There is a relief rally this morning around the Globe with the immediate fear factor tapped down a bit.
There are no fresh near apocalyptic headlines hitting the Global Banks and Oil is holding 2% to 3 % gains with WTI sporting a 27 handle. Nothing new as of 7:30 am on an OPEC production accord.
US Equity futures are looking at a 15 handle bump for the S&P 500 with the DJIA likely to start the day with a moderate triple digit gain. It is worth noting the NASDAQ outperformed the last 2 days, and even make it into positive territory late afternoon before a fade in the final 20 minutes.
"Short Oil" is such a crowded trade it doesn't take much to get short to "flatten up" positions into a 3 day weekend
— Timothy Anderson (@TJAnderson1) February 12, 2016
The Congressional testimony from FED Chair Yellen played to mixed reviews and admittedly she was in a tough spot with the recent backdrop of more Central Banks around the Globe adopting and/or enhancing a Negative Interest Rate Policy (NIRP).
I thought she did a good job of giving that topic as little credence as possible without totally ruling it out. If you’re a prudent Central Banker I’m sure it’s the right thing never rule out a potential policy move.
Russia Reluctant to Dip into its Reserves to Support Ruble, Says Central Banker: This is the kind of news cove… https://t.co/9xwJdlXXuV
— Russia News Links (@dlrussianews) February 11, 2016
We will now get a heavy dose of FED speak from Regional FED Presidents and other FED governors the next couple weeks. Hopefully a few of them will highlight the negative messaging and dysfunctional consequences from negative interest rate policies that have become a more prevalent talking point the last few weeks.
With the Q4 earnings season winding down, we’ll likely get more focus on the macro data, and an drill down as to whether the economy is as bad as recent concerns. We’ve had a 4% decline in earnings for the S&P 500 Year over Year, and 4 straight quarters of negative revenue growth.
If investors could see some positive traction in the macro economy, highlighted by a long awaited boost from the consumer after a year of declining prices at the pump it would help counter a disappointing earnings trend.
Stock Market Relief Rally Underway 2-12-16
The Early Line: Oil is building on its bounce from overnight, now showing gains of 4% to 5% with WTI encroaching on the $28.00.
I’d expect the high yielding multinationals to continue to show signs of Big Dough Institutional accumulation, while the tertiary names at the lower end of the food chain have plenty of work to do to right their respective ships.
No doubt a number of them are likely terminal.
With a 3 day weekend on tap and the coldest weather of the winter hitting the East Coast this weekend, volumes will likely tail off as we get into the afternoon.
Expect market averages to continue to trade off technicals in the near term while stocks have once again held the critical 1812 intraday support level on the S&P 500.