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The Crude Oil Rally
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February 03, 2016

Members and readers: No Dave's Daily post for Thursday, February 4th.

The buzz on WS Wednesday continued to revolve around oil markets. Russia indicated again it was willing to discuss production cut backs with OPEC.

They just said something like that last week but then oil bulls recycled the same message again Wednesday.

The problem remains how difficult such a scheme would be to implement. After all, if any agreement is reached then cheating would once again take place as always happens.

Nevertheless, crude oil prices moved higher by nearly 9% Wednesday. This follows high volatility price changes daily making it just a roulette play.

Economic data continues to worsen as the ADP Employment Report fell to 205K vs prior 267K new jobs; PMI Services Index fell to 53.2 vs 54.3 and ISM Non-Mfg. Index also fell to 53.5 vs prior 55.8.

Stocks rallied led by another crude oil rally and comments from Fed Governor Bill Dudley who stated financial conditions have tightened making it unlikely for interest rate increases in 2016. This is what traders took away from his comments.

All beaten down sectors bounced higher as Dudley’s soothing words allowed for another short squeeze on the day. The S&P 500 Index rose from intra-day lows of 1872 to close at 1912 putting markets back to the lower end of rally levels (1902-1956) suggested here from last week.

Market sectors moving higher included: SPY (S&P 500), Dow (DIA), Healthcare (XLV), Energy (XLE), Regional Banks (KRE), Materials (XLB), Utilities (XLU), Industrials (XLI), Transports (IYT), Euro (FXE), Emerging Markets (EEM), Europe (VGK), Germany (EWG), UK (EWU), EAFE (EFA), Brazil (EWZ), Russia (RSX), China (FXI), South Korea (EWY), Asia ex-Japan (AAXJ), Gold (GLD), Gold Stocks (GDX), Crude Oil (USO) and so forth.

Market sectors moving lower included: Tech (QQQ), Consumer Discretionary (XLY), Retail (XRT), Homebuilders (ITB), Japan EWJ), Dollar (UUP), Treasury Bonds (TLT) and so forth

Volume was heavy given late day short squeeze and breadth per the WSJ was positive.

2-3-2016 3-22-07 PM

12-17-2015 9-04-44 PM Chart of the Day

2-3-2016 3-22-42 PM.png USO

Charts of the Day
  • SPY 5 MINUTE

    SPY 5 MINUTE

  • SPX DAILY

    SPX DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU DAILY

    INDU DAILY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • NYMO DAILY

    NYMO DAILY

    The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

  • NYSI DAILY

    NYSI DAILY

    The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

  • VIX WEEKLY

    VIX WEEKLY

    The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation has changed due to a variety of new factors including HFTs, new VIX linked ETPs and a multitude of new products to leverage trading and change or obscure prior VIX relevance. 

Even swing traders can’t handle this day-to-day action.

Bulls loved Dudley’s comments this day translating his talk to notions of no interest rate increases in 2016. Then there’s the buzz about negative interest rates.

It seems the attack on savers will continue until TPTB lose their credibility.

Let’s see what happens.

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Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.

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ETF Digestwas awarded one of the most informative ETF websites in the10th Annual Global ETF Awards.



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