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11May2015 Market Update: Markets Move Lower After Volatile Opening, But Still Trade Sideways On The Daily Charts Breakout Ahead?

Written by Gary

Markets moved lower during today's session, but remain in a sideways jaunt in the past 4 sessions. Typical breakout pattern, which way will it be? Oil is moving downward under pressure on signs a multi-week rally was encouraging a rejuvenation in already bloated U.S. shale supplies.

Investors worries about Greece's precarious financial condition, slowing growth in China, and energy stocks falling on weaker oil prices have taken its toll on the markets today.


Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.06%, while Brazil's Bovespa is off 0.30%. Shares in U.S. are unchanged with the S&P 500 at 2,116.10.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 64%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 60
Investors Intelligence sets the breath Above 50 bullish 57.6%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -10.65
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 60.69%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 62.68%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 64.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.27
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 76.57
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,170

What Is Moving the Markets

Here are the headlines moving the markets.

OPEC Sees Oil Price Below $100 a Barrel in Next Decade

OPEC doesn't see oil prices consistently trading at $100 barrel again in the next decade, a pessimistic assessment that has the group considering the return of production limits to influence the market.

U.S. Home-Price Growth Picks Up

Home-price appreciation accelerated in many markets during the first quarter of 2015, the latest indication that the spring home-selling season is off to a strong start.

Rackspace Looks Painfully Stretched

Cloud-computing company Rackspace rallied on Amazon's results but has the same old woes as before.

Asia Loses Chocolate Craving

Slowing economic growth and higher candy prices have dulled Asia's demand for cocoa, the main ingredient in chocolate, and upended bets by investors.

Bond Market Bloodbath Is in the Math

The reach for yield in longer-dated bonds puts investors in particular peril as the market goes into reverse.

Russia Asks Greece To Join BRICS Bank

As if the discussions in Brussels and Athens were not mired in enough uncertainty, Bloomberg reports that a Greek official confirms:


*STORCHAK ASKED TSIPRAS FOR GREECE TO JOIN BRICS BANK: OFFICIAL

The pivot appears to continue. Reportedly, Tsipras was pleasntly surprised by the proposal.

As Bloomberg reports,

Russian Deputy Finance Minister Sergei Storchak spoke with Greek PM Alexis Tsipras today, proposed that Greece become 6th member of New Development Bank set up by Brazil, Russia, India, China, South Africa, a Greek govt official says in e-mail to reporters.

Tsipras said keen to discuss matter in St. Petersburg Economic Forum June 18-20, with leaders of BRICS countries.

Tsipras was pleasantly surprised by proposal.

* * *

Citigroup says could plead guilty to settle forex probe

NEW YORK (Reuters) - Citigroup Inc said it could plead guilty to an antitrust charge to resolve a U.S. Department of Justice investigation of its dealings in foreign exchange markets.

GE unlikely to gain unconditional approval for Alstom deal: sources

BRUSSELS (Reuters) - General Electric is unlikely to gain unconditional European Union clearance for its 12.4 billion euro ($13.85 billion) bid for Alstom's power equipment business, two sources familiar with the matter said on Monday.

Oil under pressure on signs of U.S. shale oil recovery

NEW YORK (Reuters) - Oil came under pressure on Monday on signs a multi-week rally was encouraging a rejuvenation in already bloated U.S. shale supplies.

"Huge Disconnect Between Physical & Futures" Suggests Commodity Rally Won't Last, Barclays Warns

For many reasons the answer to the question: "will the commodity price rally continue?" is particularly important at this juncture, and the answer from Barclays is 'no' - it will prove very tough to make further significant gains in commodity prices from here unless supply/demand conditions improve very fast indeed. There are a multitude of factors but what erks them the most is the huge disconnect between price action in physical markets where differentials are signalling oversupply and futures markets where all looks rosy. The risks for a reversal in recent commodity price trends are growing, and with fewer market makers to absorb the shocks, potentially, a period of high volatility could lie ahead.

One of the most important financial market trends of Q2 so far has been the strong performance of energy and industrial commodities. However, prices appear to have moved ahead of the improvement in underlying fundamentals, and with fewer market makers to absorb the shocks, potentially a period of high volatility could lie ahead.

The first half of Q2 has seen a strong rally develop in commodities prices. Brent crude oil is up 24% (after performing flat in Q1), copper 12% and even gold has risen a little. Despite the fact that agricultural commodities and livestock prices have continued to be weak, the S&PGSCI spot price index has made its best start to a year since 2011, up 8% in the year-to-date.

Although the price rebound is directly benefitting commodity index investors much less then the spot price gains might suggest (because the high cost of carry has ...

Italy's MPS Is Still Hard to Back

Banca Monte dei Paschi di Siena, the struggling Italian bank, faces fewer nasty surprises and looks more comfortable on capital. But loan losses will still keep a lid on returns.

China's Next Challenge: Small Business Lending

China's central bank is grappling with how to steer credit to the small and private businesses Beijing deems crucial to growth but which haven't yet benefited from its easing.

Wall St. mixed on Greece, China worries; energy stocks down

(Reuters) - Wall Street was mixed in morning trading on Monday amid worries about Greece's precarious financial condition and slowing growth in China, while energy stocks fell on weaker oil prices.

Uber Is Now Valued Higher Than 80% Of The S&P: Closing In On General Motors And Ford

Over the weekend, Bloomberg reported that just three months after it stunned observers with a $2.8 billion Series E capital raise at a $40 billion valuation, surpassing the market cap of such "blue chip" names as Canon, Yum! Brands, Delta Air Lines, Prudential and Adobe (not to mention the market cap of the entire QQQ ETF), car hailing company Uber is seeking to raise another $1.5 billion, this time at a valuation round of $50 billion: a $10 billion increase in value in a few short months.

To put this in perspective, according to CapIq, there were just 95 companies in the S&P500 with a market cap over $50 billion, suggesting Uber which did not exist when Lehman filed for bankruptcy, now has a market capitalization greater than 80% of the S&P. Specifically, at a $50 billion valuation, Uber is more "valuable" than FedEx, Marck, Deutsche Bank, General Dynamics, Nissan, Time Warner, Yahoo, Credit Suisse, Heineken and many other companies.

And since a down equity round in the VC industry is a kiss of death, it is likely that the next time Uber needs to raise capital in another 3-6 months, its valuation will likely be around $60 billion, or greater than General Motors and just why of Ford at $62 billion. It will also be bigger - on paper of course - than Lockheed Martin, Occidental, Dow Chemical, China Telecom, MOnsanto, Caterpillar, Target, and so on.

And while we have written before about both the epic bubble in private valuations as well as how tech company valuations ...

Germany, in shift, says Greek referendum on reform could help

BRUSSELS (Reuters) - EU paymaster Germany said on Monday it could make sense for Greece to hold a referendum on painful economic reforms under negotiation with its creditors, changing tack as Berlin's own lawmakers bridle at further aid for Athens.

Jobs Vie With Growth for Fed's Attention

Jobs and economic growth aren't traveling the same route. That makes it tougher for the Fed to pick a clear rates path.

Consumers Expectations Little Changed in April 2015 Except Median Household Spending Growth At Series Low

from the New York Fed

The results from the April 2015 Survey of Consumer Expectations indicate that one-year ahead inflation expectations fell while three-year ahead inflation expectation increased slightly. The median one-year and three-year ahead expected rates of inflation now stand at 2.7 percent and 3.0 percent, respectively. While earnings and household income growth expectations were largely unchanged, median household spending growth expectations retreated substantially to the series low reached in February 2015.

Read more ...

Muskular Magic (Or Smoke & Mirrors)

Submitted by Howard Kunstler via Kunstler.com,

Elon Musk, Silicon Valley's poster-boy genius replacement for the late Steve Jobs, rolled out his PowerWall battery last week with Star Wars style fanfare, doing his bit to promote and support the delusional thinking that grips a nation unable to escape the toils of techno-grandiosity. The main delusion: that we can "solve" the problems of techno-industrial society with more and better technology.

The South African born-and-raised Musk is surely better known for founding Tesla Motors, maker of the snazzy all-electric car. The denizens of Silicon Valley are crazy about the Tesla. There is no greater status trinket in Northern California, where the fog of delusion cloaks the road to the future. They believe, as Musk himself often avers, that Tesla cars "don't burn hydrocarbons." That statement is absurd, of course, and Musk, who holds a degree in physics from Penn, must blush when he says that. After all, you have to plug it in and charge somewhere from the US electric grid.

Only 6 percent of US electric power comes from "clean" hydro generation. Another 20 percent is nuclear. The rest is coal (48 percent) and natural gas (21 percent) with the remaining sliver coming from "renewables" and oil. (The quote marks on "renewables" are there to remind you that they probably can't be manufactured without the support of a fossil fuel economy). Anyway, my point is that the bulk of US electricity comes from burning hydrocarbons, and then there is the nuclear part which is glossed over because the techno-geniuses and politicians of America have no idea how they are going to de-commission our aging plants, and no idea how to safely dispose of the spent fuel rod inventory simpl ...

Drillers Answer Low Oil Prices With Cost-Saving Innovations

Even as boom towns go quiet, oil production chugs along thanks to rapid gains in technology to extract more with less.

Look to the U.S. for Path of the Euro

Far from reaching parity, the euro has bounced higher in recent weeks. U.S. data is now in the driving seat for the single currency.

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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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