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04Mar2016 Market Close: Markets Closed Solidly In The Green, Crude Seeking Higher Ground, Bullish Indicators Remain A Go

Written by Gary

WTI crude closed above $35 and is testing the next resistance at 36, which is not supposed to offer much resistance. The DOW closed up 63 points, Spooz closed up 0.3%, just above the R1 level (~2,000) and the US dollar is losing ground, settling in the low 97's. Short-term indicators are flat to fractionally bullish and depends on what crude does over the next few sessions.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street rallies after upbeat employment report

(Reuters) - Wall Street rallied toward its fourth consecutive gain on Friday after employment data reduced investors' worries about a sluggish economy without bolstering fears of future interest rate hikes.

Wall Street leans toward only two Fed rate hikes before year-end: Reuters poll

(Reuters) - A majority of Wall Street's top banks now expect the Federal Reserve to raise interest rates only two more times by the end of the year, a downgrade of earlier expectations that may presage the Fed's own revised view of its path when it meets in less than two weeks.

U.S. trade deficit widens as exports hit five-and-a-half-year low

WASHINGTON (Reuters) - The U.S. trade deficit widened more than expected in January as a strong dollar and weak global demand helped to push exports to a more than five-and-a-half-year low, suggesting trade will continue to weigh on economic growth in the first quarter. Â

U.S. payrolls surge, bolster Fed rate hike prospects

WASHINGTON (Reuters) - U.S. employment gains surged in February, the clearest sign yet of labor market strength that could further ease fears the economy was heading into recession and allow the Federal Reserve to gradually raise interest rates this year.

Exclusive: Congressional watchdog to probe lax Fed bank oversight

NEW YORK (Reuters) - A U.S. watchdog agency is preparing to investigate whether the Federal Reserve and other regulators are too soft on the banks they are meant to police, after a written request from Democratic lawmakers that marks the latest sign of distrust between Congress and the central bank.

Exclusive: Citigroup executives avoid U.S. charges over mortgage bonds - document

NEW YORK (Reuters) - U.S. authorities have decided not to pursue criminal charges against any Citigroup Inc executives or employees involved in packaging and selling mortgage-backed securities at the heart of the 2008 financial crisis, a government report shows.

Exclusive: T. Rowe Price to oppose key directors at super-voting share companies

BOSTON/NEW YORK (Reuters) - T. Rowe Price Group Inc plans to vote against key directors at companies with two classes of shares in the upcoming U.S. corporate annual meeting season, as the big asset manager steps up its push against companies that give extra voting clout to insiders.

Stocks Surge On Biggest Bear Market Short-Squeeze Since Nov 2008

They are pulling out all the stops on this one...

Another chaotically wild week...

Small Caps (Russell 2000) up 4.65% - biggest week since Oct 2014

S&P 500 up 3% - best week in 3 months

Dow Transports up 3.7% - best week since Dec 2015

"Most Shorted" stocks up 8.8% - biggest short squeeze since Nov 2008 (and in 3 weeks "Most Shorted" are up 19.8% - the most ever)

HYG (high yield bond ETF) up 2.3% - best week in 5 months (best 3 weeks since Dec 2011)

2Y, 5Y, 10Y, 30Y biggest weekly surge in yields in 4 months

7Y biggest weekly surge in yields in 9 months

Aussie Dollar soared 4.25% - the biggest week since Dec 2011

Oil up 9.6% this week - 2nd biggest week since August

Oil up 21.2% in 2 weeks - biggest 2 weeks since Jan 2009

Copper up 7.2% - biggest week since Dec 2011

Gold up 3.5% to 13 month highs

Silver up 5.8% - biggest week since May 2015

Ahead of China's National People's Congress, Chinese stocks w ...

HY Credit Spreads Have Never Been This High Outside Of A Recession

Today marked the 13th consecutive day of positive HY fund flows (bringing total to $8.6bn)...

But as Credit Suisse explains, the nature of this demand is 'different'...

Investors likely using the ETFs as a placeholder for cash in the absence of new supply, with HY issuance down ~74% year on year.

With ballooning ETF inflows the past few weeks, the liquid sector has become increasingly vulnerable to ETF cash rotating out upon the availability of new supply.

This is particularly a concern now as the visible issuance calendar for the next few months has grown sizeably (~$35bn)

So put another way - given that the calendar is set to pickup, this huge inflow of 'placeholder' cash will flow out of high yield ETFs (pushing prices lower) and into the new issuance.

But, as Edward Altman warns Goldman Sachs, however, that we are already at the end of the benign cycle or nearing it.

We are in the bottom of the 8th or 9th inning, and unless the Fed steps in to add liquidity to the market, which seems unlikely, I don't expect extra innings.

I define a benign cycle as having four ingredients:

  1. default rates below their historical average,

    relatively high recovery rates in the event of defaults, making the loss given ...

The Last Time The Market Was This Overbought, This Happened

The last 3 weeks have been a near unprecedented rip higher in stocks... as markets anticipated G-20 cooperative actions (and then BoJ and ECB follow-through) creating a vicious short-squeeze bounce..

This has sent The McClellan Oscillator to its most overbought since January 2009...

What happened then?

The Group of 20 leaders from major developed and emerging economies had pledged on their meeting on Saturday short-term measures such as fiscal stimulus in order to try to keep the global economy from falling into a deep slump and promised to look at ways to tighten regulations to prevent future crisis.

Which sent stocks soaring in another major short-squeeze hope bounce...

That did not end well!

Stocks Tumble After Fed Plans Too-Big-To-Fail Bank Counterparty Risk Cap

US financials are tumbling after The Fed proposed a rule that would limit banks with $500 bln or more of assets from having net credit exposure to a "major counterparty" in excess of 15% of the lender's tier 1 capital. Bloomberg reports that The Fed's governors plan to vote today on the proposal. The implications of this are significant in that it will force some banks to unwind exposures and delever against one another (most notably with potential affect the repo market which governs much of the liquidity transmission mechanisms). Guggenheim's Jaret Seiberg warns the proposal is likely to be "stringent," though less onerous than the Dec 2011 proposal.




JPMorgan is tumbling...

As Bloomberg reports,

Wall Street giants such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. would face new limits on credit exposure to any other large financial company under a Federal Reserve proposal set for a vote Friday.

The rules, which would limit such exposures to 15 percent of a lender's Tier 1 capital, are meant to ensure megabanks won't take others with them if they fail. The Fed is making a second effort after abandoning a 2011 proposal that called for a cap at 10 percent. Even so, th ...

BlackRock Halts New Shares in Popular Gold Trust

BlackRock suspended the issuance of new shares in the roughly $8 billion iShares Gold Trust, citing a surge in demand for gold. The suspension could cause the price of shares in the exchange-traded product to rise faster than the price of gold.

Commodities Rally Isn't Built to Last

Are the markets, especially recently buoyant commodities and emerging markets, correctly predicting a ‹global economic rebound? Friday's U.S. trade data say these markets are wrong.

A Second Way To Buy Gold At A Discount

by Russ Allen, Online Trading Academy Instructor

Online Trading Academy Article of the Week

In last week's article I laid out a way to use options to buy the exchange-traded fund representing gold at a discount. I said last week that there was a second way to approach the same goal, and we'll look at that here. To be clear, these methods could be used to buy any stock or exchange-traded fund at a discount, not just the one representing gold.

Market Extra: U.S. oil production is declining, but how fast will it fall?

U.S. shale oil production is finally starting to fall. How fast will it decline?

Market Extra: Brazil's battered currency may be on the cusp of a turnaround

With Brazilian President Dilma Rousseff's political futures in doubt, analysts say the country's battered currency and stocks could be on the verge of a lasting turnaround.

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