Markets opened lower as expected pushing the DOW down triple digits. The sharp slump in Chinese markets piled further pressure on stocks this morning, after patchy economic data and corporate earnings spurred declines last week.
The averages are moving in a choppy sideways motion on very low volume resulting in a lot of investors deciding to sit this session out.
Short-term indicators are mildly bearish, oil is down but stable and the U.S. dollar continues to trend slowly downward.
Here is the current market situation from CNN Money
North and South American markets are lower today with shares in Mexico off the most. The IPC is down 0.74% while U.S.'s S&P 500 is off 0.44% and Brazil's Bovespa is lower by 0.36%.
$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.
SHANGHAI (Reuters) - Chinese shares slid more than 8 percent on Monday as an unprecedented government rescue plan to prop up valuations ran out of steam, throwing Beijing's efforts to stave off a deeper crash into doubt.
Orders to U.S. factories for big-ticket manufactured goods posted a sizable gain in June, but the advance was fueled by higher demand for commercial aircraft. Outside of this volatile category, a key category that represents business investment rose by a far more modest amount.
After pledging a whopping 10% of China's GDP, or just about $1 trillion, to its various (at last check over 40) discrete measures to prop up its collapsing market, among which such threats as arresting shorters of stock and "malicious sellers", actions which have merely slowed down the bursting of the world's biggest stock bubble in recent years, China has finally reverted to what the communist regime does best to preserve "order" - implement witch hunts in which the population rats out any criminals who dare to go against the protocols of the communist party. In this case, the targets are "malicious sellers."
This is what appeared moments ago on the website of the Chinese stock market regulator, the CSRC - an interactive online box allowing "traders" to rat out anyone who sells... maliciously (as opposed to non-maliciously).
Online Reporting Notes
Note: This website is in trial operation stage, the event can not normally access, please understand!
According to "securities and futures law violations Report Interim Re ...
WASHINGTON (Reuters) - A gauge of U.S. business investment plans rebounded solidly in June after two straight months of declines, suggesting the drag on manufacturing from capital spending cuts was starting to ebb.
TEL AVIV (Reuters) - Teva Pharmaceutical Industries has agreed to buy Allergan Plc's generic drugs business for $40.5 billion in a cash and stock deal that will turn the Israeli company into one of the world's largest pharmaceutical firms.
BRUSSELS/ATHENS (Reuters) - Talks between Greece and its international creditors on a third bailout began in Athens on Monday but the lenders want to see more reforms turned into law before they disburse the first loans to keep the near-bankrupt country afloat.
(Reuters) - A Goldman Sachs Group Inc unit must pay $1.8 million for not reporting "substantial" details about its alternative trading system orders to a system that tracks that information, and also for other lapses, Wall Street's industry-funded watchdog said.
There is a salutary lesson being given right now to anybody who invests in Western markets but few are paying attention. If the penny drops, things could get very ugly indeed.
Overnight, the Shanghai Composite Index fell another 8.5% - with the real damage being done in the last hour as sellers, spooked by a Bloomberg story which suggested intervention in Chinese markets may be curtailed at the behest of the IMF (who, somewhat hilariously, feel that the level of intervention from the Chinese government is a little over the top).
Was the IMF story the cause of the meltdown? Well, it's hard to see why anybody would think for a second that the Chinese would listen to the IMF about such matters (not even in the face of their desire to be admitted to the SDR), and anyway, it doesn't matter. There doesn't have to be a reason for falls like this one.
This is exactly what I wrote about in my most recent Things That Make You Go Hmmm... 'The Sum of Both Fears' (www.ttmygh.com).
Whatever the reason, the selling overwhelmed the bids of both natural buyers AND the massive interventionist forces of the PBoC and the seemingly myriad regulatory bodies.
75 stocks fell for each one that rose and those hit hardest were the stocks ...
After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China's stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!
The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg's Richard Breslow: "fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day." Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling.
When rhetoric and simultaneous policy rate cuts failed to arrest the slide in Chinese equity markets late last month, Beijing resorted to threats, trading halts, and finally, to central bank intervention.
An unwind in official and unofficial margin lending channels had put immense pressure on the country's stock market bubble and when it became apparent that the only way to arrest the slide was to prop up margin lending, the PBoC moved to backstop China Securities Finance and in the process created an $800 billion, state-controlled, margin lending Frankenstein.
For a few days, calm returned to Chinese equities but to those with a keen eye, it was clear that the relative tranquility would not last.
As we noted last week, China was apparently so confident that three week's worth of unprecedented (and comically absurd) intervention had stabilized the situation and repaired what we still contend is irreparable damage to the collective psyche of the Chinese retail investor, that the PBoC was set to wind down the CSF's plunge protection activities just days after several commercial banks pledged billions more in support for the margin lender. We got a good look at just how unstable the situation still was when, last Monday, Bloomberg (citing Caijing) reported that the CSRC was "studying [a] stock stabilization fund exit plan."
Here's what happened next:
Fast forward exactly one week, and although it's not entirely clear what actions the CSF has taken recently (i.e. to what extent more money ...
After bouncing dramatically in June (the biggest surprise beat in over 3 years) - on the back of 'hope' surgiung to 6-month highs - July data continued to improve marginally but missed expectations -4.6 vs -3.5 exp). On the bright side New Orders inched into positive territory (although inventories are surging) but prices received tumbled, wages dropped, and employment fell (as hours worked rose). The biggest driver, once again, of the headline rise was 'hope' as the outlook rose to 18.8 - the highest since August.
As Hope over reality is averaging near 6 year highs...
As one responmdent noted,
It is very odd for us to be so slow this time of year. June had decent billing but really low incoming orders, and July is starting out even worse than ...
The S&P 500 and Russell 2000 are very close to joining the Dow Industrials and Transports in negative territory for the year. The S&P 500, which has fallen 5 straight days for the first time since January, is now back below its 200DMA, having swung from euphoric "Greece is fixed" exuberant record highs in just a week of rising volume. The Dow is the furthest below its 200DMA since October's Jim Bullard-rescued dump. Treasury yields are plunging.
Notably the S&P 500 was unable to make higher highs after testing the 200DMA for the first time since the rally began in 2009...
And The Dow is near 6-month lows...
The selling pressure pushed the S&P 500 near red year-to-date...
But the machines are holding the 200DMA line for all they are worth...
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