Baltic Dry Index. 1126 +04 Brent Crude 70.31
“You
can have your cake and eat it too."
Stan
Laurel, stock promoter.
Due to travel too attend a
funeral today, today’s update will be brief.
With President Trump’s
Great China Trade War on hold, if not abandoned, yesterday brought about the
relief rally. The stock pedlars and algo traders were all out in force, the
former spinning the line that the correction is over and a new bull leg is
underway, the later front running the relief rally and the unfortunate shorts.
I have my doubts that Trump’s
Great China Trade War is anything more than deferred, and anyway I doubt a new
bull market is starting in already over priced stocks, in the face of months
and months of interest rate “normalisation” still to come. I also suspect that
2018 has produced a massive negative wealth effect in the global markets, where
holders of stock are more likely to use rallies to sell down risk and take
profits, rather than add to risk by buying more in any run up to test the
January high. Building an inverted pyramid never works, no matter what the
starting level.
Below, yesterday’s action,
now for today’s follow through.
The S&P 500 Comes Roaring Back From the Brink
By Lu WangThe S&P 500 Index jumped 2.7 percent Monday for the biggest rally since August 2015, staging a powerful comeback after suffering the worst week in two years. On the surface, the animal spirits were rekindled by reassuring rhetoric from Treasury Secretary Steven Mnuchin, who talked down last week’s trade war bombast.
However, a survey of Wall Street strategists revealed a confluence of forces behind the surge. From equity valuations to chart patterns to fund positioning, the long list of triggers shows a growing bull case that investors can’t afford to ignore.
“This is a market that wants to go up,” said Jennifer Ellison, a principal of San Francisco-based Bingham, Osborn & Scarborough, which manages $4.2 billion.
Technicals
The bounce in stocks occurred after the S&P 500 closed Friday right near its average over the past 200 days, a key trend line that’s proven to be the market’s support level for the past two years, including the selloff in February.Moreover, last week’s slump may have cleared a hurdle that many chart watchers were waiting to see before a sustained rally can take hold.
It “sets the stage for a textbook double bottom retest,” Evercore ISI technical analyst Rich Ross wrote in a note to clients. Last week’s selloff “into a holiday shortened quarter ending week offers the ideal short term backdrop for the bulls to regain control of this tape and launch another v-shaped ascent,” he said.
Valuations
At Friday’s close, the S&P 500 traded at 16 times forecast profits, undercutting the valuation trough reached in early February and approaching levels that defined the market bottom during the last two major events: the U.K. vote to exit the European Union in June 2016 and the U.S. presidential election in November that year.
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Dow’s 670-point surge belies fact that stock market is on the brink of an absolute breakdown
Published: Mar 26, 2018 7:06 p.m. ET
All 3 stock benchmarks logged their best one-day gains since August 2015
The stock market surged on Monday—and it really needed to.U.S. stocks are coming off the biggest weekly decline in more than two years, and the aftermath of that drop has market technicians warning that major indexes are on the verge of a full-fledged, technical breakdown.
“The extent of the deterioration in equities is very much a concern given the combination of near-term technical damage, along with the decline in longer-term momentum after having reached record overbought conditions into late January,” wrote Mark Newton, technical analyst at Newton Advisors, in a Monday research note.
Here are some levels that the market is trying to defend or retake after last week’s withering action:
S&P 500 200-day moving average
The S&P 500 index SPX, +2.72% ended Friday’s session clinging perilously above its 200-day moving average, which was at 2,585.22. The broad-market benchmark, ultimately, ended at 2,585.38—an encouraging sign for market bulls. Market watchers tend to follow moving averages to help determine if bullish or bearish trends are intact. The chart below shows the 200-day MA (in green) presently at 2,586.16, and the pink line signifying its 50-day MA, according to FactSet data:
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March 27, 2018 / 1:22 AM / Updated 3 hours ago
Asia shares cheered by trade hopes, dollar downcast
SYDNEY (Reuters) - Asian share markets rose sharply on Tuesday as
reports of behind-the-scenes talks between the United States and China
rekindled hopes a damaging trade war could be averted, in turn sapping the
strength of the dollar and yen.
Taking
their cue from a surge on Wall Street, Japan's Nikkei .N225
climbed 1.7 percent and China blue chips .CSI3000 added 1.2 percent.
MSCI's
broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose almost 1
percent. South Korea's KOSPI .KS11
climbed 0.7 percent, adding to gains made after the U.S. exempted the country's
steel from import tariffs.
The abrupt mood
swing came amid reports Chinese and U.S. officials were busy negotiating to
avert an all-out trade war.
White House
officials are asking China to cut tariffs on imported cars, allow foreign
majority ownership of financial services firms and buy more U.S.-made
semiconductors, said a person familiar with the discussions.
Chinese Premier Li
Keqiang on Monday pledged to maintain trade negotiations and ease access to
American businesses.
Even
a whiff of a compromise was enough to propel Wall Street to its best day in
2-1/2 years and deliver the Dow its third-biggest point gain ever.
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"Too
bad ninety percent of the politicians give the other ten percent a bad
reputation."
Henry Kissinger.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, a damp squib or a mega earthquake coming to oil trading.
China Is About to Shake Up the Oil Futures Market
By Grant Clark and Sungwoo Park
25 March 2018, 22:00 GMT+1 Updated
on 26 March 2018, 03:25 GMT+1
It’s taken a quarter of a century, but China finally has its own oil
futures. At 9 a.m. local time on Monday, crude contracts began trading on the Shanghai
International Energy Exchange. Futures for September settlement opened
at 440 yuan a barrel, up from a reference price of 416 yuan. The world’s
biggest oil buyer is offering yuan-denominated futures that foreigners can buy
and sell -- a first in Chinese commodities. Among the most intriguing questions
is whether the traditional benchmarks of Brent crude in London and West Texas
Intermediate in New York will face a serious challenger. Here are some of the
other key questions.1. Why is this important for China?
Futures trading would wrest some control over pricing from the main international benchmarks, which are based on dollars. Denominating oil contracts in yuan would promote the use of China’s currency in global trade, one of the country’s key long-term goals. And China would benefit from having a benchmark that reflects the grades of oil that are mostly consumed by local refineries and differ from those underpinning Western contracts.2. Why now?
The push for oil futures gained impetus in 2017 when China surpassed the U.S. as the world’s biggest crude importer. The Asian nation’s purchases reached a record high in January.Lower crude prices have played a part as to why not earlier. Chinese oil futures were proposed in 2012 following spikes above $100 a barrel, but prices in 2017 have averaged little more than $50. There’s also concern over volatility. China introduced domestic crude futures in 1993, only to stop a year later because of volatility. In recent years, it repeatedly delayed its new contract amid turmoil in equities and financial markets. Such destabilizing moves have often prompted China’s government to intervene in markets in one way or another.
3. How do oil futures work?
Futures contracts fix prices today for delivery at a later date. Consumers use them to protect against higher prices down the line; speculators use them to bet on where prices are headed. In 2017, oil futures contracts in New York and London outstripped physical trading by a factor of 23. Crude oil is among the most actively traded commodities, with two key benchmarks: West Texas Intermediate, or WTI, which trades on the New York Mercantile Exchange, and Brent crude, which trades on ICE Futures Europe in London.4. How will Shanghai futures work?
Trading hours will be 9 a.m.-11:30 a.m. and 1:30 p.m.-3 p.m. local time and, at night, 9 p.m.-2:30 a.m. The daily trading band has been set at 5 percent on either side, and 10 percent on its debut day, while margin requirements are at 7 percent. Seven grades will be deliverable, including Dubai crude, Basrah Light and China’s Shengli. The contracts will have 36 delivery months with the first 12 months as rolling contracts. The daily cost to store crude for delivery into the Shanghai exchange is set at 0.2 yuan a barrel, or at least twice the rate elsewhere, in a move seen as deterring excessive price swings.
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Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section. Updates as
they get reported. Is converting sunlight to usable cheap AC or DC energy
mankind’s future from the 21st century onwards?
Solar Power Energy Payback Time Is Now Super Short
March 25th, 2018 by Jake Richardson
Some solar
power critics seem to enjoy trying to point out that the energy payback time
for solar power is too long, and therefore this form of renewable energy is not
valid. Those critics have not kept up with the times or are simply lying to you.
Years ago,
when solar cells were less efficient, there might have been some truth in
questioning the energy payback of solar panels because they were most likely
manufactured using electricity generated from coal, natural gas, or nuclear
power and were less efficiently manufactured.
Today’s solar panels are more efficient, so they
produce more electricity, and this fact along with more efficient manufacturing
means that energy payback periods have decreased to just a few years. Research
has found, “Energy payback estimates for rooftop PV systems are 4, 3,
2, and 1 years: 4 years for systems using current multicrystalline-silicon PV
modules, 3 years for current thin-film modules, 2 years for anticipated
multicrystalline modules, and 1 year for anticipated thin-film modules (see
Figure 1). With energy paybacks of 1 to 4 years and assumed life expectancies
of 30 years, 87% to 97% of the energy that PV systems generate won’t be plagued
by pollution, greenhouse gases, and depletion of resources.”
Other estimates also show solar is viable and have tremendous energy payback
periods. “In Australia, the International Energy Agency[vii]
calculated the energy payback period for a solar power system to be under two
years. This means a solar power system takes less than two years to generate
enough energy to break even on the amount of energy taken to manufacture it.
“Based on models and data examined by both the
International Energy Agency and the US Department of Energy[viii],
solar panels do pay back their energy investment. With solar panels lasting as
long as 25 years, they make more energy over their lifetime than it takes to
manufacture the panel. Since the payback times are decreasing over time,
we have now reached the point that even at this strong growth, the total
installed PV capacity is a net producer of energy and a net GHG sink.”
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The monthly Coppock Indicators finished February
DJIA: 25,029 +283 Up 01. NASDAQ: 7,273 +313 Up 03. SP500: 2,714 +212 Flat.
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