01/25/2016 Live Update

[K447]

... Guess who SPY is following, again…..

Via the ThinkorSwim news feed, FWIW;
Apologies for inserting the long article

By Tommy Stubbington and Georgi Kantchev
Oil and stock markets have moved in lockstep this year, a rare coupling that highlights intensifying fears about global economic growth.
As oil prices tumbled early in 2016, global equities recorded one of their worst-ever starts for a new year. On Monday, oil and equities were lower again, with Brent crude, the international oil benchmark, down around 2% and European indexes and U.S. stock futures all falling. That followed a joint rebound on Friday.
The correlation between daily moves in the price of Brent and the S&P 500 stock index over the last month-long period is 0.97, the tightest correlation for any comparable period over the last 26 years, according to data from both benchmarks examined by The Wall Street Journal . A correlation of 1 would mean that oil and stock prices always move in the same direction, while a correlation of minus 1 would mean they move in opposite directions.
The unusually strong link between the two markets partly reflects a common theme driving both: fears that a slowing Chinese economy could tip the global economy into recession. But as traders and investors in each market look at the other for clues as to how bad things are, they have exacerbated the overall bearish mood.
The recent pattern marks a shift in the dynamics of oil's 19-month collapse. Traders who long worried that the oil market was suffering from oversupply are now growing increasingly concerned that demand may be weakening as well.
"There is a vicious-cycle mentality among investors," said François Savary, Chief Investment Officer at Prime Partners , a Swiss investment firm managing $2.6 billion of assets. "It is become self-sustaining."
Even in the oil-rich Middle East , the mood has changed. In Dubai , businessman Ramesh Manglani never used to look at the oil price when investing in equity, despite the influence of energy in the region and its companies.
"Everything's changed since last year," Mr. Manglani said, after investing in stocks for nearly a decade. "First thing in the morning we now check oil prices and Asian markets."
Historically, the correlation between oil and stocks has been tighter during recessions. As the financial crisis spread in 2008 it spiked above 0.8.
That could just reflect investors' tendency to dump all risky assets when times get tough. During the financial crisis, whole swaths of markets moved in unison, as "risk on" and "risk off" trades dominated.
Currently, big swings in oil prices may be forcing some investors to sell stocks simply because they measure risk in their portfolios by looking at volatility across a range of assets. So crude's recent gyrations are forcing them to trim their holdings of risky assets like stocks, according to Jonathan Golub , chief equities strategist at RBC Capital Markets .
"As long as oil stays volatile and in the headlines and under pressure, it's going to be the most important driver" for equity markets, he said.
Stocks aren't the only asset class showing a tighter relationship with oil during the current turmoil. Copper prices and corporate bonds have taken similar paths to crude in recent months, driven by fears about global growth. Correlations between oil and credit indexes have moved close to 1 in recent weeks, according to strategists at Citigroup .
Most economists aren't forecasting a global recession. Still, the growing correlation is another signal coming out of markets that growth could slow rapidly.
"Oil and stocks are being correlated by a single issue, which is fear of slipping global growth," said Rob Haworth , senior investment strategist at U.S. Bank Wealth Management which manages $128 billion in assets.
Until last summer, most stock markets climbed even as oil slumped. The prevailing view was crude's decline mainly reflected a glut in its supply, as producers from Texas to Saudi Arabia flooded the market. But a raft of weak Chinese economic data around August shifted focus to demand. The world's No. 2 economy consumes about 12% of the world's oil, second only to the U.S.
The Asian giant's deepening thirst for oil has long been the main source of global demand growth. But this year that growth is expected to nearly halve, according to the International Energy Agency , a top energy monitor.
An oil slump should be a good thing for a big chunk of the stock market, many analysts say. Cheaper energy prices are often compared with a tax cut, likely to boost consumer spending as people have more money in their pockets.
Yet a variety of data including last week's poor U.S. retail sales figures seem to be suggesting that weaker oil's expected boost to consumer spending hasn't shown up.
Even sectors expected to benefit from cheaper oil and fuel have made a dismal start to 2016. For one, the S&P 500 airlines sector is down more than 9% so far this year, compared with 7% for the broader S&P 500.
Brent crude is down 16% this year. On the other side of the ledger, the rout is hurting oil-dependent nations from the Middle East to Central Asia , whose sovereign-wealth funds are huge holders of global stocks.
J.P. Morgan estimates those funds could sell $75 billion worth of equity this year to prop up their countries' budgets.
"On average, cheaper oil should be a good thing for the economy," said Valentijn van Nieuwenhuijzen, head of multiasset strategy at Dutch asset manager NN Investment Partners . "But in this type of market, it isn't about the average, it is the fear of unknown."
-- Nikhil Lohade in Dubai and Benjamin Eisen in New York contributed to this article.
Write to Tommy Stubbington at [email protected] and Georgi Kantchev at [email protected]

(END) Dow Jones Newswires
01-25-16 1129ET ...

[fehro]

1920ish Jan 14 close .. watch the hourly for a hammer.. then may have something..

nada on da hammer.. doji

[BullBear52x]

... Guess who SPY is following, again…..

Via the ThinkorSwim news feed, FWIW;
Apologies for inserting the long article

By Tommy Stubbington and Georgi Kantchev
Oil and stock markets have moved in lockstep this year,.

My take: we are back to easy trade if thing will come back to normal as it has this year, economy data will be useful again,

[BullBear52x]

by that I mean, earnings lead GDP number, anyone pay attention to earning will see this. bad earning stock going down, it has been and it always will.

[Al_Dente]

... Guess who SPY is following, again…..

Via the ThinkorSwim news feed, FWIW;
Apologies for inserting the long article

thanks

[Al_Dente]

FOR THE BULLS:
I follow (and post) the MANDATORY re-balancing QUARTERLY and I assume quarterly re-balancing, however, note this:
EOM (end of month) isn’t until Friday, but Morgan Stanley has a good point here:
“January has seen the largest monthly gap between stock and bond returns since October 2008 (around 11%). Any stock/bond allocation set at the start of 2016 is now off-benchmark as a result, raising the question of portfolio rebalancing flows. Given the c.US$36 trillion that sits in global pension mandates, even small adjustments could be meaningful.”

Those who rebalance MONTHLY will be buying stocks and selling bonds to regain the required stocks/bonds blend. This is the first time I’ve seen that number: circa $36 trillion dollars in mandated managed funds…

[MrMiyagi]

spy

[Out of Bounds]

NAZ and DOW perking up

[ALdaytrade]

Maybe just a gap fill at 1905.

[josephli]

FOR THE BULLS:
I follow (and post) the MANDATORY re-balancing QUARTERLY and I assume quarterly re-balancing, however, note this:
EOM (end of month) isn’t until Friday, but Morgan Stanley has a good point here:
“January has seen the largest monthly gap between stock and bond returns since October 2008 (around 11%). Any stock/bond allocation set at the start of 2016 is now off-benchmark as a result, raising the question of portfolio rebalancing flows. Given the c.US$36 trillion that sits in global pension mandates, even small adjustments could be meaningful.”

Those who rebalance MONTHLY will be buying stocks and selling bonds to regain the required stocks/bonds blend. This is the first time I’ve seen that number: circa $36 trillion dollars in mandated managed funds…

Boss, I like the reasoning. my concern here is that without quantitatively know/model how much rebalancing will happen, it is really hard to foresee how much impact they have on the market especially everyone knows they have to rebalance. For those funds that would like to rebalance away from equities, and pile into safe haven like treasuries, wouldn't it a good opportunity

[Jennyahwu]

2228.png

Hi Miyagi, you missed the p bar on Friday 186.77. can you add it into ?

[BullBear52x]

since bulls show a weak hand, sell is coming here (hint:TSI)

[BullBear52x]

FOR THE BULLS:
I follow (and post) the MANDATORY re-balancing QUARTERLY and I assume quarterly re-balancing, however, note this:
EOM (end of month) isn’t until Friday, but Morgan Stanley has a good point here:
“January has seen the largest monthly gap between stock and bond returns since October 2008 (around 11%). Any stock/bond allocation set at the start of 2016 is now off-benchmark as a result, raising the question of portfolio rebalancing flows. Given the c.US$36 trillion that sits in global pension mandates, even small adjustments could be meaningful.”

Those who rebalance MONTHLY will be buying stocks and selling bonds to regain the required stocks/bonds blend. This is the first time I’ve seen that number: circa $36 trillion dollars in mandated managed funds…

Boss, I like the reasoning. my concern here is that without quantitatively know/model how much rebalancing will happen, it is really hard to foresee how much impact they have on the market especially everyone knows they have to rebalance. For those funds that would like to rebalance away from equities, and pile into safe haven like treasuries, wouldn't it a good opportunity

One thing need to note if you are heavy in BONDs, Fed balance sheet is crazy high, if interest perking up watch out, fed can not have that, pension can not allow that, pop and mom will not allow that, soft landing is the only way out, that is let the equity sell off to be cheap enough to unload the burden on treasuries. just one opinion WDIK?

[Cobra]

3 push up? I'm not sure because in the past most bear patterns simply don't work.

[Al_Dente]

Sector performance one-day only:
Health strong, banks and smalls weak

[MrMiyagi]

Hi Miyagi, you missed the p bar on Friday 186.77. can you add it into ?

I show 11 down to $186.74 from Friday.

[fehro]

SPX 17 point day range from the 60 point days.. now it feels like paint drying.. remember the 7-10 point days?
mind the possible bear flag, invs H&S VIX .. not sure..

[josephli]

FOR THE BULLS:
I follow (and post) the MANDATORY re-balancing QUARTERLY and I assume quarterly re-balancing, however, note this:
EOM (end of month) isn’t until Friday, but Morgan Stanley has a good point here:
“January has seen the largest monthly gap between stock and bond returns since October 2008 (around 11%). Any stock/bond allocation set at the start of 2016 is now off-benchmark as a result, raising the question of portfolio rebalancing flows. Given the c.US$36 trillion that sits in global pension mandates, even small adjustments could be meaningful.”

Those who rebalance MONTHLY will be buying stocks and selling bonds to regain the required stocks/bonds blend. This is the first time I’ve seen that number: circa $36 trillion dollars in mandated managed funds…

Boss, I like the reasoning. my concern here is that without quantitatively know/model how much rebalancing will happen, it is really hard to foresee how much impact they have on the market especially everyone knows they have to rebalance. For those funds that would like to rebalance away from equities, and pile into safe haven like treasuries, wouldn't it a good opportunity

One thing need to note if you are heavy in BONDs, Fed balance sheet is crazy high, if interest perking up watch out, fed can not have that, pension can not allow that, pop and mom will not allow that, soft landing is the only way out, that is let the equity sell off to be cheap enough to unload the burden on treasuries. just one opinion WDIK?

I agree Fed does not want interest rate to perk up, but pension would love it. Life insurer would love it. Bill Gross' view on the issue:

http://fortune.com/2015/09/23/bill-gros ... est-rates/
http://www.foxbusiness.com/features/201 ... onomy.html

"to insurance companies, pension funds and other institutions that need higher interest rates. So yes, the chickens are coming home to roost so to speak."

[ALdaytrade]

Might be a bear flag here.

[rhight]

Nibbled at a long today, hope to hold for a few days.