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16May2016 Market Update: DOW Up Triple Digits, SP500 Up 0.9%, Crude Trading Sideways

Written by Gary

Wall Street turned higher today after a bruising week, bolstered by a bounce in Apple shares, while surging oil prices fired up energy stocks. Crude did rise 2% this morning, but has been testing the $47 resistance since the opening bell and doesn't appear to have enough steam to go higher - at least today.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.85% while the IPC gains 0.06%. The Bovespa is off 0.03%.

Traders Corner - Health of the Market

U.S. STOCK INDEXES

The June NASDAQ 100 was lower overnight. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near-term. If June renews the decline off April's high, the 50% retracement level of the February-April-rally crossing at 4227.72 is the next downside target.

Closes above the 20-day moving average crossing at 4389.41 are needed to confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 4389.41. Second resistance is the reaction high crossing at 4489.75. First support is the reaction low crossing at 4271.00. Second support is the 50% retracement level of the February-April-rally crossing at 4227.72.

The June S&P 500 was slightly higher overnight. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. If June renews the decline off April's high, the reaction low crossing at 2027.00 is the next downside target.

Closes above last Tuesday's high crossing at 2079.80 are needed to confirm that a low has been posted. First resistance is last Tuesday's high crossing at 2079.80. Second resistance is April's high crossing at 2105.00. First support is the reaction low crossing at 2027.00. Second support is the 38% retracement level of the February-April-rally crossing at 1993.13.

What Is Moving the Markets

Here are the headlines moving the markets.

Surge in oil, Apple boosts U.S. stocks

(Reuters) - Wall Street was higher on Monday after a bruising week, bolstered by a bounce in Apple shares, while surging oil prices fired up energy stocks.

Domestic focus may limit clout of $2 trillion Saudi fund

DUBAI (Reuters) - Saudi Arabia aims to create the world's biggest sovereign wealth fund, a $2 trillion behemoth that can throw its weight around global markets, but the fund's growth abroad is likely to be slowed by its responsibility for aiding the economy at home.

Oil hits six-month highs on supply outages, Goldman forecast

NEW YORK/LONDON (Reuters) - Oil prices hit six-month highs on Monday on worries about supply outages in Nigeria and Venezuela and as long-time bear Goldman Sachs sounded more positive on the market, although a stockpile build at the U.S. storage hub for crude futures pared gains.

Buffett's Berkshire invests $1 billion in Apple

(Reuters) - Warren Buffett's Berkshire Hathaway Inc on Monday revealed a new stake in Apple Inc , in a bet that the stock's price could rebound after iPhone sales fell for the first time.

Pfizer to buy Anacor in $5.2 billion deal for access to eczema gel

(Reuters) - Pfizer Inc is buying Anacor Pharmaceuticals Inc in a $5.2 billion deal to add an eczema gel to its portfolio, just a month after the U.S. drug major scrapped plans to acquire Allergan Plc .

HSBC axes 840 IT jobs in Britain in first big wave of planned cuts

LONDON (Reuters) - HSBC , Europe's largest bank, started laying off 840 information technology workers in Britain on Monday, the first big tranche of redundancies under a restructuring plan that will eliminate 8,000 British jobs by the end of next year.

Delta trims growth in flights as rivals' expansion hurts prices

(Reuters) - Delta Air Lines Inc on Monday said it will fly fewer seats this winter than it had planned and defer the 2018 delivery of four large aircraft, as extra flights by rivals threaten to depress its ticket prices.

China needs the private sector to step up

BEIJING (Reuters) - Xia Xiaokang and Bruno Chen, who both run private-sector companies, are the sort of businessmen that Chinese leaders are increasingly concerned about as economic growth slows.

German state refused to clear VW management but relented: source

BERLIN (Reuters) - Volkswagen shareholder Lower Saxony wanted to withhold its backing for the carmaker's top management at a supervisory board meeting but relented to avoid further damaging the firm, a source close to the German federal state said.

China's Largest Bank Is Quietly Cornering The Market For London Physical Gold

We have followed the ownership changes of London's massive vaults with keen interest ever since our December 2014 article when we reported that Deutsche Bank's gold vaule was for sale in "Massive 1,500 Ton Gold Vault For Sale In The Heart Of London, One Previous Owner, Asking £4,500,000 O.B.O." The fate of that particular vault was revealed earlier this year when Reuters reported that none other than China's largest bank, ICBC Standard Bank, was buying the lease on Deutsche Bank's London gold and silver vault, "enlarging its footprint in the city's bullion market"

The Chinese and South African lender is aiming to fill the gap left by Western banks, which are retreating from commodities to cut costs and reduce regulatory burden. "They (ICBC Standard Bank) have taken on the lease for the vault," the first source said.

Deutsche Bank's vault became operational in June 2014 and has a capacity of 1,500 tonnes. It was built and is managed by British security services company G4S. "The figure that was initially talked about may have been around $4 million, but it's way lower now," a second source said, without disclosing the figure paid for the vault.

We thought that ICBC would be content with its purchase of one of London's biggest vaults but that appears to not have been the case. Earlier today,

"Markets Have No Purpose Any More" Mark Spitznagel Warns "Biggest Collapse In History" Is Inevitable

After making over $1 billion in one day last August, and warning that "the markets are overvalued to the tune of 50%," Mark Spitznagel knows a thing or two about managing tail risk.

The outspoken practitioner of Austrian economic philosophy tells The FT, "Markets don't have a purpose any more - they just reflect whatever central planners want them to," confirming his fund-management partner, Nassim Taleb's perspective that "being protected from fragility in the financial system is a necessity rather than an option."

"This is the greatest monetary experiment in history. Why wouldn't it lead to the biggest collapse? My strategy doesn't require that I'm right about the likelihood of that scenario. Logic dictates to me that it's inevitable."

While some money managers are critical of a strategy that "sells fear," The FT reports there are others who share Mr Spitznagel's views that another reckoning is imminent.

Among those who share his wo ...

Ruble makes historic recovery

Traders should be able to admit, when they're wrong. As we explain in great detail in Splitting Pennies - there's nothing worse than a trader who takes great effort to explain reasons why he was wrong or why it wasn't in fact his fault, it was the market! (or some such nonsense). Such severe psychological factors is the reason that many traders opt for algorithm developement.

EES provides analysis of the markets in general, in addition to actual robot algorithms for clients to trade and use. We rarely will make a call on the market, but this situation in Russia was really unique. Anyway, we were wrong. The trade was right, but our timing was off. We suggested to sell USD/RUB pair in December, here. We watched in surprise as the 70 level broke to 72, to 73, and higher. In Forex this move is unheard of in majors. The question in this trade is - is the Ruble a major - or an exotic? Finally, USD/RUB hit 86, before retreating to it's current level, around 64. We were stopped out around 74, with great pain (we had a huge position in relation to our account). Take a look at USD/RUB chart:

For those who do not actively trade Forex, the above chart is US Dollar vs. Ruble so that means if this chart is going up, dollar is up and ruble is down.

Investors who were short USD/RUB were squeezed out in January. There are a few differences about trading this pair that don't apply to other currencies. One, margin/leverage is a little different, a little lower. Depending on your bank/broker, it can be as low as 10:1, or 20:1 as opposed to other pairs that have much higher l ...

Biotech M&A: Pfizer Bets on Growth

Pfizer's purchase of Anacor shows the biotech M&A window is still open.

Why Savings Alone Won't Save Telecom Italia

Cutting costs may buy Telecom Italia time, but don't address the company's core problem: new competitors.

How Mortgages Could Keep This Central Bank in Check

U.K. house prices are back beyond precrisis levels and debt is high, that risks another shock

The Money Makers: The inventor of the 401(k) says he created a 'monster'

Ted Benna helped turn a little-noticed new subsection of the tax code into the least likely of household names: the 401(k).

In One Chart: The reason for low Treasury yields may not be what you think

Treasury yields have remained stubbornly low so far this year even as global equity markets have recovered from the massive selloff seen in the early weeks of 2016 "causing some to speculate that the concerns about sluggish global growth that triggered the drop haven't entirely disappeared.

Market Snapshot: Energy and tech shares lead U.S. stock rally

U.S. stocks rose solidly on Monday, rebounding after three straight weeks of declines, as a surge in oil prices and a rally in tech stocks overshadowed weaker-than-expected manufacturing data from the New York region.

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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