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11Aug2016 Market Update: Wall Street Climbs Higher, WTI Crude Rises Solidly Off 40 Handle Support, Indicators Shift To Bullish And Gold Loses Ground

Written by Gary

Wall Street climbed higher as the Dow touched a record intraday high as strong results from department store chains and a surge in oil prices buoyed investor sentiment. Oil prices jumped 5 percent on comments from the Saudi oil minister most traders remain skeptical of the outcome.


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 1.59% while Mexico's IPC is up 1.05% and U.S.'s S&P 500 is up 0.52%.

Saudi Energy Minister Khalid al-Falih said OPEC members and non-members would discuss the market situation, including any action that may be required to stabilize prices, during an informal meeting on Sept. 26-28 in Algeria.

However, most traders remain skeptical of the outcome, expecting a repeat of the Doha meeting in April when talks fell through after Saudi Arabia backed out, citing Iran's refusal to join in a so-called production freeze.

"As long as oil holds $40, we should be at the bottom," Phil Flynn, senior energy analyst at Price Futures Group said.

"The failure to follow through on bear market closes suggest we are near the low."

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 75%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 78%
Investors Intelligence sets the breath Above 50 bullish 66%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -14.27
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
8/5%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 70%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 76%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 15.56
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 81.93
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,837

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. labor market firming; inflation remains benign

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits fell last week, pointing to sustained labor market strength in early August that could help spur faster economic growth.

Strong earnings, surge in oil power Dow to record high

(Reuters) - The Dow touched a record intraday high on Thursday afternoon as strong results from department store chains and a surge in oil prices buoyed investor sentiment about economic growth.

Oil up 5 percent as Saudis mull meeting, tighter market forecast

NEW YORK (Reuters) - Oil prices rose about 5 percent on Thursday after comments from the Saudi oil minister about possible action to stabilize prices triggered a round of buying and the International Energy Agency forecast crude markets would tighten in the second half of 2016.

Keyless systems of many VW Group cars can be hacked: researchers

FRANKFURT (Reuters) - Tens of millions of vehicles sold by Volkswagen AG over the past 20 years, and some current models, are vulnerable to theft because keyless entry systems can be hacked using cheap technical devices, according to European researchers.

Macy's to close another 100 stores; stock jumps

(Reuters) - Macy's Inc said it plans to close another 100 stores, or 14 percent of the total, as it seeks to turn around its business after six quarters of falling sales, sending its shares soaring.

General Mills must face lawsuit over Cheerios Protein marketing

(Reuters) - A federal judge has ruled that General Mills Inc must face a lawsuit claiming it tricked consumers by marketing Cheerios Protein as a high-protein alternative to regular Cheerios, when the main difference was that it contained 17 times more sugar per serving.

Valeant stock falls as report of criminal probe adds to woes

NEW YORK (Reuters) - Valeant Pharmaceuticals International Inc shares fell about 10 percent on Thursday as new details about a criminal investigation into the drugmaker raised investor concerns about risks related to the company's past business practices.

U.S. import prices unexpectedly rise in July

WASHINGTON, Aug 11 (Reuters) - U.S. import prices unexpectedly rose in July as a drop in petroleum prices was offset by gains in the cost of other goods, but renewed dollar strength will likely dampen underlying inflation in the coming months.

Kohl's quarterly profit beats estimates; shares rise

(Reuters) - Kohl's Corp reported a higher-than-expected quarterly profit, helped by better inventory management and warm weather that boosted sales of summer clothes and accessories.

Hillary Clinton Explains How Much Better Her Economic Plan Is Than Trump's (And Obama's) - Live Feed

According to the mainstream media, this should be a "no-brainer." Trump's economic plan would mean depression, fire, and brimstone with massive job losses and, in general, all the worst parts of the bible for America. However, Hillary Clinton's plan will 'fix' everything - more jobs, lower taxes (apart from for those nasty middle-class Americans), better economic growth, and ponies and unicorns for everyone (except the wealthy, they can buy their own unicorn). The farce of campaign promises is getting almost too much to bear as we wonder, if Hillary has all these brilliant ideas, then why did she not share them with President Obama - who just presided over the only term without a 3% growth year in the history of America.

As The Wall Street Journal reports, Hillary Clinton will dial up a line of attack on Donald Trump's economic proposals in a Thursday speech that casts his agenda as a crony giveaway that erodes his populist appeal, according to a campaign official familiar with the remarks.

The Democratic nominee's remarks will brand Mr. Trump's proposal to sharply reduce taxes on so-called pass-through entities, where business income is claimed ...

Average 30Y Auction Sees Solid Foreign Central Bank Support, Sliding Bid To Cover

While yesterday's 10Y auction was a stellar response to the woeful July showing, today's 30Y left a little to be desired. While today's issue of $15 billion in 30Y paper did print at a high yield of 2.274%, or stopping through the 2.277% by 3 bps, the internals were less favorable.

The Bid to Cover of 2.236 dipped from last month's 2.485%, and was lower than the 6M trailing average of 2.32. Perhaps the most important metric, Indirect bidders, took down 61.5%, also down from last month's 68.5%, and below the 6MMA of 62.9%. With Indirects less excited to take down ultra-dated paper, the Direct take down was modestly higher than July, coming at 10.9%, compared to 8.4% last month, leaving some 27.7% for Dealers, in line with the 6 month average, and higher than last month's 23.1%.

As Stone McCarthy puts it, "we had some concerns bout demand for the 30-year bond auction this afternoon, but it actually wound up going well. The auction stopped a hair through the 1:00 PM bid side and the bid/cover was in line with the average of the four Refunding bond auctions over the prior year. The buyside takedown figures were also good. Indirect bidders took down 61.5% of the auction, and Direct bidders took down 10.9% of the auction."

In short, a less than notable auction, and certainly weaker than yesterday's benchmark issuance, suggesting the pressure in the coming days may be toward more steepening as foreign Central Banks seem to be less excited by the longest tenor on the curve.

Iraq's Deal With Oil Majors Could Crush OPEC's Output Freeze Plans

Submitted by Tsvetana Paraskova via OilPrice.com,

Iraq and oil majors BP, Shell, and Lukoil have agreed to resume investments in oil fields the foreign groups are developing, which is expected to raise the country's crude output by 250,000-350,000 barrels per day in 2017, Reuters reported on Thursday, quoting Iraqi officials - a move that has the potential to aggravate the supply glut and muddy the waters of the additional OPEC meeting in September, which some were glass-half-fulling might end with a production cap of some sort.

[Of course, why worry... all you need in this market is a meaningless, vacuous headline to spark panic-buying...]

The recently reached accords actually push projects that the companies had originally planned for the first half of 2016 to the second half. The projects had been previously put on hold due to the low crude prices.

BP, Shell and Lukoil have agreed to spend in the second half this year around half the budgets they had planned for 2015, Reuters said, citing documents it has seen. BP will be spending US$1.8 billion at the Rumaila field, Shell will spend US$742 million, and Lukoil - US$1.08 billion.

"Many vital projects that foreign firms were forced to halt due to lower oil prices will be brought online after the recent budget cuts agreements," Basim Abdul Kareem, the deputy chairman of South O ...

Worries Persist Amid Strong Performance at Alibaba

Alibaba posted its best quarter since going public but spending on pet projects caused big losses for the Chinese e-commerce company.

Why Luxury Groups Shouldn't Rule Out Store Closures

Plans to improve the sales performance of luxury stores sit uneasily with the rapid growth of e-commerce.

Biotech's Resurgence May Cost Big Pharma

An increase in biotech stocks complicates deals and raises risks for would-be acquirers.

Market Snapshot: Stocks on track for new records as Macy's soars, oil rebounds

U.S. stocks inch higher Thursday as better-than-expected economic data and a rebound in oil prices boosted sentiment among Wall Street investors.

Tesla's Autopilot lost in translation in China

A translation decision may have backfired on Tesla Motors.

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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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