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29Mar2016 Market Update: Yellen's Speech Pushes Wall Street Into Positive Territory, WTI Crude Trims Morning Losses, US Dollar Plunges, Gold Grabs Golden Ring At 1242, But Gains Not Expected To Hold

Written by Gary

Janet Yellen's 'hint-hint' speech today pushed Wall Street into positive territory after stating that it was still appropriate for the Fed to proceed "cautiously" in hiking interest rates. The DOW was up 74 points and the Nasdaq was up over one percentage point before backing off highs. Markets are expected to slip back to mixed and perhaps somewhat negative levels over the next few sessions.


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 1.28% while U.S.'s S&P 500 is up 0.41% and Mexico's IPC is up 0.38%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 79%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 65%
Investors Intelligence sets the breath Above 50 bullish 56.0%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -1.91
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 47.24%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 63.23%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 76.20%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 18.37
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 78.40
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,115

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St. turns positive after Yellen comments

(Reuters) - Wall Street swung into positive territory on Tuesday after U.S. Federal Reserve Chair Janet Yellen said it was appropriate for the Fed to proceed "cautiously" in raising interest rates.

Yellen says Fed should proceed 'cautiously' given global risks

NEW YORK (Reuters) - Federal Reserve Chair Janet Yellen said on Tuesday that global risks were not expected to have a deep impact on the United States but that it was still appropriate for the Fed to proceed "cautiously" in hiking interest rates.

SunEdison at risk of bankruptcy, unit says; shares plummet 60 percent

(Reuters) - U.S. solar energy company SunEdison Inc , whose aggressive acquisition strategy has saddled it with almost $12 billion of debt, is at "substantial risk" of bankruptcy, one of its two publicly listed units warned on Tuesday.

U.S. FTC sues Volkswagen over diesel advertising claims

WASHINGTON (Reuters) - The U.S. Federal Trade Commission on Tuesday sued Volkswagen Group of America, saying the U.S. arm of the German automaker falsely advertised more than a half million diesel vehicles as environmentally friendly when it knew they were emitting excess pollution.

U.S. succeeds in cracking Apple's iPhone, drops legal action

SAN FRANCISCO (Reuters) - The U.S. Justice Department said on Monday it had succeeded in unlocking an iPhone used by one of the San Bernardino shooters and dropped its legal case against Apple, ending a high-stakes legal battle but leaving the broader struggle over encryption unresolved.

NBC sells $1 billion in ads for Rio Olympics

(Reuters) - NBC, a unit of Comcast Corp , said it had sold $1 billion in national ads for the Summer Olympics in Rio de Janeiro, as the network prepares to broadcast a rare Games where some of the most high-profile contests will air live in prime time for U.S. audiences.

Casino agent in Philippines says high-rollers brought in heist money

MANILA (Reuters) - A Chinese junket operator in Manila said on Tuesday that two high-rollers from Beijing and Macau were responsible for bringing $81 million stolen by hackers from Bangladesh's central bank into the Philippines.

Exclusive: UBS, Credit Suisse interested in advising on Russia privatization - sources

MOSCOW (Reuters) - Swiss banks UBS and Credit Suisse are interested in advising the Russian government on several privatizations as long as the deals do not violate sanctions, three banking sources told Reuters.

U.S. home prices up in January, but shy of expectations

NEW YORK (Reuters) - Annualized U.S. single-family home prices rose less than expected in January, a closely watched survey showed on Tuesday.

The Federal Reserve Of China?

Remember when the central bank of the United States worried about development in the, well, United States? Those days are gone. Presenting: China. From page 8 of Yellen's speech on "The Outlook, Uncertainty, and Monetary Policy":

There is a consensus that China's economy will slow in the coming years as it transitions away from investment toward consumption and from exports toward domestic sources of growth. There is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any financial disruptions that might accompany it. These uncertainties were heightened by market confusion earlier this year over China's exchange rate policy.

Confusion, that is to say, which was the direct result of the US Dollar soaring to multi-year highs, which forced China, whose currency is peg to said dollar, to aggressively devalue its own currency.

The rest is history.

And it's not just China: it's every country which, as we warned in November 2014, is reliant on the viability of the Petrodollar, and more importantly, keeping the USD low. Here is Yellen explicitly addressing the impact of collapsing oil prices on oil exporters.

A second concern relates to the prospects for commodity prices, particularly oil. For the United States, low oil prices, on net, likely will boost spending and economic activity over the next few years because we are still a major oil importer. But the apparent negative reaction of financial markets to recent declines in oil prices may in part reflect market concern that the price of oil was nearing a financial tipping point for some countries and energy firms. In the case of countries reliant o ...

"Buy It All" Uber-Dovish Yellen Sends Stocks, Bonds, Gold, Oil Surging

Well that escalated quickly. Yellen's uber-dovish (coin-flip whether we hike or QE) speech has sparked panic-buying in everything...

and USDollar dumping...

as rate-hike odds collapse...

So far Gold and Oil are winning as bonds roll-over...

Credibility Watch - Janet Yellen Crushes Recent Hawkishness, Unleashes Fresh Bout Of Soothing Dovishness: Live Feed

With the central-bank-inspired short-squeeze-driven equity market surge losing momentum, Janet Yellen's 'hint-hint' speech today to The Economic Club of New York comes at a critical moment. Amid the constant chatter of headline-making Fed members, seemingly flooring (and capping) the S&P's movement with their algo-driving comments, Yellen is caught between a credibility-crushing dovish (the world is collapsing and we need to maintain equity 'wealth' creation) rock and the hawkish (rate normalization continues - just look at how awesome jobs are, stupid) hard place. Good luck...

As Citi notes, the same Yellen that showed up at FOMC two weeks ago will be in NY today.

The market has been leaning to a hawkish Fed the last few days after a series of comments that were perceived as somewhat more hawkish than the FOMC Statement, SEP, and Press Conference. It seems most likely that Fed Chair Yellen will come across as neutral or even slightly dovish relative to the current market lean.

Bottom line question is whether she and the FOMC want to build speculation on three 2016 hikes (just over one hike is priced in now). Why not live a peaceful life?

They may regret that the market took their message as so dovish as to price in barely more than three hikes by end-2018, but pointing to April will get the market to way overshoot their desired path. June is about 50% priced-in and that is probably the way they like it.

Live feed from Yellen speaking:

Quickly parsing her sp ...

How The Bank of England is Turning Down the Mortgage Heat

The central bank is proposing tighter standards for lending to small-time landlords.

This Deal Shows How Italy's Banks Can Help Themselves

Banco Popolare and Banca Popolare di Milano are pursuing a merger that could make both stronger.

China's Tesla Remains at the Mercy of the State

Electric-car maker BYD reported big profits in 2015 as the market quadrupled in China. But the source of that growth "government policies "is changing direction.

Americans pay 300% more for this prostate cancer drug than much of the rest of the world

Nonprofits and now 12 congresspeople are petitioning the government to use a rarely-used right to revoke patents in the case of a prostate cancer drug.

The Technical Indicator: S&P 500's 'bull trend' reaches major resistance

The S&P 500 has thus far drawn limited selling pressure at its trendline, supporting a constructive intermediate-term market view.

Earnings Summary for Today

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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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