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17Apr2015 Market Update: Averages Open Lower And Continue To Trend Downward After U. Of Michigan Report Prints Positive, DOW Off Triple Digits

Written by Gary

The most important U.S financial report today is the University of Michigan Confidence report and is considered one of the foremost indicators of US consumer sentiment. It came in higher than expected and the markets rejected the good news by continuing the slide beginning this morning.

Investors are totally rejecting the possibility of setting new highs this week as the DOW plummets towards minus 300 points followed by the other averages. Is this the start of another mini-correction?


Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.39%, while the Bovespa is leading the S&P 500 lower. They are down 1.17% and 1.10% respectively.

At this point I am expecting four down sessions which in the past resulted in the markets moving back up. A bit to early to say for sure what is going to happen, but I can tell you I don't want to be in the markets over the weekend, long or short.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 57%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 55
Investors Intelligence sets the breath Above 50 bullish 63.0%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +14.24
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 64.09%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 68.16%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 74.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 18.84
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 75.39
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,078

What Is Moving the Markets

Here are the headlines moving the markets.

The IMF Admits The IMF's Forecast Of Blockbuster Greek GDP Growth May Be A Little High

A few days ago, we deservedly mocked the IMF for "projecting" that in 2016 Greece would be the Eurozone's fastest growing country, with a 3.7% expected GDP growth rate.

We said:

Yes, Greece, the same country which moments ago the IMF's chief economist Blanchard admitted may very well not be in Europe!


IMF VERY MUCH WANTS TO COME TO AGREEMENT WITH GREECE: BLANCHARD

GREEK EXIT FROM EURO WOULD BE COSTLY, PAINFUL: BLANCHARD

So yeah. Comedy.

Comedy indeed. Ignoring that in virtually all credible and realistic forecasts, thus not the IMF's, Greece will almost certainly no longer be in the Eurozone in 2016, the fact that Greece, which is not only on the verge of defaulting to its foreign creditors, but will likely seek redenomination to the Drachma soon, will result in a historic collapse in its economy in the coming years.

And moments ago, the IMF seemingly tired of being mocked by fringe blocks, admitted the obvious:


IMF OFFICIAL: IMF'S GREEK ECONOMIC OUTLOOK NEEDS TO BE LOWERED

Sigh.

New York Times Co. Elevates Meredith Kopit Levien to Chief Revenue Officer

The executive vice president for advertising will now oversee revenue generation from all advertising and subscriptions.

Chinese Stocks Are Still Crashing

While the Chinese are long to bed, futures continue to trade on their exuberant stock market... and it's going south in a hurry. As we noted earlier, the catalyst appears to be a regulatory decision to increase the number of 'shortable' securities (and follow-through from PBOC's day prior demands of brokers to monitor margin trading). Both of these actions were taken as 'signals' that policymakers may be getting nervous about the ebullient wealth creation... Chinese stock futures are now down almost 7% - the 2nd biggest drop in 7 years.

It appears the 4% rally post-crappy-GDP print was a little too far too fast..

Source: Nanex LLC

Gasoline, shelter costs lift U.S. consumer prices

WASHINGTON (Reuters) - U.S. consumer prices rose for a second straight month in March as the cost of gasoline and shelter increased, signs of some inflation that should keep the Federal Reserve on course to start raising interest rates this year.

Bonds Drop, Dollar Pops After Hotter-Than-Expected Inflation

Stocks - for now - are ambivalent to the highest core CPI in 5 months; but the grown-up markets in bonds and FX are taking notice. The Dollar has surged (led by EUR weakness) and long-bond yields are up 5bps (back to unchanged on the week).

Stocks are unimpressed...

But bonds and the dollar are 'anxious'

It appears the machines were in waterfall mode today....

Oh oh. Treasury Futures steamrolling down - didn't like 8:30 news: pic.twitter.com/YF7ductruv

— Eric Scott Hunsader (@nanexllc) April 17, 2015

Charts: Bloomberg

Coke to buy China multi-grain drinks maker for $400 million

HONG KONG (Reuters) - Coca-Cola Co has agreed to buy the beverage business of China Culiangwang Beverages Holdings Ltd for $400.5 million including debt, to get a foothold in the fast growing multi-grain drinks category.

Alibaba inks deal with Shanghai GM to finance car purchases

BEIJING (Reuters) - Alibaba Group Holding Ltd deepened its push into the automotive business on Friday, saying it had struck a partnership with Shanghai General Motors (GM) to offer online sales and financing for GM cars.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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