Trading is quiet on this May first as many global markets are closed for the day. The averages opened up fractionally and have been trading sideways on light volume. WTI oil broke down into the 58's and Brent is trading sideways in the low 66's at a support.
The markets were unmoved at first with the U.S. ISM Manufacturing for April coming in at 51.5 actual vs 52 estimate, and 51.5 prior. U.S. U. of Michigan Confidence (APR F): 95.9 actual vs 96 estimate, 95.9 prior. Shortly after the announcement the markets began to trend down off the morning highs, but remaining solidly in the green for now and sea-sawing.
Here is the current market situation from CNN Money
North and South American markets are mixed. The S&P 500 is higher by 0.74%, while the IPC is leading the Bovespa lower. They are down 2.04% and 0.64% respectively.
$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.
Last Friday, the S&P 500 closed less than 2 points above its previous all-time closing high created on March 2nd. On an intra-day basis this was bested on Monday, only to close lower. Over the past couple of years, breakouts to new all-time highs following material retracements have not been very good buying opportunities. That little sneak peek peak earlier in the week might turn out to be the worst one yet.
As of today, it has been 875 trading days since the last 10%+ correction ended, the 5th longest stretch dating back to 1945.
Should the market break 2040, the next area of support clocks in at 1968-1979. Take out that support and the gate is opened up for a move towards the October low at 1819, ~14% lower from the recent all-time closing high. The largest decline from the four prior sequences was in January of 2014, maxing out at -6%. So, given that the pattern is now twice as long in duration as the largest of the previous four, it is reasonable to conclude a decline of this size could unfold.
The headlines say construction spending declined this month - the data is volatile and backward revisions distort the picture. The backward revision was significant enough to distort the month-over-month readings - and the rollling averages did improve.
NEW YORK (Reuters) - The pace of U.S. manufacturing growth held at its slowest in almost two years in April, as a rebound in new orders was offset by employment shrinking to its lowest level in more than five years, according to an industry report released on Friday.
Charles Schwab said it doesn't plan to charge liquidity fees or adopt redemption gates for its government funds, following expanded regulation that allows fund managers to do so during times of market turmoil.
(Reuters) - Oil and natural gas producer Chevron Corp reported a better-than-expected quarterly profit on Friday as cost cuts and strong refining margins helped offset the impact of lower oil prices , sending shares up in early trading.
As I review the financials of one of the largest shale producers in the United States, Whiting Petroleum (WLL), I can't help but notice the parallels to the .COM era of 1999 which, to some extent, has already returned to the technology and biotech sectors of today. Back then, the faster you burned cash to capture customers regardless of earnings to drive your topline, the higher your valuation. The theory was that after capturing the customers (in energy today, it is the wells) spending would slow and so would customer additions allowing companies to generate cash. By the way, a classic recent case is none other than Netflix (NFLX) which, in the past was exposed for accounting gimmicks that continue even today. It is still following this path of burning cash for the sake of customer additions, while never generating any cash in its entire existence.
Cash was plentiful in 1999 so it could always be raised as the Federal Reserve began its easy money era creating a series of bubbles for the next 15 years. Does this sound familiar to what is occurring now? It will end the same way and that process has already started as currency wars heat up and our economy grinds to a halt proving QE does not, in fact, create wealth (temporary yes for the 1%, short term, until POP) but instead it destroys it by distorting asset prices, misallocating investments, and ultimately creating an equity crash.
We just witnessed this in energy, as all the economic stats that distorted the real underlying economic weakness in the economy led energy producers to overproduce while easy money fueled it and expanded speculation in the futures market. Back in 1999 did the internet companies adapt their business models? ...
On Thursday we noted that no matter how tempting it may be to tune out the almost hourly warnings from various sources claiming Greece is finally set to run out of cash, one can't just assume the government will yet again find another couch cushion to reach into in order to scrape up a few more euros to pay government employees and creditors and thereby forestall the inevitable for another few weeks. Eventually, there simply will be no more money and the first signs that Greece has entered the final, terminal phase in the long and painful road to complete insolvency showed up last month in the form of a sweeping decree which required municipalities to transfer excess cash to the central bank.
That mandate was greeted with incredulity and with the country's local governments less than willing to turn over their funds, Athens finally ran out of money (if only for 8 or so hours) on Tuesday when pensioners showed up at ATMs only to discover that their money simply was not there. Amusingly, the government blamed the delay on a "technical glitch", and while we suppose it's not exactly a lie to call running out of money a "technical glitch", it was abundantly clear that the country's socialist saviors were making a feeble attempt to avert a pensioner mutiny. Today, we get more details about the situation and sure enough, the retirees are restless.
Via The Australian:
Panicking pensioners queued at banks, raided their accounts and broke into a board meeting of the state pension fund as Greece strugg ...
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