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10Jun2015 Market Update: Bears Looking To Continuing Down Sessions Tomorrow After Today's Upbeat Advance

Written by Gary

U.S. stocks advanced this morning, buoyed by a rally in the technology sector.

Oil rallied for a second straight day as U.S. government data confirmed a big weekly drawdown in domestic crude stockpiles while Greece and its creditors moved closer to the brink

The Dow Jones Industrial Average rose more than 250 points, but this rally is nothing more than a correction to the three down market sessions.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 2.26% while U.S.'s S&P 500 is up 1.21% and Mexico's IPC is up 0.39%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 44%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 32%
Investors Intelligence sets the breath Above 50 bullish 55.2%
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.

-60.04

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.

49.13%

StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 61.15%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 62.00%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

24.62

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 76.81
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,066

What Is Moving the Markets

Here are the headlines moving the markets.

Livingston Survey: Higher Growth, Lower Unemployment Predicted for Second Half of 2015

from the Philadelphia Fed

The 28 participants in the June Livingston Survey predict higher output growth for the second half of 2015 than they did in the December survey. The forecasters, who are surveyed by the Federal Reserve Bank of Philadelphia twice a year, project that the economy's output (real GDP) will rise at an annual rate of 0.9 percent during the first half of 2015 and 3.1 percent during the second half of 2015, followed by growth of 2.9 percent (annual rate) in the first half of 2016.

Bank of England Head Carney Joins Fed's Fischer Demanding Market Rigging Bankers Go To Jail

One week ago we took delight in one particular headline in which Fed vice-chair Stanley Fischer was quoted as saying that bankers "should be punished for financial crimes."

We doubt we need to explain the virtually infinite circularity of irony contained in this quote, suffice to say that for the Fed to admit that the US judicial system is broken and that not a single banker has gone to prison following years of abuse, nearly a third of a trillion in legal settlements and charges by US commercial banks many of which have been now found to criminally manipulate markets (of which none more so than JPMorgan, whose CEO Jamie Dimon is now a billionaire as a result), and that the Fed has enabled and encouraged all of this with its policies, is... well, frankly we don't even have the right word for it.

Today, the irony goes a notch higher when another central banker, this time former Goldman partner and current Bank of England head, Mark Carney doubled down on Fischer's commentary.

Moments ago Carney said that prison sentences for market manipulating traders and bankers should be extended from 7 to 10 years. He added that so-called "rolling bad apples" or individuals who are fired from financial firms ...

Saudi Arabia, Iraq Push OPEC Over Its Ceiling

OPEC in May produced nearly 1 million barrels a day more than its target announced last week, it said, with the lion's share of the excess coming from two countries: Saudi Arabia and Iraq.

HSBC's investment bank to shed clients, assets in profitability push

LONDON (Reuters) - HSBC's investment bank could shed more than a fifth of its clients and plans to reduce its credit and interest rates businesses by $100 billion over the next two years in its bid to improve profitability.

How Do You Spell "Irony" In Japanese?

Bank of Japan Governor Kuroda has managed to do it again. In his now daily missives on "deflation mindset being over", "economy is on the right track", "QQE is working", and his best yet "BoJ has no plan to finance government debt", Kuroda unleashed the ultimate idiocy last night when he proclaimed "it is desirable for FX to move in a stable manner." USDJPY has fallen over 2 handles for the biggest surge in JPY strength in 6 months... to which Amari noted "Kuroda didn't intend to move market with his remarks."

The biggest surge in JPY (drop in USDJPY) in 6 months!

Irony indeed.

Charts: Bloomberg

USDA Raises Projection for U.S. Corn Inventories

The U.S. Department of Agriculture raised its forecasts for U.S. corn stockpiles but maintained existing projections for production in a monthly report Wednesday.

Wall St. jumps on report Germany may consider Greece aid

(Reuters) - Wall Street surged in late morning trading on Wednesday after a Bloomberg report that Germany may be satisfied with Greece committing to at least one economic reform in return for aid.

Tokio Marine to buy HCC Insurance for $7.5 billion

TOKYO (Reuters) - Tokio Marine Holdings Inc said on Wednesday it had agreed to buy U.S. specialty insurer HCC Insurance Holdings Inc for $7.5 billion, in what would be the biggest M&A deal this year by a Japanese company.

Oil up after U.S. stockpile draw, profit-taking pares gains

NEW YORK (Reuters) - Oil rallied for a second straight day on Wednesday as U.S. government data confirmed a big weekly drawdown in domestic crude stockpiles, although profit-taking by players who had bet on the draw pulled the market back from its highs.

MSCI Decision Is Setback for Beijing

MSCI's decision to defer adding China's mainland-listed shares to one of its global benchmarks disappointed many policy makers, but the delay could help prod Beijing to further open up its markets.

Apple Music faces antitrust scrutiny in NY, Connecticut

(Reuters) - The attorneys general of New York and Connecticut are investigating Apple Inc's negotiations with music companies to look for signs of potential antitrust violations.

Pressing for Greek concessions, Merkel and Hollande keep Tsipras waiting

BRUSSELS/ATHENS (Reuters) - Greece and its creditors moved closer to the brink on Wednesday with the leaders of Germany, France and the European Commission holding back planned meetings with Prime Minister Alexis Tsipras to press for more concessions from the Greek side.

Approaching The "Other" Parity: Greek Emergency Liquidity Surges After "Massive" Deposit Outflow

While we await for Germany to deny the latest "Greece is fixed" report which came out moments ago according to which Merkel "may be satisfied with Greece committing to at least one economic reform sought by creditors to open the door to bailout funds" as Bloomberg reported earlier citing "two people familiar with Germany's position" - a move which would be seen as Germany blinking to Greek demands and may well lead to Schauble's resignation if confirmed - below is a quick update of what is going on with Greek bank liquidity.

It is not good.

As the chart below shows, following last week's "massive" surge in Greek bank runs, which soared on Friday as pessimism returned with a bang that another "can kicking" deal may not get done after all, Greek Emergency Liquidity Assistance, or ELA, use soared by €2.3 billion according to Bloomberg, the single biggest weekly increase since February, rising to €83 billion. This, of course, is happening as Greek bank deposits continue their dramatic drop and which according to recent reports by Kathimerini had dipped under below €130 billion.

Which brings up the question of the "other" parity: while everyone has opined on when/if the EURUSD will hit 1.00, for Greece a far more relevant question is whether the ECB's generous ELA funding of insolvent Greek banks will reach parity with the amount of Greek deposits in the bank system.

Below is a chart showing the history of Greek ELA increases.

NYPD Can't Hire African Americans Because "So Many Of Them Have Spent Time In Jail," Commissioner Says

"The people in this building are just as upset over that piss as you are."

That's what 22-year NYPD veteran Eric Adams told a rookie cop when the two entered an elevator in a New York public housing project. The puddle of urine in the corner prompted the new recruit to offer the following appraisal: "these people are all animals; they don't deserve anything."

Adams â€" who was a captain by the time he retired five years ago to pursue a career in politics â€" is African American and says police too often stereotype entire communities based on the offenses committed by a "numerical minority." One might be inclined to view minorities' disproportionate share of lethal police shootings involving unarmed suspects as evidence of this dynamic.

Some suggest that hiring more African American police officers would help to ameliorate the situation.

The problem, according to NYPD commissioner William Bratton, is simple: too many African Americans have spent time in prison. The Guardian has more:

What an officer does, in essence, can make or break community trust â€" and even keep black applicants away from the NYPD. Even as the NYPD is more diverse over all than it's ever been, in late June the police academy will graduate one of its smallest percentage of black males since the 1960s..

While increasing numbers of Hispanics and Asians, especially men, are joining the NYPD, the future looks bleaker for black applicants. One number in particular is jarring: black males make up only 6. ...

VIX ETF Nears Record Low (85% Of Float Short)

While we are well aware of the decay-ridden denigration of VXX (the VIX ETF), today's plunge (on heavy volume) nears a new record low for the NYFed's best friend. With 51.695 million shares short (and just 60.5 million shares oustanding) according to Bloomberg data, one can only imagine what happens if we get a true 'event' that is allowed to happen.

VXX nears record lows... 18.50 vs 18.45 lows on May 22nd

As VIX futures push back towards the most short in 2 years...

And actual short spec contracts (at over 201,000) are close to record highs.

Charts: Bloomberg

Spotify raises $115 million from TeliaSonera in share sale

STOCKHOLM (Reuters) - Swedish telecom operator TeliaSonera is buying into music streamer Spotify for a slice of the fast growth and rapid innovation typical of online companies, investing as competition heats up in Spotify's industry.

Euro & Stocks Surge On Report Of German Compromise Over Greece Deal

After all the sound and fury from Schaeuble, we are now to believe he is ready to back down...

*GERMANY SAID TO CONSIDER SETTLING FOR ONE GREEK REFORM UP FRONT, OFFERING GREECE STAGGERED DEAL ON AID

Stocks and the Euro have resurged on the news. We await Germany's denial within the next 30 minutes (and the subsequent FBI investigation)

As Bloomberg reports,

Chancellor Angela Merkel's government may be satisfied with Greece committing to at least one economic reform sought by creditors to open the door to bailout funds, according to two people familiar with Germany's position.

While the Germans still insist on a package of steps that includes higher taxes, state asset sales and less generous retirement benefits, they may settle for a clear commitment by the Greek government to a measure up front to unlock aid, said the people, who asked not to be identified discussing the government's negotiating stance.

* * *

We wish Frau Merkel the best of luck getting this passed!

We wonder if the 2 sources are Tsipras and Varoufakis?

Bunds ain't buying it...

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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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