Oversold Markets Bounce

Oil prices rose despite a substantial jump in inventories that was more than expected.

But, Draghi made some vague comments regarding the March ECB meeting indicating policy revisions may be addressed then. Traders took that to mean more stimulus could be added. Sure, it’s a thin reed for prices to climb in reaction. But, markets are severely oversold and it doesn’t take much for the machines to push prices in a different direction.

In China, blatant market manipulation has now become standard government policy. China’s Vice President Li stated in Davos that “China is willing to keep intervening in stock markets (anywhere?) to make sure that a few speculators don’t benefit at the expense of regular investors”. Put another way, China markets are no longer legitimate since trading will be controlled from on high. 

One company bullish on China is General Electric (GE) but we must remember that this bullishness is compromised by all the Nuclear power plants the company has in the pipeline so…

 Elsewhere Russia has called for an emergency meeting regarding the collapse of the Ruble. This is no ordinary event.  

Not that it matters these days but economic data released Thursday reflected more economic weakness as the news follows the trend lower. Jobless Claims rose to 293K vs 275K expected & prior 283K; Philly Fed Business Outlook fell again to -3.5 vs prior revised sharply lower to -10.2 from -5.9; and, Crude Oil Inventories rose to 4 million bbls from 0.2 million bbls.

Nevertheless, stocks rallied sharply early in the trading session Thursday but as the day wore on sellers did appear throwing some cold water on the enthusiasm. Sectors overall became mixed as featured in charts below. The important issue for investors is that some of the oversold condition was relieved.

Market sectors moving higher included: Dow (DIA), S&P 500 (SPY), Energy (XLE), Crude Oil (USO), Oil & Gas Exploration and Production (XOP), Energy MLPs (AMLP), REITs (IYR), Consumer Discretionary (XLY), Retail (XRT), Homebuilders (ITB), Materials (XLB),Transports (IYT), Europe (VGK), UK (EWU), Germany (EWG), Italy (EWI), Spain (EWP), EAFE (EFA), China (FXI), Russia (RSX), Canada (EWC), Commodity Tracking ETF (DBC), Junk Bonds (JNK), Natural Gas (UNG) and others.