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Mercurial Market By Charles Payne

, CEO & Principal Analyst
12/6/2015 10:07 PM

Question of the Week

Do you think oil prices are headed higher or lower from here, and will it have a good or bad outcome on the U.S. consumer?

Post your answer below.

The mercurial market strikes again! Stocks surged after the Street digested the November jobs report and determined a not-too-hot, not-too-cold jobs growth; in fact, it's just right. This environment is perfect for slow, steady hikes in interest rates.

Ironically, the 370-point rally in the Dow only got the market to break even for the week and it is close to breaking even for the year.

There was no conviction as many big movers rallied on light volume, but that can change with a move through the Dow at 18,300, perhaps next week.

In the meantime, the Organization of Petroleum Exporting Countries (OPEC) has taken the game of chicken to a whole new level, opening the spigots even more despite a global glut. I would say that Saudi Arabia is going in for the kill on America's fracking miracle. However, the news is great for airlines and maybe even retailers.

So, the world goes into Friday, looking for OPEC to cut its output; instead, an increase of 31.5 million barrels a day from 30.0 million. The oil cartels own estimates suggest that the third quarter of 2016 will not lead to an oversupply in the marketplace. They really are going in for the kill against American frackers.

2016 Oil Picture

1Q16

2Q16

3Q16

4Q16

Demand

93.28

93.31

94.65

63.85

Non-OPEC Supply

63.1

63.05

63.14

63.85

Market Place

30.16

30.27

31.51

31.32

Speaking of retailers, Home Depot (NYSE:HD) and Costco (NASDAQ:COST) are brick-and-mortar steamrollers, and blue- chip havens that look great for those who have wasted so much time on the sidelines to ease back into the game. On that note, volume was light and the internals were shaky.

Bad Breadth

Since 1940, the S&P 500 has been up 2% or more-393 times in a single session. Only seven of those times, including last Friday, saw more losers than winners. The market breadth was abysmal. Sure, there were more advancers than there were decliners, and volume was heavier in the winners than the losers. A shocking number of stocks closed at 52-week lows.

A/D

NYSE

NASDAQ

Advancers

2,010

1908

Decliners

1,052

909

Volume

NYSE

NASDAQ

Up

2.6 billion

1.4 billion

Down

1.6 billon

436 million

Breadth

NYSE

NASDAQ

52 week highs

39

58

52 week lows

191

193

Today's Session

Oil continues to get creamed this morning and U.S. crude fell below $39. The energy complex is down over 3% today. And this is spilling over to the equity markets which are all lower.