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04Jun2015 Market Update: Oil's Eminent Crash Through Key Support Will Take The U.S. Markets Sharply Down, Prepare For A 20% Correction

Written by Gary

WTI oil has fallen sharply to it key support and does not look like it it is going to hold for much longer. Some analysts are predicting a 10% to 20% 'correction' depending on time frame. The longer it takes to start the 'correction', the greater the decent.


Here is the current market situation from CNN Money

U.S. Markets are continuing to fall with continuing fears of Greece being able to pay its debt obligations, U.S. slower-than-expected economic growth, and sharp swings in government bonds across the globe.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 57%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 51%
Investors Intelligence sets the breath Above 50 bullish 57.4%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -16.67
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 56.11%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 61.86%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 64.40%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 23.18
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 76.96
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,029

What Is Moving the Markets

Here are the headlines moving the markets.

Behind Bond Market's Latest Tantrum

What isn't behind the carnage in bond markets is a bit clearer than what is.

Celebrity Saudi Oil Minister Prepares for Potential Swan Song

Ali al-Naimi was an unlikely Saudi oil boss. But during about 20 years as oil minister, Mr. Naimi has become the most influential voice in the world oil market.

Forget "Game Theory" - Yanis Varoufakis Introduces "Hope Theory"

Authored by Yanis Varoufakis, originally posted at Project Syndicate,

On September 6, 1946 US Secretary of State James F. Byrnes traveled to Stuttgart to deliver his historic "Speech of Hope." Byrnes' address marked America's post-war change of heart vis-Ã -vis Germany and gave a fallen nation a chance to imagine recovery, growth, and a return to normalcy. Seven decades later, it is my country, Greece, that needs such a chance.

Until Byrnes' "Speech of Hope," the Allies were committed to converting "...Germany into a country primarily agricultural and pastoral in character." That was the express intention of the Morgenthau Plan, devised by US Treasury Secretary Henry Morgenthau Jr. and co-signed by the United States and Britain two years earlier, in September 1944.

Indeed, when the US, the Soviet Union, and the United Kingdom signed the Potsdam Agreement in August 1945, they agreed on the "reduction or destruction of all civilian heavy-industry with war potential" and on "restructuring the German economy toward agriculture and light industry." By 1946, the Allies had reduced Germany's steel output to 75% of its pre-war level. Car production plummeted to around 10% of pre-war output. By the end of the decade, 706 industrial plants were destroyed.

Byrnes' speech signaled to the German people a reversal of that punitive de-industrialization drive. Of course, Germany owes its post-war recovery and wealth to its people and their hard work, innovation, and devotion to a united, democratic Europe. But Germans could not have staged their magnificent post-war renaissance without the support signified by the "Speech of Hope."

Prior ...

Weak U.S. Productivity, Rising Labor Costs Stir Inflation Concern

U.S. nonfarm productivity fell more sharply than initially thought in the first quarter, leading to a jump in labor-related production costs, a trend that could ignite inflation if sustained.

I.M.F. Urges Fed to Delay Raising Interest Rates

Citing slower-than-expected economic growth, the International Monetary Fund said early 2016 would be a better time to raise the benchmark rate.

Greek left vents fury at creditors as Tsipras edges nearer to deal

ATHENS/BRUSSELS (Reuters) - Leftists in Prime Minister Alexis Tsipras' party vented fury on Thursday at terms proposed by Greece's creditors for a last-ditch deal to stave off bankruptcy and European officials acknowledged that large gaps remain to be bridged.

Dish and T-Mobile US in merger talks: source

(Reuters) - Dish Network Corp and T-Mobile US Inc are discussing a deal to combine the second-largest satellite TV operator in the United States with the fourth-largest wireless carrier, a person familiar with the matter said on Thursday.

U.S. stocks edge lower as nonfarm productivity slips

(Reuters) - U.S. stocks slipped in choppy trading on Thursday after data showed U.S. nonfarm productivity fell sharply and investors digested the International Monetary Fund's comment urging the Federal Reserve to delay a rate hike.

HSBC to pay $43 million Geneva money laundering settlement

ZURICH/GENEVA (Reuters) - HSBC agreed on Thursday to pay Geneva authorities 40 million Swiss francs ($43 million) to settle a money laundering investigation at its Swiss private bank, one of a number of probes facing its Geneva-based wealth manager.

IMF warns Fed should delay rate hike until 2016

WASHINGTON (Reuters) - The U.S. Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation, the International Monetary Fund said in its annual assessment of the economy on Thursday.

Fitbit Charge Versus Jawbone UP2: Two Top Fitness Trackers Compete Amid Accusations Of Theft

Fitbit and Jawbone continue to be the biggest names in fitness trackers. Here we have the Fitbit Charge and the newly-released Jawbone UP2. They're both midrange offerings, so which one is better?

C-Suite Gamblers - The Real "Dumb Money" Inflating The Bubble

Submitted by David Stockman via Contra Corner blog,

U.S. companies announced $141 billion of new stock buyback programs last month and $243 billion of new M&A deals. Both figures are all-time records, and according to bubblevision are further evidence that CEOs are bullish on their companies and the economic outlook.

You might say that. Then, again, it might put you in mind of swarming moths heading for a light bulb. In his excellent post yesterday, Wolf Richter didn't bother with the long-form chart on M&A deals since, say, the turn of the century. He just cut to the chase with this self-explanatory comparison of pre-crash peak monthly deal rates:

In a similar vein, the run rate of 2015 stock buyback announcements is on pace to reach $1.2 trillion for the full year, shattering the 2007 record of $863 billion. Yes, indeed, there is much bullish enthusiasm in the C-suite, with the weekly announcement line literally going parabolic.

The above might be taken a ...

Greece Keeps Its Creditors Guessing

The suggestion by various Greek officials that Athens might not pay its debt obligations could be a negotiating tactic in debt talks.

Hunting for Hackers, N.S.A. Secretly Expands Internet Spying at U.S. Border

Searching for evidence of computer hacking originating abroad, the Obama administration has stepped up warrantless monitoring, documents show.

Gold's Peak Doesn't Mean New Price Heights

Predictions that gold production is approaching its limits are again in vogue. But "peak gold" doesn't necessarily mean peak prices.

Earnings Summary for Today

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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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