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16Jun2015 Market Update: Averages Melt Up As Cliff Hanger Greek Drama Continues To Deeply Concern Investors

Written by Gary

Averages continue to melt upwards on low volume after morning opening lows. Crude Oil trying to maintain trend support, US dollar hangs on by a thread near its support. Yesterday's reversal spinning top candle seems to have been correct once again, but today's indicators are very murky about any upwards market continuation as the Greek drama goes on.

Here is the current market situation from CNN Money

North and South American markets are mixed today. The IPC is up 0.69% while the S&P 500 gains 0.43%. The Bovespa is off 0.05%.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 45%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 25%
Investors Intelligence sets the breath Above 50 bullish 55.0% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -34.82 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 50.93% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 60.66% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 60.80% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 23.25 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 76.58 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,947

What Is Moving the Markets

Here are the headlines moving the markets.

Bits Blog: Consumer Groups Back Out of Federal Talks on Face Recognition

Early Tuesday, nine civil liberties and consumer advocate groups announced that they were withdrawing from talks with trade associations over how to write guidelines for the commercial use of face recognition technology on consumers.

Greek PM tears into lenders, euro zone prepares for 'Grexit'

ATHENS/BERLIN (Reuters) - Prime Minister Alexis Tsipras lashed out at Greece's creditors on Tuesday, accusing them of trying to "humiliate" Greeks, as he defied a drumbeat of warnings that Europe is preparing for his country to leave the euro.

Commercial plane orders slow; jetmakers focus on backlog

PARIS (Reuters) - The boom in commercial plane orders of recent years appears to be giving way to a more sustainable pace of demand at the 2015 Paris air show, with jetmakers increasingly focused on lifting production to meet their record backlog of sales.

Air France-KLM's Cuts Don't Mean Takeoff

Air France-KLM is taking additional steps to cut costs, but given mounting pressure from competition it still looks a long way from finding a route to recovery.

Kirk Kerkorian, casino tycoon, movie mogul, auto investor dies at 98

(Reuters) - Kirk Kerkorian, the son of poor Armenian immigrants who used his gambler's instincts to become a multibillionaire Las Vegas casino tycoon, Hollywood mogul, airline owner and auto industry investor, died at age 98.

Fannie Mae Is At It Again: Loan-To-Value Ratio Now Higher Than During Housing Bubble

Submitted by Anthony Saunders, via The Burning Platform blog,

At last. Residential mortgage (1-4 unit) lending is almost back to zero percent growth!


It has been a tough time for mortgage lenders since the passing of Dodd-Frank and the creation of the Consumer Financial Protection Bureau (CFPB). The Urban Institute has this chart showing that the absence of risky loans in the economy is the answergoldilocks

Now, hold on one second! I am unclear as to how Laurie Goodman and company define "risky," but low down payment loans are more risky than 20% down payment loans empirically. I don't know if the Urban Institute counts 3-5% down payment loans as risky in their chart.

Why mention loan down payment lending? Because Fannie Mae and Freddie Mac are the primary purchaser of single-family mortgages since the housing bubble burst. The FHA is an insurer, not a loan purchaser.

Here is some empirical evidence from Fannie Mae mortgage-backed securities (MBS). Here is the average loan-to-value (LTV) ratio for Fannie Mae 4% coupon MBS:

Europe's Default Position on Greece

Greece's debt is mostly held by official bodies. That raises the stakes in a default

Fund Managers Pile Into Cash Amid Volatility

Fund managers hold more cash now than they have at any other time during the past six months amid a surge in volatility across global financial markets.

Spot The Mindblowing Housing Permits Outlier

The Census Bureau is no stranger when it comes to reporting absolute gibberish "data": recall one month ago the bureau reported the biggest housing starts print in the Northeast since June of 2008 on what many tried to "justify" as weather-deferred construction, but which will soon be revised far lower.

As it turns out, that was nothing compared to the even more outrageous print that the good staffers at HUD reported in the latest, May, housing data. And while it was once again all about the Northeast, this time it wasn't starts, it was permits.

Spot the outlier in housing permits among the four US census regions. Hint: at an annual change of 165.8%, it has never been higher.

Here is the same ridiculous "data" only instead of Y/Y% change, we show actual permits in SAAR terms:

What is most amusing is that Ron Griess of the Chart Store who brought this paranormal data point to our attention, called the Census bureau and HUD employees assured him the "data was correct."

If that "data" is correct one would hate to see ...

Wall St. rises as M&A chatter picks up; Fed meeting eyed

(Reuters) - U.S. stocks were up on Tuesday, after two straight sessions of losses, as deal activity picked up in the consumer and healthcare sectors and investors waited for the outcome of a two-day Federal Reserve meeting.

U.S. building permits near eight-year high; starts pull back

WASHINGTON (Reuters) - U.S. permits for future home construction surged to a near eight-year high in May, suggesting a building up of momentum in housing and the broader economy after a dismal performance at the start of the year.

Is THE Top in For Stocks?

Stocks entered a confirmed breakdown yesterday.

Corrections do not happen all at once. Normally when stocks break a major trendline, they usually bounce soon thereafter. If the bounce brings stocks back up above the former trendline, (reclaiming it) then the trend remains intact.

If, however, stocks are rejected by the former trendline, then the breakdown is confirmed and you're heading down.

Take a look at the market today.

As you can see, the S&P 500 was rejected by former support. The uptrend has been broken. The first downside target is 2,050 or so. If that doesn't hold then the door is open to a more serious breakdown (more on this in a moment).

This breakdown is not a minor development. That lower trendline actually runs all the way back to late 2013. We've only broken it once before in early October 2014. And it took considerable Fed intervention to create a bounce at that time.

Unfortunately for stocks, this time around the Fed isn't engaging in QE anymore... so that market prop won't be in place.

If stocks don't hold at 2,050 then the ultimate downside target established by the series of lower lows in 2014 is a very REAL possibility.

If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis &q ...

Money Flows Out of 401(k)s as Boomers Age

Withdrawals from 401(k) retirement plans are exceeding new contributions as baby boomers age, a shift that could shake up the U.S. retirement industry.

Regulators Try To Clamp Down On Soaring China Margin Loans "Without Triggering Panic"

As Chinese stock market capitalization topped $10 trillion for the first time in history, so the spectre of total and utter speculative mania looms as the balance of margin loans tops $2.2 trillion and remains among the most obvious early warning systems for an increasingly fragile government-sponsored equity bubble. The problem, as Bloomberg reports, is that any pullback by margin traders would undercut one of the biggest drivers of the rally leaving the "regulator trying to slow down the growth without triggering panic," as Bocom's chief China strategist explains.

As Bocom's Hao makes clear in the following chart...

"If margin loan growth starts to decelerate notably, the market will slow down. If non-compliant margin lending accounts must be closed, the market will crash."

The China Securities Regulatory Commission is planning to curb the amount of margin finance and short selling to no more than four times a brokerage's net capital, according to draft rules posted on its website June 12. There is currently no ceiling. The CSRC is also considering allowing brokerages to roll over margin trading and short-selling contracts, instead of closing them out after six months, which may quell volatility if the rally falters.

China's Firms Put Cash to Work---in Stocks

Chinese companies are putting their money into the stock marketâ€"as the wider economy struggles with tepid demand, excess industrial capacity, persistently high borrowing costs and other troubles.

"Eurozone Breakup" Fears Soar As Fund Managers Now Think Probability Of Greek Deal Same As Default

There were two notable developments in the latest BofA European fund managers survey. The first is that unlike recent months when everyone was convinced the latest Greek episode would have a quick and simple happy ending, now there is an identical split when it comes to expectations of what the fate of Greece will be with the same number of respondents (43%) saying a last minute Greek deal will be cobbled together to kick the can once again, as the managers who think Greece defaults (first to the IMF then to everyone else) but is not kicked out of the Eurozone. Only 15% still believe a full-blown Grexit is in the cards. BofA's comment appears superfluous: "We believe a peaceful Greek outcome is a necessary condition for a rally."

But while the optimistic bias is shifting, if slowly, one place where the "fund managers" are at least admitting that things are changing for the worse in Europe is their latest, June, estimation of the biggest tail risks. Here, while "geopolitical crisis" and a behind-the-curve Fed still remain in the top two "tail risks", at 21% and 20% respectively, just as they were last month, what is concerning is the third most prevalent fear which, at 18%, is a Eurozone breakup.

It is notable that one month ago this fear did not even register, suggesting just how fragile the Eurozone was and still re ...

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