View From The Hill (Dec-15-2015): Crude Oil Greases Wheels of Stock Market

Posted on Posted in Views From The Hill

Commentary

bulls-and-bears4

Stocks put in another positive performance and leading the pack were the Energy (XLE +2.52%) and Financial (XLF +2.34%) sectors. Let’s give a hat tip to Crude Oil  (USO +2.15%) because its recent rally is providing the grease to keep the wheels spinning in this market. (As long as energy market rally has gas to run, stocks should too, even if a disproportionately large share of them happen to be beaten down and oversold energy companies.)

In economic news today, the CPI less food-and-energy was relatively unchanged (mth/mth @ 0.2% vs. consensus @ 0.2% and prior @ 0.2% and yr/yr @ 2.0% vs. prior @ 1.9%).  The Empire State Manufacturing Survey report indicated a continual contraction for the New York region (actual @ -4.59% vs. consensus @  -7.0% and prior @ -10.74%). On the residential real estate front, the Housing Market Index remains strong (actual @ 61 vs. consensus @ 63 and prior @ 62).

Tomorrow the Federal Reserve will announce its interest rate policy decision which will more than likely indicate a rate hike. What is even more important will be its disposition going forward, i.e. dovish or hawkish. My guess is that it will be data dependent and lean toward the dovish side as it considers existing domestic and global economic conditions.

 


Performance Summary

*Trends: ST = short-term; MT = Intermediate-term; LT = long-term

vfth-performance-12-15-2015
Click to enlarge

 


Market Condition

So as it stands, we have a quadruple bottom (the market has tested this price level area 4 times this year and advanced). Momentum remains in bearish territory but it is accelerating upward and we are within spitting distance of crossing the SP-500’s 50 and 55 day moving averages. More encouraging is that despite advancing 50 points over the past two days, it is hardly anywhere near being overbought. Overall, it’s not a bad condition to have for a rally.

With that said I am still somewhat skeptical. Over a 3-day timeframe, only 28% of the SP-500 components are up in price on higher volume. In other words, there has not been much of a recovery in terms of breadth or volume dollars. Just be careful as this rally smells like a funky old bear-trap. I could be wrong and, if so, it would not be the first time. Nevertheless I advise caution.

Hillbent on the Market Direction…

 

Daily Chart Technical Analysis
sp500-daily2-chart-12-15-2015
Click to enlarge

 

Market Breadth
Advancers 408 Decliners 94
New 5-day highs 92 New 5-day lows 31
New 52-week highs 8 New 52-week lows 53
Bullish reversals 11 Bearish reversals 60

 

Market Momentum
% > 20 M.A. % > 50 M.A. % > 100 M.A. % > 200 M.A.
31% 39%
43%
42%
↑ = positive momentum; ↓ = negative momentum; and ↔ = neutral momentum

 


Volume Radar Alerts

  • Vol % = volume percentage greater than average volume
  • SIR = short interest ratio or days to cover
vfth-volume-radar-12-15-2015
Click to enlarge

 


Disclaimer

Hillbent does not provide individualized market advice. The information we publish regards securities in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification. Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements. Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

 

Leave a Reply

Your email address will not be published. Required fields are marked *