Crude – Equities – Euro

Crude – Equities – Euro

Posted on January 21, 2016 by Martin Armstrong




We have warned that January looked like a correction all around. We have posted a 35 minute video update for attendees of the World Economic Conference covering key markets. Wall Street rallied after a hesitant start on Thursday as oil prices led the way surging with a big gain and ECB President Mario Draghi raised hopes of further stimulus, which has done nothing anyhow. This is becoming like the person who gets married for the 5th time expecting ever-lasting love – the ultimate triumph of hope over experience.

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 11th. This model will be available on the world in the Trader Version of Socrates whereas on the Investor Version, which is gear to long-term investors, this appears for the monthly to yearly level limited to the region of the subscription. This is the beyond Artificial Intelligence and is a full blown Machine Learning model since it does everything on its own. This is monitoring patterns of everything globally 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 would take an army of analysts to do and then someone would still have to merge at the top all the analysis from individual markets. That seems to be beyond human ability.

 
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, then it no longer changes. So as of last week, the monthly level warned the new lows under 15842 would be seen.

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.

The 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 is wiping out savers and reducing their ability to cope with the deflation. This is like some medieval doctor bleeding a patient who he is killing because he keeping taking more blood out until he revives.
Therefore, the crude was overdone short-term and would only confirm a temp low wil 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.

The Draghi-led rally is touted for the bounce in global stocks, which had been set in motion fundamentally excused as a relentless drop in oil prices, which is linked to the crisis in Emerging Market debt rather than cheering a decline in oil reduces costs 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.
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