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01Feb2017 Market Update: Wall Street Flat And Mixed And Awaiting Reaction From The Fed's Decision On Interest Rates, Crude Price Lower And Volatile

Written by Gary

US markets have slipped off the morning opening highs to a mixed and nearly flat status (SPY -0.06%) reflecting yesterday's close. The S&P 500 slipped into the red and the Dow pared gains in late morning trade led by losses in energy and utilities sectors, ahead of the Federal Reserve's decision on interest rates.


Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 0.45%, while the IPC is leading the S&P 500 lower. They are down 0.09% and 0.08% respectively.

Traders Corner - Health of the Market

There will be "trouble for equity markets" if the yield on the 10-year U.S. Treasury note moves beyond 3%, warned Jeffrey Gundlach, while another bond king stated 2.6% was the key level to watch.

According to Bill Gross, the number is much more important than Dow 20K, the price of oil or dollar strength, as it would signal a bear bond market. The 10-year yield last stood at 2.38%.

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 64%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 51%
Investors Intelligence sets the breath Above 50 bullish 68%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -7.48
StockChart.com NYSE % of stocks above 200 DMA Index ($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 ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 71%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 25.00
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 84.64
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,187

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.

U.S. factory activity hits two-year high; private payrolls surge

WASHINGTON (Reuters) - U.S. factory activity accelerated to more than a two-year high in January amid sustained increases in new orders and raw material costs, pointing to a recovery in manufacturing as domestic demand strengthens and the drag from low oil prices ebbs.

Wall St. pares gains as energy, utilities drag

(Reuters) - The S&P 500 slipped into the red and the Dow pared gains in late morning trade on Wednesday, led by losses in energy and utilities sectors, ahead of the Federal Reserve's decision on interest rates.

VW, Robert Bosch agree to pay $1.55 billion to settle U.S. diesel claims

WASHINGTON (Reuters) - Volkswagen AG has agreed to pay at least $1.22 billion to fix or buy back nearly 80,000 polluting U.S. 3.0 liter diesel-engine vehicles to settle claims it fitted illegal emissions-cheating software to the cars, court documents showed.

New York sues Charter, alleges Time Warner fraud on internet speeds

NEW YORK (Reuters) - New York filed a lawsuit on Wednesday accusing Charter Communications Inc of short-changing customers who were promised faster internet speeds than it could deliver.

Tesla drops 'Motors' from name as CEO Musk looks beyond cars

(Reuters) - Tesla Motors Inc changed its name to "Tesla Inc" as Chief Executive Elon Musk looks to transform the Silicon Valley firm from an electric car maker to a diversified energy products company.

U.S. appeals court revives JPMorgan silver futures rigging lawsuits

NEW YORK (Reuters) - A U.S. appeals court on Wednesday revived three private antitrust lawsuits accusing JPMorgan Chase & Co of rigging a market for silver futures contracts traded on COMEX.

Strong iPhone 7 sales 'a bridge' to Apple's next upgrade

(Reuters) - "Things don't have to change the world to be important," Apple Inc co-founder Steve Jobs said in an interview in 1996.

U.S. car, truck sales downshift in January; Toyota falls 11 percent

DETROIT (Reuters) - The pace of U.S. car and light truck sales downshifted modestly in January as automakers pulled back on bulk sales to rental, government and business fleets and concentrated on more profitable retail sales to individual consumers.

Anthem considering role in Obamacare insurance in 2018

(Reuters) - Health insurer Anthem Inc on Wednesday said it expected to break even or make a small profit in the Obamacare individual market in 2017 even as it considers pulling out of that business next year.

The Triumph Of The Technocrats

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

We cannot advance until we dump the Technocrat Class and decentralize the power that the Liberal Establishment happily concentrated into the hands of corporate cartels and the central state.

Those who don't yet understand our centrally-planned cartel-state system will benefit from reading How Democrats Killed Their Populist Soul (The Atlantic). I've presented related analyses in three recent essays:

The Protected, Privileged Establishment vs. The Working Class

The Collapse of the Left

25 Years of Neocon-Neoliberalism: Great for the Top 5%, A Disaster for Everyone Else

What we're talking about here is the Triumph of the Technocrats. There are multiple levels to this triumph of the technocrat class:

1. The dumbing down of the Technocrat Class via a Higher Education system that optimizes technocrat specialization at the expense of real-world business experience and broad-based knowledge.

As a result, the technocrat class has a very high opinion of its intelligence and judgment because it has no idea how little it actually knows or understands. It believes Higher Education's hype that specialization has given it a superior understanding that entitles it to control and power.

This overweening belief in its own superiority sets the stage for hubris and catastrophically ungrounded decisions. ...

What To Expect From Today's Fed Rate Decision

Despite today's unexpectedly strong ADP and ISM report, which however followed a disappointing Q4 GDP print, the FOMC meeting at 2pm should be largely uneventful. The Federal Reserve, which won't have seen Friday's payroll report yet, will only release its statement without a press conference or Summary of Economic Projections. This offers market participants less information to digest and react to, and therefore consensus expects no change from the Fed.

A quick reminder on what has happened in markets since the Fed's latest, and only second in the past decade, rate hike which has seen the yield curve has flatten:

While gold has been the best performing asset class:

Although the odds of a move at this meeting are small, March is still a possibility with futures pricing in around a 15% chance of a 25bps hike.

Odds are slim as there is still a great deal of uncertainty surrounding the new President and his policies and the USD has been volatile as a result. In light of Fed rhetoric on the subject however, the Fed is not expected to give commentary to how, if at all, the potential Trump stimulus will affect the course of monetary policy.

The median FOMC participant is expected to still call for three hikes this year, a ...

Trump Tells McConnell "Go Nuclear" If You Have To

Donald Trump has made his first comments since nominating Judge Gorsuch for The Supreme Court, stating that "I don't know how anyone can opposed Gorsuch" warning that if Congress ends up in gridlock, he would tell Majority leader Mitch McConnell to "go nuclear" - referring to a rule change enabling a simple majority to confirm his picks.

President Trump to Mitch McConnell: "Go nuclear" if SCOTUS pick doesn't clear 60 votes https://t.co/uYLDrtBh3k https://t.co/IOlYQ4XMyW

— CNN (@CNN) February 1, 2017

"He's pefect in almost every way"...

"He's perfect in almost every way": Trump meets with SCOTUS groups day after Gorsuch pick https://t.co/3H8HckvhLB https://t.co/QVQ1aiHwIq

— CNN (@CNN) February 1, 2017

As a reminder, the "nuclear option" refers to a move by the majority party in Senate — in this case the Democrats — to change the Senate rules to allow most executive branch and judicial nominations to be approved with a simple majority - 51 votes — rather than the 60 votes now required. Under longstanding rules, the minority party has been able to block a nomination with just 41 votes, commonly called a filibuster.

"I want Gorsuch to go through an elegant process, as opposed to a demeaning process... of course the press can be very demeaning too, so..."

Russia Denies Shooting at Ukrainian Military Plane In Black Sea

With the US State Department in a state of protracted hiatus for the time being, tensions are again rising between Russia and Ukraine, and especially in East Ukraine, where over the past few days the number of soldiers killed in an offensive by pro-Russian separatists has reportedly risen to seven, Ukraine's military said on Monday, in the deadliest outbreak of fighting in the east of the country since mid-December.

The clashes between Ukraine's military and the pro-Russian separatists coincide with U.S. President Donald Trump's call for better relations with Moscow that has alarmed Kiev while the conflict in its eastern region remains unresolved. According to Ukraine sources, the rebels began attacking government positions in the eastern frontline town of Avdiyivka on Sunday. Five soldiers were killed and nine wounded on Sunday and two more were killed on Monday, they said.

"The situation in the Avdiyivka industrial zone is challenging. The enemy continues to fire at our positions with heavy artillery and mortars," Ukrainian military spokesman Oleksandr Motuzyanyk told a regular daily briefing. Naturally, since the media on both sides is clearly biased in its coverage, it came as no surprise that both local separatists news agencies, and Russia, denied escalation had occurred.

In the meantime, it appears that whether real or fabricated, the push to escalate another conflict is building, and on Wednesday, the Ukrainian Defense Ministry said that a Ukrainian An-26 transport plane came under rifle fire from a Russian drilling rig while flying near the Odessa gas field in the Black Sea. The plane was allegedly involved in drill over Black Sea, and was flying in Ukrainian air space.

"A Ukrainian transport plane came under fire today while flying over the Ukrainian maritime economic zone during a training mission. The crew members were not injured," Ukrainian Defense Minister Stepan Poltorak reported to President Petro Poroshenko as cited ...

As World Economies Expand Together, How Long Can It Last?

Global growth has been unusual lately. It has been surprisingly global—without a major malfunction in a really big economy. This is welcome news for investors, but the balance is also a fragile one.

Apple: Betting on Tomorrow's iPhone Today

Hopes for the next 'supercycle' pose risks, but Apple's low valuation limits its downside.

Looming Financial Crunch of Post-Brexit Britain

The U.K. could lose a chunk of European banking revenues quickly — that could hurt the country as much as its banks.

December 2016 Construction Spending Growth Declined

Written by Steven Hansen

The headlines say construction spending was down, and was below expectations. Consider this a weaker report than last month.

January 2017 ISM Manufacturing Survey Improved

Written by Steven Hansen

The ISM Manufacturing survey improved and remained in expansion. The key internals remain mixed but improved. The Markit PMI manufacturing Index, also released today, is in positive territory and improved.

The Margin: Apple trader loses massive bet... or did he?

Either it was an elaborate ruse perfectly crafted for the fake news age, or there's some furry Canadian out there licking his wounds after getting caught on the wrong side of an extremely ill-timed Apple trade.

Is this the most unhealthy state in America?

Gallup quizzed nearly 180,000 people across all 50 states about their lifestyles.

Earnings Outlook: Amazon earnings: Record holiday sales to take center stage

Amazon earnings, due after the bell on Thursday, are expected to show strong holiday-sales growth.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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