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24Jan2017 Market Update: Wall Street Enjoying A Very Positive Session, Trump Effect Pushing Back On Bearish Analysts

Written by Gary

The S&P 500 and the Dow were set for their best day in three weeks today (SPY +0.7%), powered by technology and bank stocks. Crude prices volatile and the US dollar remains in the low 100's.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Mexico leading the region. The IPC is up 1.83% while U.S.'s S&P 500 is up 0.72% and Brazil's Bovespa is up 0.34%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 67%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 50%
Investors Intelligence sets the breath Above 50 bullish 68%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -5.42
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
74%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 71%
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 24.49
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 84.38
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,217

What Is Moving the Markets

Here are the headlines moving the markets.

Trump urges U.S. automakers to make big push for new plants

WASHINGTON (Reuters) - U.S. President Donald Trump pushed the chief executives of General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV on Tuesday to increase production in the United States and boost American employment.

U.S. stocks rise as tech, bank stocks gain

(Reuters) - The S&P 500 and the Dow were set for their best day in three weeks on Tuesday, powered by technology and bank stocks.

Aetna, Humana to consider all options after court blocks merger

(Reuters) - Aetna and Humana would consider all available options for their proposed $34 billion merger, the two U.S. health insurers said on Tuesday, a day after a court ruled against the deal due to fears it would lower competition.

Toyota Motor to add 400 jobs at Indiana assembly plant

TOKYO/WASHINGTON (Reuters) - Toyota Motor Corp on Tuesday said it would add 400 jobs to build more SUVs at one of its U.S. plants, highlighting its expansion plans just as U.S. President Donald Trump calls on manufacturers to build more cars in the country.

SEC fines Citigroup, Morgan Stanley over forex trading program

(Reuters) - Citigroup Inc and Morgan Stanley each agreed to pay more than $2.96 million to settle charges they misled investors about a foreign exchange trading program they were selling, the U.S. Securities and Exchange Commission said on Tuesday.

U.S. trade commission to probe Nokia complaint against Apple

WASHINGTON (Reuters) - The U.S. International Trade Commission said on Tuesday it will investigate a complaint by Nokia Technologies alleging that Apple Inc has imported smart phones, tablet computers and other electronics that infringe upon its patents.

ECB should soon start discussing exit from stimulus: Lautenschlaeger

FRANKFURT (Reuters) - Preconditions for stable inflation in the euro zone are in place so the European Central Bank should soon start to discuss an exit from its stimulus program, Executive Board member Sabine Lautenschlaeger said on Tuesday.

Glencore eyes more Brazil mills after recent acquisition: sources

SAO PAULO (Reuters) - Swiss commodities trader Glencore Plc is considering additional sugar and ethanol mills takeovers in Brazil, where it recently bought a second plant, to ramp up operations in the world's No. 1 sugar producer, three people familiar with the plan said on Tuesday.

Vodafone wins German court victory over Telekom duct charges

BERLIN (Reuters) - Germany's highest federal court handed Vodafone a victory on Tuesday in a dispute with Deutsche Telekom over how the former state monopoly charges for the use of cable ducts, Vodafone said.

Sean Spicer's Second White House Press Briefing - Live Feed

After a bizarre first press briefing earlier this week in which Sean Spicer slammed the media for their obsession with Trump's inaugural crowd sizes, Spicer is set to take questions once again from an undoubtedly anxious press corps starting at 3:30PM EST. Although yesterday's briefing was somewhat more subdued, we suspect the press will be eager to pepper Spicer with questions regarding Trump's rapid-fire signing of several executive orders aimed squarely at dismantling key components of Obama's "legacy".

And while yesterday's breifing was somewhat more subued than his first, Spicer sent a clear message that White House Press Breifings going forward will be anything but "traditional" by calling on the New York Post and the Christian Broadcasting Network for his first questions.

Sean Spicer, the new White House press secretary, made it clear in his first official briefing that, like his boss, he would break with Washington precedents. After he stepped to the lectern yesterday and read a lengthy readout of the President's day—three Presidential memoranda signed and several meetings with corporate C.E.O.s, union officials, and congressional leaders—he called on his first news organization, the New York Post.

So it was no surprise when Spicer ignored the first row of correspondents from the major news wires and TV networks and selected the Post, whose correspondent inquired, "When will you guys commence the building of the border wall?"

From the Post, Spicer moved on to a reporter ...

2 Year Treasury Auction Stronger Than "Tailing" Headline Thanks To Surge In Foreign Demand

With no pressure in the repo market anywhere along the curve, there was little probability of a "surprise" squeeze into today's 2Y auction, and predictably, today's sale of 2 Year paper closed with a wide tail, printing at 1.21%, some 0.6bps wide of the When Issued 1.204%, which in turn was also well outside of the 1.176% yield the 2Y was trading at just ahead of the auction. This was below the 1.27% in December, but above the 1.085% in November and 0.92% 6 month average.

On the flipside, the internals were decidedly better with the Bid to Cover of 2.68 rising materially from December's 2.436, and just better than the 2.62 6 month average.

Finally, after a foreign buyer strike over the past 6 months which saw Indirect bidders under 40% and even under 30% in July and August, foreign central banks were back, taking down 48.8% of the auction, compared to just 32.7% last month and 33% on average in the prior 6 auctions. With directs taking down 9.3% this means that Dealer were left holding 41.2% of the auction, the lowest takedown by primary dealers since May 2016.

Overall, while nothing to write home about, today's auction was stronger than the "tailing" headline would suggest.

The Dollar And Rates Decouple For The First Time Since The Election

Perhaps reports of the Trumpflation rally's death have been somewhat exaggerated in the past few days. After RBC pointed out yesterday that equity generalists are "increasingly uncomfortable with reflation trades", this morning we have seen the latest violent inversion in this theme.

As RBC's Charlie McElligott points out, "after yesterday saw painful "stop-outs" by the leveraged-hordes of UST shorts as the USD came 'off' on account of what looks to me the ongoing concerns surrounding President Trump's ability to implement an alternative to a "border-adjusted" tax system, which had been a core driver of the Dollar's appreciation thesis, "today we see both US rates reversing higher again with overnight UST weakness following 1) ongoing +++ data trajectory (the strongest Japan Manu PMI print in nearly 3 years alongside the best aggregate Markit Eurozone Manu PMI in series history and another Markit US Manu PMI beat as well) and 2) some intrigue around the pro-reflation $1T Senate Democrat Infrastructure plan proposal. USH (Treasury Long Bond March fut) saw 8000 147/150 put spreads trade earlier, although it should be noted that we are seeing ongoing interest from TLT call buyers hedging for a short-squeeze on account of the significant short-base across UST futs and ED$."

As McElligott summarizes, "a glimpse at thematic equities today is like a glimpse back to the halcyon days of late Nov / early Dec, as 'cyc vs def,' 'inflation longs,' 'high beta' and 'value' factor all work, while 'low vol' and 'growth' suck wind."

Calexit: Record Number Of Californians Support Secession, New Poll Finds

According to a new Reuters / Ipsos poll, a record number of disaffected, Hillary-supporting Californians now support secession from the United States because they're just so "triggered" by Trump's victory. If successful, California would become the single largest "safe space" in the world.

Per the poll, 1 in every 3 Californians now support a "peaceful withdrawal from the union," which is a substantial increase from the 20% who favored such a withdrawal the last time a similar poll was conducted in 2014.

One in every three California residents supports the most populous U.S. state's peaceful withdrawal from the union, according to a new Reuters/Ipsos opinion poll, many of them Democrats strongly opposed to Trump's ascension to the country's highest office.

The 32 percent support rate is sharply higher than the last time the poll asked Californians about secession, in 2014, when one-in-five or 20 percent favored it around the time Scotland held its independence referendum and voted to remain in the United Kingdom.

California also far surpasses the national average favoring secession, which stood at 22 percent, down from 24 percent in 2014.

Of course, as most of the country made a shift to the right in November's election, California continued it's steady march to the left with Democrats now controlling a super-majority in both houses of the legislature.

As Reuters notes, many Cali residents felt triggered by Trump's promises to actually enforce immigration laws and repeal Obamacare with one Democrat consultant saying that "many citizens believe it would be smarter to leave than fight."

Verizon Can't Find the Next Big Thing

Verizon doesn't need to follow AT&T, but its earnings show it needs to chart a growth path away from wireless.

Trump Profit Boom? Executives Stay Mum

Investors and analysts are predicting strong profit growth under the new presidential administration but company executives are more cautious.

Bad Sign for Pharma in Blockbuster Category's Struggles

Blockbuster drug sales might be slowing down across the industry.

Richmond Fed Manufacturing Survey Improves In January 2017.

Of the three regional Federal Reserve surveys released to date, all are in expansion.

Market Extra: 'Godfather' of chart analysis says Trump rally has another 5% pop left

Prominent market technician Ralph Acampora thinks the stock market has more room to run over the near term, despite a trend that has seen the Dow steadily walk back from the psychologically significant level of 20,000.

Market Extra: Trump is building a wall of worry, and that might be good news for stocks

Should investors learn to love the uncertainty surrounding the dawning of the Trump administration?

Darrell Delamaide's Political Capital: There's a silver lining in the rocky, raucous inaugural weekend

Between the partisan excesses of the women's march and the petty obsessions of the Trump administration over crowd sizes, it's easy to get pessimistic. But Darrell Delamaide offers some reasons for hope.

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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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