[stock-ticker]
Morning Note March 7, 2016

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Morning Note-

Fri, March 7, 16

08:45 ET                                         Update:

[Stockboardasset] S&P futures -43bps

08:45 ET                                         Update:

[Stockboardasset] Nikkei -133bps

08:45ET                                         Update:

[Stockboardasset]FTSE100 -76bps DAX -59ps

 

Over the weekend, China disappoints speculators with a revision of lower GDP, no stimulus, and lower FX reserves. China equities slightly advanced as Goldman Sachs blows up more clients in Iron Ore. Last week, Goldman had the audacity to throw clients short into the rip your face off rally of Gold. As the PBOC comments overnight against NIRP, The Bank of International Settlements raises questions and impact of NIRP and monetary policies. Someone in their management can speak with the BOJ and ECB for their fail experiments. JP Morgan comments on the BOJ seeing their policy meeting pushed back from March -> July. Does the BOJ see a buying dip opportunity in the near term? The Nikkei 225 closed -43bps as an uneventful session transpired, except for Goldman blowing up their clients for the second week in a row. We almost forgot to mention N. Korea releases statements of a pre-emptive Nuclear War with the south as the largest Military Drill with S. Korea and the US are underway. That’s odd, because in Saudi Arabia Northern Thunder is the largest Military Drill ever held being conducted as we speak.

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Oil Note March 6, 2016

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Sunday March 6, 16 Oil Note-

We congratulate OPEC and Russia for truly confusing the WTI market. An advancement of +40% in less than a month on no concrete fundamental developments to the marketplace is remarkable. We believe the short cover was forced by US Banks in the ETF market to advance WTI price to a suitable level for oil companies to complete a massive round of secondary offerings. The size of the round has been the largest equity flow since 1999. This comes at a time where the US Default Rate has surpassed the infamous Lehman Crisis. Banks are avoiding another crisis via this pre- emptive measure, as the banking complex visualizes major headwinds lurk ahead.

The 2 immediate risks of WTI are Cushing Storage and Refineries. Cushing is >80% capacity with just 4-5 months of inventory build left according to GenScape. US Refineries have had a massive widespread cut of gasoline and distillates, which is the most since the great financial crisis, due to storage woes, lackluster demand, and a sluggish winter. On top of the cut, refineries have another 7 weeks of maintenance, which will add additional builds. We saw drastic measures in Feb, by Phillips 66 dumping their Cushing inventory for immediate delivery, which widened the WTI spot of Feb by over $2+ sending WTI spiraling to 26. Forced deliveries are another concern, and Feb events should be a reminder the storm has not passed.

We believe the forced short covering will have a celling of 36.50-40 range. Fundamentals will realign and the narrative of storage woes will be a crude awakening. As banks shore up oil companies via secondary offerings, we can only speculate this is a defensive play for the potential of more WTI downside to come. We believe the clearing process of excess capacity has not occurred yet, and is needed to rebalance the WTI Market. Once this occurs, the rebalancing effort will be under way, and we’ll state a heavy weigh for long positions in WTI. Our targets to the downside are first 30.63, which is a major point of control of the FY’16 balance value area. Next Price may re-visit 26 for a double bottom, and at an extreme clear into the 22.50 -20 range producing a hammer. As the Federal Reserve continues ZLB, the traditional V shape recover is nonexistent.

We end the note in a cautious tone of severe bottlenecks in the WTI patch. The 40% advancement in WTI is/was artificial in nature produced by a short covering to temporary bail out ailing oil companies via equity. The advancement in the WTI price was on no fundamental developments in curing the oversupplied and lackluster demand market, but merely to protect banks from an inevitable crisis. As the Short Cover is unsustainable in terms of slope, we are expecting an unfair high in the 36.50-40 range to produce a reversion back to the point of control of 30.63. The market is positioning for a clear of excess capacity, as banks shore up the viable oil companies. We feel confident in our analysis of an unfair high will be produced in the near term due to the drastic measures banks have undertook, which signals danger ahead.

 

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Morning Note March 4, 2016

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Morning Note-

Fri, March 4, 16

08:20 ET                                         Update:  [Stockboardasset] S&P futures +39bps

08:20 ET                                         Update:  [Stockboardasset] Nikkei +104bps

08:20ET                                         Update:  [Stockboardasset]FTSE100 +43bps DAX +65bps

 

All eyes on the NFP headline print this morning as some renewed pressure in USD, as well as Gold enters into a possible bull cycle. The market is searching for clues for the upcoming FED policies and the stability of US economic growth. Today’s NFP report needs to show increase labor participation, and wage growth to continue the narrative of everything is awesome. The midpoint NFP headline is 180k. Above 180k the narrative of a healthy economy continues and the FED doesn’t have to worry too much about jobs. Below 180k considered a miss will derail the narrative of a healthy economy and lead to possible FED policies undoing’s. When considering the collapse in the Oil/Gas industry, as well as the Technology layoffs i.e. Yahoo cutting 15% staff, we question the viability of such NFP headline. We believe the narrative will continue as a +180k read will maintain calm and the FED is on track.

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Morning Note March 3, 2016

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Morning Note-

Thur, March 3, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -07bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +97bps

08:45ET                                         Update:  [Stockboardasset]FTSE100 -25bps DAX -05bps

Global Equities advanced overnight marking the longest rally since August 2015. Asia equities led higher for the third consecutive day as JPN225 advanced +128bps, as well as Chinese markets remained marginally positive. US data will be in focus today, as initial claims and Service ISM will be clues to the underline health of the economy. Non-farm payrolls will be released tomorrow as this confluence of data will enable traders to develop a thesis into next week ’s central bank circus. Overnight, US Futures are mixed, as the +20 day rally has advanced more than +1000bps on speculation of central bank policies. As a barometer of trend health TRIN and NYMO print at extreme levels signifying overbought conditions in the intermediate timeframe. Gold continues to consolidate in a Symmetrical triangle giving the market mixed signals as a flight to safety. SPX and GOLD have advanced in tandem recently, so we took a poll to find out who is telling the truth. (Poll Below)

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Morning Note March 2, 2016

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Morning Note-

Wed, March 2, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -17bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +139bps

08:45ET                                         Update:  [Stockboardasset]FTSE100 -86bps DAX -44bps

 

Overnight Global Equities staged an impressive rally extending into the 20th session, which was sparked by the biggest SPX gain since January and the best first day of march on record. Despite recent domestic and global data releases that have been reinterpreted as “great”, and as Reuters peddles fiction“Wall Street surges as weak data spurs stimulus hopes”, we believe the current rally is overextended as depicted by NYMO >90 print. There was weakness in Energy overnight, as API reports the largest build in 11 months clocking in at 9.9mm. Immediately, WTI dropped 200bps, and continues to be under pressure leading into EIA 1030am. We note, if EIA data is less than API, algos will run a bull bias. Our hats are tipped to a well played OPEC and Russia for confusing WTI Traders, as their fiction peddling nonsense has appreciated WTI +30% since January. Near Term, the WTI Market will revisit the Cushing Storage narrative as storage capacity at the facility nears maximum capacity. As long as storage volumes remain >80% there will be pressure on WTI spot. The market has lost focus on storage and refiners, and we believe the narrative of capacity will resurface near term. The PSX debacle in early Feb was a warning signal to traders in the market place as many refiners come under pressure. The spot Price WTI was extreme wide when PSX dumped their crude for immediate delivery. The question arises, when other refiners follow the PSX trend, but are denied by Cushing to bottlenecks in storage capacity what will spot widen to this time around?

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Morning Note March, 1, 2016

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Morning Note-

Tues, March 1, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures +70bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +147bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +144bps DAX +249bps

 

Global Equities have had a modest advancement leading into last week’s G20 Meeting. Global Speculators were expecting a coordinate central bank program of new stimuli to heal the demand issue. Results of the G20 were constructive, but no such plan of stimuli was conveyed. US Equities advanced more than +900bps in a massive short cover rally of an unstable structure into the G20. The thesis of more stimulus was debunked as current fair value of US Equities levitates as WTI is used as a prop not a true correlation. As the levitation continues, US Pending Home

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Morning Note February 29, 2016

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Morning Note-

Monday, Feb 29, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -23bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei -106bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +31bps DAX -22bps

 

Over the weekend, the G-20 meeting was a big disappointment. The expectations of a coordinate central bank stimulus program to lift global equities out of a rout was debunked. The theme of the meeting was the “4C’s”: China, Credit, Consumer, and commodities. Also, two major problems recited at the meeting were US-growth, as well as slow down in the global economies.

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Morning Note February 26, 2016

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Morning Note-

Fri, Feb 26, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures +55bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +108bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +71bps DAX +124bps

 

In the past 2 weeks, Global equities have diverted from the normal rout and maintain a corrective impulse wave leading-in to the G20 meeting this weekend. US VIX in this timespan has lost more than 50%, as well as US-Equities panic buying +9% short cover rally. US Equities on a double-banded oscillators signal overbought extremes, but what’s more troubling is the volume drop off. Even more troubling is how the US Equities rally was stimulated. First, OPEC announced production freezes saving SPX from the 1800 level, the FED announces MBS POMO cancellation and a US 7YR Treasury auction cancellation creating more panic buying. The structure of the move is unstable and we maintain our view of an unfair high in the near term producing a reversion.

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Morning Note February 25, 2016

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Morning Note-

Thur, Feb 25, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -4bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +127bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +126bps DAX +86bps

 

Overnight China Markets crashed, Japan advances, as well as Europe advances. That is the vibe of the Pre- G20 meeting as it’s host country: China continues a rout not seen in a month. Typical comments out of Japan from Kuroda defending NIRP, meanwhile Japanese markets in a post-NIRP era have seen dramatic declines. Apparent this morning, normal coefficient correlations to US Equities have dissipated in preparation to G20. Last week’s OPEX rally short cover advanced US Equities in an unstable structure. The resistance on the advancement is a major 1.414 extension of the entire bull cycle at SPY 195. Markets are testing this level on a non-linear timeline of 4 days. If a rejection of this level occurs expect a reversion to 189.50, then fill the 187 window. If the 1.414 extension is successfully on the upside, a migration to the upper distribution of the bi modal will be seen. Markets at crossroads.

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Morning Note February 24, 2016

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Morning Note-

WED, Feb 24, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -93bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei -94bps

08:45 ET                                         Update:   [Stockboardasset]FTSE100 -128bps DAX -228bps

 

Last week’s OPEX and Short Cover Rally in US-Equities had an advancement that rejected the 1.414 extension of the entire bull cycle. As we’ve noted, the structure of the rally in US-Equities was unstable due to the composition of how the market moved. Our analogy would be constructing a home without a sturdy foundation. The cracks in the foundation were so obvious that others such as Geneva Swiss Bank and Tom DeMark publicly voiced their concern of the recent advancement. SWFs have been the largest hurdle in US Equities as liquidity is not a constant variable, its highly conditional, thus explaining the volatility. The liquidity floor sits on Fib extensions 1.272 and as of recently a liquidity hole took SPX underneath such level, but a saving grace from OPEC in a well-timed manner saved markets from the inevitable clearing process. Markets are at a cross roads, do we open door number 1 (Market Clearing) or door number 2 (FED).

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