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10Jan2017 Market Update: US Stock Markets Recover From Morning Losses To A Moderate Gain, Crude Losses Continue To Mount, Volume Levels Are Headed To Anemic Status

Written by Gary

Wall Street climbed out of the morning opening doldrums to post moderate gains (SPY +0.3%). Crude prices have fallen further into the low $51's, while the US dollar and gold remain stable.


Here is the current market situation from CNN Money

North and South American markets are higher today with shares in Brazil leading the region. The Bovespa is up 0.66% while Mexico's IPC is up 0.48% and U.S.'s S&P 500 is up 0.30%.

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 62%
Investors Intelligence sets the breath Above 50 bullish

67%

StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +1.23
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
79%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 72%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 74%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 23.79
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 83.71
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,219

What Is Moving the Markets

Here are the headlines moving the markets.

Nasdaq hits record, S&P and Dow close in as banks gain

(Reuters) - The Nasdaq hit a record intraday high on Tuesday, extending its bullish run as healthcare stocks rose for the sixth straight session, while a jump in banks boost the S&P 500 and the Dow.

Xi to be first Chinese leader to attend Davos World Economic Forum

BEIJING/GENEVA (Reuters) - President Xi Jinping this month will become the first Chinese head of state to attend the World Economic Forum (WEF) in Davos, which this year will dwell on the rising public anger with globalization and the coming U.S. presidency of Donald Trump.

Yahoo to be named Altaba, Mayer to leave board after Verizon deal

(Reuters) - Yahoo Inc said Monday that it would rename itself Altaba Inc and Chief Executive Officer Marissa Mayer would step down from the board after the closing of its deal with Verizon Communications Inc.

VW board to meet Wednesday to approve U.S. diesel accord: sources

(Reuters) - Volkswagen's supervisory board will meet on Wednesday to approve a civil and criminal settlement with the U.S. Justice Department over the carmaker's diesel emissions scandal that will include a penalty of about $4 billion, sources briefed on the matter said.

Boeing joins group lobbying to keep $8.7 billion in tax breaks

SEATTLE (Reuters) - Boeing Co has joined a new coalition lobbying to preserve $8.7 billion in tax breaks that Washington state gave its aerospace industry in 2013, the group said.

Citi downgrades Goldman Sachs to 'sell' on valuation

(Reuters) - Citigroup downgraded Goldman Sachs Group Inc to "sell" citing valuation, sending its stock down as much as 1.6 percent and making it the biggest drag on the Dow Jones Industrial Average .

U.S. crude output for 2018 to rise by 300,000 bpd: EIA

NEW YORK (Reuters) - The U.S. Energy Information Administration expects U.S. crude oil production in 2018 to rise by 300,000 barrels per day (bpd) year-on-year, according to its monthly short term energy outlook released on Tuesday.

EU privacy proposal could dent Facebook, Gmail ad revenue

BRUSSELS (Reuters) - Online messaging services such as WhatsApp , iMessage and Gmail will face tough rules on how they can track users under a proposal presented by the European Union executive on Tuesday which may hit advertising revenue.

Coty to buy majority stake in Younique for about $600 million

(Reuters) - Beauty products maker Coty Inc said it would buy a 60 percent stake in privately held online cosmetics retailer Younique LLC for about $600 million as it reduces its dependence on its ailing fragrance business.

2017 Auctions Kick Off With Strong Showing By 3 Year Paper Courtesy Of Short Squeeze

Ahead of today's 3Y auction, the first coupon auction of the year, much of the curve was trading normal in repo, with the only notable pressure as expected on the 3-year, which was trading special at -0.50% for On The Run issues, suggesting there could be a modest upside surprise in today's auction.

Which is why it was not a surprise that with courtesy of the sizable short overhang coming into 1pm, today's sale of $24 billion in 3Y paper printed stronger than expected, coming in at a high yield of 1.472%, stopping through the When Issued by 0.6 bps, and 2 bps higher than the December 3Y auction of 1.452%.

The internals came in strong than expected as well, with the Bid to Cover printing at 2.968, a big jump from last month's 2.653, and the highest since December 2015. Indirect Bidders received 54.6% of the takedown, the above last month's low 42.6%, and the highest since September 2016; Directs were left holding 6.6% which meant 38.8% went to Dealers, the lowest since October.

Overall, an uneventful auction ahead of tomorrow's 10Y which will likely be watched much closer.

The Extraordinary Size Of Amazon In One Chart

What has more value: all major publicly traded department stores in the United States, or Amazon?

As Visual Capitalist's Jeff Desjardins illustrates, Amazon takes the cake, and its no contest.

Add together the market caps of Walmart, Target, Best Buy, Nordstrom, Kohl's, JCPenney, Sears, and Macy's, and they amount to a significant $297.8 billion.

However, it's not enough to beat the Amazon machine.

The online retailer alone is worth $356 billion, making it one of the largest companies by market capitalization in the world.

Courtesy of: Visual Capitalist THE DEATH OF TRADITIONAL RETAIL

Ten years ago, the future of brick and mortar retail sill looked bright. The aforementioned retailers were worth a collective $400 billion, and Amazon was only valued at $17.5 billion.

But disruption often comes without warning. Or if there were warning signs, they went unheeded by retailers.

Big box and department store sales plummeted, as consumers increasingly went online to do their shopping. This year, it is estimated that revenues are equal to just 62% of their totals in 2006:

Richmond Fed's "Uber-Hawkish" President Jeffrey Lacker To Retire

Just three months after Atlanta Fed president Dennis Lockhart announced he would step down as president effective February 28, moments ago another (non-voting) FOMC member, the uber-hawkish president of the Richmond Fed, Jeffrey Lacker, 61, also decided to call it quits as well, and on Tuesday said he will retire as president and chief executive officer of the Federal Reserve Bank of Richmond on Oct. 1, after 28 years at the Richmond Bank.

"It's been an honor to serve the Federal Reserve," Lacker said. "I feel fortunate to have spent time throughout the Fifth District learning first-hand about people's economic experiences, and to have participated in some of the most extraordinary policy deliberations in our nation's history. It's been my deepest privilege to lead the Richmond Fed and the dedicated people who work here."

Lacker joined the Richmond Fed in 1989, where he served in various positions prior to his appointment as president in August 2004. Previously, Lacker was an assistant professor of economics at Purdue University, and also previously worked at Wharton in Philadelphia.

Continuing his hawkish ways, Lacker, who is not a policy voter in 2017, on Friday said that recent data supports further Fed rate hikes, when he said that improvement in inflation compensation measures, strong employment growth, and possible fiscal stimulus support case for higher rates.

"Improvement in measures of inflation compensation were underway well before the election," he says in prepared remarks at a speech in Baltmore last Friday, adding that the "Fed's interest rate target is exceptionally low. Upward adjustment is needed" He also cautioned that "monetary policy rates are likely to increase, and my view is that they may need to increase more briskly than markets appear to expect, depend ...

Top Five Monetary Policy Issues To Watch In 2017

Submitted by Paul-Martin Foss via The Mises Institute,

With a new year come new opportunities as well as new issues to take into consideration. Here are the five most important issues to keep an eye on in 2017.

1. Trump Presidency

The most important issue facing monetary policy, at least in the United States, will be the incoming Trump Administration. The Federal Reserve Board of Governors is currently operating with two vacancies and has been for quite a while. With majorities in both the House and Senate, it is highly likely that President Trump will be able to successfully nominate two candidates to the Board. Depending on who he picks, that could put additional pressure on Chairman Janet Yellen to continue to raise the federal funds target rate throughout 2017.

2. Ongoing Weakness in Europe

The PIIGS are returning. The Greek debt crisis is still unresolved, the Italian banking sector is weakening with Monte dei Paschi likely facing a bailout this year, and Portugal is showing signs of a weakening banking sector. Add to that the difficulties continuing to face Deutsche Bank and 2017 could be a perfect storm facing the Eurozone banking sector. The big question then would be to what extent bank failures and bailouts in Europe would cause spillover effects in the United States and worldwide.

3. China Is Still a Wild Card

While the yuan continues its march towards becoming a global reserve currency, the Chinese economy faces continued difficulty and slowing growth. Private sector debt loads are high, the insurance and banking sectors are built on matchsticks, and the government is beginning to sell off some of its foreign exchange reserves to defend the yuan. 2017 could be a very interesting year for C ...

U.S. Car Industry Has Unlikely Patriots

Tesla and the German luxury car makers can better afford U.S. manufacturing than the Detroit Three.

Alibaba Is Better at Selling Than Buying

Chinese e-commerce giant Alibaba says it will pay up to $2.6 billion, a 42% premium, to raise its stake in department-store operator Intime Retail. It's no bargain.

'Take Your Medicine' Is Big Pharma's Best Prescription

Adherence, or improving patient's ability to stick with doctor's orders, marks an area of opportunity for drug companies.

November 2016 JOLTS Job Openings Rate Continues to Show Insignificant Year-over-Year Growth

Written by Steven Hansen

The BLS Job Openings and Labor Turnover Survey (JOLTS) can be used as a predictor of future jobs growth, and the predictive elements show that the year-over-year growth rate of unadjusted private non-farm job openings again were insignificantly changed from last month.

The Tell: Stock-market bulls may get scorched by 'Icarus trade' in 2017

Stocks may have further to run in the first half of 2017, but bulls run the risk of getting scorched over the longer term warns Bank of America Merrill Lynch.

Market Extra: As yields rise, sun may be setting on dividend-ETF rally

Despite a pick-up in dividend activity in the fourth quarter, exchange-traded funds dedicated to high-yielding companies underperformed the broader market in the final three months of the year, while some of the largest such funds suffered outflows.

The Fed: Lacker, head of Richmond Fed and leading hawk, to retire

Richmond Fed President Jeffrey Lacker, one of the most vocal hawks on the U.S. central bank, announced Tuesday that he will retire in October.

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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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