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16Jul2015 Market Update: Averages Looking Weak As We Enter The Afternoon Session, Markets At Crossroad

Written by Gary

Today's session repeating yesterday's by opening high and then doing nothing but trade sideways on anemic volume. Supposedly, U.S. stocks climbed following a batch of upbeat earnings reports and as Greece's Parliament passed austerity measures needed to secure a fresh bailout.

Short-term indicators are neutral, but melting towards the bearish side. WTI oil is still testing its support and the U.S. dollar is testing its resistance as we sit out this crossroad drama.


Here is the current market situation from CNN Money

North and South American markets are higher today with shares in U.S. leading the region. The S&P 500 is up 0.61% while Mexico's IPC is up 0.42% and Brazil's Bovespa is up 0.23%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 72%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 22%
Investors Intelligence sets the breath Above 50 bullish 47.9%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 32.21
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 46.87%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 54.79%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 56.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 23.49
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 79.28
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,016

What Is Moving the Markets

Here are the headlines moving the markets.

3 Things: Retail, NFIB, Divergences

Submitted by Lance Roberts via STA Wealth Management,

Retail Sales Flop

Last month, when the retail sales figures for May were released showing a sharp rebound in consumer spending by jumping 1.2%, analysts were quick to jump on the "economic strength" bandwagon. The jump in spending was also stated to be a sure sign that low oil prices had finally worked their way into the pockets of consumers.

As I stated then:

"While the pickup in retail sales was certainly welcome, singular data points, particularly following several months particularly weak data, rarely point to a return of a more sustainable trend. This is particularly the case given that retail sales are currently near levels that have normally denoted very weak, or recessionary, economic environments."

Notwithstanding that both April and May retail sales gains were revised substantially lower, the recent report on June retail sales confirmed ongoing weakness. As reported by Econoday:

"The second-quarter suddenly doesn't look very strong as retai ...

Europe moves to restore funding to Greece after bailout vote

ATHENS (Reuters) - Europe moved to re-open funding to Greece's stricken economy on Thursday after the parliament in Athens approved a new bailout program in a fractious vote that left the government without a majority.

Wall St. jumps on strong earnings report

(Reuters) - Wall Street rose sharply on Thursday, with the Nasdaq composite touching a three-week high, as bellwether companies such as Citigroup , eBay and Netflix reported strong results.

If Greek Banks Are "Fixed" Thanks To Draghi - Then Why Is This Happening?

When we noted that Greek banks would re-open Monday - thanks to gracious handout from The ECB, we questioned how much faith depositors would have? It appears, given the 4% tumble in National Bank of Greece ADRs that, judging by investors, that 'faith' won't last very long...

U.S. jobless claims, housing data point to firming economy

WASHINGTON (Reuters) - The number of Americans filing new applications for unemployment benefits fell more than expected last week and confidence among homebuilders held at a more than 9-1/2-year high in July, indicating underlying momentum in the economy.

Citi posts highest profit since financial crisis, shares rise

(Reuters) - Citigroup Inc, the third biggest U.S. bank by assets, reported its highest quarterly profit since the financial crisis as Chief Executive Michael Corbat's restructuring and cost-cutting efforts paid off and the bank's legal expenses plunged.

U.S. Looks Into Online Marketplace Lending

The U.S. Treasury Department on Thursday opened a study of the online marketplace lending industry, in one of the first federal forays into the fast-growing sector.

Goldman profit plunges on weak bond trading, legal provisions

(Reuters) - Goldman Sachs Group Inc reported its smallest quarterly profit in nearly four years on Thursday as it set aside more money to cover mortgage settlements and nervous investors pulled back from bond trading.

ECB gives Greece thumbs up with funding boost

FRANKFURT (Reuters) - The European Central Bank increased emergency funding for Greek banks on Thursday, ending a freeze of almost three weeks and urging Europe to find a way to cut the country's debt burden.

U.S. Stocks Rise as Greek Uncertainty Ebbs

U.S. stocks climbed following a batch of upbeat earnings reports and as Greece's Parliament passed austerity measures needed to secure a fresh bailout.

Volatility In Motion

Submitted by Salil Mehta of Statistical Ideas

Volatility In Motion

Views on volatility are often only within recent context, causing sometimes influential advisers and investment banks to misguidedly extrapolate correction or premature rebound calls with far greater frequency then they actually occur (excessive false positives). In this article we see everything through a pertinent wider lens. We focus on how and when volatility moves from one level, to another.

The implied volatility index is currently trading in the upper-teens (about average); a natural question to ask is how long will we might stay there, before breaking out of this range level. Days, weeks, or months? Without fail, all of these choices have been seen through history, though we will show what the probability distribution is on these choices. We show that volatility tends to change quickly within this middling environment, though not so quickly as we often hear suggested in the media. Also the duration of time at any given volatility decile tends to be serially uncorrelated across time. The other interdependent question a trader generally has is about how volatility will change from here. Will the transition profile remain similar to last year's, or from these volatility levels does it tend to either collapse or rise? Again a true and refined answer sometimes takes into account a joint combination of these questions. It is more a matter of

WTI Tumbles Back To A $50 Handle On Iran, Default, And Cushing Build Fears

Having surged on Tuesday when the Iran "deal" was confirmed and tumbled yesterday despite inventory draws and production decreases, WTI crude is re-slumping back to a $50 handle this morning as traders cite more Iran concerns (flattening the curve) and a Genscape report that indicates inventory builds at Cushing once again...

It appears the algos have been turned upside down...

As we noted previously, worries over Shale Oil company indebtedness are resurging...

"The energy sector of the high-yield market continues to be a silo of misery," Margie Patel with Wells Capital Management, told Bloomberg telephone interview. "If we stay near these levels, marginal high-cost producers won't be able to survive."

Bonds due in 2020 for Energy XXI, a driller in Louisiana, are now trading at 84.5 cents on the dollar, and Oklahoma-based SandRidge has seen its debt fall to 87 cents on the dollar.

The markets will get a clearer picture as second quarter earnings season arrives, as indebted shale companies provide some clues into their ongoing struggles.

However, the outlook moving forward may be gloomier than whatever they report in the second quarter.

Charts: blo ...

VIXterminated - Fear Collapses By Most In 31 Months

There is nothing to fear but freed itself... With VXX - the VIX ETF - at record lows, the VIX term structure has swung from backwardated last week to extremely steep with VIX hitting an 11 handle this morning. This is the biggest weekly drop in fear since January 2013...

VIX has collapsed from last week...

By the most in 31 months...

July 2015 Philly Fed Manufacturing Growth Rate Declines

Written by Steven Hansen

The Philly Fed Business Outlook Survey growth fell significantly - but remained in expansion. Key elements are mixed.

Philly Fed "Bounce" Plunges To 2015 Lows, Employment Tumbles

After June's hope-strewn dead-cat-bounce, Philly Fed has plunged back to the lows of the year. Printing 5.7, missing expectations of 12.0, this is the biggest miss since January. It appears the weakness in Q1 (and Q2) and now Q3 was more than just weather... or port closures... as the employment index plunged to its lowest since January.

Not the post-weather bounce everyone called for...

Breakdown...

Meanwhile hope remains...

Most of the survey's broad indicators of future growth edged slightly higher this month. The future general activity index increased 2 pointsto its highest reading since January. The future index for new orders increased 1 point, while the future shipments index fell 6 points, after reaching a 10-month high in June.

The future employment index was essentially unchanged compared with last month. More than 31 percent of the firms expect expansion in their workforce over the next six months, while 9 percent expect a reduction.

or maybe it's just more delusion.

Charts: Bloomberg

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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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