Written by Gary
Market action today showed the averages traded sideways with a flavor of trending down during the afternoon session on low volume. If this trend continues, expect 2 more session of red outcome and then we will see the uptrend began again to at least the previous historical highs.
By 4 pm the markets were solidly in the red, The DOW down 300 points and the Tech Stocks taking a beating. U.S. stocks fell on today, with losses accelerating after short-term technical indicators failed, while recent winners stumbled as investors cashed in towards the end of the quarter after a gauge of industrial orders unexpectedly fell last month.
Also greasing today’s decline, Goldman Sachs economist Kris Dawson said today he has scaled back his view of U.S. growth in the first quarter, following an unexpectedly weak report on domestic durable goods orders in February.
Todays S&P 500 Chart
Interestingly, WTI oil has been flirting with higher than normal highs mainly because of the disturbance in Yemen report some pundits. Interesting in that Yemen is not a player in the output of oil production whether it shuts down the fields or continues production. If anything, rebel controlled Yemen oil fields should lower the price. Exactly what is going to happen to the commodities and equities over the next few weeks is a conundrum because of the many ‘issues’ influencing World factors in play.
Right now, there are multiple Saudi owned super tankers in the Persian Gulf filled with crude. The Iranians also have stored crude that will hit the market as soon as the ‘sanctions’ are lifted because they need the financial gain badly and the Saudis want to dilute their income by releasing theirs at the same time.
That is one story, the others about storing to sell later are not fully plausible because oil has not fallen enough to make floating storage fees of $15 million a year, per tanker a financial gain.
Only a few international traders, according to Basil Karatzas, a ship broker and adviser, have the heft to buy and sit on this much oil, he says, companies such as Vitol, Trafigura and Gunsor Beheer. He says he’s inundated with calls from investors who want to take advantage of the contango and buy and store oil. But it’s not so easy to do.
“You have to have a special license; you have to be a registered trader with oil producers like Saudi Arabia,” he says. “If you are just a financial institution, you cannot just show up in Saudi Arabia and tell them I want to buy 2 million barrels of oil because I want to speculate. They will not sell it to you.”
The combination of the U.S. shale oil boom and Saudi Arabia’s pricing tactics are pushing oil prices down. So the smart companies are poising their crude in oil tankers and waiting to jump on the higher oil prices in the months to come.
Right now, approximately 50 million barrels of crude oil are being stored in oil tankers offshore of South Africa and Asia.
WTI oil is at 48.97 rising from morning lows of 47.00 (Chart Here), Brent has risen to 56.24 from its low of 54.75 (Chart Here), and the U.S. Dollar is regaining lost ground now at 97.13, up from its low at 96.70 (Chart Here).
Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) is 61 % Bullish (mostly because of rising oil today) up from 10 % bullish at the opening bell. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned down, but remains above zero at +2.61. It is expect to move lower over the next few sessions before turning back up.
Having some cash on hand now is not a bad strategy as negative market changes are happening everyday. Many investors are starting to take in some profits from ‘high-fliers’ as a precaution and to build a better cash base for the ‘dips’.
The Market in Perspective
| Here are the headlines moving the markets. | |
 | Wall St falls; biotech, technology push Nasdaq down (Reuters) – U.S. stocks dropped on Wednesday as a slump in technology and biotech shares sent the Nasdaq to its biggest decline in almost a year, while the S&P 500 fell through key support levels. |
| Exclusive: Canada regulator probing TransCanada over safety allegations (This March 18 story corrects paragraph nine to show audit had been scheduled, not prompted by allegations) |
| Oil up 3 percent on weak dollar, speculative buying, Yemen NEW YORK (Reuters) – Oil settled up about 3 percent on Wednesday as a weak dollar, fighting in Yemen and speculative buying boosted crude prices in spite of U.S. inventories building to record highs for an 11th week. |
| State of the Art: Debunking the Latest Predictions of Facebook’s Demise A theory making the rounds in Silicon Valley warns that Facebook relies too heavily on app ads from start-ups inflated by venture capital. But the threat is overblown. |
| Wells Fargo to cut 1,000 jobs, shut Milwaukee home-lending office (Reuters) – Wells Fargo & Co, the fourth-largest U.S. bank by assets, said it will cut 1,000 jobs and close its home-lending servicing office in Milwaukee, Wisconsin. |
| Peet’s Introduces a Fresh Take on Cold Coffee The company will emphasize that its iced drink, unlike its competitors’, is made from coffee brewed in the stores where they’re sold. |
| PayPal to pay $7.7 million in U.S. Treasury sanctions case WASHINGTON (Reuters) – PayPal, the electronic payments firm, agreed to pay $7.7 million to settle charges by the U.S. Treasury Department that it violated numerous sanctions programs against countries that include Iran, Cuba and Sudan, Treasury said on Wednesday. |
| Kraft to combine with Heinz in deal led by 3G, Buffett (Reuters) – Ketchup maker H.J. Heinz Co, owned by 3G Capital and Warren Buffett’s Berkshire Hathaway Inc, is acquiring a majority stake in Kraft Foods Group Inc to create the third-largest North American food company, executives said on Wednesday. |
| Argentina minister says Citigroup bond deal is illegal BUENOS AIRES (Reuters) – Argentina’s Economy Minister Axel Kicillof said on Wednesday a deal between Citigroup Inc and a U.S. judge allowing the banking giant to process two Argentine debt payments violated the South American country’s laws. |
| Lumber Liquidators Faces U.S. Safety Inquiry The Consumer Product Safety Commission said it would investigate whether the flooring retailer sold products with dangerous levels of formaldehyde. |
| Jeremy Clarkson Loses Contract as Host of BBC’s ‘Top Gear’ The BBC said it would not renew the contract of the host of the popular car-based TV show, who was suspended after a “fracas” with a producer. |
| Goldman trims U.S. first quarter GDP view to 1.8 percent from 2.0 percent NEW YORK (Reuters) – Goldman Sachs economist Kris Dawson said on Wednesday he scaled back his view of U.S. growth in the first quarter, following an unexpectedly weak report on domestic durable goods orders in February. |
| Pirelli does not plan special dividend for ChemChina deal – sources MILAN (Reuters) – Italian tyre maker Pirelli , which is being bought by China National Chemical Corp (ChemChina), does not plan to pay a special dividend to its shareholders as part of the buyout plan, two sources with direct knowledge of the matter said. |
| Wall St. Slumps After Durable Goods Report Misses Expectations Heinz announced it would buy Kraft Foods Group, creating one of the largest food and beverage makers in the world. |
| Weak U.S. business spending data points to tepid first quarter growth WASHINGTON (Reuters) – U.S. business investment spending plans fell for a sixth straight month in February, likely weighed down by a strong dollar and weak global demand, leading economists to further lower their first-quarter growth estimates. |
| Orders for Durable Goods Fall 1.4% Orders to American factories for long-lasting manufactured goods dropped in February. |
Summary of Economic Releases this Week
Earnings Summary for Today
leading Stock Positions
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