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21May2015 Market Update: Averages Move Back Up Towards Historic Highs On Weaker Than Expected U.S. Data

Written by Gary

U.S. stocks moved higher in morning trading today, with both the S&P 500 and Nasdaq Composite inching toward record territory. Investors shrugged of fresh batch of weaker-than-expected data, which came a day after the Federal Reserve all but ruled out an interest rate hike in June. Investors thinking? Buy Stocks!

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.26%, while the Bovespa is leading the IPC lower. They are down 1.08% and 0.23% respectively.

For the 5th month in a row, Kansas City Fed missed expectations by an increasingly large amount. May's -13 print is the worst since April 2009, and is the biggest drop since 2009.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 64%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 62%
Investors Intelligence sets the breath Above 50 bullish 58.4% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +2.93 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 62.19% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 63.40% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 63.80% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.14 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 77.10 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,250

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. labor market resilient despite sluggish economy

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose slightly more than expected last week, but the underlying trend continued to point to a rapidly tightening labor market.

U.S. fast-track trade bill clears key hurdle in Senate

WASHINGTON (Reuters) - Legislation key to sealing a Pacific trade pact passed another important test in the U.S. Senate on Thursday, boosting hopes for a deal that is central to President Barack Obama's strategic shift toward Asia.

CVS to expand pharmacy business with $10.1 billion Omnicare buy

(Reuters) - Drugstore operator CVS Health Corp said Thursday it will spend $10.1 billion to buy Omnicare Inc , a company that supplies prescription medicines to nursing, assisted living and other healthcare facilities.

Bond Selloff Boosts Lure of Italy, Spain

Southern European bond yields have risen sharply. It may be time to take a closer look at Italian and Spanish debt.

Kansas City Fed In Recession Territory After Respondent "Laid Off 8% Of Workforce In 2 Months"

For the 5th month in a row, Kansas City Fed missed expectations by an inmcreaisngly large amount. May's -13 print is the worst since April 2009, and is the biggest drop since 2009. Every single individual component also tumbled led by orders, backlog, number of employees and average workweek. Firmly in recession territory, the respondents comments are stunningly reminiscent of the great recession (or depression)...

Recession.. .or no recession!?

The breakdown is a disaster...

Some respondents said:

"We had a good first quarter but the brakes have been applied since the start of May. Looks like our business will be down compared to last May."

"It is becoming increasingly difficult to find qualified job candidates who are not carrying some form of personal baggage / problem."

"We are continuing to operate at full capacity but the volume of new orders has slowed sig ...

Kansas City Fed: Manufacturing Contraction Accelerates in May 2015

Of the three regional manufacturing surveys released to date for May, two show weak manufacturing growth one is in contraction.

Read more ...

Best Buy Profit Beats Expections

Best Buy Co. Inc, the largest United States consumer electronics chain, reported better-than-expected quarterly profit and sales, helped by strong demand for large-screen TVs, smartphones and appliances.

Best Buy profit beats on strong demand for TVs, smartphones

(Reuters) - Best Buy Co Inc , the largest U.S. consumer electronics chain, reported better-than-expected quarterly profit and sales, helped by strong demand for smartphones and large-screen TVs, sending its shares up over 8 percent.

April 2015 Existing Home Sales Headlines Say Sales Down. We Believe Sales Continue to Trend Upward.

Written by Steven Hansen

The headlines for existing home sales claim "April failed to keep pace with the robust gain seen in March". Our analysis of the unadjusted data shows that home sales are normally uneven - and that the rolling averages did improve. Because of the noise, it is very difficult for the headline seasonal adjusted data to accurately present the situation. Overall, existing home sales are improving and in a upward trending channel.

Read More ...

You Know It's A Fiscal Crisis When... Republicans Raise Taxes

As a reminder, America's state and local governments are going broke.

In the most high profile example of what can happen when the fiscal nightmare rubber meets the ratings agency road since Detroit, Moody's cut Chicago's ratings to junk last week after the Illinois Supreme Court struck down a pension reform law that would have paved the way for Mayor Rahm Emanuel to push through legislation aimed at closing funding gaps for the city's worker retirement funds. Pension costs are 18% of revenue in Chicago, more than double the amount of the next closest major US city.

Meanwhile, in Louisiana, LSU is facing funding cuts of 82% after falling oil prices blew a $1.6 billion hole in the state's budget â€" if the cuts are implemented in full, the school will face the university equivalent of bankruptcy.

These are but two examples. As we pointed out earlier this month, nearly half of US states face funding gaps with 17 states reporting negative Y/Y revenue growth in 2014. The situation is so bad in Kansas (where tax cuts pushed through by Governor Sam Brownback have bankrupted the state government) that schools are being forced to beg for emergency funding in order to pay salaries (perhaps Varoufakis has some ideas).

Here's a look at which states are in trouble:

Greece, creditors not in talks on extending bailout: Commission

MUNICH, Germany (Reuters) - Greece and its creditors are not in talks on extending the country's bailout until the autumn, with negotiations focused on meeting the program's conditions by the time it expires in June, a senior European Commission official said.

Stocks Recover Post-FOMC Losses After 4-For-4 Economic Data Misses

Manufacturing PMI - Miss/Drop. Existing Home Sales - Miss/Drop. Philly Fed - Miss/Drop. Economic Confidence - Miss/Drop. Buy Stocks...

Public Confused Why World's Biggest Banks Admitting Criminal Fraud, Leads To Public Yawns

It was about two years ago when we summarized all the known and confirmed rigged markets.

Libor - interest rates (link)

ISDAfix - swaps (link)

Platts - oil prices (link)

WM/Reuters - FX (link)

High-Frequency Trading - equities (link)

Since then things have gone from bad to worse for believers in fair and efficient markets, with not only countless more banks now admitting they rigged Libor and FX, not to mention gold (yes gold too was manipulated as impossible as it sounds) and even the CFTC finally figured out just how spoofers manipulate the price of both stock indices and gold, but that biggest master manipulator of all, the world's central banks, unleashed a record liquidity blitz into world markets with 2015 set to be the year in which CBs are set to monetize ...

Crash Contagion: Second Chinese Billionaire Wiped Out In Seconds After Stock Instacrash

Yesterday China's richest man, Li Hejun, lost more than half his fortune when his solar company stock suddenly crashed over 50%. Overnight it happened again, and Hong Kong's securities regulator, warned other investors to exercise "extreme caution," as Hong Kong's best-performing stocks this year are crashing in a serial, tulip-like manner. And another billionaire was promptly wiped out: Pan Sutong started the day engorged with wealth after his companies Goldin Financial and Goldin Properties had risen 300% this year. By the close he had lost 60% of his wealth!

What goes up... crashes to floor in a wealth-destroying frenzy...

"It's a contagion effect," said Nick Cheng, chief derivatives trader at Liquid Capital Markets Ltd. in Hong Kong.

Investors "are now rushing to take profit and everyone's suddenly running for the exit," he said.

The volatility "will damage investor confidence with such a reputable stock exchange."

As Bloomberg reports,

Hong Kong's best-performing stocks this year are tumbling even faster than they rallied.

Goldin Financial Holdings Ltd. and Goldin Properties Holdings Ltd., controlled by billionaire Pan Sutong, plunged more than 60 percent in Hong Kong trading Thursday. There was no immediate explanation for the drop. Before the rout, the tw ...

40% Of Existing Home Sales At Or Above Asking Price, Highest On NAR Record

Following the blockbuster housing starts and permits earlier this week, there was much hope that finally the NAR would confirm that the housing recovery was more than just another weather fabrication, and once again the dead cat has bounced, overtaking the sales high from last July. Alas, moments ago the NAR reported that after rising by 5.21 million units in March, April existing home sales dropped -3.3%, well below the 0.8% expected increase to 5.23 million.

As the NAR chief economist Larry Yun reported, sales in April failed to keep pace with March. "April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices," he said. "However, the overall data and feedback we're hearing from Realtors continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes."

Unless of course low interest rates are not so low in the future.

And while we understand that increasingly more potential buyers are simply priced out of a market that only the wealthiest can access, we are confused by Yun's statement that there is lagging supply: after all the NAR in the very next sentence admits that "total housing inventory at the end of April increased 10.0 percent to 2.21 million existing homes available for sale. Unsold inventory is at a 5.3â€"month supply at the current sales pace, up from 4.6 months in March."

So... perhaps we need to double seasonally adjust the inventory as well?

The good news for yet one more month, is that millionaires ...

Wall Street shrugs off weak data to inch higher

(Reuters) - U.S. stocks moved higher in morning trading on Thursday as investors shrugged of fresh batch of weaker-than-expected data, which came a day after the Federal Reserve all but ruled out an interest rate hike in June.

Philly Fed Hovers Near 15-Month Lows, Prices Paid Collapse Most Since Lehman

After a very modest bounce in April, Philly Fed fell again in May, printing a disappointing 6.7 (against 8.0 expectations). Philly Fed has now missed 5 of the last 6 (and 7 of the last 9) months. While new orders picked up, prices paid plunged at recessionary pace, inventories tumbled, and the average workweek slumped. Hope also tumbled as future expectations dropped.

Philly Fed hovers neasr 15 month lows...

Prices Paid are signalling recessionary environment...


April 2015 Leading Economic Index Rate of Growth Increases But Index Authors Downplay This Improvement

Written by Steven Hansen

The Conference Board Leading Economic Index (LEI) for the U.S. "sharply improved" this month - but the authors believe this index is not supporting a significant strengthening in the economic outlook at this time.

Read more ...

May 2015 Philly Fed Manufacturing Survey Softens With Key Elements Mixed

Written by Steven Hansen

The Philly Fed Business Outlook Survey growth declined modestly. Consider that this is the fifteenth month in a row of expansion. Key elements were mixed.

Read more ...

Economic Hope Crashes By Most Since 2013 Government Shutdown

Consumer Comfort is now the lowest it has been since Dec 2014 as Bloomberg's sentiment index continues to track the pain of higher gas prices better than the gain of higher stock prices. This is the biggest 6-week plunge in sentiment since Oct 2013. What is more worrisome is 'hope' is plunging. Economic Expectations fell by the most since Oct 2013 - the government shutdown - having fallen for 3 straight months. It appears the trickle-down popularity of seeing a Green Dow print every night on the news does not make the average joe feel any better about the world after all???

Confidence is tumbling...

As Hope collapses...

Charts: Bloomberg

U.S. home resales unexpectedly fall, tarnishing housing recovery

WASHINGTON (Reuters) - U.S. home resales unexpectedly fell in April as tight inventories pushed prices higher, giving a cautious signal on the strength of the housing market.

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