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06Apr2017 Market Update: Wall Street Higher, DOW Up Double Digits, WTI Crude Prices Trend Into The High 51 Handle, US Dollar Steady, Watch For Sudden Reversals Today And Tomorrow

Written by Gary

US major stock indexes rose today (SPY +0.4%), led by energy companies and a rebound in financials, but gains were kept in check by cautious trading ahead of the Trump-Xi meeting and on uncertainty about quick U.S. fiscal stimulus.


Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.33%, while the IPC is leading the Bovespa lower. They are down 0.67% and 0.45% respectively.

Traders Corner - Health of the Market

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 44%
Investors Intelligence sets the breath Above 50 bullish 64%
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.

-1.62

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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
84%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 66%
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 23.53
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 87.50
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,454

Stocks hold higher in choppy trade as investors brace for Trump-Xi meeting

xxxxxx

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. weekly jobless claims post largest drop in almost two years

WASHINGTON (Reuters) - New applications for U.S. unemployment benefits recorded their biggest drop in nearly two years last week, pointing to a further tightening in the labor market.

Financials, energy lead Wall St. gains, Trump-Xi meet looms

(Reuters) - U.S. stocks rose on Thursday, led by energy companies and a rebound in financials, but gains were kept in check by cautious trading ahead of the Trump-Xi meeting and on uncertainty about quick U.S. fiscal stimulus.

Despite 'challenging' environment, GM CFO expects strong 2017

DETROIT (Reuters) - General Motors Co's chief financial officer said on Thursday the automaker expects another "very strong year" in 2017 and reiterated the company's earnings forecast for the year.

Unilever promises cash to shareholders after rebuffing Kraft approach

LONDON (Reuters) - Unilever promised a multi-billion euro program of shareholder rewards on Thursday after a corporate rethink sparked by a takeover approach from Kraft Heinz , aiming to prove it can generate lucrative returns as an independent company.

Sunoco to sell convenience stores to 7-Eleven operator for $3.3 billion

(Reuters) - Sunoco LP said on Thursday it would sell 1,110 convenience stores to Japan's Seven & i Holdings Co for $3.3 billion as the Texas-based convenience store operator shifts its focus to its fuel supply business.

Berkshire insurance unit sues Goodyear over asbestos claims

(Reuters) - An insurance unit of Warren Buffett's conglomerate Berkshire Hathaway Inc said it has sued Goodyear Tire & Rubber Co to avoid having to cover asbestos-related injury claims that Goodyear said nothing about for seven years.

Aetna will not sell 2018 Obamacare exchange plans in Iowa

NEW YORK (Reuters) - Health insurer Aetna Inc will not sell Obamacare individual insurance plans in Iowa in 2018 due to financial risk and the uncertain outlook for the online marketplace, the company said in a statement on Thursday.

Exclusive: ECB calls for tougher regulation of foreign bank branches

VALLETTA (Reuters) - The European Central Bank has proposed that large branches of foreign banks in the European Union be subject to tighter regulation and capital requirements, a move that would increase U.S. and Asian lenders' costs and also hit British banks after Brexit.

Comcast enters U.S. wireless business with unlimited data plans

NEW YORK (Reuters) - Comcast Corp , facing pressure in its core business, said on Thursday it is launching a wireless service with an unlimited data plan, making it the first major U.S. cable provider to enter the highly competitive wireless market.

OPEC's No.2 Goes Rogue: Plans 600,000 Bpd Oil Output Increase

Authored by Irina Slav via OilPrice.com,

Iraq has plans to boost its crude oil production by 600,000 bpd to 5 million bpd by the end of this year, regardless of its participation in OPEC's production cut deal. Iraq is the cartel's second-biggest exporter of crude and has been the most disinclined of all parties to the agreement since its inception, with a lot of observers expecting it to be the first one to cheat.

Iraq's first problem is that as much as 95 percent of its budget revenues come from crude oil. There are no viable alternatives in sight for revenues at the moment. The second problem that the country has to contend with is its war with Islamic State, which makes these revenues more important than ever.

Amid the final push against IS in Mosul, Iraq is working hard to ensure the sustainable growth of its oil and gas industry—OPEC deal or no OPEC deal. Three months ago, Oil Minister Jabar al-Luaibi said that Baghdad is planning to build five new refineries on an investment basis, in addition to fixing and expanding existing refineries that were damaged in the war with IS.

While Al-Luaibi has repeatedly assured media - and indirectly, investors - that Iraq will stick to its OPEC commitment, Iraq is doing whatever it ca ...

Senate Republicans Trigger Nuclear Option, Clearing Gorsuch Nomination

Summary: The Senate voted 52-48 along party lines to repeal a rule allowing filibusters against Supreme Court nominees,invoking the so-called nuclear option, and clearing the way for Gorsuch confirmation who now needs a simple majority for nomination.

The move sets up a final confirmation vote on Gorsuch for Friday afternoon, the Hill notes, after another cloture vote later Thursday followed by thirty hours of more debate.

Senate Majority Leader Mitch McConnell (R-Ky.) initiated the rules change by raising a point of order asserting that simple-majority votes should advance Supreme Court nominees to final confirmation votes. Democrats tried to delay it by offering motions to postpone a vote and to adjourn the chamber, but both fell short as Republicans stayed unified.

Earlier Thursday, McConnell said the rules change would restore the Senate's tradition of considering a Supreme Court nominee based on credentials instead of ideology.

He called the Democratic filibuster of Goruch "a radical move" and something "completely unprecedented in the history of our Senate."

"This threatened filibuster cannot be allowed to succeed or to continue for the sake of the Senate, for the sake of the court and for the sake our country," he said.

Earlier, McConnell accused Democrats of having steadily ratcheted up the "judicial wars" over the years and noted that Justice Ruth Bader Ginsburg, President Bill Clinton's pick for the court in 1993, once advocated for the abolishing Mother's Day but was still confirmed by a 96-3 vote.

The American Bar Association rated Gorsuch as unanimously well-qualified, but Democrats criticized him for not revealing his personal judicial philosophy during confirmation as well as for several opinions they said showed he tended to favor powerful interests over "the little guy."

* * *

Up ...

Twitter Co-Founder Explains Why He Is Liquidating A Minority Of His TWTR Shares

Moments ago Twitter shares slumped, then rebounded...

... after Ev Williams, co-founder of Twitter, published an article on Medium in which he explained why he - along with apparently everyone else these days - is "selling some twitter shares"

As he explains... "After a year and a half of no selling, I have filed a new 10b5-1 plan to liquidate a minority of my TWTR over the next year. It actually pains me to be selling at this point, but this sale is all about personal context, not company context....

Here's the short story: I like to invest a lot in things I care about. For example, I'm the largest LP at Obvious Ventures, which is now on its second fund and has invested in over 35 world-positive companies. In addition, my wife and I have done a fair amount of philanthropic giving and—especially in the last year—upped our political donations significantly ????. These are all efforts to help build a smarter, more sustainable world. I've been doing all of them for a while, and I'd like to continue."

In short, for that reason or any other, he prefers cash over TWTR shares here.

His full note is below:

Why I'm selling some Twitter shares

A note for Twitter shareholders and employees

If you're not a Twitter shareholder or emp ...

A Key Reflation Trade Support Level Just Broke

While most eyes are focused on the longer-end of the curve and the butterfly-rotations in the Treasury complex...

RBC's Mark Orsley points out that there is a substantial repricing going on in the front-end that could bleed into the broader reflation theme.

Arguably the most popular way in rates to play reflation and the thought of a more aggressive Fed has been the EDZ7/EDZ8 steepener (buying Dec '17 Eurodollars/selling Dec '18 Eurodollars). Conventional wisdom was the curve had 2 hikes priced in, the Fed has been saying 3 hikes for 2018 so its 1 hike light and thus a buy (steepener). Fair enough and I was a believer of this theory as well. However, Dudley really threw the Eurodollar market for a loop when he:

talked down the Fed's urgency to hike revealed that the taper of reinvestments represents a hike or two showed us that the markets current pricing for terminal rates is pretty fair when he said there is 100-150bps more of hikes (was priced)

As I have been saying in the past couple notes, this caused a recalculation of Fed hike expectations by the Eurodollar market and that caused the bleed lower in the EDZ7/EDZ8 spread. It may not look like much in the charts but we are talking about a significant move. From the pre-March FOMC high to now, that curve has fallen from 57bps to 38bps (19bps). That is an 11 standard deviation move. For those equity minded, it would be equivalent to S&P's dropping 150 points (~7%).

Yesterday's FOMC minutes from the Ma ...

Unilever's New Look Suggests More Deals to Come

The Anglo-Dutch consumer giant will probably rationalize its legal and shareholding structure in readiness for the next big deal wave in consumer goods

Aviva: An Insurance Stock That Could Come to Life

Aviva was long known as the European insurer most likely to disappoint. Now the U.K.-based group is showing greatest potential to bring good surprises.

Constellation Brands: This Trump Trade Has More Upside Ahead

Shares of Constellation Brands have suffered from President Donald Trump's posturing toward Mexico, but the selloff looks overdone

Market Extra: Why investors are fretting over the Trump-Xi meeting

Here's why investors will be paying close attention when President Donald Trump and his Chinese counterpart meet.

Harry Boxer's four stocks to watch

In focus: GBX, VRTX, CATM and UBNT.

In One Chart: Want to know if your local Payless ShoeSource store is closing?

Payless ShoeSource has released a list of nearly 400 stores that will be closing in the U.S. and Puerto Rico.

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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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