Wednesday, November 16, 2016

Markets waver, looking for direction after the recent advance

Dow lost 54, advancers a little higher over decliners & NAZ added 18.  The MLP index dropped 5+ to the 298s & the REIT index was up pennies in the 323s.  Junk bond funds drifted a tad lower & Treasuries had a modest gain.  Oil went below 46 (more below) & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Crude traded near $46 a barrel after a gov report showed US refinery demand surged & Russia's oil minister expressed optimism that OPEC would reach a deal.  Refiners used 16.1M barrels a day last week, up 309K barrels from a week earlier, according to the Energy Information Administration.  Crude stockpiles rose 5.27M barrels (a 1.5M barrel gain was forecast).  Russia is ready to support an OPEC decision to stabilize the market, Energy Minister Alexander Novak said. OPEC ministers meet on Nov 30 to discuss how to implement production cuts.

Oil retreated for much of the past 3 weeks amid skepticism about OPEC's ability to implement a production cut.  Officials from the group & Russia are meeting tomorrow for another round of talks without ministers from Iran & Iraq, the 2 countries that pose the biggest obstacle to an output accord.  West Texas Intermediate for Dec delivery slipped a penny to $45.80 a barrel, after dropping 1.7 % earlier.  Prices rose 5.8% yesterday, the biggest gain since Apr 8.  Volume was 52% above the 100-day average.  The gain left US crude supplies at 490M last week, according to EIA data.  Stockpiles are at the highest seasonal level in more than 30 years.

Oil Trade Near $46 as U.S. Crude Use Grows, Russia Optimistic

China is confident it will achieve its major full-year targets & tasks, Premier Li Keqiang said.  China should stabilize & improve macro policies & will expand aggregate demand moderately, he added.  He called for steadying employment & promoting innovation.  The economy's stabilization this year has come on the back of easy monetary policy & a ramp up in fiscal support, ensuring the gov full-year growth target of 6.5-7% will be met.  Trump's election victory has complicated its policy outlook, with threats to slap tariffs of up to 45% on imports.   "Uncertainties have increased abroad.  Regions and industries have diverged at home.  Both pose relatively big challenges to the economy," Li said.  

China Sure to Meet Full-Year Economic Targets, Premier Says

Target, a Dividend Aristocrat, reported a higher-than-expected quarterly profit & raised its fiscal-year forecast after benefiting from a strong back-to-school shopping season & higher online sales.  CEO Officer Brian Cornell said store visits increased & sales trends "meaningfully" improved during Q3 that ended on Oct 29.  Digital sales increased 26%, an acceleration from previous qtrs.  Sales in high-margin "signature" categories such as baby & health & wellness outpaced total comparable sales by 3 percentage points.  "As we move into the biggest quarter of the year, we are pleased with our inventory position," Cornell said.  TGT expects fiscal-year EPS of $5.10-5.30, excluding special items, up from a prior outlook of $4.80-5.20.  It also raised the forecast for its sales performance at stores open at least a year by one percentage point to a range of down 1% to up 1% for this qtr.  EPS was $1.06 in Q3, up from 88¢ a year earlier.  Excluding items that include the favorable resolution of income tax matters & the company's pharmacy transaction, EPS was $1.04.  Analysts were expecting 83¢.  Total sales fell 6.7% to $16.4B.  Same-store sales dipped 0.2%, while analysts had expected a decline 1.1%.   The stock shot up $4.57.  If you would like to learn more about TGT, click on this link:   

Target Corp raises profit forecast; earnings rise

Target (TGT)

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After stellar gains, based primarily on hope, the stock market is very tired.  No surprise.  Techs have been ignored, but there was some buying today.  The chart below shows that Dow had been stuck a little above 18K for months.  This advance needs a pullback, at a minimum, if it wants to cross 19K.

Dow Jones Industrials

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