We also learned Saudia Arabia has increased production of oil in February at 130,000 barrels per day to 9.85 million per day which is their highest level since Sept. of 2013. However, I'm sure you are aware of our analysis on USO / Crude as the charts improve in many ways, near term I still would expect some weakness as per today's update USO/Oil Follow Up.
Things didn't get much better for macro data from there with the gasoline discount being saved rather than spent as the cheap gas narrative has been blown out of the water by Consumer Spending this morning with the second consecutive decline for the first time since just after Lehman during January of 2009. January came in at -.2 and December -.3 and suddenly every investment bank's research department is working overtime tonight to cut their growth forecasts. This is very material as Consumer Spending accounts for about 2/3rds of US economic activity.
ISM National Factory Index also fell to 52.9 (still above contraction which is below 50), a miss of consensus with the lowest reading in 13 months and down from the previous of 53.5.
Early the market made a parabolic move, the early one we were talking about fading, I know a couple of you did. Interestingly this initial advance to NASDAQ 5000 which fell back, apparently had a lot to do with the fact that CBOE was not disseminating options information, essentially broken from about the open to 10:30 a.m., allowing the VIX to be slammed.
In Friday's "Week Ahead" we did expect some early strength based on where the 3C charts left off, if this chart picks up where it left off as is the case much more often than not, I'd say we'll be on our way to the finishing of this cycle and the weakness for the week also in the Week Ahead forecast.
Only the IWM maintained an inline status from its positive divegrence close on Friday as of today's close.
VIX was definitely slammed and I mentioned VIX earlier in the day as well as VIX futures as well as Trade Idea: UVXY (VIX Short Term Futures) and VXX / UVXY / XIV / VIX Follow Up..
I don't see VIX Futures move too often on 3C charts, but today they were definitely moving...
While we have been expecting HYG to move lower based on recent ad trend 3C charts, for instance from Thursday, Things just got real interesting for HYG / HY Credit, you can see the long term primary trend in HYG, the Intermediate, sub-intermediate and cycle as well as VERY strong recent deterioration in the timing timeframes (1-3 mins), from the linked post from Thursday above, this is one of the charts and the commentary...
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So although I was expecting HYG to start coming down, I didn't think it would take out a week's worth of gains/longs in one day or one morning as the a.m. gap was the worst of it, HY Corp. Credit (HYG).
This also broke a seious trendline that has been in effect fro all of 2015, HYG of course being one of the easiest ways to see a ramp coming or in cases like this, a negative tone to the market.
Treasuries as shown earlier in the Futures Update pulled back today sending yields higher (supportive to stocks). However while I wouldn't bet too much on one day's data, the fact the short end looked worse on the Index futures charts and the fact the F_E_D's unofficial spokesman, Hilsenrath of the WSJ upped the F_E_D funds rate by more than double according to his sources at a level which would make it almost necessary to start hiking by no later than early summer, I suspect the move there was all about that article.
In the meantime, it certainly helped the market a bit as yields move opposite treasuries and they tend to pull equity prices toward them For example...
As for market breadth, it is seemingly impossible to get a Dominant Price/Volume Relationship which usually we have nearly every day, we haven't had a solid reading in a week and today is no different. Among the 4 major averages, the only one even close was the Dow with 15 stocks at Close Up/Volume Down which is the most bearish of the 4 possibilities and suggests the move is on fumes.
The other averages were pretty evenly split with nothing dominant.
Among the 9 S&P sectors, 7 of 9 closed green, this is closer to a short term or 1-day overbought condition. Ironically Consumer Discretionary led at +1.20% and Utilities lagged at -1.92%.
The Morningstar groups saw 189 of 238 close green, also much closer to a 1-day overbought event, had the Dominant P{/V been there as well, we'd have 3 of 3 and a strong next day implication, although the 3C charts picking up where they left off looks to be a fairly strong next day implication which is why I wanted to get some positions that looked interesting out there, specifically UVXY.
From a breadth perspective, the market has some very strange breadth readings that have been near motionless.
The Percentage of NYSE Stocks Trading Above Their 40-Day Moving Average (green vs the SPX in red) has NOT moved since February 5th, no higher highs, no anything.
The Percentage of NYSE Stocks Trading Above Their 200-Day Moving Average (green vs the SPX in red) Also hasn't moved, but in this case since Thanksgiving!
These are broadly divergent over a large area stretching quite a ways, but usually there's some movement on a bounce or rally , certainly you'd expect it on a new high, NADA.
And our celebrated NASDAQ 5k's Advance/Decline line leaves something to be desired...
Again, near motionless as far as market breadth goes. especially when you are talking about a new high.
Tomorrow I intend to cover some of our older core positions that I've just let be because they've been doing great, but there may be some opportunities to leverage up true short positions like out HLF a;ready at a 53% gain or SCTY at a +29% gain (a market of stocks). As a true short you can pyramid up the position with the gains.
As for futures, given the parabolic stretch to make NASDAQ 5k, HYG, the 3C charts, etc., I'll be looking in on futures later tonight, as of right now, they aren't looking very good.
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