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16Apr2015 Market Close: Markets Move Session Up Fractionally, End In The Red, But Potentially Setting Up Another Run At Historic Highs

Written by Gary

Exciting times for traders today, well, sort of. First oil moves up smartly and the U.S. Dollar eases downward eventually melting the averages upwards. Though the movements that look promising on the real-time charts as they did today, they have been rather narrow in the risk/reward spread. Unless you are a 'big' investor or a very lucky trader, any profits today have been on the meager side of profitability.

We did see the averages sneak up into the green fractionally which was predicable after oil shot upwards, but now that oil is easing back down somewhat the markets are flat and red. By 4 pm the averages were off the session highs fractionally, flat and in the red with BTFDers jumping in during the last minute.

Are we going to see a run on the SP500's previous historic high (2,119.59) tomorrow?

Todays S&P 500 Chart

The answer is most likely yes and the technical indicators show there is no reason why these highs should remain intact. The resistance is just a line on the chart and in this case it isn't very significant and should be penetrated easily, somewhat like the several past advances.

The real question is what happens next? Do we see a correction (needed), more sideways action (consolidation can be good for the bulls) or a 3% hell-bent rise in the averages (not likely)?

WTI oil is at 56.48 rising from morning lows (55.09) to 57.35. (Chart Here), Brent rose to 64.81 from its low of 62.00 and closed lower at 63.86. (Chart Here), and the U.S. Dollar has lost more ground now at 97.80, down from its high at 98.92 this morning. (Chart Here).

Our medium term indicators are leaning towards SELL portfolio of non-performers and the session market direction meter (for day traders) is 41% bullish up from 8 % bearish at the opening bell. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned up, but remains above zero at +6.00. Watch the WTI oil prices as anything below $50 will be the first sign of a declining market in the works. Below $44 you had better put on your seat belt as the encroaching roller coaster ride may be be very bumpy.

Having some cash on hand now is not a bad strategy as negative market changes are happening everyday, 99% of them are minor, it is that 1% I am worried about. Many investors are starting to take in some profits from 'high-fliers' as a precaution and to build a better cash base for the 'dips'.

The Market in Perspective

Here are the headlines moving the markets.

Wall Street flat; first-quarter results mixed so far

(Reuters) - U.S. stocks were little changed on Thursday as mixed first-quarter results from companies gave investors few clues on the outlook for U.S. earnings.

Fed's Lockhart says 'murky' data complicates rate hike decision

West Palm Beach, Fla. (Reuters) - Atlanta Federal Reserve Bank president Dennis Lockhart said on Thursday the recent "murky" run of U.S. data has him leaning against a June interest rate hike, but added he is confident the economy will remain on track.

VW in full-blown crisis as CEO vows to fight: sources

BERLIN (Reuters) - Volkswagen has plunged into a full-blown leadership crisis after Chief Executive Martin Winterkorn let it be known on Saturday he will fight for his job even though the carmaker's chairman has reportedly withdrawn confidence in the CEO.

Yanis Varoufakis Speaks On "The Greek Economy And Its Global Partners" - Live Webcast

Lately the Greek finmin is far more in the media for things he doesn't say, or "allegedly says" (or which fingers he extends during his speeches), than for his official statements, however his statements are still relevant especially with the Greek endgame according to many having started. So feel free to watch him without any lost in translation moments as he speeks at the Brookings Institute, the place where Citadel's latest trader Ben Bernanke blogs out of, on the topic of "the Greek economy and its global partners." It may be a short speech.

ECB gave no deadline for Monte Paschi to find buyer: CEO

MILAN (Reuters) - The European Central Bank has not set a deadline for Italian bank Monte dei Paschi di Siena to find a buyer but wants to see precise steps in this direction, the lender's chief executive said on Thursday.

N.Y.U. Labor Rules Failed to Protect 10,000 Workers in Abu Dhabi

A report, requested by New York University and an Abu Dhabi government agency, said some subcontractors were exempted from labor guidelines based on decisions made by local contractors.

3 Things: Retail Sales, Real Unemployment, Optimism

Submitted by Lance Roberts via STA Wealth Management,

Should You Ignore Recent Retail Sales Weakness?

Over the past several weeks I have heard repeated comments that you should ignore the recent retail sales weakness for a variety of reasons such as cold winter weather, consumers don't believe the drop in gas prices, etc. Putting aside the fact that cold weather almost always occurs during winter (which is why the data is seasonally adjusted to begin with), or that more than 70% of Americans are living paycheck-to-paycheck, should we dismiss the data entirely?

Scott Grannis recently penned:

"Retail sales in the first quarter of this year were obviously impacted by lower gasoline prices and bad weather. Both of those have faded in importance, however, so it's important to see if there has been any change in the underlying trends. As I see it, nothing much has changed. The economy continues to grow, but at a disappointingly slow pace compared to other recoveries."

(Note: I have replicated Scott's original analysis and added recessions and deviation for clarification)

VW: no statement on leadership crisis meeting will be issued today

BERLIN (Reuters) - Volkswagen said late on Thursday no statement on the leadership crisis meeting will be published today.

Citigroup's Gold "Expert" Demands A Cash Ban

Late last year, Grexit "expert" Willem Buiter decided that he was a greater expert on the topic of monetary metals than on geopolitics by stating that "Gold Is A 6,000 Year Old Bubble." Now, he has decided that after gold, it is best to just do away with any physical currency altogether and the time to ban cash has arrived.

Submitted by Pater Tenebrarum via Acting-Man blog,

Citigroup's Chief Economist Joins the Cash Ban Bandwagon

We have discussed the views of Citigroup's chief economist Willem Buiter previously in these pages (see "A Dose of Buiternomics" for details), on occasion of his coming out as a supporter of assorted monetary cranks, such as Silvio Gesell, to name one. Not to put too fine a point to it, Buiter is a monetary crank too.

Buiter is always shilling for more central bank intervention, and it seems no plan can ever be too silly or too extreme for him. In fact, he seems to have made the propagation of utterly crazy ideas his trademark.

Buiter has now joined one of his famous colleagues, Kenneth Rogoff, another intellectual enamored with central planning, in clamoring for a cash ban (for our discussion of Rogoff, see "Meet Kenneth Rogoff, Unreconstructed Statist"). Both Buiter and Rogoff want to make it impossible for citizens to escape the latest depredations of central bankers, such as the imposition of negative interest rates. This is to be done by forcing them to keep their money in accounts at fractionally reserved banks.< ...

Yahoo and Microsoft Revise 10-Year Search Partnership

Under the new agreement, Yahoo will be allowed to deliver its own search results and ads for up to half the searches made by visitors to its sites and apps.

Dollar Dump Sends Oil, Bonds & Stocks Surging

The sudden decision to buy EUR and dump USDs (after a slew of Fed speakers spewed their usual spew) has sparked a buy everything trade across markets as bonds, stocks, and crude are surging...

As EURUSD nears 1.08...

Charts: Bloomberg

Goldman reports highest profit in five years as trading picks up

(Reuters) - Goldman Sachs Group Inc reported its best quarterly profit in five years on Thursday, notching up big gains from trading bonds and currencies as global markets fluctuated during the first three months of the year.

Citi posts highest quarterly profit in eight years as costs plunge

(Reuters) - Citigroup Inc reported its highest quarterly profit in nearly eight years as costs plunged, showing that the bank's efforts to streamline its business may be starting to pay off.

Lockheed eyes cost cuts, reputation in satellite business

COLORADO SPRINGS, Colo. (Reuters) - Lockheed Martin Corp has long dominated the U.S. military space market, but it is fighting harder than ever to cut costs, become more innovative, and shed a reputation for arrogance, Mark Valerio, the head of its military satellite unit, said in an interview.

More Thoughts on the Current Oil Market

By EconMatters

WTI surged to close at $56.01 a barrel on Wednesday, while Brent closed at $62.86 after the US crude oil inventories showed a 'less-than-expected increase'. The latest weekly inventory (week ending April 10) from EIA showed an increase of 1.3 million barrels, much less than the 10.9 million barrels of build from the previous week. The report also showed that total motor gasoline inventories decreased by 2.1 million barrels, while distillate stockpiles rose by 2.0 million barrels.

Chart Source: Apr. 15, 2015

Fiat Chrysler wants to play major role in industry consolidation: CEO

AMSTERDAM (Reuters) - Chief Executive Sergio Marchionne wants Fiat Chrysler Automobiles (FCA) to play a key role in a consolidation of the global auto industry which he sees as inevitable to manage prohibitive capital costs.

Welcome to Your First Year as a Lawyer. Your Salary Is $160,000.

Salaries for first-year lawyers at big firms have been stuck at around $160,000 since 2007, according to the National Association for Law Placement.

Bernanke to advise hedge fund Citadel - NYT

(Reuters) - Ben Bernanke, former chairman of the U.S. Federal Reserve, has agreed to become a senior adviser to Citadel, a $25 billion hedge fund founded by billionaire investor Kenneth Griffin, the New York Times reported on Thursday.

Use of E-Cigarettes Rises Sharply Among Teenagers, Report Says

A study released by the Centers for Disease Control and Prevention says use of the devices among middle and high school students tripled between 2013 and 2014.

Cost-Cutting Helps Citigroup Beat Estimates

First-quarter profit rose 16 percent, benefiting from lower expenses and strong investment banking results.

The REAL Issue With a Grexit/ Greek Default

The situation in Greece boil down to the single most important issue for the finacial system, namely collateral.

Modern financial theory dictates that sovereign bonds are the most "risk free" assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.

Because of this, the entire Western financial system has sovereign bonds (US Treasuries, German Bunds, Japanese sovereign bonds, etc.) as the senior most asset pledged as collateral for hundreds of trillions of Dollars worth of trades.

Indeed, the global derivatives market is roughly $700 trillion in size. That's over TEN TIMES the world's GDP. And sovereign bonds... including even bonds from bankrupt countries such as Greece... are one of, if not the primary collateral underlying all of these trades.

Lost amidst the hub-bub about austerity measures and Debt to GDP ratios for Greece is the real issue that concerns the EU banks and the EU regulators: what happens to the trades that EU banks have made using Greek sovereign bonds as collateral?

This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the previous Greek bailouts.


1) Before the second Greek bailout, the ECB swapped out all of its Greek sovereign bonds for new bonds that would not take a haircut.

2) Some 80% of the bailout money went to EU banks that were Greek bondholders,

Citadel Head Bond Trader (And TBAC Member) "Leaves" After Losing $1 Billion

It is almost too coincidental to be a coincidence: on the day Ben Bernanke, who until a year ago was the biggest fixed income portfolio manager in the world courtesy of the Fed's $4.5 trillion in assets, joins Citadel as an advisor, the massively levered "market-neutral" hedge fund which as we showed earlier has $176 billion in regulatory assets, "loses" its global head of fixed income, senior managing director Derek Kaufman. Well not exactly loses. The reason for his "voluntary" departure: according to Bloomberg Kaufman is leaving Citadel not because he is about to be replaced by the former Fed chairman but because last year he lost $1 billion "in a variety of trades."

Some more details on Derek from his Linkedin Profile:

Derek Kaufman is [ZH: was] Head of Global Fixed Income and a member of Citadel's Portfolio Committee.

Prior to joining Citadel in 2008, Mr. Kaufman was a Managing Director at JPMorgan Chase, where he most recently served as Global Head of Fixed Income in the Proprietary Positioning Business. He started at J.P. Morgan in 1996.

Mr. Kaufman is a member of the Treasury Borrowing Advisory Committee and the Federal Reserve Bank of New York's Investor Advisory Committee on Financial Markets. He is a member of the Economic Club of New Y ...

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