04Jan2016 Market Close: Markets Close Down, DOW Off Triple Digits, US Dollar Higher, Will Tomorrow Open Higher?

Written by Gary

The first trading day of 2016 was a bummer for many hoping for a positive run for the gold ring. The DOW was down over 300 points for most of the session and ended down 1.6% while the small caps remained down over 2%.

The market run-up at the close was evidently an agent of the NY Fed, front-running a NY Fed sponsored ramp that will be put into all markets tomorrow at the open. It is also speculated that the European markets will be up 1.5% (every one) at the open.

Todays S&P 500 Chart

An important graph from cdftrading.com. The DOW is trading around support, keep an eye on how it responds this week. Closed today at 17,148.94

Click here for larger view.

The Market in Perspective

Here are the headlines moving the markets.
	Wall Street begins year sharply lower after China selloff NEW YORK (Reuters) – U.S. stocks dropped on Monday, giving the Dow its worst start to a year since 2008 after weak Chinese economic data fanned fears of a global slowdown.
	GM, Lyft set out self-driving car partnership, $500 million investment SAN FRANCISCO (Reuters) – General Motors Inc and Lyft Inc on Monday set out plans to develop an on-demand network of self-driving cars as the U.S. No. 1 automaker announced it would put $500 million into the ride-sharing service’s latest $1 billion fund-raising round.
	Volkswagen faces billions in penalties as U.S. sues for environment violations WASHINGTON (Reuters) – The U.S. Justice Department on Monday filed a civil lawsuit against Volkswagen AG for allegedly violating the Clean Air Act by installing illegal devices to impair emission control systems in nearly 600,000 vehicles.
	GM appoints CEO Mary Barra chairman (Reuters) – General Motors Co named Chief Executive Mary Barra as the chairman of its board, effective immediately.
	Exclusive: Norfolk Southern customers lobby regulator against CP bid CHICAGO (Reuters) – Industry groups representing major freight customers of Norfolk Southern Corp have asked the U.S. rail regulator to reject any bid for the railroad by Canadian Pacific Railway Ltd, according to letters viewed by Reuters.
	Fidelity drops credit card partners American Express, Bank of America BOSTON (Reuters) – Fidelity Investments said on Monday it is dropping long-time credit card partners American Express Co and Bank of America Corp, ending a 12-year partnership that has generated billions of dollars in fees.
	Fed’s Mester says not worried by Chinese stock plunge WASHINGTON (Reuters) – Cleveland Federal Reserve President Loretta Mester on Monday said the sudden drop in China’s stock market was not a major concern and weakness in the Chinese economy did not pose a “significant” risk to the U.S. economic outlook.
	U.S. factory, construction data point to tepid growth WASHINGTON (Reuters) – U.S. manufacturing contracted further in December as lower oil prices undercut spending in the energy sector while construction spending fell in November for the first time in nearly 1-1/2 years, suggesting the economy ended 2015 with less momentum.
	Apple shares off but weather U.S. market selloff SAN FRANCISCO (Reuters) – Shares of Apple Inc fell to their lowest since August on Monday following recent worries about potentially soft iPhone sales but fared better than a 2 percent drop in major indexes.
	Late-Day Buying Panic Saves Stocks From Worst Start To January In 84 Years Santa Rally…? An ugly day… just as we predicted The bloodbath started in China, which was halted early on circuit breakers… Europe was ugly… And that dragged US Futures lower, which were not helped by weak manufacturing data, weak construction data, and not helped by overly confident Fed speakers, but shortly before the EU close a hug eblock sucked up all ther liquidity in futures and stalled the selloff. We rallied back to VWAP around 1995 in S&P then faded… The machines did their best at 1101ET to stall the weak …
	Visualizing Brazil’s Economic Decline In One “Straight-Line” Chart As we kick off the new year, there is perhaps no more tragic economic story than that of Brazil. Once an EM darling, Latin America’s largest economy fell off the deep end in 2015 as a perfect storm of falling commodity prices, depressed demand from China, a soaring dollar, a devalued yuan, and an intractable political crisis plunged the country into what even the sellside has begun to acknowledge is an outright depression. Inflation is running in the double digits and the country is facing an unemployment crisis which is bad news for an economy in which consumers have levered up in recent years to finance a middle class lifestyle. Meanwhile, President Dilma Rousseff is battling for her political life as House Speaker Eduardo Cunha presses ahead with an impeachment bid even as he faces his own set of problems tied to the Car Wash investigation. Finance Minister Joaquim Levy was shown the door after political gridlock left him unable to implement much needed austerity measures. The market is concerned that his replacement, Nelson Barbosa, is less inclined to fiscal responsibility despite his best efforts to convince investors and ratings agencies otherwise. In short, everything that could go wrong in 2015 did go wrong – and then some. Things aren’t looking too good for 2016 either, a year in which Rio is set to host the summer Olympics. œBrazil’s economy will contract more than previously forecast and is heading for the deepest recession since at least 1901 as economic activity and confidence sink amid a political crisis, a survey of analysts showed, Bloomberg writes, adding th …
	Pay Attention, Things Are Beginning To Get Interesting Submitted by Lance Roberts via RealInvestmentAdvice.com, There is an abundance of “Wall Street Axioms” surrounding the first month of the New Year as investors anxiously try and predict what is in store for the next twelve months. You are likely familiar with many of them from the “Superbowl Indicator” to “What Happens In The First 5-days Predicts The Month.” Considering that trying to predict the markets more than just a few days in advance is mostly an exercise in “folly,” it is nonetheless a traditional ritual as the old year passes into the new. As Wall Street espouses their always overly optimistic projections of year-end returns, as discussed in this past weekend’s newsletter, reality has tended to be rather different. However, from an investment management perspective, we can take a look at some of the statistical evidence for the month of January to gain some insight into performance tendencies looking ahead. From this analysis, we can potentially gain some respect for the risks that might lay ahead. According to StockTrader’s Almanac, the direction of January’s trading (gain/loss for the month) has predicted the course of the rest of the year 75% of the time. Furthermore, twelve or the last sixteen presidential election years followed January’s direction. Every down January on the S&P 500 since 1950, without exception, preceded a new or extended bear market, flat market or a 10% correction. Starting from a broad historical perspective, the chart below shows the January performance going back to 1900.
	Angola’s Currency Collapses To Record Low As “Hyperinflation Monster” Looms Over Africa Just two weeks ago we warned of the looming “hyperinflation monster” in Africa with the continent appearing to be running out of dollars as some of Africa’s largest economies, including Nigeria, Angola, Ethiopia and Mozambique, are restricting access to the greenback to protect dwindling reserves. Specifically we warned of Angola’s already-soaring inflation hampering its ability to ‘adjust’ its currency towards its black market ‘reality’. But that did not stop the central bank devaluing Kwanza by 15% over the weekend – the most since 2001 – to record lows as crude prices crush their economy. Here’s what we said two weeks ago: to be sure, African central banks have a simple way out: stop defending their currencies, and let the market determine the fair value. The problem with this approach is that it promptly leads to an immedate devaluation of the currency, and without fail, hyperinflation and social unrest. The latter is not an option for many African countries where inflation is already running red-hot in the double digits. Angola, which is Africa’s second-biggest oil producer after Nigeria, has also been using its dollars to prop up its currency, the kwanza. Its central bank says it plans to stay on that course. “If we devalue, it will have a huge impact on inflation because most of our food is imported,” said Gualberto Lima Campos, deputy governor for the Central Bank of Angola. The country has a 14% annual rate of inflation. And now, it seems Angola is wi …
	Dow Plunges 276 Points in First Trading Day of 2016 Global stocks kicked off 2016 with a stumble, as another disappointing report on China’s economy rekindled concerns over slowing global growth and tempered hopes for a better year.
	5 Reasons to Be Scared of the Market Selloff There’s nothing quite like fireworks to ring in 2016. Global markets took a dive to start the first trading session of the year, sparked by a rout in Chinese equities. Here are some of the factors at play.
	Why China’s Market Fell So Much China’s economic troubles pounded markets on the first trading day of the year, leaving investors worried about a continuation of last year’s market turmoil.
	Bond Report: Treasury yields fall for third session as stock rout sparks flight to safety Treasury prices surged Monday for the third straight session, pushing yields to their lowest level in a week, as a global stock-market rout fueled demand for assets perceived as safe, including government bonds.
	Outside the Box: Santa Claus failure suggests potentially rough 2016 The fact that the S&P couldn’t perform over the last several days tells us, on a historical basis, that 2016 may be a tough one for the index.