US Oil Throws An Assist

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Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a roller coaster kind of day with the markets dropping out of the gate, regaining upside momentum, falling again below the unchanged line before staging a mid-day comeback, which accelerated into the close.

Wall Street is still digesting the possibility of a rate hike in September. It’s the same old story with the Fed keeping markets at bay and under control. Personally, I think there is absolutely no way to justify higher rates based on economic fundamentals with most data points, along with GDP, heading south. However, if the Fed is concerned with the lofty levels of the major averages, they might pull the trigger on a tiny rate hike just to keep the market from moving deeper into bubble territory. I am not sure if that is a consideration, but the fact is the Fed trapped with none of their options looking particularly enticing.

Oil was the lead dog again as it continued its rally for the 6th day on no news of any shortage. On the corporate side, the mother of all hogs (Harley-Davidson) got spanked today (-1.73%) and agreed to a $12 million fine for selling illegal after-market tuners, which caused excessive motorcycle pollution.

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Back On Top Again

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Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Falling in line with the (as of lately) market topping then dropping phenomena, all three indexes pushed higher again today…barely.  Stocks here in the U.S. stretched into positive territory late in the day after Fed Minutes news suggested that an interest rate hike may still be on the table for calendar year 2016.

In usual fashion, Fed officials still appear to be largely divided on whether the economy is strong enough to warrant a rate hike.  Alleged recent economic strength, most notably the jobs report in July, has added fuel to the growing suspicion that the Fed could move to slow things down. During July, employers added 255,000 predominantly part-time jobs, which are supposed to be a strong showing for the second-straight month.

Though Wall Street might be pleased at the prospect of low interest rates for a longer period, some sectors are hurting. Today, the retail sector suffered another round of blows as home improvement retailer Lowe’s (LOW) posted disappointing earnings and big-box chain Target lowered its outlook, bludgeoning stocks of both companies.

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An Elegant Fall From Grace

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Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Wow, what a surprise; no new highs! Despite Crude oil taking the lead to the upside, the major indexes lagged and closed lower. You can thank Fed Pres Dudley for jawboning about potential interest rate hikes sometime this year, which took the starch out of yesterday’s rally. Given the continuous flow of unimpressive economic data points, Dudley’s hint towards higher rates seem to me an attempt to keep the markets in check, as odds are very low that any rate hikes are forthcoming anytime soon.

Over the past week, markets have continued to climb to new record highs, then drop the next day and repeat this cycle over and over again. Thus, the headline “an elegant fall from grace…” Perhaps investors took a pause from their recent streak of exuberance today as they await Wednesday’s release of the minutes from the latest Federal Reserve meeting that will offer more clues on the trajectory of U.S. interest rates.

There was an interesting press release today from one of the nation’s largest health insurer’s, Aetna. Word on the street, is that Aetna (potentially) intends to pull out of about 70% of the Obamacare insurance exchanges it participates in. A spokesperson from the company said that they lost roughly $200 mil on individual plans and that they needed a larger amount of healthy plan members to offset the large amount of sick patients that are the heavier users of their services.

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Bulls Ride The US Oil Train To Another Record

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks hit record highs today for the second time since 1999. The Dow Jones Industrial Average rose 0.3% to close at 18,636.05.  The Standard & Poor’s 500 index rose 6.10 points to close at 2,190.15 and the Nasdaq composite index gained +0.56% to finish at 5,262.02 in the stock market today. Again, as I pointed out Friday, while this makes for great headline reading, the fact is the major indexes are not racing into record territory, but stumbling slowly higher supported only by Fed policy. Volume was the lowest of the year and there was no broad based participation.

Energy stocks had the strongest performance among major industry sectors as oil prices ticked upward. The Dow Jones U.S. Oil & Gas index outperformed with a 0.8% gain. West Texas Intermediate crude oil rose 2.8% to $45.74 a barrel and Brent Crude Oil rose 2.9% to $48.35 a barrel as speculation over the reports that OPEC allegedly is considering a production cut or freeze.

In other markets, European stocks were flat, while Asian markets closed mostly higher with Chinese stocks helped by a pending announcement for the launch of a trading link between the Chinese stock exchanges in Shenzhen and Hong Kong.

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One Man’s Opinion: In 50 Years This Has Never Failed To Trigger A Bear Market

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OneMan'sOpinionAuthored by Jesse Felder of TheFelderReport.com,

It’s earnings season once again and it looks as if, as a group, corporate America still can’t find the end of its earnings decline since profits peaked over a year ago. What’s more, analysts, renowned for their Pollyannish expectations, can’t seem to find it, either.

So I thought it might be interesting to look at what the stock market has done in the past during earnings recessions comparable to the current one. And it’s pretty eye-opening. Over the past half-century, we have never seen a decline in earnings of this magnitude without at least a 20% fall in stock prices, a hurdle many use to define a bear market.

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ETFs On The Cutline – Updated Through 08/12/2016

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Below please find the latest High Volume ETF Cutline report, which shows how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 366 High Volume ETFs ETFs, defined as those with an average daily volume >$5 million, of which currently 325 (last week 313) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line from those that have dropped below it.

Take a look:

The HV ETF Master Cutline Report  

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.