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23Apr2015 Market Close: SP500 Sets New High Then Descends, Oil Stable At Session Highs, New Market Highs Tomorrow In Doubt

Written by Gary

The SP500 beat its historical high by 90 cents today on low volume and then immediately started to descend, continuing right up to the closing bell. Is this going to be a double top and signaling the markets starting an 'extended' correction or what, time will tell. The oils remained stable at the resistance trading sideways and the U.S. Dollar has trended down for most of the session.

By 4 pm the closing volume was a ho-hum, mostly red - I guess investors went home early. It will be interesting to see if the markets rise again tomorrow however,

I have thoughts about that scenario below.

Todays S&P 500 Chart

For the markets to move higher, oil MUST rise further and the U.S. Dollar MUST fall, there are no two ways about it. Yes, we may see higher highs as we have seen when the SP500 sets new records and then we see the markets fall off after a few sessions. The real problem with this market today is that it is a crap shoot, but really new highs, say 2%, just do not seem to be in the cards, but betting on a 5% decline does seems reasonable. Maybe more, we will have to wait until we get to that point of reference as there is lot of conflicting information right now making it impossible to see the forest because of the trees.

WTI oil is at 57.49 rising from morning lows of 55.76 (Chart Here), Brent has risen to 64.86 from its low of 63.21 (Chart Here), and the U.S. Dollar is loosing ground now at 67.46, up from its high at 98.63 (Chart Here).

Our medium term indicators are leaning towards SELL portfolio of non-performers and the session market direction meter (for day traders) is 42 % bullish up from 21 % 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 flat, but remains above zero at +7.23. 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 market 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.

What We Read Today 23 April 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

BECOME A GEI MEMBER - IT's FREE!

Every day most of this column ("What We Read Today") is available only to GEI members.

To become a GEI Member simply subscribe to our FREE daily newsletter.

Read more ...

Worst Macro Data in 6 Years Sends Stocks Soaring To Record Highs

The "easier for longer" trade was on in force today after every macro data item missed expectations...

...sending the US Macro index to new 6 year lows...

Buit of course, we couldn't begin today without noting the utter nonsense that happened in US equity "markets" at 1151ET when 'someone' decided it was time to buy in large size at record-breaking highs, lifting the Nasdaq and S&P to record closing highs and beyond...

Which 'demanded' another clip on such a day as this...

By the close, Trannies were the day's big winner until the last few minutes... Dow the relative loser...

But futures show the chaos since yesterday's close as weakness in Asia and Europe sent stocks sprawling but US weakness was just what everyone wanted...

Greek PM meets Merkel, urges speeded up reform-for-cash deal

BRUSSELS/BERLIN (Reuters) - Greek Prime Minister Alexis Tsipras called for a speeding up of work to conclude a reform-for-cash deal with euro zone creditors to keep his country afloat after talks with German Chancellor Angela Merkel on Thursday that both sides called constructive.

Nasdaq on track for first closing record since 2000

(Reuters) - The Nasdaq Composite, the U.S. market index most closely associated with technology stocks, jumped to a 15-year high on Thursday and was on track for its first record high close since the tech bubble burst.

Family Office of Google's Eric Schmidt Buys Stake in Hedge Fund D.E. Shaw

The 20 percent stake of the $36 billion hedge fund is one of the last vestiges of the bankrupt Lehman Brothers.

Flash crash trader used rapid series of brokers: documents

WASHINGTON/CHICAGO (Reuters) - The UK futures trader blamed for his role in the May 2010 Wall Street flash crash went through a rapid succession of brokerages that cleared his trades on the CME, documents filed in court showed.

GM first-quarter profit misses estimates on South America, Russia weakness

DETROIT (Reuters) - General Motors posted a smaller-than-expected quarterly profit on Thursday on weakness in South America and Russia and a higher tax rate, sending shares down 3.5 percent.

Comcast Reportedly Plans To Drop Time-Warner Cable Deal 'As Soon As Friday'

Following the FCC joining the DoJ in the government's blowback against the merger, Bloomberg reports:


*COMCAST SAID TO PLAN ANNOUNCEMENT AS SOON AS FRIDAY

*COMCAST SAID TO PLAN FINAL DECISION ON TIME WARNER TODAY

Comcast stock initially jumped and Time-Warner tumbled... but both are now higher!!

As Bloomberg reports,

Comcast Corp. is planning to walk away from its proposed takeover of Time Warner Cable Inc., people with knowledge of the matter said, after regulators decided that the deal wouldn't help consumers, making approval unlikely.

A formal annoucement on the deal's fate may come as soon as Friday, said one of the people, who asked not to be named discussing private information.

This week, U.S. Federal Communications Commission staff joined lawyers at the Justice Department in opposing the planned $45.2 billion transaction.

Median Household Income Lower in March 2015

from Sentier Research

According to new data derived from the monthly Current Population Survey (CPS), median annual household income in March 2015 was $54,203, about 0.8 percent lower than the February 2015 median of $54,639. The Sentier Household Income Index for March 2015 was 95.4 (January 2000 = 100).

3 Things: Kass, Rosie and Short

Submitted by Lance Roberts via STA Wealth Management,

Doug Kass - 12 Big Picture Factors

Doug Kass recently wrote a piece for TheStreet.com identifying "12 Big Picture Factors" that may weigh on the markets and the economy.

First, a little background for clarity. Historically, the economy and the earnings generated by corporations have a highly correlated relationship as shown below. Since it is consumption that comprises 70% of the economy, and corporate earnings are a function of the underlying consumption, the relationship makes complete sense. Not surprisingly, corporate stocks prices have appreciated by roughly the same amount as well.

Stocks-GDP-AvgGrowth-042315

However, over the last six years the Federal Reserves monetary interventions have skewed that relationship. Stock prices have surged while underlying economic growth has remained fairly stagnant.

Economic Trends: In Battle Between Strong Dollar and Cheap Gas, the Strong Dollar is Winning

The question is how much the currency strength will reduce American exports, increase imports and prove a drag on overall growth in the United States.

Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The "Mass Manipulation Of High Frequency Nerds"

There are several notable items in Bloomberg's comprehensive overnight summary of the epic humiliation America's market regulators are about to undergo, complete with yet another round of theatrical Congressional kangaroo courts, which will lead to a lot of red faces, a wrist slap or two and maybe even the termination of one or two lowly employees and... nothing else.

Because what difference does it make?

At this point only a bottom-up overhaul can "fix" the fragmented, broken market which by definition can only come after the next market crash, one which will promptly be blamed on HFTs (which leaving the central bankers unscathed).

Back to the Bloomberg piece in which we first discover that it wasn't even the CFTC that, 5 years later, "figured out" the flash crash was one person's fault:

When Washington regulators did a five-month autopsy in 2010 of the plunge that briefly erased almost $1 trillion from U.S. stock prices, they didn't even consider whether it was caused by individuals manipulating the market with fake orders.

Their analysis was upended Tuesday with the arrest of Navinder Singh Sarao -- a U.K.-based trader accused by U.S. authorities of abusive algorithmic trading dating back to 2009. Even that action was spurred not by regulators' own analysis but by that of a whistle-blower who studied the crash, according to Shayne Stevenson, a Seattle lawyer representing the person who reported the conduct.

Your tax money not at work.

But fear not: after today's Deutsche Bank $2.5 billion "get out of jail" card, the CFTC will be $800 million richer and can finally even afford to hire ...

Hey Dick (Fisher) - Explain This

Two short months ago, (now former) Dallas Fed head Richard Fisher was ushered on to the propaganda channel to puke out platitudes about how low oil prices was "net positive for Texas," because Texas is a diverse state and being a consumer society, it's "good for everyone."

Shortly after we destroyed that fiction, none other than Goldman President Gary Cohn rubbed salt into that wound stating "it's not going to be positive."

And now we have the hard data... as jobs dropped at the fastest pace in 6 years!

Source: Dallas Fed

Explain that, Dick?

* * *

Bonus Chart: Home Sales are lagging too..

Southwest Airlines to explore new IT functions, such as codesharing

(Reuters) - Southwest Airlines Co will explore new functions enabled by a new reservation system after it is in place, such as codesharing flights and assigning seats to passengers, Chief Executive Officer Gary Kelly said in an investor call on Thursday.

Jobless Claims Rise for 3rd Straight Week, but Labor Market Seems Stronger

Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 295,000 for the week ended April 18, the Labor Department said.

Oil Prices Won't Recover Anytime Soon Says Exxon CEO

Submitted by Nick Cunningham via OilPrice.com,

There is mounting evidence that oil prices are poised to rebound from a historic bust.

Rig counts hit new lows each week. For the week ending on April 17, Baker Hughes says the U.S. lost an additional 34 oil and gas rigs, bringing the total down to 954. Domestic crude oil production appears to have plateaued and the EIA expects a contraction in May. Nearly every driller is dramatically scaling back spending, which should increasingly cut into new output. And oil consumption is finally picking up, as drivers far and wide take advantage of cheap fuel.

But what if the bust is not over yet? Despite the signs of a rebound, ExxonMobil's CEO Rex Tillerson has a much more bearish take on oil prices. Speaking at the IHS CeraWeek conference in Houston, Tillerson predicted that oil prices would remain subdued for the next several years.

While the longer-term is harder to predict, there is quite a bit of evidence to suggest that oil prices may not rise much higher than where they are right now in the short-term. For one, crude oil inventories continue to build. Although the stock build has slowed in recent weeks, it is still dramatically higher than the five-year average. Until production slows to the point that consumers are drawing down inventories faster than they can be replaced, oil prices have little room to rise.

Deutsche Bank fined record $2.5 billion over rate rigging

LONDON/NEW YORK (Reuters) - U.S. and British authorities fined Deutsche Bank $2.5 billion, accused Germany's largest lender of obstructing regulators and ordered it to fire seven employees in the eighth global settlement of alleged benchmark interest rate rigging.

Schwab CEO praises fast 'robo advisor' start, laments low rates

NEW YORK (Reuters) - Charles Schwab Corp's automated investment product has attracted $1.5 billion of assets in over 23,000 accounts in its first six weeks, about 20 percent of whom are new clients, Chief Executive Officer Walt Bettinger told analysts on Thursday.

Boeing CEO warns of job relocations if U.S. Ex-Im Bank disappears

WASHINGTON (Reuters) - Boeing Co may have to relocate U.S.-based engineering and manufacturing jobs overseas if Congress eliminates funding for the U.S. Export-Import Bank, Chief Executive Jim McNerney said on Thursday.

Goldman Sachs Asset Management to buy Pacific Life business

NEW YORK (Reuters) - Goldman Sachs Group Inc's Asset Management plans to acquire the Pacific Global Advisors solutions business from Pacific Life Insurance Co , the company said on Thursday.

Soft U.S. economic data suggests mild second-quarter growth rebound

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment aid edged up last week for a third straight week, but the underlying trend continued to point to solid momentum in the labor market.
< ...

Spot The Odd "VIX" Out

US Equity volatility (VIX) is trading at its lowest since early December, as the schizophrenic swings continue. However, Rates, FX, and Oil "VIX" all remain notably high...

VIX back near cycle lows...

As the last few days have been anything but un-volatile...

One of these things is not like the other...

"Managed"... "Unrigged"

Charts: Bloomberg

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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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