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14Mar2017 Market Update: Wall Street Trading Mostly Sideways On Low Volume, WTI Crude Volatile In The 47 Handle

Written by Gary

US stocks drifted lower today (SPY -0.5%) as crude prices fell for the sixth straight day and investors held off from making big bets ahead of a widely expected interest rate hike.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in U.S. off the most. The S&P 500 is down 0.44% while Mexico's IPC is off 0.23% and Brazil's Bovespa is lower by 0.17%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 66%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 50%
Investors Intelligence sets the breath Above 50 bullish 66%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -44.61
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
87%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 67
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 77%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

25.91

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 87.02
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,449

What Is Moving the Markets

Here are the headlines moving the markets.

Ackman's Pershing Square sells Valeant stake, takes $3 billion loss

BOSTON (Reuters) - Billionaire investor William Ackman walked away from Valeant Pharmaceuticals International Inc on Monday with a loss of more than $3 billion as he sold his entire stake in the struggling drug company after trying to rescue it for some 18 months.

Snapchat 2017 ad revenue forecast trimmed to $770 million: eMarketer

(Reuters) - The 2017 advertising revenue forecast for Snap Inc's Snapchat has been trimmed by $30 million due to higher than expected revenue sharing with its partners, digital marketing firm eMarketer said in its latest ad spending forecast on Tuesday.

Neiman Marcus says exploring alternatives, including sale

(Reuters) - Luxury fashion retailer Neiman Marcus Group Ltd LLC [NMRCUS.UL] said on Tuesday it was exploring strategic alternatives, including a sale of the company.

Wall Street down as oil prices slide; Fed meet in focus

(Reuters) - U.S. stocks drifted lower on Tuesday as oil prices fell for the sixth straight day and investors held off from making big bets ahead of a widely expected interest rate hike.

Fed, in shift, may move to faster pace of rate hikes

SAN FRANCISCO/WASHINGTON (Reuters) - The Federal Reserve, which has struggled to stoke inflation since the financial crisis and up until now raised rates less frequently than it and markets expected, may be about to hit the accelerator on rate hikes.

Exclusive: Delta hires consultant to study refinery options - sources

NEW YORK (Reuters) - Delta Air Lines has hired a consultant to assess the impact on jet fuel prices if the carrier sells or closes the Philadelphia-area refinery it purchased five years ago to keep fuel affordable, two sources familiar with the process said.

Toshiba pushes sale of nuclear unit Westinghouse as crisis deepens

TOKYO (Reuters) - Toshiba Corp is 'actively considering' a sale and other strategic options for U.S. nuclear unit Westinghouse, the group said on Tuesday, as it expanded a probe into problems there that caused it to miss an earnings deadline for a second time.

Volkswagen CEO says not ruling out merger talks with Fiat Chrysler

WOLFSBURG, Germany (Reuters) - Volkswagen Chief Executive Matthias Mueller said he did not rule out he could hold merger talks with Fiat Chrysler boss Sergio Marchionne, in a marked change of tone by the German carmaker toward its Italian-American peer.

Activist hedge fund opposes Walt Disney's move on Disneyland Paris

LONDON/PARIS (Reuters) - An activist hedge fund has said it objects to plans by Walt Disney to take full control of debt-laden Paris theme park operator Euro Disney , according to a letter seen by Reuters.

Germany Set to Pass New Law to Punish Social Media Networks for Permitting Hate Speech to Exist

Taking a bold authoritarian step towards fighting online hate speech, Germany intends to pass a law that would fine social media outlets up to $53m for failing to delete hateful comments within a designated time frame.

Out of all the social media outlets, YouTube is the best at monitoring hate speech, with a 90% removal rate inside a week. Facebook was second at 39% and Twitter an abysmal last at just 1%.

Lots of hate happening on Twitter these days. Evidentially, something will have to be done about that.

"This (draft law) sets out binding standards for the way operators of social networks deal with complaints and obliges them to delete criminal content," Justice Minister Heiko Maas said in a statement announcing the planned legislation on Tuesday.

Germany tried to do this the nice way, proposing a pledge to jointly fight hate speech on the social networks back in 2015. Alas, the time for soft words and half measures is over. All those who do not conform to these rules shall be punished, severely.

In Germany, hate speech is taken very seriously, often doling out harsh fines and even prison sentences for holocaust deniers or inciting acrimony against minorities. But in the era of free online speech, Germany finds themselves lacking in the authoritarian department. God willing, these new laws will put an end to that.

The Central Council of Jews in Germany welcomed the new law.
"We do not want an internet police or thought control," the council's president, Josef Schuster, said. "But when hatred is stoked, and the legal norms in our democracy threaten to lose their relevance, then we need to intervene."

The new law mandates a code of conduct to be enforced, removing illegal material, repor ...

Not The Onion: "Fed Is Jeopardizing The Buy-The-Dip Trade", BofA Warns

Conceived several years ago, "buy the (fucking) dip" was a joke among traders seeking to explain the market's nearly-instant upward mean reversion, which as we have alleged since 2009, has been pushed higher by central bank policy and various HFT strats. Since then it has, sadly, become perhaps the only "explanation" for the behavior of the most bizarre market traders have ever encountered.

Luckily, the buy the dip quote-unquote "market" may be about to end, perhaps as soon as tomorrow, if Bank of America is right.

In a note titled "Reasons to increasingly fear, not love, the dip", BofA analyst Nitin Saksena writes that a "faster US rate hiking cycle jeopardizes the buy-the-dip trade."

His observations will be familiar to anyone who has tried to top-tick the S&P over the past 8 years, to short stocks, or to otherwise do anything besides "buy" (the dip):

Saksena writes that a "buy-the-dip mentality is dominating US equities as Fed put has become self-fulfilling. It has now been 104 trading days since the S&P 500 last fell by more than 1% (on a close-to-close basis), a stretch of calm in US equities not seen since 1995."

Not paraphrasing the Onion, BofA then goes on to say that "this extreme buy-the-dip mentality is helping crush equity volatility, with S&P 3M realized vol now at a meagre 6.6% and in the 3rd percentile since 1928."

Wikileaks' Assange Claims Hillary, Intel Officials "Quietly Pushing A Pence Takeover"

Over the weekend we noted chatter that some saw Mike Pence as "the Deep State's insurance policy," and now, judging by tweets from Wikileaks' Julian Assange, that may well be the Clinton/Intelligence Officials plan...

Clinton stated privately this month that she is quietly pushing for a Pence takeover. She stated that Pence is predictable hence defeatable.

— Julian Assange (@JulianAssange) March 14, 2017

Adding that...

Two IC officials close to Pence stated privately this month that they are planning on a Pence takeover. Did not state if Pence agrees.

— Julian Assange (@JulianAssange) March 14, 2017

As The Daily Caller notes, Assange's claims appear to come in response to reports that President Trump authorized the CIA to perform drone strikes on terrorists Monday evening...

By handing unilateral power to the CIA over its drone strikes at this time White House signals that bullying, disloyalty & incompetence pays

— Julian Assange (@JulianAssange) March 14, 2017

A Crash is Coming (Either in Oil or In Stocks)

Oil may have just stopped the Bank of Japan.

The fact is that in late September 2016, the Bank of Japan embarked on a new monetary policy of targeting a yield of 0% on 10-Year Japanese Government bonds.

What this means is that the Bank of Japan will intervene in the market to maintain a 0% yield, and this involves aggressively devaluing the Yen against the $USD. You can see this in the chart below.

This is the famed "yen carry trade" through which devaluing the Yen boosts risk assets. The reason it works as market manipulation is that 80% of market activity is now dominated by computer trading algorithms that operate based on correlations.

As soon as the Bank of Japan began this campaign, the algorithms synched up with the Yen/ $USD pair. Since that time, the correlational buying activity between this currency pair and US stocks has been extreme.

On a weekly basis the correlation was above .75 from mid-December until late January. It has since fallen somewhat but remains above 62%.

Let me repeat this... the correlation between the weekly moves of the $USD/YEN pair and the S&P 500 was over 0.75 for more than a month. This is statistically impossible unless you are dealing with outright manipulation via compute algorithms.

However, Oil appears to have finally ended this.

When the Bank of Japan engages in rampant devaluation of the Yen against the $USD is exports deflation into the west. The last time the BoJ did this in 2014, commodities experienced their worst collapse in 40+ years. Oil was what stopped this as it plunged 75%...forcing Oil producing nations to "call the Bank of Japan."

Generic Drugmakers Can Live With a Speedier FDA

FDA chief nominee Scott Gottlieb's changes may pressure generic drug prices, but there are other positives for the sector.

Why Emerging Markets Shouldn't Fear the Fed

The Fed is in focus for emerging markets again. But stronger growth is the key element for investors to watch.

Pound Takes the Strain as Brexit Door Opens

There is no better barometer for the fraying ties of globalization than the British pound.

Rex Nutting: Remember when Trump said raising rates would crash the 'big fat ugly bubble'?

Donald Trump said last year that if the Fed raised rates, the stock market would crash. Now the Fed is prepared to test that theory, writes Rex Nutting.

Capitol Report: Trumpcare helps those who like the president the least: millennials

The Republican health-care bill has been panned by critics on the left and the right, but there is one demographic that would benefit if enacted: millennials.

Key Words: Rubio chides Snoop Dogg over video with Trump lookalike clown shot by toy gun

Rapper Snoop Dogg's latest video shows a clown-faced Donald Trump impersonator getting shot by a toy gun, and Senator Marco Rubio says, "Whoa."

Earnings Summary for Today

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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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