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22Jul2015 Market Update: Gold Remains In Loosing Streak, Averages Continue To Melt Down And Short Term Indicators Modestly Bearish

Written by Gary

U.S. markets opened low and climbed close to the unchanged line before sliding down again. Oil is seriously testing its support, gold has stopped its fall for now but were on track for their 10th straight day of losses and the U.S. dollar is trending up again. Short term indicators modestly bearish as the averages trend fractionally downward.


Here is the current market situation from CNN Money

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 71%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 23%
Investors Intelligence sets the breath Above 50 bullish 47.1%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -2.16
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 44.14%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 52.92%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 55.40%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 23.22
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 79.09
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,890

What Is Moving the Markets

Here are the headlines moving the markets.

And Now We Begin

I realized that our mentally-challenged, differently-abled bullish friends will refuse to accept it for a long, long time, but their welfare-sponsored bull-run ended last December. The breakdown has been subtle since then, and the Silicon Valley stocks that are keeping my house valued at preposterous levels just keep shooting higher (GOOGL, etc.)

But the cold fact of the matter is that there's rot beneath the surface, and the failure of JNK today - - a chart I've been watching with great zeal and interest - - seals the deal. A major bear market truly has started, and we're going to see the fraud from the past six years unwind in a glorious, albeit inconsistent, fashion.

0722-jnk

Retail Federation Slashes Sales Outlook By 15%, Blames "Deflationary Enviornment"

Despite the absence of bad weather, good weather, port strikes, and snow, The National Retail Federation today slashed its retail sales forecast for 2015 from 4.1% growth to just 3.5%. Sales grew at a 2.9% pace in the first half of 2015 and hope remains that the next 5 months show growth of 3.7% (with same store sales growth revised lower). The excuse reason for this markdown..."spending has been hampered by lackluster growth in our economy. Much of that blame can be shifted to Washington where too much time has been spent crafting rules and regulations that almost guarantee negative consequences for consumers and American businesses alike."

As The NRF details,

The National Retail Federation today lowered its retail sales forecast for 2015 because of unexpected slow growth recorded during the first half of the year, similar to the industry's experience in 2014. However, NRF expects sales will steadily increase through the remainder of the year. NRF forecasted in February that retail sales would grow 4.1 percent in 2015 over 2014, but today's revision lowers the forecast to 3.5 percent.

"A confluence of events, including treacherous weather throughout the United States through most of the winter, issues at the West Coast ports, a stronger U.S. do ...

Wall St. Is Down as Tech Stocks Weigh on Markets

Results from Apple and Microsoft displeased investors, and their stocks sank.

Bonds Say Let The Rate Hikes Begin: 1Y Bills Sells At Highest Yield In 5 Years

The US Treasury sold $25 billion of one-year T-bills at an interest rate of 33bps yesterday, the highest since June 2010. It appears the short-end of the yield curve is increasingly pricing in 'liftoff' sooner rather than later (and the long-end is responding by rallying - lower in yield - as medium term growth expectations fade) but it raises significant questions about the economic trajectory after the hike (and the ebbing confidence in The Fed).

This makes sense, given the majority now forecast a rate hike in September...

Which raises the question - if everyone expects rates to go up 25bps in September and 1Y bills are at 33bps... is it one-and-done for The Fed as the market is pricing a return to economic weakness?

Charts: Bloomberg

Will The Oil Patch Bust Trigger Recession?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

This seemingly inexhaustible credit line is now drying up, with severely negative consequences for oil producers with debt that's coming due.

Could the oil patch bust triggered by oil plummeting from $100/barrel to $50/barrel kick the U.S. into recession? Longtime correspondent B.C. recently observed: The question is whether the incipient recession in the energy and energy-related transport sectors is sufficient this time around to be the proximate cause of a US/global recession and real estate bust.

To help answer the question, B.C. sent this FRED chart of key measures of economic activity in Texas, America's GDP and industrial production and the price of oil. The chart may look busy but the key indicators are oil (the blue line that fell off a cliff and has formed a fish hook), the red line (GDP adjusted for inflation, i.e. real GDP), the dotted line (industrial production) and the remaining two lines that reflect the leading indicators and economic activity in Texas.

Six months into the energy bust, the leading index for Texas has hit the zero line, U.S. industrial production has rolled over but real GDP hasn't budged. So far, the impact of dramatically lower oil revenues has been limited to the oil patch, but the potential for contagion is still present.

As B.C. noted:

The last time the energy sector experienced a similar bust as is emerging today and clearly evident in Texas was in 1985-86, which occurred coincident with the crash in the price of oil and the onset of the S&L Cr ...

June 2015 Existing Home Sales Headlines Say Sales Up Strongly. NAR Claims Prices At All Time High

Written by Steven Hansen

The headlines for existing home sales claim "Buyers have come back in force, leading to the strongest past two months in sales since early 2007". Our analysis of the unadjusted data shows that home sales did rebound - but that the rolling averages did not improve. Overall, existing home sales appear to continue in the long term improvement trend channel..

Hedge Funds Gear Up for Another Big Short

Some money managers are looking to profit from potential trouble at some "alternative" mutual funds and bond exchange-traded funds that have boomed in popularity among individual investors.

Gold on Track for Longest Losing Streak Since 1996

Gold prices were on track for their 10th straight day of losses Wednesday, what would be its longest losing streak since 1996, as investors fled the precious metal on fears of higher U.S. rates.

U.S. Oil Futures Dip Below $50

U.S. oil prices briefly dipped below $50 a barrel Wednesday after weekly data showed an unexpected increase in U.S. crude-oil supplies.

Fool Me Once...

Once again, US equity markets are algorithmically surging as Treasury bonds are aggressively bid. It didn't end well yesterday, and we suspect won't today either...

It appears 124.00 stops on USDJPY are limiting the fun-durr-mental driver of equity strength today.

Charts: Bloomberg

WTI Back Below $50 After Inventory Build Takes Crude Stocks To Highest In 80 Years

Following yesterdsy's API data, DOE has confirmed a 2.5 million barrel build in crude inventory - the highest stocks of crude at this time of year in at least 80 years. This was accompanied by a very small drop in production and has squeezed WTI back below $50 (although there was an algo flash-smash up to $50.50 right after the data).

Crude inventories rose by the most in 3 months...

US EIA: REPEATS CRUDE STOCKS HIGHEST IN AT LEAST 80 YRS, RTRS

Which we assume means for this time of year...

Dragging Crude lower (despite a flash smash)

Algos are turmoiling...

Volcker Rule Set to Start With Little Fanfare

Starting Wednesday, Wall Street banks have to comply with perhaps the most significant new restriction on their activities since the aftermath of the Great Depression, but the change was greeted with a shrug.

USDJPY Spike Sends S&P Surging Back Into The Green

Within 50 minutes of the US cash market open, the S&P 500 has been ridiculed all the way back to unchanged - erasing all the losses from tech titan turmoil overnight. The reason is simple! USDJPY was manhandled up to 124.00 just as we predicted... the question is - how much further will the BoJ push it?

with AAPL in major turmoil...

You'd think aggressive buyers/sellers in $AAPL would meeting in the middle and EXCHANGE stock pic.twitter.com/7DbaA2tmTJ

â€" Eric Scott Hunsader (@nanexllc) July 22, 2015

All because of the BoJ and USDJPY's ramp...

Who could have seen this farce coming...

Just another 15 USDJPY pips until green. You can do it Har-Kur

zerohedge (@zerohedge) July 22, 2015Another SDJPY ig ...

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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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