Archive for Default

US nonfarm payrolls totaled 242K in Feb

Amid fears that the U.S. could be joining a global slowdown, the economy added a better-than-expected 242,000 jobs in February while the unemployment rate held steady at 4.9 percent. Economists were expecting 190,000 new positions and no change in the jobless figure.

Despite the strong headline number, the closely watched average hourly wages actually declined for the month, falling 3 cents and equating to a 2.2 percent annualized jump, down from 2.5 percent in January. Fed policymakers are looking at wages for evidence of inflation. The average hourly work week also declined 0.2 hours to 34.4.

The bulk of the job gains came from health care, retail and bars and restaurants, which added 57,000, 55,000 and 40,000 new positions, respectively. Construction added 19,000 but mining-related industries lost 19,000 jobs.

Job quality was titled toward part time, which the household survey indicated grew by 489,000, while full-time positions increased by just 65,000.

Get the market reaction here.

A separate unemployment gauge that includes those not actively looking for a job or at work part-time for economic reasons fell to 9.7 percent, the lowest reading since May 2008. A declining labor force participation rate had played a big role in the decline of the headline jobless number, but the gauge rose in February to 62.9 percent, its highest level since January 2015, as the civilian labor force increased by 555,000.

Revision to previous months added 30,000 jobs, with December going from 262,000 to 271,000 and January pushed up to 172,000 from 151,000.

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“The report says that we have a healthy economy and it’s beginning to get people back into the market. But it’s not pressuring wages yet,” said William E. Spriggs, chief economist at the AFL-CIO. “We need everyone to be aware that our wages have not rebounded, so we still have a ways to go before the labor market is really tight.”

The figures come amid a turbulent time both for the economy and financial markets. Despite the recent stock rally, the S&P 500 is still down about 2.5 percent for 2016.

Federal Reserve officials are looking for wage-driven inflation as a trigger to continue policy normalization. The U.S. central bank in December enacted a quarter-point hike in its interest rate target, the first such move in more than nine years…read more @ CNBC

 

 

 

The markets after Brexit

By The Economist online..
OUR third look at the impact of the Brexit referendum* concerns the effect on the financial markets. Market movements can affect the economy (higher gilt yields, for example, would make it harder for the government to finance its deficit; lower equity prices could dent confidence) but they also act as a signal. Other things being equal, a decline in the pound, a rise in gilt yields or a fall in equities indicate that investors are finding British assets less attractive, and points to their assessment of the economic impact of the vote. As in the other blogs, I will be drawing on the views of investors, economists and thinktanks for evidence.

On sterling, the view is pretty universal; a Brexit vote would cause the pound to fall. A Bloomberg poll of economists found that 29 of 34 saw a decline below $1.35 and only one saw the pound above $1.40 (at the time of writing, the pound is around $1.42). Among investors, Blackrock, the biggest fund manager in the world, says that

Sterling is most vulnerable…

…read more

Read more here: The markets after Brexit

Category: Business and finance, Buttonwood’s notebook

ChartAdvisor for March 4, 2016 (SPY, DIA)

By Justin Kuepper..

A weekly technical summary of the major U.S. indexes.

The U.S. markets moved higher over the past week, as of Thursday’s close, led by small-cap stocks in the Russell 2000. While consumer spending rose and labor markets improved, the manufacturing and energy sectors continued to show weakness. Wage growth also varied considerably throughout the nation and consumer prices remained stubbornly flat. That said, some experts believe that a rate hike or two may be back on the table for 2016.

International markets also moved mostly higher over the past week, as of Thursday’s U.S. close. Japan’s Nikkei 225 rose 4.02%; Germany’s DAX 30 rose 2.51%; and, Britain’s FTSE 100 fell 0.37%. In Europe, a series of economic reports suggested that growth was continuing to slow ahead of the ECB’s rate decision next week. In Asia, China’s President Xi Jinping announced a series of economic measures that sounded a lot closer to Reagan than Mao.

The S&P 500 SPDR (ARCA: SPY) rose 2.39% over the past week, as of Thursday’s close. After breaking through its 50-day moving average at 193.78, the index reached its R1 resistance at 199.80. Traders should watch for a breakout toward its 200-day moving average at 201.01 or a move lower to its 50-day moving average. Looking at technical indicators, the RSI appears a bit lofty at 62.90, while the MACD remains in a bullish uptrend since its crossover back in mid-February.

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The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 1.85% over the past week, as of Thursday’s close. After breaking out from its 50-day moving average at 169.35, the index reached its 200-day moving average at 170.00. Traders should watch for a breakout to R2 resistance at 175.80 or a move lower to its 50-day moving average. Looking at technical indicators, the RSI appears a bit lofty at 61.60, while the MACD remains in a bullish uptrend.

 

…read more

Read more here: ChartAdvisor for March 4, 2016 (SPY, DIA)

Category: SPY, DIA, IWM, QQQ

Mortgage Rates at Crossroads Ahead of Jobs Report

Mortgage rates began the day slightly higher, on average, but managed to make it back in line with yesterday’s levels by the afternoon. Some lenders are in slightly better shape. Some are worse. In either case, the differences between today and yesterday would be minimal–only affecting the closing cost/credit side of the rate equation (as opposed to changes in the rate itself. Most lenders continue quoting conventional 30yr fixed rates in a range of 3.625% to 3.75% with the latter gaining significant traction over the past few days. Tomorrow brings the most important economic report of any given month: The Employment Situation (aka “nonfarm payrolls” or simply, the “jobs report”). As always, the jobs report carries significant market moving potential , for better or worse. At the moment, we …read more

Read more here: Mortgage Rates at Crossroads Ahead of Jobs Report

Category: currency, dollar, economy, federal reserve, gas prices, inflation, interest rates, janet yellen, job market, jobs, monetary policy, oil prices

Agricultural Stocks May Head Even Lower (POT, MON)

Agricultural chemical companies may resume major downtrends after working off oversold technical conditions.

Agricultural chemical companies have underperformed in this bull market cycle and could head substantially lower in 2016, offering profitable short sales. However, the sector is working off an extremely oversold technical condition, and the best short entries should come at higher price levels, after testing at long-term moving averages.

These stocks got hurt badly during the 2007-2009 bear market because the agricultural industry’s performance is levered to emerging market economies that contracted through that period. Conditions improved into 2011 and 2012 but have deteriorated since that time, primarily due to stalling growth in China and deep recessions in Russia and Brazil.

The recovery effort also ran into a brick wall when potash prices collapsed four years ago, following the breakup of a Russian-Belarusian marketing cartel that had limited the nutrient’s supply. That commodity’s decline continues to escalate while the sector faces additional headwinds from the broader raw material downtrend that’s infected world markets since 2014.

Potash prices have failed to bounce so far in 2016, continuing to hover near eight-year lows despite healthy upticks in other beaten down commodities, including metals and energy. This lagging behavior waves a red flag that reinforces the bearish outlook for sector operations this year and beyond. It also tells us that current recovery efforts should eventually fail.

Potash Corp of Saskatchewan Inc. (POT) sold off from 81 to 16 during the bear market and bounced up to 60 in 2011. It then traded sideways for more than two years before breaking support in the upper 30s in 2013. The stock tested new resistance into early 2015 and rolled over in a steep decline that reached the 2008 low in January. It built a small base at that level and headed higher this week. …read more

Read more here: Agricultural Stocks May Head Even Lower (POT, MON)

Category: POT, MON, AGU

Uptrend and Downtrend Trade Setups (ERIC, KIM, XYL)

Here are current trade setups for buying or selling, and a couple stocks that could see a big move either way.

Since the middle of February, the S&P 500 has rallied, from 1810.01 (on February 11) to 1986.45 on March 2. While short-term momentum is up, there are major resistance levels overhead—primarily starting at 2060, but selling could kick in before then. In this sort of environment big moves in either direction are likely (as opposed to a strong trending market where the big moves favor one direction), so plan some trades for both the long and short side. Here are four stocks with recent trade setups, one favoring a long trade, one favoring a short trade, and two others which could make a move in either direction.

Kimco Realty Corp. (KIM) is trending higher since September when it bottomed at $22.07. The recent February 3 move higher, to $28.08 confirms the uptrend is still intact. Through November and December, the stock moved sideways, breaking above $27 resistance in late January. Mid-February saw the price pullback to this former resistance area, as the price hovered between $27 and $26 for a couple of weeks. With the stock closing at $27.50 on March 2, the next rally may already be starting. Buy orders can still be placed between $27 and $26.60, and may be filled on an intraday fluctuation. A stop loss goes below $26, and the upside target is $29. That target is just above the 2015 high of $28.54. By getting in near $27 the reward:risk on the trade is 2:1; getting in at a higher price reduced the reward:risk, making the trade less attractive.

Ericsson (ERIC) is in a declining trend channel going back to mid-2015. Right now the stock is at the top of that trend channel, where it has a tendency to decline from. Between February 25 and March 2, a consolidation has formed between $9.38 and $9.14. If the price declines below $9.14, that signals the price may start dropping again. If the price continues to rise before dropping below $9.14, the short trade is avoided. If the trade triggers, place a stop loss at $9.45 or above. The target is $8.40, just below the February 9 low of $8.43 and near the bottom of the channel. This trade also provides a roughly 2:1 reward to risk ratio.…read more

Read more here: Uptrend and Downtrend Trade Setups (ERIC, KIM, XYL)

Category: ERIC, KIM, XYL

Can Netflix Get Back on Track? (NFLX)

By Alan Farley

Netflix has entered a topping pattern after posting an all-time high while institutions continue to dump positions.

Netflix Inc. (NFLX) ripped higher in the fourth quarter of 2015, posting an all-time high at 133.27 in December. The superior performance solidified its membership in the FANG quartet, joining Facebook Inc. (FB), Amazon Inc. (AMZN) and Alphabet Inc. (GOOGL) formerly known as Google. Netflix’s stock has fallen on hard times in 2016, losing its leadership role in a steep decline that’s trapped overeager shareholders.

The stock has bounced in recent weeks, but is still trading well below last year’s lofty levels. Will this recovery effort finally end the downtrend and attract the sidelined capital needed to build a new uptrend? Or is this uptick represent a short selling opportunity, ahead of a much steeper slide that takes out first quarter lows and sends this iconic tech company into a multi-year bear market?

The stock rallied above the 2004 high at 5.68 (post spilt) in 2009, entering a strong uptrend that topped out in the lower 40s in 2011. The subsequent decline gave up the majority of the two-year uptrend, coming to rest in 2012 just a few points above the 2009 breakout. This fierce downtrend obliterated the stock’s loyal shareholder base at the same time that broad benchmarks were hitting multiyear highs.

A strong recovery set into motion in the fourth quarter of 2012, lifting the price back to the prior rally high about one year later. It broke out at the end of 2013, joining other tech stocks in the strong bull market but the rally stalled quickly, yielding a rectangular consolidation pattern, with support at the breakout level and resistance in the upper 60s. The stock finally cleared range resistance in April 2015 and entered a rapid advance into the December rally peak.

The 2011 into 2013 downtrend tells us the stock can go its own way regardless of broad market direction. This is a two-edged sword because it raises the possibility of another brutal decline in coming years. However, the stair step rally in the last three years has built a number of platforms that should provide strong support if lower levels get tested. The strongest of these levels lies at the top of the 2014 rectangle.…read more

Read more here: Can Netflix Get Back on Track? (NFLX)

Category: NFLX

A gambler on shale

By The Economist online
“To hell with OPEC”

IT WAS a tragic end to a life that epitomised the winner-takes-all spirit of American capitalism. On March 2nd, the day after he was indicted by a federal grand jury on charges of rigging bids for oil-drilling rights, Aubrey McClendon, a founder of Chesapeake Energy and one of the pioneers of America’s natural-gas revolution, died after driving his car at high speed into a wall.

Mr McClendon, 56, was one of the high-rollers of the shale boom—and of its bust. He turned a $50,000 investment in 1989 in Chesapeake, based in Oklahoma City, into what became one of the two biggest natural-gas producers in the United States, with an acreage of leaseholds almost the size of West Virginia. He was also one of the champions of natural gas as a relatively clean fuel compared with coal, and an advocate for freeing America from dependence on Middle Eastern oil. “To hell with OPEC”, he was fond of saying.

 

Yet his ride was a white-knuckled one even by the standards of America’s oil industry. He quickly seized on the potential of two emerging technologies, horizontal drilling and hydraulic fracturing…

…read more

Read more here: A gambler on shale

Category: Business and finance, Approved, Business, Business

Three Stocks with Buying Opportunities (GCI, MT, SXL)

By Cory Mitchell Three buying opportunities based on an uptrend and pullback, or severely depressed prices offering long-term upside potential.

The saying “buy low, sell high” has different meanings to different traders. To some, it means buying when the price is trending higher, but only after a pullback. To others, it means buying after a big decline starts to show evidence an uptrend may be beginning, and to others it means buying at a high price, with the expectation that the price will go even higher. All these strategies can work, at times. With the S&P 500 well below its May 2015, 2134.72 high, current buying opportunities favor the first two strategies—buying uptrending stocks during pullbacks or buying stocks at very depressed prices. Here are three such opportunities.

Gannett Co., Inc. (GCI) trended higher from the July 2015 low of $10.75, to a high of $17.91 in December 2015. In 2016 the price has fallen, finding support above $13.27 since late January. The pullback presents an opportunity to enter a long trade between $15 and $14, with a stop loss below $13.25. The target for the potential advance is $18 to $19. Buyers will also appreciate the $0.16 quarterly dividend, which equates to a 4.27%yield if purchasing at $15.

ArcelorMittal (MT) is an example of a price depressed stock, with the possibility of a turnaround. On March 1 the stock gapped up 8.95% to $4.14, hitting an intraday high of $4.19. The prior swing high was on February 4 at $4.16. Between the former high and the March 1 rally the stock hit a low of $2.93. The movement between $4.19 and $2.93 is an inverse head and shoulders pattern—a bottoming formation if the price can break and close above resistance in the $4.16 region. The height of pattern ($1.23) provides an initial upside target of $5.39, but considering this stock hovered around $10 for the first half of 2015, longer-term investors are expecting moves back up into the $9 region (or higher).

 

 

 

…read more

Read more here: Three Stocks with Buying Opportunities (GCI, MT, SXL)

Category: GCI, MT, SXL

Capital in fetters

By The Economist online..

THE chairman of Barclays, a big British bank, was asked in a conference call last year whether the firm might draw back its investment in its listed African subsidiary. Actually, he replied, “we would probably be biased to own more than less.” Yet on March 1st Jes Staley, Barclays’ CEO since December, announced that it hopes to reduce its 62% stake in Barclays Africa over the next two or three years, to focus on its main business in Britain and America.

On the face of things, the reversal is surprising. Barclays has been in Africa for over a century. Its blue eagle logo can be found in shopping centres from Nairobi to Lagos. Moreover, Barclays Africa made a healthy return on equity of 17% last year. It has grown quickly in recent years and plans to keep doing so. Over the past year it has acquired licences of various sorts in Ghana and Nigeria and part of an insurance business in Kenya. This will continue despite the sale of Barclays’ stake, Maria Ramos, Barclays Africa’s CEO, insisted this week.

 

But Barclays is one of the most weakly capitalised big Western banks. As well as the sale of…

…read more

Read more here: Capital in fetters

Category: Business and finance, Approved, Finance and economics, FINANCE

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