitrust laws, police said. He was 56.

Bill Gross: Avoid bank stocks in negative interest-rate world

NEW YORK (Reuters) - Bill Gross, the widely followed investor who runs the Janus Global Unconstrained Bond Fund, said on Thursday that investors should not be tempted into purchasing beaten-down bank stocks against the backdrop of interest rates potentially turning negative.

Futures little changed as investors await economic data

(Reuters) - U.S. stock index futures were little changed on Thursday as investors await a raft of economic data to further assess the health of the economy.

Businesses struggled from Asia to Europe in February

LONDON (Reuters) - Global business growth slowed last month as services from Asia to Europe reported waning demand and little or no inflationary pressure, suggesting more central bank stimulus may be needed, surveys showed.

Volkswagen shares fall after statement on emissions

FRANKFURT (Reuters) - Volkswagen shares fell almost 2 percent in early trading on Thursday after the carmaker said its former chief executive did not pay particular attention when he was alerted to problems with U.S. diesel emissions tests in 2014.

Global stocks, oil dip, but markets calm down as growth fears ease

LONDON (Reuters) - European stocks and oil prices fell on Thursday but still held on to most of this week's gains, as concern eased about the global outlook for economic growth.

World food prices stable in February near seven-year low

ROME (Reuters) - World food prices stabilized in February, as rising vegetable oil and meat prices offset declining cereal, sugar and dairy prices, the United Nations food agency said on Thursday.

Starbucks to open first shop in South Africa next month

JOHANNESBURG (Reuters) - Starbucks will open its first store in South Africa next month in the upmarket Johannesburg suburb of Rosebank, the coffee giant's local licensee Taste Holdings said on Thursday.

Bill Gross Previews The Financial Apocalypse: "The Classical Economic Model Has Reached A Dead End"

Bill Gross takes a turn for the downright apocalyptic (with a +/- 5 billion year error margin) in his latest letter speculating on the future of banking and finance under NIRP in a world where the "credit based economic system appears to be in the process of devolving from a production oriented model to one which recycles finance for the benefit of financiers"; a world in which "the negative interest rates dominating 40% of the Euroland bond market and now migrating to Japan like a Zika like contagion, are an enigma to almost all global investors"; a world where our "finance based economic system which like the Sun has provided life and productive growth for a long, long time " is running out of fuel and that its remaining time span is something less than 5 billion years."

His bottom line? The same as ours for the past 7 years: "central bankers seem ever intent on going lower, ignorant in my view of the harm being done to a classical economic model that has driven prosperity " until it reached a negative interest rate dead end and could drive no more."

The next step: admission of failure and paradropping money, leading to soaring inflation.

Or perhaps Gross is wrong and banks will be able to sweep all the world's problems under the money printing/NIRP/helicopter money rug for another 5 billion years?

His full monthly letter below

Sunshine, Lollipops and ¦

Our Sun " a rather tiny star in the galaxial scheme of things " seems inexhaustible. But 5 billion years from now, it will swallow, instead of nurture the Earth as it burns itself out " first contracting, then expanding like a flaming candle turned firecracker. Not to worry though. We won't be around. It's not that we are beyond worrying; it's that our lives are much shorter and we needn't think m ...

Interest on Gold Is the New Tempest in a Teapot

by Keith Weiner

Zero Hedge published an article on Canadian Bullion Services (CBS) last week. Other sites ran similar articles. The common thread through these articles, and in the user comments section, is that CBS is committing criminal fraud. Or, if not, then it's a conspiracy by the Canadian government to confiscate gold. Terms like fractional reserve and re-hypothecation were dusted off for the occasion.

I don't know anything about this company other than what I read that day. I am writing today to make a different point, not to address or defend CBS.

My point is: a company offers interest on gold, and the gold community goes ballistic. Why so visceral a response? To answer that, we need to look at the backdrop of today's bizarre financial world.

Interest rates have been falling for well over three decades. This has caused endless asset bubbles in which to speculate to make a fortune (or lose one). And now, in the terminal stage of our monetary disease, there is scant yield to be had even in the US. Negative yields already prevail in several other countries.

We have become accustomed to it. We're trained to not expect to earn interest, to not even think about it. Instead, we're like Pavlov's dogs who know to salivate at the sound of a bell. Only we're not after food, but opportunities to speculate. All we want to know is, what's going up next. Mainstream folks prefer to speculate on mainstream assets like stocks and real estate. Gold bugs would rather bet on gold and silver. Either way, it's the same: seek capital gains by the rising dollar price of an asset. Yield is as dead as the rotary dial telephone.

And, we're beyond merely accustomed. People demand speculative bubbles. It feels right as rain "or the next dose of opiate painkillers. Besides, speculation is ...

Large Cap Growth Stocks At "Pivotal" Level

Via Dana Lyons' Tumblr,

The S&P 500 Pure Growth Index has broken above a key level that has alternately served as support AND resistance over the past 2 years.

When traders mention "pivot points", they are referring to levels on a chart that serve as both support and resistance, depending upon whether prices are above or below the level. Basically, they are like any support or resistance levels, except that they have been tested from both sides. Consider them support/resistance lines with experience. One case in point, with current ramifications, can be seen in the chart of one of the market's former leaders, the S&P 500 Pure Growth Index (SPXPG).

Notice on the SPXPG chart how in the past few years, prices have alternately been repelled by the level near 7600, both from below and from above. This is a good example of a pivot point.

image

First, in early 2014, the 7600 area served as resistance, repelling prices lower for about 4 months. Finally, in mid-2014, the SPXPG broke above that level. Thus, what was resistance became support, and it did indeed provide such support on two occasions soon after.

Fast forward to 2015 and we see the 7600 level again serving as support at both the August and September lows. After finally dropping below there early this year, what was support once again became potential resistance. And the late January bounce did find resistance again right at the 7600 level.

After subsequently testing (and undercutting) the January lows, the SPXPG has bounced to once again challenge the 7600 ...

Washington Battles Over Munis: Safe or Hard to Sell?

Some federal regulators trying to shore up the banking system aren't convinced municipal bonds would be easy to sell in a crisis. The contrast has led to an unusual showdown.

Global Stocks Steady Ahead of U.S. Jobs Report on Friday

Global stocks steadied, as recent bullish sentiment fizzled out ahead of the release of the U.S. jobs report on Friday.

China's Soft Power Tested as Cotton-Stockpile Sale Looms

Global cotton prices have plunged in recent weeks as speculation mounts that China is getting ready to sell some of its 11 million metric ton stockpile "enough to make 10 billion pairs of jeans.

27 February 2016 Initial Unemployment Claims Rolling Average Again Improves.

Weekly Initial Unemployment Claims

The market expected (from Bloomberg) were 263,000 to 272,000 (consensus 270,000), and the Department of Labor reported 278,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 272,000 (reported last week as 272,000) to 270,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

February 2016 Job Cuts Fall by 18%

from Challenger Gray and Christmas

After surging to a six-month high to begin the new year, downsizing slowed in February, as US-based employers announced 61,599 job cuts during the month, 18 percent fewer than the 75,114 in January

Economic Report: U.S. productivity revised to show smaller 2.2% drop in fourth quarter

The productivity of U.S. businesses fell at a 2.2% annual pace in the fourth quarter, a smaller decline than previously estimated.

Economic Report: Jobless claims climb 6,000 to 278,000

The number of Americans who applied for unemployment benefits rose by 6,000 to 278,000 in the last week of February, but the overall pace of layoffs still hovered near postrecession lows.

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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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