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01May2015 Market Update: Markets Are Quiet, Volumes Are Low, Averages In Green For Now As WTI Oil Begins To Decline

Written by Gary

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.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 66%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 51
Investors Intelligence sets the breath Above 50 bullish 59.4%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -40.83
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 59.30%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 65.04%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 67.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.87
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 75.83
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11.096

What Is Moving the Markets

Here are the headlines moving the markets.

S&P 500 - Price Action Suggesting it Will No Longer Avoid the Elusive 10% Correction

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.

Read More >>

Construction Spending Growth Mixed in March 2015. Backward Revisions Are Distorting Monthly Changes

Written by Steven Hansen

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.

Read more ...

Chevron Profit Beats Expectations, Cost Cuts Offset Cheap Oil

Oil and natural gas producer Chevron Corp posted a 43 percent drop in quarterly profit on Friday due to low oil prices .

Global Market Turnaround Whips Investors

April proved a cruel month for investors, many of whom had bet the dollar would march higher, oil prices would fall and the rally in bond markets would gain steam.

U.S. manufacturing growth holds at low level in April, employment shrinks: ISM

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.

Schwab Opts Not to Adopt Liquidity Fees

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.

U.S. factory activity growth slows in April: Markit

NEW YORK, (Reuters) - Expansion in the U.S. manufacturing sector weakened in April as growth in output and new orders fell, according to an industry report released on Friday.

Ford Sales Up 5 Percent in April

Ford says its U.S. sales rose 5 percent last month for its best April in nine years.

Big Banks Use Loophole to Avoid Ban

Big banks are using a little-known loophole to avoid triggering a Securities and Exchange Commission ban on selling certain lucrative products to clients in the wake of enforcement actions.

General Motors April U.S. Sales Rise 5.9%

General Motors says its U.S. sales last month rose 5.9 percent as Americans snapped up small and midsize SUVs.

Your Money Adviser: Health Insurance Deadline Passes for Most, but There Are Exceptions

The Affordable Care Act's open enrollment period for health insurance expired on April 30, but people with special circumstances can still get coverage.

U.K. Economy Helps Keep Lloyds on Rebound

Lloyds shares rose, reflecting improving earnings and expectations that the bank will be in a position to return money to shareholders this year.

Chevron profit beats Street as cost cuts offset cheap oil

(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.

Euro Reaches Two-Month High

The euro climbed to a fresh two-month high against the dollar, extending its recent rebound against the buck in quiet holiday trade.

Fiat Chrysler expects U.S. auto industry April sales to rise 6 percent

DETROIT (Reuters) - Fiat Chrysler Automobiles said on Friday it expects April U.S. auto industry sales to rise 6 percent from a year ago.

How Shale Is Becoming The Dot-Com Bubble Of The 21st Century

Submitted by Leonard Brecken via OilPrice.com,

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? ...

Fiat Chrysler US Sales Rise 6 Percent in April

Fiat Chrysler says its U.S. sales rose 6 percent last month, a sign that April will be another good month for the industry.

CVS Health Tops Forecasts, as Earnings Climb 8%

CVS Health Corporation (CVS) on Friday reported first-quarter earnings of $1.22 billion.

Greek Pensioners Crash Pension Fund Board Meeting, Form Lines At Bank

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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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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