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15May2015 Market Update: Markets Move From Green To Red In A Roller Coaster Move, Oil Tests Support As Does US Dollar

Written by Gary

Markets experience mild volatility this morning as the averages swung from opening higher to a downswing seriously placing equities into the red. By 11 am the markets were posting mostly green only to fall back down into the red.

Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 0.40% while the IPC gains 0.10%. The S&P 500 is off 0.12%.

Oil fell today as renewed worries of a supply glut weighed on a market feared to be overpriced from a recent rally. U.S. industrial production also fell for a fifth straight month in April due in part to a further decline in oil and gas drilling, painting a lackluster picture of economic growth in the second quarter. Both oil and the US dollar are testing their supports - which is going to win?

ECRI's WLI Growth Index which has spent 28 weeks in negative territory - is now into positive territory for the second week. It is now forecasting better growth later this year, but we will see if this forecast holds any water.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 61%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 60%
Investors Intelligence sets the breath Above 50 bullish 57.6% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +7.78 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 61.67% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 62.74% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 63.20% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.53 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 76.22 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,204

What Is Moving the Markets

Here are the headlines moving the markets.

Oil falls on glut worries as rally comes into question

NEW YORK (Reuters) - Oil fell on Friday as renewed worries of a supply glut weighed on a market feared to be overpriced from a recent rally.

U.S. factory, consumer confidence data darken second-quarter outlook

WASHINGTON (Reuters) - U.S. industrial production fell for a fifth straight month in April due in part to a further decline in oil and gas drilling, painting a lackluster picture of economic growth in the second quarter.

Oil Industry Sues US Government Over Oil Train Safety Rules

Submitted by Andy Tully via,

America's largest energy trade association is suing the US government, contending that its timeline for upgrading oil tank cars for freight trains isn't realistic and, in some cases, is too expensive.

In its suit filed on May 11 in the US District Court of Appeals for the District of Columbia, the American Petroleum Institute (API) asked the panel to block the new regulations, issued May 1 by both Canada and the United States, that would require reinforcing the tank cars and fitting them with advanced braking systems.

The companies that build the cars, or those that have already leased them, were given between five and ten years to retrofit cars, called DOT-111 tank cars, that carry crude oil and other flammable liquids, depending on the nature of their intended cargo and each car's current set of safety features.

The API said that timeline doesn't give them enough time to make the upgrades. It also said the cost of installing new electronic braking systems of the cars exceeded their benefits. API spokesman Brian Straessle argued that "retrofit timelines, braking systems and other actions must all be based on facts and science to maximize the safety impact of this rule."

But Straessle added, "[w]e definitely support upgrades to the fleet. It's a matter of timing."

The rail industry's ...

Bank of America's Woes Test 'Fixer' CEO

Five years into the job, Brian Moynihan has struggled to move past the financial crisis, trying shareholders' patience.

Exclusive: UK may extend trading plan to sell more Lloyds shares

LONDON (Reuters) - Britain is considering selling more shares in Lloyds Banking Group by extending a trading facility beyond the current deadline at the end of June, people with knowledge of the matter said.

08 May 2015: ECRI's WLI Into Positive Territory for the Second Week in a Row

ECRI's WLI Growth Index which has spent 28 weeks in negative territory - is now into positive territory for the second week. It is now forecasting better growth later this year.

Read more ...

Second Quarter 2015 Survey of Professional Forecasters See Weaker Outlook for Growth

from the Philadelphia Fed

The outlook for growth in the U.S. economy over the next three years looks weaker now than it did in February, according to 44 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 2.5 percent this quarter and 3.1 percent next quarter. On an annual-average over annual-average basis, real GDP will grow 2.4 percent in 2015, down 0.8 percentage point from the previous estimate. The forecasters predict real GDP will grow 2.8 percent each in 2016 and 2017, and 2.5 percent in 2018.

Read more ...

King Digital Still Coming Off Sugar High

Candy Crush maker King Digital might look like a bargain next to its peers, but diversification is still an issue.

Preliminary May 2015 Michigan Consumer Sentiment Takes a Dive

by Doug Short, Advisor Perspectives/

The University of Michigan preliminary Consumer Sentiment for May came in at 88.6, down from the 95.9 April final reading and well below the interim high of 98.1 in January. had forecast 96.0 for the May preliminary.

Read more ...

Someone Is Lying: Job Optimism Plummets To Levels Unseen Since Financial Crisis

The percentage of respondents to University of Michigan's Consumer Sentiment Survey that "think they (or their spouse) will lose their job over the next 5 years" soared to its highest since March 2009.

Either the BLS' workers are lying, or the government's data on jobs is 'misleading'

According to UMich Curtin:


And worse still:


But do not worry:


Though he offered no actual reason for his expectation.

Finally, we note the last time this happened...

Personal Spending Collapsed!

Charts: Bloomberg

Carl Icahn invests $100 million in ride-sharing service Lyft

(Reuters) - Ride-sharing company Lyft Inc said it raised $150 million, led by a $100 million investment from activist investor Carl Icahn's Icahn Enterprises LP .

Economists cut second-quarter U.S. jobs growth forecasts: Philly Fed survey

NEW YORK (Reuters) - Economists cut their forecasts for U.S. economic growth in the second quarter and full year, and trimmed expectations for U.S. labor market gains.

U.S. consumer sentiment falls in May

NEW YORK (Reuters) - U.S. consumer sentiment fell more than expected in May, a survey released on Friday showed.

U. of Mich Consumer Sentiment Crashes As Surging Gas Prices Trump Stock Record Highs

Soaring gas prices dueled with soaring stock prices to leave University of Michigan Consumer Sentiment and it appears the former won. Printing at the weakest level since Oct 2014, UMich dropped to 88.6 (vs 95.9 expectations). This is the biggest miss on record.. and biggest MoM drop since Dec 2012. Both current conditons and expectations plunged despite surges in inflation expectations. Higher income expectations are starting to plunge - at their lowest in 7 months - and household finances are seenas the worst since July 2014. And finally, the survey's spokspersonsays that respondents showed "concern over employment."

In case you needed to understand what drives Consumer Sentiment (or perhaps exactly who UMich is actually surveying), here is the following....

Higher gas prices crush confidence... and stocks don't matter

Charts: Bloomberg

Wall Street little changed as industrial output falls

(Reuters) - U.S. shares were little changed on Friday as U.S. industrial production fell for a fifth straight month in April, pointing to a lack of momentum in the economy.

Deutsche Bank: "No One Knows How To Hedge Or Price Liquidity In This World"

Deutsche Bank's Jim Reid was recently visiting clients in the US, where he listened to their gripes, concerns and market fears. At the very top: buying is easy, but when the selling starts it's all over.

To wit:

Whilst I was [in the US] everyone wanted to talk about trading liquidity and rates. In terms of liquidity some stressed more than others about it but all concluded that the last few weeks in rates were eye-opening. No-one really knew how to hedge or price for it in a world where you need to hit short-term performance targets. This supports my view that liquidity premiums will never be properly priced in this cycle and investors will stay in assets too long in order to maximise short-term performance. This is completely understandable though given the nature of the industry. But when this cycle does end there is likely to be savage moves in markets where either investors need to sell or where they are able to sell. The good news is that central bank liquidity should continue to push this problem out for a good while yet but we're likely to get regular reminders of the problems that will occur when the fundamentals change.

Don't worry about the selling: once it does begin, it will be so furious exchanges will simply shut down for the day (or week, or month, or good) and nobody will be allowed to leave the biggest Hotel California ever created by central banks for market participants. The truth is that nobody is getting out of this alive, or at least with profits, when the central planners lose control. There is zero hedge to what is coming.

As for the bad news, while central bank liquidity is "pushing this problem out", it is also causing it as we showed in . . .

April 2015 Industrial Production: Weak Data Continues

Written by Steven Hansen

The headlines say seasonally adjusted Industrial Production (IP) declined. This month the manufacturing portion of this index was unchanged month-over-month - but the other portions of industrial production declined. This is another weak report, and again under expectations.

Read more ...

Dear Bureau Of Labor Statistics, About Those Plunging Gasoline Prices...

One of the major reasons for yesterday's market surge to new record highs was the surprise drop and miss in the April wholesale inflation report, or rather make that deflation, when the BLS announced that PPI in April had dropped by 0.4%, far below expectation of a 0.1% increase, of which the BLS said "over 30 percent can be attributed to the index for gasoline, which decreased 4.7 percent."

The implication, of course, being that with the US drifting ever further from the Fed's desired 2% inflation threshold, not only is the probability of a June rate hike negligible, but the last time US macro data was this bad, the Fed launched QE2 (and Operation Twist... and QE3).

Which is all great, we just have one question for the BLS: just what "data" are you looking at?

Because a quick reality check reveals April gasoline prices not only did not drop 4.7%, they rose by 8%!

... leading to the following grtesque divergence between "data" from the US Department of Truth and, well, the real world.

And just to put it in perspective, at this rate in a few weeks gasoline prices in America's most auto-dependent state, California, will be at or above levels seen from last year. In f ...

Saudi Victory? WTI Crude Tumbles To Key Support (Again)

It appears a slew of dismally disappointing economic data has finally broken the back of the camel... WTI Crude - on the heels of Saudi proclamations that they are winning the fight against US Shale - has tumbled back to the key $59.50 level...

Perhaps Goldman was right after all and higher prices will merely delay the required restructurings. And then there is this:

Blackstone Group LP's distressed credit unit is backing away from investments in the most troubled energy companies based on its expectation that oil prices are due for a renewed decline.

Has the easy (and dumb) money funding dried up?

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