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22Apr2015 Market Close: Markets Close Up, Market Manipulation Feared By Some, World Events Still Front And Center

Written by Gary

Markets unexpectedly melted up from their lows this morning to a fractional, but respectable green numbers. Unfortunately, many investors are crying foul because of 'Spoofing' in the E-Mini today. The Grexit, Russia, China are still in the forefront of investors minds.

By 4 pm the averages were still melting upwards on 'normal' elevated volume occurring in the last several minutes of trading.

My thoughts below.

Todays S&P 500 Chart

'The "Smart Money" Has Never Been More Bearish', reads one headline and it remains to be seen of the HFT algo computers can continue to push the averages higher.

Regardless of what the main stream media's brain dead copywriters are reporting, there is a definite pall over first quarter earnings reports that will eventually catch up with investors reading these uninformed openings. The forthcoming 'kick in the butt' is going to hurt some investors, mostly 'sheeples'.

WTI oil is at 56.28 falling from morning highs of 57.10 (Chart Here), Brent has fallen to 62.27 from its high of 63.27 (Chart Here), and the U.S. Dollar is regaining lost ground now at 98.25, up from its low at 97.61 (Chart Here).

Our medium term indicators are leaning towards SELL portfolio of non-performers and the session market direction meter (for day traders) is 1 % bearish up from 29 % bullish after 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 flat, but remains above zero at +6.23. 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.

GM gets boost from smaller pickups, but doubters question for how long

DETROIT (Reuters) - General Motors Co's return to selling smaller pickups in the United States has resuscitated a moribund market segment, but new data highlights the risk that the automaker's new trucks are cannibalizing sales of higher-priced models.

Wall Street finishes higher, helped by Visa and McDonald's

(Reuters) - U.S. stocks ended stronger on Wednesday as Visa Inc's potential expansion into China and talk of a turnaround at McDonald's Corp helped investors see the bright side of mixed quarterly earnings.

U.S bailout of AIG in 2008 was 'punitive,' ex-CEO's lawyer says

WASHINGTON (Reuters) - The U.S. government was "punitive" in its bailout of American International Group Inc in 2008, a lawyer for the company's former chief executive argued during closing arguments of a trial that may impact how much flexibility regulators will have when they respond to future financial crises.

Accused 'flash crash' trader granted bail, fights extradition to U.S.

LONDON/CHICAGO, (Reuters) - A British trader accused by U.S. authorities of market manipulation that contributed to the May 2010 Wall Street "flash crash" was granted bail by a London court on Wednesday, after saying he opposed extradition to the United States for a trial.

The "Smart Money" Has Never Been More Bearish

Via Dana Lyons Tumblr,

We have mentioned the put/call ratio of open interest on S&P 100 (OEX) options a handful of times over the past 6 months or so. The reason is that this historically "smart money" indicator has been flashing warning signs off and on during that period. On March 3, we posted our most recent update on the indicator as it was on an unprecedented string of bearish readings. The stock market peaked simultaneously and has drifted sideways in the 6 or 7 weeks since. The bearish OEX put/call readings have not relented, however. In fact, the bearishness has accelerated. Even so, we had not intended to dedicate another post to this indicator so as not to be redundant. However, the readings over the last few days warrant an update as they have become so extreme, they stick out on the chart like a sore thumb - kind of like Wilt Chamberlain's 4th grade class picture.

image

As a refresher, we typically scan for extreme readings in put/call ratios in the options market in order to fade them. For example, when a certain put/call ratio reaches what has historically been a high extreme, it is often a "buy signal" in that market as it indicates that traders have become too fearful or bearish due to their preference for puts relative to calls. One market that has historically been an exception to this "contrarian" rule is the OEX options market. For whatever reason, these trade ...

In Accusing Gazprom, Europe Begins a Test of Wills

Antitrust regulators charged the energy company with abusing its dominance in gas markets.

Boeing Cash Concerns Overshadow Profit Growth, Shares Stumble

Boeing Co shares dropped as much as 3 percent on Wednesday despite strong earnings, reflecting concerns about the aerospace company's cash flow, orders and costs.

Brent up on more Yemen bombing; U.S. crude dips after stock build

NEW YORK (Reuters) - Oil prices diverged on Wednesday with Brent closing up on renewed fighting in Yemen while U.S. crude fell after another weekly rise in inventories despite slower production.

Chipotle Posts Another Quarter of Billion-Dollar Sales

The restaurant chain said its profits jumped 47.6 percent in the first quarter as it continued its explosive growth.

Google Introduces Phone Service Called Project Fi

The service aims to blend several communication tools â€" cellular calls, online calls like Skype â€" into a single phone number and service.

Goldman's Advice On Economy Like Dracula's Advice On Blood Banks, British Economist Says

No one ever accused Goldman of being unbiased, but two British economists claim the bank's recent self-serving analysis of the UK general elections is particularly egregious.

The background: in a note out this week, Goldman spells out what it says are the dangers of a "leftward shift" in government. Here are the basics:

The business community may be sceptical that a Labour-led government would deliver market-friendly policies at the micro level in the face of adverse shocks. By contrast, the existing Conservative-led coalition has established some market credibility as a consequence of the stabilisation it has achieved in the UK economy since 2010. More generally, a Conservative-led government would likely be expected to react in a more business- and market-friendly manner in the event of unforeseen challenges...

While the published party programmes do not provide a basis for arguing that the UK would be placed on radically different macroeconomic trajectories by the election of one of the main parties rather than the other, it is likely that market and business sentiment would be supported by the emergence of a Conservative government.

In part, this reflects doubts that the Labour party's manifesto commitment to fiscal prudence and limited intervention in markets would be maintained once it took office. More fundamentally, the policy programmes outlined in manifestos will have to confront macroeconomic and financial shocks that will inevitably emerge in the coming years. Given the mixed record of Labour administrations dealing with such challenges in the past, the business community may be sceptical that a Labour-led government would deliver market- ...

Audi to Test Plan to Deliver Amazon Packages to Drivers' Trunks

The German automaker will test the program in Munich, hoping to solve the problem of packages that can't be delivered because no one is home.

S&P upgrades Renault to investment grade

PARIS (Reuters) - Credit rating agency Standard and Poor's upgraded Renault on Wednesday to investment grade due to the French carmaker's improving financial health and profitability.

Google rolls out new U.S. wireless service

NEW YORK (Reuters) - Google Inc on Wednesday launched a new U.S. wireless service that switches between Wi-Fi and cellular networks to curb data use and keep phone bills low.

Exposed: The Real Market Manipulator Behind The Flash Crash

Having been among the first scapegoats fingered for causing the May 2010 Flash Crash, Universa's Mark Spitznagel has some harsh words for the latest farce that the regulators are trying to pull (telling CNBC):

"The Federal Reserve remains the largest market manipulator ever, and the desperate yield-chasing, hair-trigger markets that it created were the primary cause of that crash and the inevitable ones yet to come."

While the CFTC head says the delay in finding Sarao is because "it takes a long time to put this together," it just makes him seem even more of a Luddite... and as Spitznagel wrote previously, "To find the real source of the system's excessive fragility, the regulators will need to look much closer to home."

Via The Wall Street Journal,

Regulators have been busy searching for the cause of the May 6 "flash crash" when the market dropped by 9.3% and then recovered within minutes. I think it's a good bet no cause will be found; there is still no consensus on what triggered the one-day 20% stock market crash of 1987. But even if there was no trigger, market conditions created by the Federal Reserve's easy money policy definitely made the crash more likely.

The market is a critical system. To illustrate, let's consider another fragile system: the earth's crust. Imagine geologists scouring through the debris of a big earthquake in search of its trigger—as in, " ...

Gadgetwise: Backers Say USB-C Is the Cable of the Future

A successor to the USB connector, it is smaller to work with thinner devices, and it is designed to handle high speeds for data transfers and lots of power.

Dear CFTC: This Is The Market Manipulating "Spoofing" Taking Place In The E-Mini Just Today

Dear CFTC:

Thank you!

Thank you, because 6 years after we warned about the dangers from predatory HFT including such parasitic "strategies" as spoofing (or layering, which together with the DOJ you have now confirmed is illegal), quote stuffing, flash trades, momentum ignition, sub-pennying, ISOs, and countless others, you have confirmed everything we have said.

So we have decided to return the favor.

Just because we know how serious you are in your quest to root out all market rigging, or as you put it in your charge against Navinder Sarao "manipulation or attempt to manipulate the price of the intra-day contract price for the near month of the E-mini S&P," we have decided together with Nanex to once again give you a helping hand, and point out all the spoofing that has taken place in the E-mini or ES.

Just today.

The chart below shows a contract count of just the buy orders added/canceled/executed in the 1 hour interval between 11 and 12pm in the ES:

Deutsche Bank Expects $1.6 Billion in Legal Costs

The bank declined to confirm that the total was related to a settlement of the Libor investigation, which is expected to be announced soon.

Greek cash seen lasting into June, no EU deal imminent

ATHENS/BRUSSELS (Reuters) - Greece can scrape together enough cash to meet its payment obligations into June, euro zone and Greek officials said on Wednesday, playing down fears of an imminent default as hopes receded of a deal with its creditors to release fresh aid.

Home sales vault to 18-month high as supply improves

WASHINGTON (Reuters) - U.S. home resales surged to their highest level in 18 months in March as more homes came on the market, a sign of strength in housing ahead of the spring selling season.

Q&A: Working With Old Office Files on a New Mac OS

Even with an upgrade, there are several ways to work with Microsoft Office files. Also, backing up data on an Amazon Fire tablet.

Mission Dis-Accomplished? Saudis Resume Bombing Yemen

Less than 24 hours after Yemen announced an end to Operation Decisive Storm and its airstrikes on Yemen - in hopes of initiating Operation New Hope aimed at resuming a political process - The NY Times reports, warplanes from a Saudi-led military coalition conducted airstrikes in the southwestern Yemeni city of Taiz on Wednesday. Mission Dis-accomplished or Operation 'Empire Strikes Back'?

As NY Times reports,

Warplanes from a Saudi-led military coalition conducted airstrikes in the southwestern Yemeni city of Taiz on Wednesday, hours after Saudi officials had announced they were halting their nearly monthlong bombing campaign against the Houthi rebel movement.

The warplanes bombed Houthi positions during heavy clashes in Taiz on Wednesday morning, according to a local official in the city. The new airstrikes, combined with reports of continued fighting in other parts of the country, including the southern port city of Aden, dampened hopes that the Saudi announcement would quickly result in a broader cease-fire.

A Yemeni man checked a house in Sana after a bombing that killed at least 25 people. Sana has been bombed almost daily for more than three weeks, damaging factories, gas stations and residential neighborhoods.

McDonald's to develop new turnaround plan as sales fall again

(Reuters) - McDonald's Corp's new chief executive officer, who is charged with reinvigorating world's biggest restaurant chain, on Wednesday said he would deliver his turnaround plan next month.

DuPont buying microbiome firm, seeks edge in emerging crop products

(Reuters) - DuPont is buying a California-based microbiome discovery company for development of biological crop products, a move that the chemical and crop company hopes will give it an edge in an emerging agricultural market.

The Defaults Are Coming In HY Energy, UBS Warns

As we've discussed on quite a few occasions, voracious appetite for HY issuance (which hit $90 billion in Q1) coupled with artificially low borrowing costs has allowed otherwise insolvent oil producers to keep drilling in the face of the global commodities downturn contributing not only to depressed oil prices, but also to an increase in the amount of risk that's embedded in US HY credit markets. Consider the following graphics which tell the story quite nicely:

Despite the obvious risks that go along with throwing money at highly leveraged shale companies ahead of Q1 results which will invariably include huge writedowns as E&Ps are forced to calculate PV-10 based on prices that bear a stronger resemblance to market prices than they did at the end of last quarter, "investors" have continued to chase double-digit yields seemingly undeterred by the fact that even in a world where credit markets have been stripped by central banks of th ...

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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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