Written by Gary
The Dow crossed the 21,000 mark for the first time ever this morning (SPY +1.5%), as President Trump’s measured tone in his first speech to Congress lifted investor optimism and bank stocks surged on hopes of an interest rate hike this month. Oil prices were largely steady along with the US dollar.
Here is the current market situation from CNN Money | |
 | North and South American markets are broadly higher today with shares in U.S. leading the region. The S&P 500 is up 1.41% while Mexico’s IPC is up 1.04% and Brazil’s Bovespa is up 0.47%. |
Traders Corner – Health of the Market
| Index | Description | Current Value |
| Investors.com Members Sentiment: | % Bullish (the balance is Bearish) | 75% |
| CNN’s Fear & Greed Index | Above 50 = greed, below 50 = fear | 79% |
| Investors Intelligence sets the breath | Above 50 bullish | 69% |
| StockChart.com Overbought / Oversold Index ($NYMO) | anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. | -10.55 |
| StockChart.com NYSE % of stocks above 200 DMA Index ($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. | 71% |
| StockChart.com S&P 500 Bullish Percent Index ($BPSPX) | In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. | 80% |
| StockChart.com 10 Year Treasury Note Yield Index ($TNX) | ten year note index value | 24.53 |
| 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 | 87.36 |
| StockChart.com NYSE Composite (Liquidity) Index ($NYA) | Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors | 11,670 |
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. | |
| Dow tops 21,000 on Trump speech, rate hike talk(Reuters) – The Dow crossed the 21,000 mark for the first time ever on Wednesday, as President Donald Trump’s measured tone in his first speech to Congress lifted investor optimism and bank stocks surged on hopes of an interest rate hike this month. |
| Snap to price long-awaited IPO on Wednesday amid signs of brisk demand(Reuters) – Snap Inc, owner of popular messaging app Snapchat, will price its initial public offering after the U.S. stock market closes on Wednesday in the most eagerly awaited technology IPO since Chinese e-commerce giant Alibaba went public in 2014. |
| Oil pares gains after U.S. crude stocks build to record highNEW YORK (Reuters) – Oil prices were largely steady on Wednesday, paring gains and briefly turning negative, after crude inventories in the United States rose to a record high. |
| Murdoch’s Fox set to request EU approval for Sky takeover bidLONDON (Reuters) – Rupert Murdoch’s Twenty-First Century Fox will seek approval from the European Commission for its $14.4 billion bid for European pay-TV firm Sky in the coming days, a person familiar with the matter said. |
| U.S. consumer spending slows; inflation pressures firmingWASHINGTON (Reuters) – U.S. consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years, raising the probability of an interest rate hike from the Federal Reserve this month. |
| GM, Ford beat February sales expectations; industry sales seen downDETROIT (Reuters) – February U.S. auto sales, an early-month indicator of consumer spending, fell slightly but remained strong as pickup trucks and SUVs continued a robust showing based on the first three automakers that reported on Wednesday. |
| McDonald’s turns to technology, value to win back lost customersCHICAGO (Reuters) – McDonald’s Corp later this year will give U.S. customers the opportunity to order and pay via their cell phones as it fights to win back customers lost to other fast-food rivals. |
| Wells Fargo says no 2016 cash bonuses for eight senior executives(Reuters) – Wells Fargo & Co said eight senior executives, including Chief Executive Tim Sloan and Chief Financial Officer John Shrewsberry, will not receive cash bonuses for 2016, as the bank looks to increase accountability following a sales scandal. |
| After 15 years, lawsuit against UBS over Enron collapse is dismissed(Reuters) – A federal judge in Houston has thrown out a lawsuit accusing UBS Group AG of hiding fraud by its client Enron Corp from retail customers, a decision that may end a 15-year legal battle stemming from the energy company’s December 2001 bankruptcy. |
| Euro Breakup Contagion Risk Is ExplodingWith existential elections looming, Sentix Euro Break-up Contagion Index – a market measure of the contagion risk from one or more countries leaving the euro area within the next 12 months period – has hit its post-2012 record recently… As Sentix notes, the Eurocrisis is once again in the limelight. And this time the How
h/t Constantin Gurdgiev France and Italy both seeing Euro-exit odds rising…
The Eurozone has now developed many more breaking points than just Greece. Although it has now been somewhat calmer about Italy, the euro exit probability remains almost unchanged at 13.9%. Added to this is the strong rise in the probability of exit from France. This is now 8.4% – compared to 5.7% in January! An all-time high. |
| America’s In A Drugged StuporAuthored by Bill Bonner (Bonner & Partners) via Acting-Man.com, Learning Machine The Dow, the S&P 500, and the Nasdaq remain near record highs and are up about 10% since Election Day. Fed officials say they could raise interest rates “fairly soon.” Blah… blah… blah…
One of these days… sooner rather than later… as soon as the data permit… The economy is a learning machine. So is a person. We’re not talking about the kind of faux “learning” you do in school. Much of that is negative – ideas, information, and skills that destroy or delay real learning. In fact, some people stay in school to avoid learning. Learning can be painful, humbling, and hard. And only win-win deals teach you anything useful. Economist Adam Smith described the process more than 250 years ago. Willing buyers and sellers discover what things are worth (what someone is willing to pay). This information directs – like an “invisible hand” – investors, producers, and consumers. Result? More wealth (or, in other words, satisfaction). This learning metaphor is more useful than we thought: How do you learn? By trying. When do you try? When you have to.
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| Q1 GDP Estimates Tumble: Goldman, Atlanta Fed Cut To 1.8%, JPM At 1.5%, Bank Of America Sees Only 1.3%With the Fed telegraphing an imminent rate hike, one which together with the “tempered” Trump speech has once again unleashed the reflation trade, and sent the Dow Jones soaring above 21,000, it appears the Federal Reserve will be hiking in a quarter in which GDP comes in in the mid 1%-range. The reason: while “soft data” – which is important to animal spirits if not actual economic output – continues to surge as shown most recently by today’s Manufacturing ISM survey, the “hard data”, that which actually matters to the economy, is still disappointing.
On Wednesday morning, this divergence was noticed by the Atlanta Fed, which after forecasting Q1 GDP as high as 3.4% one month ago, revised its forecast sharply lower and moments ago reported that its GDPNow model forecast for real GDP growth in the first quarter of 2017 is 1.8 percent on March 1, down from 2.5 percent on February 27. The forecast for first-quarter real personal consumption expenditures growth fell from 2.8 percent to 2.1 percent after this morning’s personal income and outlays release from the U.S. Bureau of Economic Analysis.
According to the “beancount” breakdown of details, this is what the Atlanta Fed sees as of this moment: PCE contribution est. at 1.44% Nonresidential equipment investment contribution est. at 0.50% Nonresidential intellectual property products Investment contri … |
| BELIEVEMarkets are forward looking indicators. Over the past 8 years, the market kept pricing in central bank rigging, rightly so. From the BOJ to the ECB to our Fed, central banks showed a keen willingness to boost asset prices since the financial crisis in 2008 — helping reflate equities and keep Humpty Dumpty together. What Trump is talking about is totally different — a return to American greatness, something that resonates with just about all Americans — because everyone loves a fairytale. Whether he can pull it off or not is immaterial as of today. All people care about now is the future and how bright it looks. Gone are the dreary days of being beholden to Fed speeches, listening to ugly people in bad clothes discuss our future. These new plans that Trump has outlined paints a colorful picture of an American renaissance — high paying jobs for all, affordable healthcare, strong military, strong borders — peace. At some point in life, you start figuring out mostly everything you knew was bullshit, smoke and mirrors, parlour tricks, a delightful game of three card monte until the end. People want to believe. Trump is a superb salesman, probably the best you’ve ever seen — because you don’t see him coming. At times he sounds off the cuff, petulant, and unrehearsed — drawing jeers from professional losers. That’s likely done with purpose. You don’t see him coming, a yet here he is worth $10b and President of the United States. The market is the sum total of hope, the expectations of the masses, an endless parry betwixt by fear and greed. |
| How Google Does TVGoogle’s bet on web TV with YouTube involves a much smaller wager than AT&T’s with DirecTV. |
| A Surprising Clue About Oil Prices TodaySurging U.S. crude oil exports don’t mean that OPEC is winning, but a shift in customers would. |
| Trumponomics Causes Global Corporate Bonds to CollideAn unusual shift is under way in U.S. and European corporate bond markets—politics on both sides of the Atlantic are the reason. |
| January 2017 Construction Spending Growth DeclinedWritten by Steven Hansen The headlines say construction spending was down, and was significantly below expectations. Consider this a weaker report than last month.
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| Capitol Report: GDP estimate cuts show divergence between economic activity and optimismThere’s a growing divergence between the optimism seen by stock market traders, business executives and consumers, and actual economic activity. |
| Earnings Outlook: Costco earnings: Analysts think a membership-fee hike is comingAnalysts think Costco will install a membership fee hike at some point in the next few quarters. |
| Caroline Baum: Stocks and bonds view Trump through different filtersThere is a wide gap between the stock market’s ebullience over Trump-fueled growth and the bond market’s relative caution, writes Caroline Baum. |
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