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03Jan2017 Market Update: Wall Street Slides Down From Higher Opening, Crude Prices Higher, US Dollar Stronger And Investor Participation Not Yet At Full Strength

Written by Gary

US markets opened skyrocketing higher as a post-election rally extended into the new year, only to fade and slide down towards the unchanged line (SPY +0.3%). The Institute for Supply Management's gauge of factory activity rose to 54.7 from 53.2. Economists expected an increase to 53.6 for the month.


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 3.21% while Mexico's IPC is up 0.61% and U.S.'s S&P 500 is up 0.33%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 70%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 58%
Investors Intelligence sets the breath Above 50 bullish 67%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -8.89
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
73%
StockChart.com NYSE Bullish Percent Index ($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 ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 70%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 24.46
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 81.40
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,057

Looking at the last three columns, the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St. pares some gains as oil prices drop

(Reuters) - Wall Street rose on Tuesday as a post-election rally extended into the new year, but stocks pared some of their early gains after oil prices lost ground due to a strong dollar.

Ford cancels plan for $1.6 billion plant in Mexico after Trump criticism

FLAT ROCK, Mich./WASHINGTON (Reuters) - Ford Motor Co said Tuesday it will cancel a planned $1.6 billion factory in Mexico and will invest $700 million at a Michigan factory, after President-elect Donald Trump had harshly criticized the Mexico investment plan.

Trump assails GM over car production in Mexico, threatens tax

DETROIT/WASHINGTON (Reuters) - President-elect Donald Trump on Tuesday threatened to impose a "big border tax" on General Motors Co for making some of its Chevrolet Cruze compact cars in Mexico, an arrangement the largest U.S. automaker defended as part of its strategy to serve global customers, not sell them in the United States.

Intel to take 15 percent stake in mapping firm HERE: source

FRANKFURT (Reuters) - Chip maker Intel is to take a 15 percent stake in digital mapping firm HERE, a person familiar with the process told Reuters on Tuesday.

Oil business seen in strong position as Trump tackles tax reform

WASHINGTON (Reuters) - Big Oil could be in a unique position to protect its interests against a Republican proposal to tax imports, given that President-elect Donald Trump's cabinet is studded with oil champions sensitive to the risk of higher gasoline prices.

U.S. manufacturing, construction sectors shine as year ended

WASHINGTON (Reuters) - U.S. factory activity accelerated to a two-year high in December amid a surge in new orders and rapidly rising raw material prices, indicating that some of the drag on manufacturing from prolonged dollar strength and a slump in oil prices was fading.

Twitter's China boss Kathy Chen quits after eight months

NEW YORK/BEIJING (Reuters) - Twitter Inc executive Kathy Chen, brought in to run Greater China just over eight months ago, has quit, according to a tweet sent by her over the weekend.

EU regulators delay ChemChina/Syngenta merger decision to April 12

BRUSSELS (Reuters) - European Union antitrust regulators have extended the deadline for a decision on ChemChina's proposed buy of Swiss pesticides and seeds group Syngenta by 10 working days to April 12.

Icahn sweetens offer for Federal-Mogul for third time

(Reuters) - Billionaire Carl Icahn's investment firm, Icahn Enterprises LP , sweetened its offer for a third time to buy shares of Federal-Mogul Holdings Corp it does not already own.

Venture Capitalist Warns Of Government Backlash Against Google, Facebook 'Monopolies' In 2017

Submitted by Fred Wilson via AVC.com,

Here's what I expect to happen this year:

Trump will hit the ground running, cutting corporate and personal taxes, and eliminating the preferential treatment of carried interest capital gains. The stock market has already factored in these tax cuts so it won't be as big of a boon for investors as might be expected, but the seven and half year bull market run will be extended as a result of this tax cut stimulus before being halted by rising rates and/or some boneheaded move by President Trump which seems inevitable. We just don't know the timing of it. The loss of capital gains treatment on carried interest won't hurt professional investors too much because the lower personal tax rates will take the sting out of it. In addition, corporations will use the lower tax rates as an excuse to bring back massive amounts of capital that have been locked up overseas, producing a cash surplus that will result in an M&A boom. This will lead to an even more fuel to the fire that is causing "old line" corporations to acquire startups.

The IPO market, led by Snapchat, will be white hot. Look for entrepreneurs and the VCs that back them to have IPO fever in 2017. I expect we will see more tech IPOs in 2017 than we have since 2000.

The ad:tech market will go the way of search, social, and mobile as investors and entrepreneurs concede that Google and Facebook have won and everyone else has lost. It will be nearly impossible to raise money for an online advertising business in 2017. However, there will be new players, like Snapchat, and existing ones, like Twitter, that succeed by offering ...

How The Game Is Played In Financial Markets (Video)

By EconMatters

We provide some game training for the uninitiated regarding financial markets, fund flows via the currency crosses, to move assets around the trading board in this video. Be careful of rallies in markets, that you don`t become the sucker that is taken advantage of to profit take at your expense.

EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest |

JPM On Today's Sudden Intraday Reversal: "The Question Is Why Stocks Were So Strong To Begin With"

Confused by today's sudden intraday reversal in risk assets, which pulled the Dow Jones from up over 160 to barely in the green, while slamming Crude from up over 2% on the day to red?

You are not alone: as JPM's Adam Crisafulli opines in his intraday "market update" note, "the question isn't why stocks have come in from their highs but instead why they were so strong to begin with."

From JPMorgan:

Market update: The reflation trade was strong out of the gate but has reversed a decent amount heading into the afternoon - the question isn't why stocks have come in from their highs but instead why they were so strong to begin with.

In a lot of ways trading is similar to the last two weeks of Dec in that news is minimal while liquidity remains limited. The only major headlines over the last few days were manufacturing PMIs and while they were either inline (Eurozone, China NBS) or better-than-expected (US, UK, and China Caixin) none of the figures are dramatically altering the narrative around growth and the key for stocks over the coming weeks and months will remain US politics (specifically the progression of tax/regulatory reform and realization of Trump's trade agenda). Trump's GM tweet Tues morning didn't help sentiment although fits a pattern that is now several weeks old (he has tweeted on a variety of corporate matters since 11/8).

The bigger picture backdrop for US equities remains unchanged - the landscape doesn't seem favorable given th ...

Trump Rally Darkens Skies for All-Weather Portfolio

All-weather and risk-parity portfolios designed to produce smooth returns have hit a rough patch since the U.S. election.

Making Banks Safer Waits for Another Day

Global regulators have delayed an agreement over "Basel IV" bank-capital rules that would bring U.S. and European lenders closer together.

Peak Auto Sales Make 2017 a Waiting Game for Investors

U.S. car sales have stalled, leaving the automotive industry worryingly dependent on Chinese subsidies and crisis-prone Southern Europe.

November 2016 Construction Spending Improved Again

Written by Steven Hansen

The headlines say construction spending was up, and was above expectations. Consider this a very strong report.

MarketWatch First Take: Ford's Mexico shift shows Trump's bully pulpit has some value

There's going to be a tendency in the media to minimize the impact of soon-to-be President Trump, in part because he so readily takes credit for positive developments. But it's hard to deny that Trump is reshaping the business climate, even if it's fair to debate how radically.

Here's why Tesla is Baird's top stock-market pick for 2017

Analyst Ben Kallo is confident the company's energy business and Model 3 electric sedan will surpass expectations.

Financial tips for women getting a divorce

Separate all spousal property and accounts immediately

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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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