Averages moved mostly sideways after opening down supposedly on some poor earning reports, but I suspect it is more than that; tech stocks maybe? Crude and WTI oil broke down through their supports and are testing a new support. The U.S. dollar has somewhat recovered from a failed attempt to pierce its resistance and gold has, for now, stopped its steep decent worrying the gold bugs.
Todays S&P 500 Chart
Short-term indicators are very bearish, expecting to become more so on continued falling oil prices. WTI oil closed below 50 for the first time since early April after a weekly report from the U.S. government showed that crude supplies unexpectedly rose.
But the data also showed that gasoline stockpiles fell and implied-gasoline demand over the past four weeks showed a jump compared with a year ago. Separately, growth in China's oil demand remained strong in June.
On Nymex, "with crude oil closing under $50, this should be its new resistance level as prices continue to sell off," John Macaluso, an analyst at Tyche Capital Advisors.
ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras sought on Wednesday to contain a rebellion in his left-wing Syriza party ahead of a vote on a second package of reforms required to start talks on a rescue deal.
Last week we presented China's latest bazooka in its ongoing attempt to halt its plunging market (apparently threats to arrest sellers were insufficient) - China Securities Finance Corp. As a subsidiary of the China Securities Regulatory Commission, this meant that "China's central bank is now underwriting brokerages' margin lending businesses" and that "the PBoC is now in the business of financing leveraged stock buying."
If this sounds suspiciously like US' own plunge protection team, it is because that's precisely what it is. This is how Bloomberg presented it: "China has created what amounts to a state-run margin trader with $483 billion of firepower, its latest effort to end a stock-market rout that threatens to drag down economic growth and erode confidence in President Xi Jinping's government.
China Securities Finance Corp. can access as much as 3 trillion yuan of borrowed funds from sources including the central bank and commercial lenders, according to people familiar with the matter. The money may be used to buy shares and provide liquidity to brokerages, the people said, asking not to be named because the information wasn't public.
While it's unclear how much CSF will ultimately deploy into China's $6.6 trillion equity market, the financing is up to 25 times bigger than the market support fund started by Chinese brokerages earlier this month. That's probably enough to restore confidence among China's 90 million individual investors, says Boco ...
Some know it as one of the longest running Las Vegas pre-bankruptcy dramas. But what Caesars Entertainment really is, is the biggest hedge fund hotel in "special situation" history: with "investors" such as Paulson, Omega, Canyon, Soros, JMB, Scoggin, Pentwater, Och Ziff and many others, this is quite literally the who is who of biggest and baddest US hedge funds.
But apparently not bad enough.
Moments ago Bloomberg reported that a judge said Caesars Entertainment must face lawsuits that could force the gambling company into bankruptcy alongside its main operating unit, dealing a blow to efforts to restructure billions in debt.
The immediate result: CZR is now halted after falling record a 40% to lowest since Nov. 2012 on >3.2x avg. daily volume.
The real result is that a whole lot of hail mary's at the most prominent hedge funds may have just missed ttheir target. It also means that tonight will be an empty bar at Hustler, Penthouse Club and Sapphires.
And another way of showing what just happened at a great many trading desks:
CHICAGO/NEW YORK (Reuters) - Package delivery United Parcel Service Inc is in talks to buy Chicago-based Coyote Logistics LLC for at least $1.8 billion, a source familiar with negotiations said on Wednesday.
When we posted yesterday's piece on the stock market's weak internals (If Beauty's On The Inside, This Market Wins The Ugly Contest), we weren't sure if things could get any worse - and by how much - with the major averages still able to hold near 52-week highs. Well, the answers were "yes" and "a lot". In yesterday's piece, we noted that Friday produced one of the ugliest "Up" days in memory, based on the internals. Again, the internals, as represented by indicators like advance-decline breadth, advance-decline volume and new highs-new lows, are a gauge of the health of the broad stock market. This health can differ, sometimes significantly, from the market's appearance from merely watching the major averages (e.g., the S&P 500 and Nasdaq Composite, etc.) We like to see strong internals as an indication of a healthy market. When a rally "thins", i.e., the internals weaken, it can be a sign of vulnerability for the broad market, even with the major averages at their highs.
Well, we can say with confidence that yesterday, July 20, 2015, was the thinnest new high on record in the U.S. stock market (while the Nasdaq Composite closed at a new high, we are taking some license with here with the S&P 500 as it closed up to within 0.12% of it 52-week high).
Here is our evidence (all data from Reuters):
1.) Yesterday saw the fewest % of NYSE Advancing Issues ever near an S&P 500 52-Week High
Discover Financial Services has been ordered to pay $18.5 million by the Consumer Financial Protection Bureau, which alleged that the firm engaged in illegal practices related to the repayment and collection of student loans.
As the NYMEX close approached, front-month WTI Crude futures slumped towards a $48 handle - the lowest since early March, having firmly rejected the algo-driven rip after this morning's inventory build and tiny production cut...
Submitted by Gail Tverberg via Our Finite World blog,
Why are commodity prices, including oil prices, lagging? Ultimately, it comes back to the question, "Why isn't the world economy making very many of the end products that use these commodities?" If workers were getting rich enough to buy new homes and cars, demand for these products would be raising the prices of commodities used to build and operate cars, including the price of oil. If governments were rich enough to build an increasing number of roads and more public housing, there would be demand for the commodities used to build roads and public housing.
It looks to me as though we are heading into a deflationary depression, because prices of commodities are falling below the cost of extraction. We need rapidly rising wages and debt if commodity prices are to rise back to 2011 levels or higher. This isn't happening. Instead, Janet Yellen is talking about raising interest rates later this year, and we are seeing commodity prices fall further and further. Let me explain some pieces of what is happening.
1. We have been forcing economic growth upward since 1981 through the use of falling interest rates. Interest rates are now so low that it is hard to force rates down further, to encourage further economic growth.
Falling interest rates are hugely beneficial for the economy. If interest rates stop dropping, or worse yet, begin to rise, we will lose this very beneficial factor affecting the economy. The economy will tend to grow even less quickly, bringing down commodity prices further. The world economy m ...
One wouldn't know it by looking at CAT stock, which has gone very much nowhere in the past 5 years thanks to just one thing - an exponential increase in the company's share buybacks...
... but the company's publicly disclosed monthly retail sales have just one message for anyone who follows them: forget recession, there is a global depression going on.
And it is not just in China as many would like to scapegoat: in June, in addition to a -19% drop in Asia Pacific (following a 30% Y/Y plunge a year ago, which in turn followed a 21% drop in 2013), US retail sales posted their first Y/Y decline since February, dropping by 5%.
But the real depression is in Latin America, where CAT retail sales plummeted by a whopping 50%: the most in reported history, and follow an 18% drop from a year earlier.
Summarizing it all, after an increasingly shallower series of dead CAT bounces in the past year, first thanks to Latin America, and then the US, global retail sales just dropped by 14% - marching the biggest Y/Y decline since the financial crisis.
And the cherry on top: there has now been an unprecedented 31 consecutive months of CAT retail sales declines. This compares to "only" 19 ...
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