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21Apr2015 Market Update: Markets Head South After Opening Higher, Oil Steady, U.S. Dollar Trending Higher

Written by Gary

Markets opened up fractionally on moderate volume as a spate of companies beat lowered expectations, helping to ease fears of a disappointing earnings quarter, but immediately began to head south.

Oil has remained steady with the U.S. Dollar trying to climb on continuing moderate volume. Anything could happen in today's session and here is what we think is going to happen.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The IPC is up 0.31% while the S&P 500 gains 0.12%. The Bovespa is off 0.36%.

As reported yesterday, the markets were higher, but investor participation was extremely low and it really appeared the markets were headed for a fall in the next session or two and that is where we think the markets are going to go.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 58%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 50
Investors Intelligence sets the breath Above 50 bullish 52.3%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -0.09
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 62.55%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 67.78%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 74.80%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 19.11
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 75.99
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,127

What Is Moving the Markets

Here are the headlines moving the markets.

April 2015 Chemical Activity Barometer Rises for Fourth Consecutive Month; Reaches Seven Year High

from the American Chemistry Council

The Chemical Activity Barometer (CAB), was up 0.1 percent in April, as measured on a three-month moving average (3MMA). Reaching an index of 98.1, last seen in January 2008, the CAB remains up 2.6 percent over a year ago, and suggests gains in business activity will continue into the fourth quarter.

Read more ...

Gazprom Chief and Tsipras of Greece to Hold Energy Talks

The meeting will come amid speculation about a possible multibillion-dollar gas pipeline deal between Athens and Moscow, which could provide Greece with the cash it needs.

Wary of brinkmanship, euro zone won't set more deadlines for Greece: official

WASHINGTON (Reuters) - Euro zone finance ministers will not be setting any deadlines for Greece because they lead to brinkmanship in negotiations on what reforms Athens needs to do in exchange for more funding, a senior euro zone official said on Tuesday.

Generic drugmaker Teva makes $40 billion offer for rival Mylan

TEL AVIV/NEW YORK (Reuters) - Generic drugmaker Teva Pharmaceutical Industries Ltd. on Tuesday proposed buying smaller rival Mylan for $40 billion, saying it was a better deal than Mylan's alternate offer to buy Perrigo Co.

Safran faces AGM heat as revolt over French Florange law widens

PARIS (Reuters) - Proxy advisory firms are threatening to block key financial resolutions at French aerospace group Safran , opening a second front in a battle between the French government and institutional investors over a new corporate law.

Earnings beats lift Wall St. at open

(Reuters) - U.S. stock opened higher on Tuesday as a spate of companies beat lowered expectations, helping to ease fears of a disappointing earnings quarter.

EU's Juncker wants greater Greek effort in debt talks

VIENNA (Reuters) - European Commission President Jean-Claude Juncker urged Greece on Tuesday to step up efforts to strike a deal with its international creditors, warning that talks had not reached a stage at which they could come to a quick positive end.

BlackBerry to buy WatchDox to bolster data security

TORONTO (Reuters) - BlackBerry Ltd said on Tuesday it is acquiring privately-held U.S. tech company WatchDox, which makes software that secures files, in a bid to further bolster its security credentials.

A New Dark Age: When College Doesn't Pay

Submitted by Daniel Drew via Dark-Bid.com,

If you're so smart, why aren't you rich? One day, as ignorance becomes an ideal to strive for, that question might be replaced with, "If you're so dumb, why aren't you rich?"

The possibility that evolution might take a wrong turn and transform us into a society of imbeciles was dramatized in the movie Idiocracy. That process is beginning today as education is no longer rewarded. A look at the labor force participation rate for college graduates shows a steady decline since the data was first tracked.

Bachelor Degree Labor Force Participation

Getting a college degree used to mean a ticket on the upward trajectory of this thing they once called a "career." Now, your college degree guarantees you a place behind the bar counter in the McJob recovery.

Student Loans

As more college graduates become unemployed, the more the federal government picks up the tab.

...

German banks need tighter cost management: Bundesbank

FRANKFURT (Reuters) - Germany's banks ought to focus on improving cost management as they revise their branch networks to catch up with the profitability enjoyed by international rivals, Bundesbank board member Andreas Dombret told a German magazine.

Egypt's Clinton-Backed Former President Jailed For 20 years

Deposed former Egyptian President Mohammed Morsi was sentenced to 20 years in prison today in connection with a crackdown on protesters during demonstrations against his rule in late 2012. Morsi, whose Muslim Brotherhood has been branded as a terrorist organization by now-President Abdel Fattah al-Sisi, assumed the Presidency in 2012 after Hosni Mubarak was toppled a year earlier during the Arab Spring. Morsi would himself become the target of mass protests after issuing a decree granting himself special powers â€" the unrest would ultimately end in the military assuming power in July of 2013 in an infamous (maybe)-coup.

Here's Al Jazeera:

A Cairo court has sentenced former Egyptian President Mohamed Morsi and 12 other defendants to 20 years in prison.

Morsi was convicted on Tuesday of ordering the arrest and torture of protesters in clashes outside the presidential palace in December 2012. The court acquitted the former president of murder charges that could have seen him face the death penalty.

Morsi also faces serious charges in three other cases, including an accusation that he passed intelligence to Qatar.

Mohammed Soudan, a senior member of the Muslim Brotherhood, and an official within its affiliated Freedom and Justice Party, told Al Jazeera that the trial was a "political farce".

And a bit more from BBC:

European Banks Are Paid To Borrow For First Time Ever As Euribor Goes Negative

Mario Draghi said this week that the transmission channels for European Q€ were opening up and crowed how well his cunning plan was working (by well we assume he means stocks are up). Today we get the ultimate test of that 'transmission' as 3-Month EURIBOR fell below 0.00% for the first time ever (likely wreaking havoc on European derivative pricing models). In English that means banks are being paid to borrow from one another in the interbank money-markets (which sounds a lot like a 'glut' of excess cash) seemingly confirming ICMA's de Vidts fears: "We are scared about the [repo] market freezing," as the ECB is "driving without headlights in the dark." Of course this is yet another disturbing distortion on the heels of homeowners being paid to take out mortgages...

Banks now paid to borrow from one another...

As fears of the repo market in Europe freezing appear to be confirmed... (via Reuters),

The European Central Bank (ECB) risks secured-lending or repo markets grinding to a halt unless it works more closely with national central banks (NCBs) to improve liquidity, a senior trade association official told Reuters.

The 5.5 trillion euro ($6 trilli ...

Following "Soft" Capital Controls, ECB Threatens Greece With ELA Cut Even As 1 Million Workers Go Unpaid For Months

Things for insolvent, cashless Greece are - not unexpectedly - getting worse by the day.

Following yesterday's shocking decree that the government will confiscate local government reserves and "sweep" them into the central bank to provide the country more funds as it approaches another month of heavy IMF repayments, earlier today Bloomberg reported that the ECB would add insult to injury and may increase haircuts for Greek banks accessing Emergency Liquidity Assistance, thus "reining in" the very critical emergency liquidity which has kept Greek banks operating in recent weeks as the bank run sweeping the domestic banking sector has gotten worse by the day.

ECB staff have proposed increasing the discounts imposed on the securities banks post as collateral when borrowing from the Bank of Greece, the people said, asking not to be named as the matter is private. While adjusting these so-called haircuts hasn't been formally discussed by the Governing Council, it may be considered if Greece's leaders fail to quickly convince euro-area finance ministers they can reform their economy and secure bailout funds, one of the people said. Greek bank stocks slid.

According to Bloomberg, the ECB staff proposal lays out three options to reduce central-bank risk: "the scenarios envisage returning haircuts to the level before late last year, when the ECB eased its collateral requirements for Greece; to set them at 75 percent; or to set them at 90 percent. The latter two options could be applied ...

March 2015 Sea Container Counts Are Not Strong Even Though the Labor Troubles Are Over

Written by Steven Hansen

The West Coast Ports labor dispute is over, and appears the backlog has been eliminated causing a spike in exports. However, not only is year-to-date volumes contracting for both imports and exports - but March exports are contracting month-over-month and year-over-year. This is indicating weak economic conditions domestically and globally.

Report Seeks Overhaul of Postal Service Surveillance Program

The program, which records information on letters and packages sent to suspects, lacks oversight, a report by a national defense lawyers' group said.

Earnings Summary for Today

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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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