Thursday, July 6, 2017

FRIDAY 7/7/17; G20 Summit; Oil Tumbles -3%; US Monthly Jobs Report; TRAN (Dow Jones Transports; Trannies) Prints New All-Time Record High

Aussie and Asia stocks begin trading lower. NIKK -0.6%. ASX 200 -0.7%. KOSPI -0.5%. US futures are flat. S&P +2. Dow +10. Nasdaq +6.

Japanese salaries rise more than expected but the move higher in wages is very minor. In south Korea, Samsung Electronics is up +1% after reporting record profits up a huge +72% year-on-year. Smartphone sales are steady and the chip unit sales are ramping strongly higher. Morgan Stanley raises estimates for Macau gambling revenue. MS probably owns stock in Wynn Macau.

Euro 1.1422. Dollar/yen 113.15. Pound 1.2971. Dollar/yuan 0.7578. Aussie dollar 0.7578.

WTIC oil 45.28. Brent oil 48.11. Natural gas 2.89. Gold is down 5 dollars to 1220. Silver is off -1.7% at 15.71. Copper 2.6555.

Treasury yields are; 2-year 1.39%, 5-year 1.94%, 10-year 2.37%, 30-year 2.90%.

US Secretary of Defense James “Mad Dog” Mattis says, “The US is no closer to war with North Korea.” Mattis calms the North Korea situation.

The Asia session is well underway with negative numbers across the trading screens. The stock and bond market selloffs in the States create angst in Asia. NIKK -0.2%. Topix -0.1%. Australia’s SPASX200 tanks -1.4%. KOSPI -0.4%. SSEC -0.4%. CSI300 -0.6%. HSI -0.5%. Taiex -0.5%. Straits Times -0.4%.

Oil slips -1.4% lower. WTIC 44.88. Brent 47.45. Natty 2.89. Gold 1220. Silver 15.84. Copper 2.6545.

Treasury yields are; 2-year 1.40%, 5-year 1.95%, 10-year 2.38%, 30-year 2.91%.

S&P +2. Dow +10. Nasdaq +10. Euro 1.1423. Dollar/yen 113.65. The dollar/yen pair moves higher reflecting a weaker yen after the BOJ steps up its bond-buying program. The Bank of Japan is targeting 0% for the 10-year JGB yield which briefly tagged 0.105% a few hours ago. JGB yields are reaching levels not seen in 1-1/2 years. The weaker yen helps Japanese stocks recover off the lows during the trading session. The central bankers are the market.

The US says computer hackers are trying to access power plant computer programs since May. The Wolf Creek Nuclear Power Plant in Kansas is targeted. The Russians are suspected of the cyber warfare. The announcement occurs at a convenient time, for the United States, ahead of the Trump-Putin meeting today. A skeptical person would think the US released the news to increase President Trump’s bargaining position at today’s US-Russia denouement.

President Putin realizes a new sheriff is in town. President Trump will match wits with master strategist Putin who used former President Obama as a doormat. On foreign policy over the last eight years, Putin played three-dimensional chess while Obama played checkers. President Trump knows how to play chess.

Ray Dalio, founder of Bridgewater the world’s largest hedge fund, proclaims, “Central bankers have clearly and understandably signaled that the end of the nine-year era of monetary easing is coming.” Dalio says the Federal Reserve will attempt to raise rates at a pace that does not damage economic growth or stifle inflation. He says the Fed risks a major market downturn if they get the pace of rate hikes wrong. Dalio says, “I do not see a big debt bubble about to burst.”

China foreign exchange reserves are $3.0568 trillion below the $3.0610 trillion expected but remaining steady for the last five months. The PBOC will continue to manipulate the yuan currency and support China’s markets. China’s central bank maintains and targets the Shanghai Index stock market above 3K for the last two years. The central bankers are the market.

The global bond rout dominates the water cooler discussions this morning. The US 10-year yield tagged 2.39% and the German 10-year bund yield 0.57%. Global investors have less of an appetite for European debt as well as other debt around the world. Traders believe the central bankers are beginning to move in a coordinated manner towards raising rates in the months ahead.

Oil slips lower. WTIC 44.70. Brent 47.35. Aussie oil, gas and energy stocks are punched in the face. Oil Search -2%. Santos -2.6%. Euro 1.1419. USD 95.88.

In South Korea, Samsung loses the early gains trading down -0.4%. Korean Air Lines nosedives -2.2% on news that police and regulators are raiding the company’s headquarters in Seoul.

Asia and Aussie indexes end the session lower sans China. The NIKK ends the session down -0.3% to 19929. The ASX 200 drops -1% to 5704. The KOSPI loses -0.3% to 2380. The SSEC gains +0.2% to 3218. The HSI loses -0.5% to 25341. The India session continues with the Nifty down 16 points, -0.2%, to 9659.

For the week, Japan’s Nikkei Index loses -0.5%. Australia’s SPASX200 loses -0.3% this week. South Korea’s KOSPI loses -0.5% a rare down week in its strong upside orgy this year. The KOSPI is up 10 of the last 12 weeks with price going parabolic. China’s SSEC finishes the week up +0.8%. Hong Kong’s Hang Seng Index loses -1.7% this week. Hong Kong is the big loser while China is the sole winner.

At 3:00 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading flat. DAX and CAC flat. FTSE -0.1%. UK services company Cape catapults +46% higher on a takeover from Altad, a private French company. Howden Joinery loses -1.7% after the founder and CEO announces retirement.

Centrica jumps +4.3% on takeover chatter. EasyJet soars +2.1% higher on a CS upgrade. BNP Paribas gains +1.3%. The oil majors are hit. RDS -0.9%. BP -0.9%. HSBC -0.4%. Total -0.666%.

Saudi Arabia says Qatar is not cooperating with the requests by the small block of Arab nations to address the terrorism problem. The Saudi’s say Qatar’s inaction proves that they support terrorism and the nefarious activities occurring across the Middle East led by Iran.

WTIC oil is down -1.3% to 44.89. Brent oil is down -1.2% to 47.50. Natural gas is up +1.1% to 2.91. Gold is down 4 dollars to 1222. Silver 15.87. copper 2.6645.

S&P +3. Dow +11. Nasdaq +12. Russell +3. VIX 12.49.

Euro 1.1416. Euro/yen 129.90. Dollar/yen 113.79. Pound 1.2960. Euro/pound 0.8809. Mexican peso 18.2819. Canadian dollar 1.2983. Dollar/yuan 6.8011. Indian rupee 64.74. Aussie dollar 0.7590.

Treasury yields are; 2-year 1.41%, 5-year 1.95%, 10-year 2.38%, 30-year 2.91%. The 2-10 spread is at 97 bips. German bund 0.57%. UK gilt 1.32%.

At 3:26 AM EST, S&P -1. Dow -3. Nasdaq -2. Russell -1. VIX 12.56. The Nifty is down 16 points at 9658.

DAX -0.2%. CAC -0.4%. FTSE -0.2%. SMI -0.4%. OMX -0.3%.

The G20 Summit begins in Hamburg, Germany. Small skirmishes and riots occur overnight with a couple of fires burning in the streets. The police presence is extremely heavy with over 500 officers in and around the G20 buildings. A helicopter is in the air and water cannons are positioned in the streets ready for further unrest. Global leaders will be arriving at the meeting over the next hour and greeted by German Chancellor Merkel.

The central bankers have papered over the Italian banking problems. The UniCredit CEO proclaims, “There are no more systemic issues for Italian banks.”

S&P +1. Dow +1. Nasdaq +1. Russell +1. VIX 12.52. Nifty 9655. Euro 1.1423. Dollar/yen 113.71. Pound 1.2956. WTIC 44.76. Brent 47.37.

Treasury yields are; 2-year 1.41%, 5-year 1.95%, 10-year 2.37%, 30-year 2.91%.

At 4:30 AM EST (9:30 AM London), UK May Manufacturing Output is +0.2% missing the +0.5% expected. Industrial Production is +0.1% missing the +0.4% expected. Pound 1.2920.

President Trump’s motorcade arrives at the G20 meetings in Hamburg. Trump walks inside and is greeted by Chancellor Merkel; they shake hands. Chinese President Xi and Russia President Putin arrive. The bigwigs are at the party. Global traders are watching how the European leaders treat President Trump and are especially interested in the first face-to-face meeting between Trump and Russia President Putin. The Trump-Putin meeting will be small and tight with only the two presidents, US Secretary of State Tillerson, Russia Foreign Minister Lavrov and the interpreters attending.

S&P +1. Dow -9. Nasdaq +6. Russell flat. VIX 12.49. WTIC oil 44.35. Brent oil 46.92. Natural gas is at 2.92 ahead of inventory data in a few hours. Copper slips negative down -0.3% to 2.6535.

DAX -0.2%. CAC -0.4%. FTSE -0.1%. MIB -0.5%. IBEX -0.3%. PSI -0.4%.

Euro 1.1415. Dollar/yen 113.73. Pound 1.2917. Euro/pound 0.8837. Aussie dollar 0.7594. South African rand 13.4433. USD 95.93.

Markets are steady and stable as the morning proceeds. DAX -0.2%. S&P futures +1. The Nifty is down 12 points at 9663 heading into the close.

VIX 12.51. The VIX remains above its 200-day MA at 12.44 which is a stock market sell signal. Market bulls will win the day if they can send VIX below 12.44. If the VIX stays above 12.44, there will be stock market carnage ahead.

Oil dips lower. WTIC loses -2.5% to 44.38. Brent oil drops -2.3% to 47.01. Oil may be starting another leg down. Natty 2.92.

The US dollar index is at 95.93 and moving through a tight sideways range at 95.80-96.00 since yesterday. Dollar bulls win above 96 while dollar bears win below 95.80.

At 6:45 AM EST (12:45 PM Hamburg), in Hamburg, Germany, First Lady Melania Trump is unable to leave her hotel room due to the protestors in the streets. The Secret Service is keeping the First Lady in place due to security reasons. German riot police are having difficulty clearing roads as thousands of demonstrators are in the streets. Protestors are disrupting the G20 which will create stress for Chancellor Merkel. A couple of cars are set on fire.

At 7 AM, oil is falling apart. WTIC oil is down -3.1% to 44.13 nearing a 43-handle. Brent oil is down -2.9% at 46.70. Lower oil prices will slap the energy stocks lower. The VIX is at 12.49 remaining above the critical 200-day MA at 12.44 (bearish).

Treasury yields are; 2-year 1.42%, 5-year 1.95%, 10-year 2.38%, 30-year 2.91%.

At 7:08 AM EST (1:08 PM Hamburg), the world leaders are gathered together at the G20 preparing for the group photo. It is amazing to see the most powerful individuals in the entire world all in the same room at the same time. Everyone is all smiles and cordial with one another since they know the cameras are watching. Chinese President Xi stands directly next to Merkel while Trump stands several bodies away. The leaders then migrate to the main meeting room to begin discussions.

After the big bond rout yesterday, the global 10-year yields are; Brazil 10.52%, Mexico 6.84%, India 6.54%, Greece 5.27%, Portugal 3.04%, New Zealand 3.00%, Australia 2.73%, US 2.38%, South Korea 2.30%,  Italy 2.28%, Singapore 2.20%, Canada 1.85%, Spain 1.666%, Hong Kong 1.48%, UK 1.30%, France 0.93%, Netherlands 0.76%, Germany 0.57%, Japan 0.08%, Switzerland -0.02%.

Switzerland’s 10-year yield is on the verge of going positive. Investors have been willing to pay Switzerland for the privilege of parking their money in a safe place. Portugal’s 10-year is above 3%. The US, South Korea and Italy are at the same general 10-year yield. The German bund poked up through the 0.50% resistance yesterday and popped to 0.57% but is idling sideways ever since. Global markets are waiting on the US Monthly Jobs Report dropping in about one hour.

AAPL trades flat and QCOM is up +1.3% as the patent squabbles continue between the two tech heavyweights. MDLZ lowers guidance. TSLA gains +1.7% recovering from the -5.6% drubbing yesterday. However, California, an important state for Tesla electric car sales, reports less registrations.

WGO drives higher on a Stifel upgrade. SWK rises on a MKM Partners upgrade. SNCR leaps +9% higher on news that it is exploring strategic alternatives such as a potential sale. ILCR is placed on the conviction buy list at Goldman. TWTR gains +0.8% in early trading.

In Hamburg, President Trump and President Putin shake hands at the G20 meeting. They appear cordial and friendly.

Ahead of the important US jobs report, S&P +1. Dow -10. Nasdaq +5. Russell +1. VIX 12.55. DAX -0.3%. CAC -0.4%. FTSE flat.

WTIC oil 44.35. Brent oil 46.93. Natty gas is up +1.3% to 2.93 with inventory data two hours away. Gold 1223. Silver 15.86. Copper 2.65.

Treasury yields are; 2-year 1.41%, 5-year 1.95%, 10-year 2.38%, 30-year 2.91%.

Euro 1.1412. Euro/yen 129.78. Dollar/yen 113.74. Sterling drops under 1.29. Pound 1.2898. Euro/pound 0.8847. Mexican peso 18.1821. Canadian dollar 1.2975. Dollar/yuan 6.799. Indian rupee 64.595. Aussie dollar 0.7605. USD 96.02.

S&P +2. Dow +3. Nasdaq +10. Russell +2. VIX 12.46. Gold 1222. USD 95.97. WTIC 44.56. Brent 47.11. DAX -0.2%. CAC -0.3%. FTSE +0.1%. MIB -0.7%.

The consensus expectation is for 170K jobs. Last month was a disappointing 138K jobs. The 12-month average is 189K jobs. The unemployment rate is expected at 4.3% matching the prior 4.3%. Private Payrolls are expected to come in at 164K jobs versus the prior 147K. The Average Workweek is expected at 34.4 hours unchanged from the prior month. The Labor Participation Rate is at currently 62.7%.

The critically-important Average Hourly Earnings are expected at +0.3% month-on-month versus the prior paltry +0.2%. Inflation, that the Federal Reserve has tried to create for over eight years with its obscene Keynesian spending, cannot exist without wage inflation. Average Hourly Earnings are expected at +2.6% year-on-year versus the prior disappointing +2.5%.

The wage data is more important than the headline jobs number and unemployment rate since it determines if the eight-plus years of Fed monetary policy is a success, or failure. The Federal Reserve began this long Keynesian experiment under former Chairman Bernanke’s watch in March 2009 and the final conclusion remains a mystery. Chair Yellen prays each night for wage growth. Will her prayers be answered?

At 8:30 AM EST, the Monthly Jobs Report is 222K jobs a beat above the 170K expected. The unemployment rate is 4.4% higher than the 4.3% expected. Yellen’s prayers are unanswered with wages. Average Hourly Earnings are +0.2% missing the +0.3% expected. Wage growth is paltry. Interest rates are rising and investors are waving the inflation flag but without wage growth inflation will not increase.

Private Payrolls are 187K beating the 164K expected. The May revision to the jobs number is up to 152K from 138K and in April up to 207K from 174K which is a net 47K gain in jobs on the revisions. For the last three months, jobs are averaging 194K per month. For the last six months, jobs are averaging 180K per month.

Healthcare jobs are up 37K, business and professional services 35K, restaurants 29K, construction 16K and government jobs are up a big 35K.

The Average Workweek is up 0.1 hours to 34.5 hours. The Labor Participation Rate is 62.8%. The U-6 rate moves higher from 8.4% to 8.6%.

Month-on-month wages miss expectations with the paltry +0.2%. Wages rise +2.5% year-on-year missing the +2.6% expected a repeat from last month. American workers are not receiving raises and new employees are working for peanuts.

The healthcare sector leads this month but many of these jobs are people cleaning bedpans and sweeping nursing home floors for low wages. Ditto restaurant work where employees are washing dishes and waiting tables hoping for a tip they can slip into their pocket. On the other hand, the computer and technical jobs typically pay higher wages.

Interestingly, the bump higher in the unemployment rate from 4.4% to 4.5% may actually indicate that many workers are willing to reenter the job force and are out pounding the pavement looking for jobs again. Over the last few years, many folks have struggled to find employment and have given up. These unemployed people are not counted in the unemployment rate calculation (since they are no longer looking for work) so the rate tends to drift lower.

Then, if the economy picks up, or it is at least perceived to be picking up from the worker’s perspective, folks start looking for jobs and are again included in the unemployment rate calculation (since they are actively looking for work) which tends to bump the rate higher on a temporary basis. Once the economy is humming along the unemployment rate then typically begins dropping again. One month is not a trend.

The stock market bulls are cheering the 222K headline jobs number proclaiming it is party time in front of the weekend. The market bears tout the lack of wage growth saying inflation is not occurring and the euphoria over the jobs report is likely overdone.

US futures pop. S&P +5. Dow +26. Nasdaq +30. Euro 1.1421. Dollar/yen 113.69. Pound 1.2903.
Treasury yields are; 2-year 1.39%, 5-year 1.94%, 10-year 2.38%, 30-year 2.92%.

At 8:34 AM, S&P +6. Dow +37. Nasdaq +35. DAX -0.1%. CAC -0.1%. FTSE +0.2%.

Euro 1.1432. Dollar/yen 113.54. Pound 1.2912. Oil is down -1.9%. WTIC oil 44.64. Brent oil 47.19. Natty 2.93.

Treasury yields are; 2-year 1.39%, 5-year 1.93%, 10-year 2.37%, 30-year 2.91%.

 At 8:49 AM, S&P +5. Dow +41. Nasdaq +25. Russell +4. VIX 12.09. DAX -0.1%. CAC -0.2%. FTSE +0.2%.

Euro 1.1422. Dollar/yen 113.75. Pound 1.2894. Mexican peso 18.1426. Canadian dollar 1.2916. Aussie dollar 0.7605. USD 95.79.

At 9:15 AM, the USD is above 96 at 96.05. The euro moves under 1.14 to 1.1387. Dollar/yen 113.91. Pound 1.2877.

Treasury yields are; 2-year 1.41%, 5-year 1.95%, 10-year 2.40%, 30-year 2.94%. The 2-10 spread is 99 bips on the verge of widening to 100 bips and more. Banks will be happy with the steeper yield curve. German bund 0.57%. UK gilt 1.31%. France 10-year yield 0.94%.

The full moon peaks for the month on Sunday at 12:06 AM EST the brightest overnight period for July. Stocks are typically bullish moving through the full moon.

S&P +4. Dow +31. Nasdaq +18. Russell +3. VIX 12.04.

At 9:30 AM EST, US stocks begin trading higher as the futures indicate. The SPX pops 6.66 points to 2416. The INDU, or DJI, gain 60 points to 21377. The COMPQ rallies 25 points to 6114. The RUT is up 4 points to 1404.  All four indexes are up uniformly +0.3%-0.4% so the robots are in charge today. VIX 12.03.

Euro 1.1396. Dollar/yen 113.84. Pound 1.2886. The Mexican peso currency pair moves lower to 18.1267 reflecting a stronger peso as President Trump and Mexican President Pena Nieto meet in Hamburg.

Banks rise. XLF +0.3%. BAC +1%. JPM +0.8%.  AAPL +0.5%. AMZN +0.7%. FB +0.8%. GOOGL +0.6%. MSFT +0.3%. GE is down -0.6% at two-year low. Sector gains are broad-based. XLK +0.6%. XLV +0.2%. XRT +0.3%. REIT’s trade higher. VNO +1.2%.

WTIC 44.45. Brent 47.03. Natty 2.94. Gold 1217. Silver 15.77. Copper 2.6555.

DAX -0.3%. CAC -0.3%. FTSE +0.1%. Euro 1.1391. Dollar/yen 113.83. Pound 1.2884.

Treasury yields are; 2-year 1.39%, 5-year 1.94%, 10-year 2.38%, 30-year 2.93%.

At 10:10 AM, SPX 2417. INDU 21366. COMPQ 6129. RUT 1405. Volatility drops and stocks pop. The VIX slips under 12 to 11.83.

President Trump and President Putin are sitting on chairs for a photo-op. Trump says, “I am looking forward to very positive things happening.” Putin says, “I am delighted to meet you in person” and “personal meetings are quite important.” They shake hands and the meeting will continue behind closed doors.

At 10:30 AM, delayed one day due to the holiday, the EIA Natural Gas Inventories are a 72 BCF build. Natty gas is up +0.6% at 2.90 so price loses a penny or two on the healthy build.

Stocks remain elevated moving sideways. SPX 2418. INDU 21385. COMPQ6130. RUT 1406. VIX 11.75. WTIC 44.22. Brent 46.72. Gold is down 11 dollars to 1214. Silver tanks -2.2% to 15.63. Copper 2.6525.

The Federal Reserve releases the Monetary Policy Report which summarizes the first six months of the year. The report says asset values may be stretched but there are no signs of excessive leverage so stocks are not in a bubble. The Fed says the job market is strengthening. The report says inflation softens after it briefly tagged the +2% level.  USD 96.09. The 10-year yield is 2.39%.

European indexes end the session mixed recovering off the lows. The DAX is up marginally at 12389. The CAC loses -0.1% to 5145. The FTSE finishes up +0.2% to 7351. The MIB drops -0.3% to 21015. Spain’s IBEX loses -0.1% to 10489. Portugal’s PSI finishes down -0.3% to 5154.

For the week, Germany’s DAX finishes up +0.5%. France’s CAC gains +0.5%. London’s footsie also rallies +0.5% this week. Italy’s MIB gains +2.1% this week. IBEX +0.4%. PSI is flat on the week. The big winner this week is Italy after the central bankers bailout the Italian banks. All Hail the Power and Glory of the central bankers! They are modern-day money Gods! The central bankers are the market.

Euro 1.1384. Dollar/yen 114.10. Pound 1.2877. Russian ruble 60.484. German bund 0.57%. France 10-year yield 0.94%. Italy 10-year yield 2.3%.

Deutz sputters -12% on news that Volvo is selling part of its stake in the German engine manufacturer. Volvo, owned by China’s Geely, announced a couple days ago that the carmaker will only offer electric and hybrid models starting 2019. Carrefour -5%. Centrica +2%.

The Dow is up 66.66 points to 21387. SPX 2421. COMPQ 6141. RUT 1408. US stocks begin floating higher after the European close.

The Trump-Putin meeting continues in Hamburg, Germany. The meeting was supposed to last only 35 minutes but it continues for a couple hours and more.

At noon, SPX 2424. The S&P 500 is beginning to break out above yesterday’s high. INDU 21411. COMPQ 6149. RUT 1411. VIX 11.49.

Oil is down -3.3%. WTIC 44.01. Brent 46.51. Natty 2.89. Gold 1209. Silver 15.42.

Treasury yields are; 2-year 1.41%, 5-year 1.95%, 10-year 2.39%, 30-year 2.93%.

At 12:30 PM (6:30 PM Hamburg), Presidents Trump and Putin conclude a 2 hour and 20 minute meeting. The two leaders announce a cease-fire in southern Syria to take effect on Sunday. The cease-fires do not have a good track record always failing after the Assad government or Russia violates the rules.

The SPX is at 2426 at the day’s highs. INDU 21418. COMPQ 6155. RUT 1414. VIX 11.48.
At 1 PM, the BHI Oil Rig count is up 7 rigs to 763 rigs. WTIC oil is down -3.1% at 44.12.

Secretary of State Tillerson says President Trump confronted Putin about potential US election meddling and computer hacking. Of course he does. With the left-leaning US media such as CMBC and MSNBC touting the Russia meme 24/7, Trump had to bring up the matter of cyber hacking to appease many Americans.

The waters quickly become muddied, however, after Russia says President Trump accepted Putin’s denial that Russia meddled in the US election. The Whitehouse quickly releases a message refuting the Russia statement. It is all very silly. Both Russia and the United States are spying on each other and trying to wreak havoc on each other’s governments continuously. To pretend that this activity will stop or does not take place is naive.

The violence continues in and around Hamburg, Germany, during the G20 Summit. 196 officers are injured in scuffles and clashes between the anarchists and riot police. Most injuries are minor bumps and bruises but one officer suffers a broken arm. Fires are burning in the streets.

In the States, consumers are squealing over higher bacon prices that are up more than +20% this year. Pork bellies rise more than +70% this year driving bacon costs higher. Restaurants are squeezed having to absorb the higher costs.

Blue Apron is spattered with red blood as APRN collapses -4.3% below its IPO price. Traders are not impressed with the cutting-edge meal delivery service company. The stock market peaked and popped at the dotcom bubble in late 1999 early 2000 when Webvan was going to change the world delivering food to everyone’s houses. Does history rhyme?

The chips are pumping the stock market higher today along with lower volatility. SOX +1.7%. LRCX +3%. AMAT +3.4%. QRVO +2.9%. AMD +2.6%. Homebuilders are constructing upside gains. XHB +1.5%. LEN +3.1%. DHI +3.8%.

Cybersecurity stocks are joyous. CUDA +5.5%. FEYE +4.5%. PANW +2.7%. SYMC +2.5%. FTNT +1.3%. INTC +0.7%. MSFT +1.3%. IBM +0.4%. FB +1.8%. AMZN +1.4%. AAPL +1%. NFLX +2.7%. GOOGL +1.4%. Traders are tripping over each other to buy tech stocks. XLK +1.2%. ATVI +2.6%.

The Dow Jones Transports break out to new all-time highs as oil prices drop. TRAN gains +1.2% above 9704. Reduced fuel costs are music to the ears for shippers, truckers, railroads and airlines. UPS +1%. FDX +1.6%. YRCW +3.8%. JBHT +1.5%. UNP +0.6%. KSU +1.2%. DAL +2%. LUV soars +1.4% higher loving the lower fuel costs.

Energy stocks are slapped as oil prices tumble lower. XLE -0.3%. CHK -2.6%. HES -2.4%. DVN -2.1%. ORLY -2.1%. NBR  -3.5%.

Mickey D’s and Nike send the Dow Jones Industrials Index higher. MCD +2.1%. NKE +1.4%. INCY +2.8%. PCLN +2.5%. FOSL +6.4%.

SHLD sinks -2.6%. Sears plans to close more stores. LB -3%. COST -1.9%. TSCO -0.9%. TGT -0.7%. GE -0.6%. GS -0.6%.

The party is in full swing during the last one-half hour of trading. SPX 2426. INDU 21419. The COMPQ is up 66.66 points, +1.1%, to 6155.66. RUT 1415. The VIX is under 11 at 10.99 so the low volatility is slapping the market bears in the face. Slap, slap.

Euro 1.1405. Euro/yen 129.95. Dollar/yen 113.943. Pound 1.2889. Euro/pound 0.8848. Mexican peso 18.0804. Canadian dollar 1.2878. Indian rupee 64.595. Dollar/yuan 6.8057.

WTIC 44.27. Brent 46.74. Natty is down -1.1% to 2.86. Gold 1211. Silver is down -3% to 15.51. Copper 2.648.

Treasury yields are; 2-year 1.40%, 5-year 1.95%, 10-year 2.39%, 30-year 2.93%. The 2-10 spread is at 99 bips.

US stocks finish the session in rally mode bouncing after a 12-day negative trend. The SPX gains 15 points, +0.6%, to 2425 bouncing off the 50-day MA at 2414. The INDU gains 94 points, +0.4%, to 21414. The Dow uses its 20-day MA at 21383 as support.

The Nasdaq Composite rallies 64 points, +1%, to 6153 back kissing the 50-day MA at 6166 from the underside. HOD 6165. Price bumps its head on the 50-day and is pushed back down. The NDX is up +1.1% to 5656. The RUT gains 15 points, +1.1%, to 1416.

For the week, the S&P 500 ekes out a tiny +0.1% gain. The Dow Industrials gain +0.3% this week. COMPQ +0.2%. NDX +0.2%. The Russell 2000 trades flat this week.

The trannies breakout higher this week verifying the highs in the Dow Industrials and providing a Dow Theory confirmation signal. TRAN gains +1.4% this week to 9695 a new all-time high and 9695 a new all-time closing high.

The “Elite Eighteen” high-flying stocks that have driven the gains in the US stock market over the last few years finish the week mixed. AAPL +0.1%. AMZN +1.1%. CELG +2.1%. CRM +1.5. FB +0.3%. GE -3.2%. GOOGL +1.2%. HD -0.8%. FB +0.3%. MSFT +0.8%. NFLX +0.5%. NKE -1.7%. NVDA +1.5%. PCLN +2.6%. SBUX -0.5%. ULTA -3.6%. UAA -5.2%. V +0.2%.

General Electric is a piece of garbage. GE is at 26.15 testing its 200-week MA support at 26.17. General Electric has to make a critical bounce or die decision next week. Will it begin to recover and show that industrials are on the way higher with a strong economy, or, will GE fail from the 200-week dropping into the trash bin of society indicating that the economy may be far weaker than anyone realizes?

Home Depot is another skunk at the garden party. Nike and Under Armour lose ground this week. Starbucks sinks. Ulta Beauty is ugly. Priceline explodes to new record highs above 1921. Amazon and Alphabet are both below 1000 after printing above the 1K level a few weeks ago.

The sectors are mixed this week. SOX +1.9%. XLF +1.5%. IBB +0.8%. XLI +0.8%. XLB +0.6%. XLK +0.5%. XHB +0.3%. XLV flat. XLY -0.5%. XLP -0.8%. XLU -0.9%. XLE -1.4%. XRT -2.5%. Semiconductors lead. Trades are buying chips with little concern over prices. Financials also lead higher with the XLF at highs not seen since the October 2007 stock market top. Utilities, energy and retail stocks are the losers this week.

For the week, WTIC oil is down -3.9% to 44.23. Brent oil drops -4.2% to 46.71. Natural gas collapses -5.6% this week to 2.86.

Gold drops -2.6% this week to 1210. Silver is bludgeoned -7.2% to 15.43 with the low of the week down at 14.34. Copper loses -2.4% to 2.65.

Recent student debt data reports that the average college student graduated with about $10,000 in debt in the 1990’s. Fast forward a decade or two, and the average student debt was $25,000. The average student now is graduating with $35,000 debt. This is ridiculous. That is a lot of debt to take on especially when the young person cannot find a job in the field of study and instead ends up flipping burgers at the local greasy spoon.

The worst part is that bankruptcy cannot be claimed on student debt so the young people become indentured servants to the US government. In the months ahead, the student debt and subprime auto loan problems will probably slap the economy and markets in the face similar to the subprime housing crisis in 2007-2009.

The young people straddled with student debt are avoiding buying houses since they do not want to take on more debt. The housing sector may slow. At the same time, loan companies can repossess vehicles from those unable to pay the monthly bill, however, who will buy this car supply in future months?

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