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07Aug2015 Market Close: Markets Close Down Fractionally, WTI Oil Breaks Through Support And Technical Indicators Remain Bearish

Written by Gary

Averages traded sideways and down a half percentage point for most of the afternoon session while WTI oil broke through and closed below its support beginning in January, 2015, making the next support starting at ~41.18.

Things could turn around next week, but analysts and indicators remain bearish for the short term, especially if oil continue to fall.

Todays S&P 500 Chart

Reasons To Be Concerned:

  • Total US revolving credit outstanding in June hit $906.5 billion. The highest since January, 2010, but still well off the $1.021 peak in April, 2008

  • Crude Oil prices fell to new multimonth lows as U.S. drilling continued to increase despite a persistent oversupply of crude and heading for a sixth straight week of losses.

  • U.S. summer driving season suggested a growing surplus in gasoline supply.

  • Solid job growth data for July pried the door open a little wider for a potential interest rate hike by the Federal Reserve in September.

  • Puerto Rico headed for bankruptcy. Puerto Rico is $72 billion in debt, and it will take a painful process to bring the island's finances back from the brink.

  • China, HK stocks fall, investors still shaky despite support measures when China decided to double down on Saturday - hoping to avoid a "Black Monday" when trading resumes after the weekend.

The Market in Perspective

Here are the headlines moving the markets.

US consumer borrowing hits another record in June as Americans add $20.7 billion in debt

WASHINGTON (AP) — U.S. consumer borrowing hit another record in June, good news for the American economy. Americans piled on another $20.7 billion in debt in June, bringing total consumer borrowing to a record $3.42 trillion, the Federal Reserve reported Friday.

In June, borrowing in the category that includes auto and student loans rose by $15.2 billion. Borrowing in the category that includes credit cards rose by $5.5 billion. The Fed's monthly report on credit does not cover home mortgages or other loans secured by real estate such as home equity loans Economists expect consumers to borrow and spend more the rest of the year.

That would boost growth in a country where consumer spending accounts for nearly 70 percent of economic activity.

US oil and natural gas rig count increases by 10 to 884 this week, down from 1,908 a year ago

HOUSTON (AP) — Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. increased by 10 this week to 884. Houston-based Baker Hughes said Friday 670 rigs were seeking oil and 213 explored for natural gas.

One was listed as miscellaneous. A year ago, 1,908 rigs were active. Among major oil- and gas-producing states, Texas gained eight rigs, Louisiana gained four, Kansas increased by three, West Virginia gained two and California, and North Dakota each increased by one.

Pennsylvania lost three rigs, Colorado declined by two and Ohio lost one. Alaska, Arkansas, New Mexico, Oklahoma, Utah and Wyoming were unchanged.

Wall Street now thinks Fed hike in September will be 2015's only move: Reuters poll

NEW YORK (Reuters) - Top Wall Street banks still expect the Federal Reserve to raise interest rates in September, but a growing number now believe the central bank is likely to only hike once this year, a Reuters poll found on Friday.

Solid U.S. jobs report bolsters case for Fed rate hike

WASHINGTON (Reuters) - U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that opened the door wider to a Federal Reserve interest rate increase in September.

The Big "Earnings Beat Expectations" Lie Exposed (In 2 Simple Posts)

Quarter after quarter, we are spoon-fed statistics 'proving' that everything is awesome trotting out the percentage of companies 'beating expectations'. However, as is widely-known 'inside' Wall Street, this is simply all smoke and mirrors. As the following two charts prove: every quarter, 'hockey-stick' hope starts off high, is then drastically reduced into the actual earnings period...

...which then rises during earnings to a level still lower than the pre-earnings period hope-fest...

and once again, hope is pushed off into the next quarter... just one more quarter.

And sure enough you can buy stocks safely on forward earnings expectations that the hockey stick is just around the corner!!

How many more quarters do we have to see this 'game' play out before there are no greater fools left?

Source: Deutsche Bank

Oil down, heads for 6th weekly loss on gasoline glut

NEW YORK (Reuters) - Crude oil dipped on Friday, plumbing multi-month lows and heading for a sixth straight week of losses, as the approaching end of the U.S. summer driving season suggested a growing surplus in gasoline supply.

Big Biotech Stocks' Skimpier Growth Story

Large biotech companies posted strong second-quarter results. Now, the game gets harder.

The Elevator Down...

Between SUNE (7.92% holding), MU, gold, and a litany of other recent Einhorn blowups, will Greenlight be the first fund of the New Normal to gate... or will it be Andy Hall?

The collapse in SunEdison (where Einhorn is the biggest holder) seems extremely 'margin-call, liquidation-forced' in style... especially the last 2 days...

Charts: Bloomberg

Common Sense: King Coal, Long Besieged, Is Deposed by the Market

In a few short years, market forces have accomplished what environmentalists struggled to do for decades: curtail America's coal consumption.

Wall Street falls as rosy jobs growth points to September rate hike

(Reuters) - U.S. stocks dropped on Friday after solid job growth data for July pried the door open a little wider for a potential interest rate hike by the Federal Reserve in September.

Abercrombie & Fitch to End On-Call Shifts for Workers

The retailer had been one of 13 investigated by the New York State attorney general's office over the practice of unpredictable scheduling and staffing.

History Always Repeats ... Gold Protects From Capital Controls and Devaluations

History Always Repeats ... Gold Protects From Capital Controls and Devaluations


Simplistic gold analysis speculates solely on price

Forgets vital importance of diversification

Lorcan Roche Kelly's analysis lacks all context

Ignores huge physical demand for gold coins and bars

Today's world is very different to the world of the 1980s and 1990s

Alas, financial crisis has been postponed not averted

Physical gold will have value when paper and digital wealth is devalued, confiscated or inaccessible ...

07-08-2015

An article on Bloomberg comparing the gold market in the late 1970s - dramatically peaking in 1980 - to that of recent years has suggested that "gold could soon get very boring" and a "repeat of that trend would leave gold at around $1,000 an ounce in 2035."

We have long noted the importance of focussing on gold as a diversification and therefore not focussing solely on gold's price. Price predictions are foolhardy at the best of times and when we occasionally venture into that space, we are always cautious and give caveats.

What is odd about this call for gold to fall nearly 10% in dollar terms in the next 20 years is that it is completely devoid of any kind of all important historical, geopolitical, macroeconomic or indeed monetary context.

So too it completely ignores the supply demand funda ...

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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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