Crude – Equities – Euro

Crude-D 1-20-2016


DJFOR-D 1-20-2016 DJIND-D 1-20-2016

We will post a 35-minute video update to the World Economic forum (see “Helpful Video” thread) that will cover key markets.

We have warned that January looked like a correction all around. Wall Street rallied after a hesitant start on Thursday as oil prices led the way after surging with a big gain. ECB President Mario Draghi raised hopes of further stimulus, which has done nothing anyhow. This is becoming like a person who gets married for the fifth time expecting ever-lasting love — the ultimate triumph of hope over experience.

Crudee-w GMW 1-11-2016

Nevertheless, our models on oil were reaching critical major support for the year. The oscillators (stochastic) were also at extreme lows. Our Global Market Watch warned of a Waterfall the week of January 11. This global model will be available on the Trader version of Socrates. The Investor version is gear to long-term investors and the Global Market Watch will appear for the monthly to yearly levels, limited to the region of the subscription.

This is beyond artificial intelligence — this is a full-blown machine learning model since it does everything on its own. Socrates is monitoring patterns of everything globally while differentiating the slightest divergences among markets. I personally believe that this model will ultimately prove to be the end of human analysis since it does what it would take an army of analysts to do, and even then someone would still have to merge at the top all the analyses from individual markets. That seems to be beyond human ability.

DJIND-M GMW 1-11-2016

The Global Market Watch on the Dow picked the May high last year and the key low at 15370 on the monthly model, but the last month is DYNAMIC so that comment will change as the final period unfolds. Once complete it no longer changes. So as of last week, the monthly level warned of new lows under 15842.

DJIND-W GMW 1-11-2016

The weekly level went into crash mode the last week of December. So again, this has done a pretty good job from a pattern recognition perspective.

So far, all 10 major S&P 500 sectors rallied with a 3.2% rise in energy stocks. All but two Dow components were higher as well. This is starting to show something we have been warning about which remains on the horizon. As CONFIDENCE shifts from government to the private sector, we should begin to witness an alignment where all private assets begin to rise against government.

Draghai Euro Crisis

medieval doctor bleeding a patientThe European Central Bank kept its main rates on hold as Mario Draghi said the central bank would “review and possibly reconsider” its monetary policy as early as March. Many analysts had not expected a rate cut before June. They still have not figured out that lowering rates to try to stimulate borrowing wipes out savers and reduces their ability to cope with the deflation. This is like some medieval doctor bleeding a patient who he is killing because he keeps taking more blood out until he revives.

Therefore, the crude was overdone short-term and would only confirm a temp low with a daily closing above $32.20. Oil prices bounced, rising up more than 5 percent (just shy of $30 a barrel) after U.S. crude stockpiles did not rise. This mixed with Draghi’s comments lifted U.S. and European stock markets. Nothing but ANTICIPATION.

IBEUUS-M GMW 1-11-2016

The Draghi-led rally is touted for the bounce in global stocks that had been set in motion by a relentless drop in oil prices. This is linked to the crisis in emerging market debt, rather than cheering a decline in oil’s cost of production in the reverse process of the OPEC actions of the 1970s. Of course, fears of a China-led slowdown in global growth are real for they will not be building the infrastructure they have, and that will not help emerging markets in any event, regardless of the direction of oil. Our Global Market Watch simply is not impressed with the long-term viability of the euro.