Afternoon Note
The mercurial market strikes again! Stocks surged after the Street digested the November jobs report and determined a not-too-hot, not-too-cold jobs growth; in fact, it’s just right. This environment is perfect for slow, steady hikes in interest rates.
Ironically, the 370-point rally in the Dow only got the market to break even for the week and it is close to breaking even for the year.
There was no conviction as many big movers rallied on light volume, but that can change with a move through the Dow at 18,300, perhaps next week.
In the meantime, the Organization of Petroleum Exporting Countries (OPEC) has taken the game of chicken to a whole new level, opening the spigots even more despite a global glut. I would say that Saudi Arabia is going in for the kill on America’s fracking miracle. However, the news is great for airlines and maybe even retailers.
So, the world goes into Friday, looking for OPEC to cut its output; instead, an increase of 31.5 million barrels a day from 30.0 million. The oil cartels own estimates suggest that the third quarter of 2016 will not lead to an oversupply in the marketplace. They really are going in for the kill against American frackers.
2016 Oil Picture |
1Q16 |
2Q16 |
3Q16 |
4Q16 |
Demand |
93.28 |
93.31 |
94.65 |
63.85 |
Non-OPEC Supply |
63.1 |
63.05 |
63.14 |
63.85 |
Market Place |
30.16 |
30.27 |
31.51 |
31.32 |
Speaking of retailers, Home Depot (HD) and Costco (COST) are brick-and-mortar steamrollers, and blue- chip havens that look great for those who have wasted so much time on the sidelines to ease back into the game. On that note, volume was light and the internals were shaky.
Bad Breadth
Since 1940, the S&P 500 has been up 2% or more-393 times in a single session. Only seven of those times, including last Friday, saw more losers than winners. The market breadth was abysmal. Sure, there were more advancers than there were decliners, and volume was heavier in the winners than the losers. A shocking number of stocks closed at 52-week lows.
A/D |
NYSE |
NASDAQ |
Advancers |
2,010 |
1908 |
Decliners |
1,052 |
909 |
Volume |
NYSE |
NASDAQ |
Up |
2.6 billion |
1.4 billion |
Down |
1.6 billon |
436 million |
Breadth |
NYSE |
NASDAQ |
52 week highs |
39 |
58 |
52 week lows |
191 |
193 |
Today’s Session
Oil continues to get creamed this morning and U.S. crude fell below $39. The energy complex is down over 3% today. And this is spilling over to the equity markets which are all lower.
Comments |
Speculative question, hmm.. continue to produce more at a loss, hurting fracking, solar, wind, exploration, Russia and risk entire world oil based employment economy, but hey at least we are not living “peak oil” no more. Deflation does not end only begins what? Ken Frost on 12/7/2015 10:12:23 AM |
Oil prices to remain this level or lower until at least the end of next summer. Overall a plus for the consumer. Doug on 12/7/2015 10:18:44 AM |
Senator Graham was on Fox Business ... Maria Bartiromo ... this morning. He was excellent. He just got back from a whistle stop trip to Syria and had some useful ideas and perspectives. He says another 9/11 size and scope attack soon. ISIS spent eight (8) months planning out the Paris attacks. I think 1000 ISIS teams attacking churches, police stations, bridges on Christmas Day. Farooq was a hot head and took his 2000 rounds of ammo and his pipe bombs and attacked the Christmas Party. His wife was his "code talker". But Farooq's attack was premature by a month. He would have needed two or four more members; the fingerprints of his team members are all over his garage. Graham thinks a chemical attack. And Graham complains about spending cuts on defense and NSA and CIA and FBI. Graham was very good. Ask him to talk more. One of the women said that maybe if we didn't fight, then they would leave us alone. Graham about choked. Get Graham back. Let him talk for a long time. Best regards, - Al Al M. on 12/7/2015 10:33:13 AM |
Apart from a war, the price will remain soft through 2016. This may be good for the consumer in the short term, but it is bad for the industry as a whole due to the halting of development and capital projects. This will have a broad negative impact, and is not quickly reversible. John Stovall on 12/7/2015 11:08:05 AM |
Ironically, the 370 point rally in the Dow only got the market... Read John Crudele's article in business section of NY Post Saturday..hopefully nobody is naive enough not to believe the market averages are controlled by Treas/Fed and a few select Banks...aka..the PPT (the Plunge Protection Team). Treas/Fed CANNOT afford a declining market!! RLB on 12/7/2015 11:12:58 AM |
Dollars are being transferred from one segment of the economy to another. Net zero. z on 12/7/2015 12:14:02 PM |
The oil $ will drop lower before it adventually rises again . Will have a good impact on everyday consumers at the pump . More $ for people to spend elsewhere . However, it will coincide with many people losing there jobs in the oil industry , imparticuler offshore . Jordan Hipps on 12/7/2015 2:32:09 PM |
based on one or two TA reports from ealier this year target 32 / 33 ish, or even touch 28.xx with a sharp rally of some kind from there. im sort of in denial that SA and OPEC doing this for market share or to contain US frack. time for a reallity check, US (and SA, Quatar) and Russia both at war in Syria. use Canada as a litmus test. low prices good for US consumer, probably not. but the low prices would present a good time to introduce a simple North American plan to address global warming weather you believe it exists or not. simply tax carbon by 3 % and invest this into alt energy, then hand back ownership of these installations to those that were taxed (carbon producers). effectively 3% of carbon revenues would go into reinvestment into alt energy - hardly a difficult proposition for brainles single celled organisms that do nothing other than eat more. em es on 12/7/2015 3:37:18 PM |
want price of oil to rise then we should stop protecting Saudi, Kuwait and defending flow of oil thru Gulf. Pull our Forces out of area to include Navy from the Gulf and let House of Saud stand on it's own then see what happens. We don't need the oil anyway. EU and Japan and getting most the oil and benefiting from our defense of the area. Joe Brown on 12/7/2015 5:50:02 PM |
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