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06Apr2016 Market Update: Market Marginally Higher But Trending Up Before 2pm FOMC Minutes, Crude Prices Higher After Domestic Crude Falls

Written by Gary

Markets are drifting below uptrend line after trading marginally higher, in the green, for most of the early afternoon session. At 2 pm today the FOMC will issue the minutes from its last meeting, where the Fed left rates unchanged and lowered its forecast for hikes this year from four to two. Oil prices surged by 4 percent after reporting an expected draw in domestic crude stockpiles last week.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.66% while the IPC gains 0.22%. The Bovespa is off 1.06%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 77%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 75%
Investors Intelligence sets the breath Above 50 bullish 56.7%
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.

-40.48

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 49.38%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 64.02%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 77.40%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 17.57
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 78.61
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,125

What Is Moving the Markets

Here are the headlines moving the markets.

Tata Steel to launch UK sale process by Monday: UK minister

LONDON (Reuters) - India's Tata Steel will launch the formal sale process for its British assets by Monday and give a "reasonable" timeframe to find a buyer, Britain's business minister said after meeting the company's chairman in Mumbai.

Pfizer, Allergan scrap $160 bln deal after U.S. tax rule change

(Reuters) - U.S. drugmaker Pfizer Inc and Ireland-based Allergan Plc walked away from their $160 billion merger on Wednesday, a major win for President Barack Obama, who has been pushing to curb deals in which companies move overseas to cut taxes.

Nokia to cut thousands of jobs following Alcatel deal

HELSINKI/PARIS (Reuters) - Telecom network equipment maker Nokia is planning to cut thousands of jobs globally, including 1,400 in Germany and 1,300 in its native Finland, as part of a cost-cutting program following the acquisition of Alcatel-Lucent earlier this year.

Wall Street gains led by healthcare, energy stocks

(Reuters) - Wall Street was marginally higher on Wednesday, helped by a rise in energy and healthcare stocks, as investors awaited the release of minutes from the Federal Reserve's meeting on monetary policy in March.

Oil prices jump 4 percent after surprise U.S. crude stocks draw

NEW YORK (Reuters) - Oil prices surged by 4 percent or more on Wednesday after the U.S. government reported a surprise draw in domestic crude stockpiles last week, versus market expectations for a new record high.

U.S. weakens retirement advice rule, responding to industry

WASHINGTON (Reuters) - The Obama administration on Wednesday unveiled its final version of a retirement advice rule aimed at ensuring that broker-dealers put their clients' interests ahead of their own profits, though it was softened in response to industry complaints.

U.S. sues to block Halliburton and Baker Hughes deal, says anti-competitive

WASHINGTON (Reuters) - The U.S. Justice Department filed a lawsuit on Wednesday to stop Halliburton Co from buying Baker Hughes Inc, , arguing the combination of the No. 2 and No. 3 oil services companies would hurt competition in the sector.

Airline hedges fuel rally in later dated oil prices

NEW YORK (Reuters) - Big airlines are making waves in the oil market for the first time since prices went into a tailspin nearly two years ago, betting this may be their best chance to lock in cheap jet fuel for years to come, industry and market sources say.

Valeant Has Biggest Daily Surge Since 2005 On Bill Ackman's Soothing Comments

Having been crushed by his Valeant exposure, today there was finally some good news for the embattled hedge fund manager.

Speaking on an investor conference call Ackman said Valeant is now on track to deliver its delayed 10-K by month end which will likely give the company a shot in the arm because investors will look at the company anew, according to Reuters.

Apparently this is sufficient to ignite a monster squeeze which has seen the stock soar from its $29 opening price to the mid-$30s.

This follows yesterday's announcement by the board's ad hoc board committee which cleared the company of any further wrongdoing; incidentally this is the same board which can't even limit the presence of a dissident member, namely former CFO who has refused to quit the board despite being scapegoated by Valeant for everything that has gone wrong with the embattled pharmaceutical and now burst roll-up over the past 3 years.

William Ackman on Wednesday said the board of Valeant could find a new chief executive officer in "weeks" and said the stock will become "investable" again once the annual report is filed.

That remains to be seen, but it certainly appears investable if only for this moment: earlier today VRX stock was up nearly $6, jumping some 20%, for its biggest intraday surge since September 2005. At last check it was up 17%, although that sounds bigger than it actually as the following chart clearly demonstrates.

Those who missed it, can hear a replay of Ackman's call at the follo ...

Active Managers Just Had Their Worst Quarter In 18 Years: Here's Why

According to BofA's Savita Subramanian, just 19% of funds outperformed the S&P 500 in the 1Q. According to the bank, this was the the lowest quarterly hit rate in our data history spanning 1998 to today. The average fund lagged by 1.9ppt, marking a record spread of underperformance.

Even worse, growth funds saw only a 6% hit rate, the worst since at least 1991. According to BofA, "the average fund lagged by the widest margin we have recorded in our quarterly data: - 3.5ppt."

It wasn't quite as bad for value managers who had a better hit rate (19.6%), and Core funds saw the highest quarterly hit rate of 29%.

But March results were the worst in a string of months, with hit rates dropping from to January's 34% to February's 27% to March's 21%.

What caused this dramatic (and latest) underperformance by the large-cap mutual fund community who are after all paid to outperform the market? Here is BofA's explanation why it has become so difficult to outperform the market.

Correlations, dispersion, reversals, positioning ¦

The recipe for distress may boil down to a few factors. Heightened correlations (Chart 1) and low alpha opportunity (Chart 2) continued to hurt, as stock selection thrives when intra-stock correlations are low and alpha is abundant.

But these contributors to underperformance have been in place for a while - the lit match taken to active returns last quarter was likely the massive reversal " by the market, by sectors, by styles and by stocks - occurring within the quarter. Momen ...

Alibaba Surpasses Walmart As Largest Retail Company In The World

We may not have the exact numbers yet, but in a filing with the SEC on Tuesday, China's online retail behemoth Alibaba Group announced that it had "become the largest retail economy in the world" at the end of its fiscal year on March 31, "as measured by gross merchandise volume (GMV) on its China retail marketplaces." As IBT notes, the company has yet to declare its financial results for its last quarter and the complete fiscal year, but the announcement makes it clear that BABA surpassed the $482.1 billion in 2015 revenues reported by Wal-Mart Stores Inc. for its fiscal year ended Jan. 31. To wit:

Alibaba Group Holding Limited announced on April 5, 2016 that as of March 31, the end of its fiscal year 2016, it has become the largest retail economy in the world as measured by annual gross merchandise volume (GMV) on its China retail marketplaces. PricewaterhouseCoopers (PwC) has performed agreed upon procedures on data relevant to Alibaba Group's GMV

As a reminder, two weeks prior to the SEC filing, Alibaba's Executive Vice Chairman Joe Tsai announced in a blog post on March 21 that œwith 10 days remaining in our fiscal year ending March 2016, Alibaba's China retail marketplace platforms surpassed RMB 3 trillion [yuan] in GMV. That is about [$]476 billion in U.S. dollars and, if the platforms we operate were a province, we would rank as the 6th largest provincial economy in China."

Inferring a full year's revenue from that number sug ...

The Fed's Next Rate Steps: Connecting the Dots

Uncover whose dot is whose in the Federal Reserve's dot plot, and the case for just two rate increases this year gets stronger.

Emerging Markets in the Sweet Spot: Can It Last?

Emerging-market investors have finally caught a break. Currencies, bonds and stocks have rallied; money has been flowing in. But some of the foundations for optimism are fragile.

Glencore's Deal-Making and a Question of Debt

Glencore has made another big step in its efforts to reduce debt, by selling a stake in its agriculture business.

Monsanto aims to tackle looming global food crisis

Monsanto is stepping up its game to tackle a looming global food shortage, in a move seen as potentially improving its frayed reputation and boosting its bottom line long term.

Latest casualty of low oil prices? Fine-dining restaurants

Darden said same-store sales growth at its high-end Eddie V's chain took a hit in Texas.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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