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12Jul2016 Market Update: SP 500 Climbs To New Historic Highs, Crude Prices Still Melting Upwards, US Dollar Trading Mostly Sideways

Written by Gary

The SP 500 and the Dow hit record new historic highs today, while the Nasdaq turned positive for the first time this year, buoyed by rising prospects of global economic health and with Alcoa getting the U.S. earnings season off to a promising start. St. Louis Fed President James Bullard said the central bank may need only a single rate hike for years to come.

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 1.05% while U.S.'s S&P 500 is up 0.78% and Mexico's IPC is up 0.60%.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 72%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 88%
Investors Intelligence sets the breath Above 50 bullish 59% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 55.4 NYSE % of stocks above 200 DMA Index ($OEXA200R) $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%. Following a major market correction, the conditions for safe re-entry are when:
a) Daily $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
73% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 65% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 68% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 15.00 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 81.55 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,744

What Is Moving the Markets

Here are the headlines moving the markets.

S&P, Dow at record highs; Nasdaq turns positive for 2016

(Reuters) - The S&P 500 and the Dow hit record intraday highs on Tuesday, while the Nasdaq turned positive for the first time this year, buoyed by rising prospects of global economic health and with Alcoa getting the U.S. earnings season off to a promising start.

IMF says sees 'negligible' Brexit impact on U.S. growth

WASHINGTON (Reuters) - Britain's referendum on leaving the European Union has caused uncertainty and increased risks to the U.S. economy, but thus far it looks likely to have a pretty "negligible" impact on U.S. growth, the International Monetary Fund said on Tuesday.

Tesla has no plans to disable Autopilot feature: WSJ

(Reuters) - Tesla Motors Inc Chief Executive Elon Musk said the electric car maker has no plans to disable its Autopilot feature in the wake of a fatal accident in which the driver of a Model S car was using the technology, the Wall Street Journal reported.

U.S. business wants slow Brexit, investment to dry up: lobby

ISTANBUL (Reuters) - U.S. businesses, Britain's biggest foreign investors, largely factored in the vote to leave the European Union and now want to see exit talks progress slowly, a top executive at the U.S. Chamber of Commerce said.

Fed's Bullard sticks with single U.S. interest rate hike view

ST. LOUIS (Reuters) - The Federal Reserve should be in no rush to raise U.S. interest rates despite a surge in June hiring, St. Louis Fed President James Bullard said on Tuesday, sticking with his view that the central bank may need only a single rate hike for years to come.

EU watchdog calls for tighter rules as Barroso takes Goldman job

BRUSSELS (Reuters) - The European Ombudsman called on Tuesday for the EU to tighten rules on commissioners taking appointments on leaving office after former chief executive Jose Manuel Barroso moved to a senior job at Goldman Sachs.

Exclusive: Japan government to cut inflation forecasts, gloomier on outlook than BOJ

TOKYO (Reuters) - Japan's government is expected to cut its consumer inflation forecast for the current fiscal year and produce an estimate for fiscal 2017 that is much lower than the central bank's 2 percent target, government sources told Reuters on Tuesday.

Ex-Barclays director pleads guilty in U.S. to passing tips to plumber

NEW YORK (Reuters) - A former director at Barclays Plc pleaded guilty on Tuesday to U.S. charges that he engaged in insider trading by tipping off a plumber friend to impending mergers that he learned about at the bank.

Global stocks outlook dims with risk aversion on the rise again: Reuters poll

LONDON/BENGALURU (Reuters) - Optimism about stock market performance this year has wilted, with investors fretting about the global economy and unexpected shocks likely to condemn most key indices to a weaker performance than thought just a few months ago.

Dreadful 10 Year Auction: Massive Tail, Plunging Bid to Cover, Fleeing Foreign Bidders

It has been years since we have seen as dreadful a 10 Year auction as the just concluded sale of $20 billion in 10 Year paper.

With a high yield of 1.516%, the 10Y auction tailed a whopping 1.2bps to the When Issued, the biggest tail going back years.

Things got even worse when looking at the crashing Bid to Cover, which plunged from 2.70 just a month ago to a paltry 2.33, was the lowest since March of 2009.

The internals were likewise a disaster: the Indirect Bidders, after constantly soaking up 10Y paper over for the past 2 years, simply fled, taking down just 54.3% of the final allottment, down from 73.6% last month. And with Directs likewise barely budging, and holding 7.9% of the final proceeds, it meant Primary Dealers had to step up big time and purchase a whopping 37.7%, after taking down a modest 21.9% on average in the past 6 month: the highest Dealer award since January 2015.

In short: we called it dreadful, Stone McCarthy used "atrocious", and indeed this auction marked a stunning reversal in demand for 10 Y paper. In fact, if demand for paper continues to evaporate at this rate, the US Treasury may have another problem on its hands: getting the Fed to start monetizing paper as soon as possible, i.e., QE4.

Why JPM Now Thinks The S&P 500 Is Promptly Headed For 2,200

The S&P 500 is less than 50 points away from 2,200. That number is notable: in addition to that being Goldman's year end price target - for 2017 that is - it also the combination of two important digits: 17 and 130, which are what JPM thinks are the PE and EPS bogeys that the market is currently aiming for. It is also why JPM's trading desk commentary now expects that the S&P500 will hit 2,200 in short notice.

From JPM's Intraday update:

Market update - more of the same for this market. The 17x/$130 argument continues to resonate (that combination of numbers points to 2200). It's still very, very early in the CQ2 season but the indications so are more positive than negative (AA, Daimler, PEP, Samsung, SIMO, STX, WDC, etc) and that is helping investors look past the earnings recession and is bolstering confidence in a ~$130 number for next year. In terms of macro news, there wasn't a lot out in the last 12-18 hours. On Fri stocks rallied b/c of low bond yields and this week they are extending those gains despite bond weakness (i.e. yields are higher). For the first time in a while there is genuine evidence of a rotation trade underway w/money moving out of safe-haven areas and into cyclical ones. Investors are hesitant to embrace this trend wholeheartedly given all the recent head fakes and ahead of a busy month of central bank meetings. However, while the BOE (7/14) and BOJ (7/29) are expected to ease, policy expectations in aggregate are prob. too dovish (the ECB and FOMC are likely pretty happy w/the post-Brexit market reaction and don't have any incentive to hint at further easing right now) and thus the risk for rates is for them to move higher in the coming weeks (which should help further a further safety vs. cyclic ...

Why Japanese Banks Shouldn't Be Anyone's Bargain

Much could still go wrong for Japanese banks.

Why This Bank Is at the Center of a Battle for Europe

Italy is at loggerheads with its European peers over how to shore up the country's struggling banks.

Brexit Isn't Only Reason Clothing Sales Are Out of Fashion

The rise of e-commerce and sportswear matter more to fashion chains than Brexit.

In One Chart: This common delusion can wreck your lifestyle in retirement

Why many baby boomers may struggle in retirement.

The Wall Street Journal: Citigroup to pay $7 million penalty over incomplete 'blue sheet' data

Citigroup agrees to pay $7 million and admit wrongdoing to settle SEC charges that it provided incomplete "blue sheet" data.

Market Snapshot: Dow, S&P 500 sprint to fresh records

U.S. stocks on Tuesday carve out fresh intraday all-time highs and still trade above their record closing highs, as a rise in oil prices and stronger-than-expected earnings from Alcoa Inc. bolstered sentiment.

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