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27Apr2015 Market Update: New Highs For The SP500, Gold Above 1200 And The U.S. Dollar Sinking Along With Equities

Written by Gary

Midday averages are trading near the unchanged line after a solid opening in the green this morning. The SO500 recorded a new historic high (2125.92) remained there for the first hour, dipping down, sea-sawing and finally trending down to the flat line.

By noon the market trend was down, albeit slowly with the DOW still in the green for now.


Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.27%, while the Bovespa is leading the S&P 500 lower. They are down 1.08% and 0.16% respectively.

Oil has remained trading sideways just below resistance of 58, U.S. Dollar is trending down in the high 96's and gold has squeaked above 1200 but below resistance. All of this meaning any breakouts are still a possibility - in either direction, be VERY careful.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 60%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 66
Investors Intelligence sets the breath Above 50 bullish 62.3%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +13.02
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 64.38%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 67.74%
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 19.33
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 77.53
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,220

What Is Moving the Markets

Here are the headlines moving the markets.

Apple Runs Up Against Its Own Success

Ahead of the Tape: Apple may manage another iPhone surprise, but the hurdle is getting higher.

Wall Street edges higher ahead of Apple results, S&P hits record

(Reuters) - U.S. stocks rose on Monday morning with the S&P touching a new intraday high and the Nasdaq inching closer to its record intraday high ahead of Apple's results after the close.

Goldman Warns Companies To Halt Buybacks At Record Valuations, Reminds What Happened In 2007

One month ago, Goldman warned that the biggest risk for the market was the stock buybacks hiatus due to earnings season, which in turn resulted in what was almost a modest market selloff, before someone stepped in to buy: we say someone"" because we know for a fact it wasn't retail or institutional flow, which has been pulling out of the market at the fastest pace in years...

So, yes "someone" - call it BOJ taking advantage of the CME's "Central Bank Incentive Program" to buy E-minis, or call it Citadel spoofing the ES higher with the explicit blessing of the NY Fed's Chicago office, it doesn't matter. Point is stocks are higher even as actual flows are reversing.

However, while preserving the farce of the S&P's relentless rise no matter the earnings recession, the 1% GDP or the negative funds flow, has been entirely a central bank mandate in the past month (one which will soon inlude the PBOC), the good news for the BOJs and the NYFeds of the world is that the stock buyback hiatus is almost over, and starting this week the bulk of companies can come right back and proceed to repurchase their stocks at all time highs.

And what a come back it will be. According to Goldman, the pace of buybacks is now absolutely off the charts, with nearly $1 trillion in buy ...

Investors question Deutsche Bank's overhaul

FRANKFURT (Reuters) - Deutsche Bank's biggest strategic overhaul under co-chief executives Anshu Jain and Juergen Fitschen got a thumbs down from investors on Monday who judged it too little too late.

Officials Warn Senkakus Fall Under US Protection; Japan To Take "More Assertive" Military Role

Following meetings with Sec. of State John Kerry, Defense Sec. Ashton Carter, Japanese officials, it appears, have been shown the endgame now that the Keynesian farce is over... As AFP reports, Japan's military to take on more assertive role, according to Japanese officials as Japan and US bolster their alliance for the first time in 18 years. Noting the alliance "serves as the cornerstone of peace in AsiaPac," and that the Senkakus will fall under protection of this new treaty, we suspect the Chinese will have more than a few things to say about this.

As AP reports,

The United States and Japan are boosting their defence relationship to allow a greater Japanese role in global military operations with an eye on potential threats from China and North Korea.

Before Japan's prime minister visits Washington this week, the two countries' foreign and defence ministers on Monday signed off on revisions to the U.S.-Japan defence guidelines. They are the first changes to the treaty allies' joint strategy in 18 years. Any changes are subject to security legislation pending in Japan's parliament.

The revisions boost Japan's role in missile defence, mine sweeping and ship inspections amid growing Chinese assertiveness. The new arrangements also allow Japan to dispatch its armed forces beyond the region for logistical backup of U.S. military's global operations, in distant areas including the Middle East.

* * *

Bloomberg adds

*U.S., JAPAN GUIDELINES ALLOW GREATER CONTRIBUTIONS TO SECURITY

*JAPAN, U.S. BOLSTER ALLIANCE FOR FIRST TIME IN 18 YEARS

*U.S., JAPAN AGREE TO GIVE ...

Applied Materials scraps Tokyo Electron takeover on U.S. antitrust concerns

TOKYO (Reuters) - U.S.-based Applied Materials Inc on Monday scrapped its $10 billion planned takeover of chip-making gear rival Tokyo Electron Ltd after the deal, a rare foreign bid for a Japanese firm, fell foul of U.S. anti-trust regulators.

Greek Blame Game: At Whom Will History Point The Finger?

Will they default or will they not? Are they out of cash or can they scrape together another half billion by tapping some heretofore untouched pocket of the public purse? Did they just institute capital controls? Because that's what it looks like. What was Varoufakis thinking? Is an advance from Gazprom on the way?

These are just of few of the many questions which seem to get asked and re-asked on an almost daily basis as the crisis in Greece plays out like a slow motion car crash that no one can take their eyes off of even though everyone (the market, the creditors, Athens … everyone) is exhausted, exasperated ("Gratigue" maybe?), and ready for some manner of resolution. Unfortunately, as Citi noted last week, the most scenario will be a kind of euro purgatory characterized by capital controls, defaults, and prolonged pain and suffering for the populace. This state of affairs is known as "Grimbo," and as Reuters notes, no one involved in the ordeal wants history to remember them as the villain. Here's more:

The game of chicken between Greece and its international creditors is turning into a vicious blame game as Athens lurches closer to bankruptcy with no cash-for-reform agreement in sight.

Europe's political leaders and central bankers and Greek politicians agree on only one thing: if Greece goes down, they don't want their fingerprints on the murder weapon!

Greece's leftist government has already identified its culprit of choice - Germany, Europe's main paymaster, accused of hav ...

Machines Shift To "Spoofing" Soybeans & OatsToday

Amid too close scrutiny in the equity markets, it appears the "spoofing" machines have turned their attention to the Soybean complex. As Nanex's Eric Hunsader exposes, a series of 200-lot sell-order-spoofs has sparked a pump-and-dump roundtrip in Soybean futures today. Oat futures have been monkey-hammered down almost 10% today and ripped back higher.

Oats Futures continue to get clubbed (in odd ways according to traders) strongly suggesting more spoofing...

And Soybean futures pump-and-dump...

As machines shift their spoofing attention...

Charts: Bloomberg, @NanexLLC

Reuters poll: 40 percent chance Greece exits the euro zone - traders

BENGALURU (Reuters) - There is a 40 percent chance Greece will leave the euro zone, according to a Reuters poll of money market traders in which just over half said the country could stay in the bloc even if it defaults on its debt payments.

April 2015 Texas Manufacturing Survey Manufacturing Activity Weakens Again

Of the four Federal Reserve districts which have released their April manufacturing surveys - one forecasts weak growth and three are in contraction. A complete summary follows.

Read more ...

A Star in Nasdaq Boom, ETF Now Looks Square

Nasdaq stocks are back at record levels, but investors are abandoning the Qubes, a once red-hot ETF that tracks the Nasdaq-100 stocks.

Dallas Fed Extends Miss Streak To Record 5 Months, Hovers Near 6-Year Low

Despite all of Dick Fisher's promises, The Dallas Fed Manufacturing Outlook had collapsed in the last 4 months (and is down for 6 months in a row - the longest losing streak in history) and April did not disappoint. Against expectations of -12, Dallas Fed printed -16 (the 5th large miss in a row). Silver-lining enthusiasts will note this is a slight rise from 2-year lows at -17.4 in March but remains close to 6-year lows. Of the 15 sub-cmponents only wages and employment were positive (sure why not) as capacity utilization and new order growth rates slowing further. Prices Paid are at their most negative since Lehman.

Prices Paid and "Hope" Collapsed...

It appears low oil prices are not a net positive to the Texas economy after all.

Charts: Bloomberg

Greece Says It Is Changing Team That Negotiates With Creditors

The shake-up has been interpreted in the Greek news media as a way of sidelining Greece's finance minister, Yanis Varoufakis, who has been criticized by European counterparts.

Mylan Rejects Teva's $40 Billion Takeover Offer

The move sets the stage for a fierce battle among three generic pharmaceutical giants.

Gold, Silver, Copper, & Crude Are Soaring On Heavy Volume

Dollar weakness continues (after weak US Services PMI) which has sent stocks to new record highs but it is the China-QE-driven commodity complex (along with Aussie and Canadian Dollar) that is in outright vertical panic mode...

And the move is on very heavy volume...

Gold is nearing $1200 once again, Silver now well above $16, Copper surgiung over $275, and WTI Crude testing $58 (2015 highs)

And commodity currencies likewise are soaring...

When considering catalysts, perhaps it is worth noting the relative buying began in the Asia session as China QE hints were dropped... it appears people remember that the thing China buys a lot of after it generates inflation is gold and if indeed China QE is pushing stocks higher then gold (and other hard assets) is up next.

Despite US Services PMI Miss, Markit Says "FOMC Should Normalize Policy Sooner"

After 3 months of somewhat surprising strength (given the background of disastrous hard data), US Services PMI dropped in April by the most since December, missing expectations by the most on record. Against serial extrapolators' expectations of a rise to 58.9, PMI fell to 57.8 with cost inflation jumping to a six-month high and the biggest rise in the jobs index suggests to Markit that "the FOMC to consider starting the process of normalising monetary policy sooner rather than later at its meeting later this week.."

A miss - but under the covers Market is excited...

As Markit concludes,

Greater optimism regarding future business activity, alongside sustained growth of incoming new work in April, contributed to robust job hiring across the service economy. The latest increase in payroll numbers was the steepest since June 2014.

"The improvement in second quarter economic growth, rising price pressures and strong job creation signalled by the PMI surveys adds to pressure on the FOMC to consider starting the process of normalising monetary policy sooner rather than later at its meeting later this week."

The Abercrombie & Fitch Makeover: A Review

The retailer, known for its images of frolicking, half-clad teenagers, has reformed its ways.

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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