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12Aug2015 Market Update: Averages Trading Below 200 DMA, But Short Term Indicators Just Mildly Bearish, DOW Off Triple Digits, WTI Oil Steady

Written by Gary

The averages gaped down below the 200 DMA and the lower Bollinger band at the opening and have recovered fractionally. The averages still deeply in the red and over one percentage point losses, the short term indicators are just mildly bearish suggesting tomorrow's session may be in the green, but in a downturn trend. Remaining below the 200 DMA at the close is bearish, but the averages have done this before and later climbed to new highs.


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) 55%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 9%
Investors Intelligence sets the breath Above 50 bullish 41.9%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +4.83
StockChart.com NYSE % of stocks above 200 DMA Index ($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.

40.60%

StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 47.46%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 50.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.20
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 77.26
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,694

What Is Moving the Markets

Here are the headlines moving the markets.

Fidelity National to buy software maker SunGard in $9.1 billion deal

(Reuters) - Financial industry software maker Fidelity National Information Services Inc has agreed to buy rival SunGard Data Systems Inc for $9.1 billion including debt, in order to get access to Sungard's thousands of lucrative trading and money management clients.

"This Will End Badly" High Yield Bonds Tumble To Worst Since 2011

As far as credit markets are concerned, U.S. stock investors have lost touch with reality. As Bloomberg reports, the collapse in high-yield bonds "is something that sooner or later is going to impact the stock market," according to one major asset manager.

We have, of course, seen this picture before (most egregiously in 2007/8) and as Bloomberg calculates over 70% of the time since 1996, as spreads widened as much as they have since April, the S&P 500 has fallen, with the average decline exceeding 10%.

History may not repeat but it sure does rhyme...

Charts: Bloomberg

Kraft Heinz to cut 2,500 jobs in U.S. and Canada

(Reuters) - Kraft Heinz Co said it will eliminate 2,500 jobs in the United States and Canada, including about 700 at its headquarters in Northfield, Illinois.

June 2015 JOLTS Continues to Predict Slower Jobs Growth Rate

Written by Steven Hansen

The BLS Job Openings and Labor Turnover Survey (JOLTS) can be used as a predictor of future jobs growth, and the predictive elements show that the year-over-year unadjusted private non-farm job opening growth rate declined. This continues to suggest a slower employment growth rate, but still the employment growth rate predicted is about average for times of expansion.

Creditors to subject Greek deal to tough October review

ATHENS/BRUSSELS (Reuters) - The European Union moved to keep Greece on a tight rein after its latest bailout, with sources saying the 85 billion euro ($94.83 billion) deal will be reviewed by lenders in October and any discussion of debt relief will only come at a later stage.

Treasury Longs Beware: Gartman Is About To Be Stopped Out Of His 10Y Short

Less than one week ago, none other than Dennis Gartman gave the all clear signal to go long the 10Y treasury (on double seasonally-adjusted margin) when he proudly declared he went short. We appropriately commemorated this development:

From August 6:

It is time to be shot of the long end of the US bond market and we wish this morning to sell the September T-note future at or near to 126 3/4. We can imagine the front month future trading to 118-119 over the course of the next several months while at the same time we shall be willing to risk only 1 1/2 points to the upside. The top has been formed over the course of the last several months and we are willing to be short even ahead of tomorrow's Employment Situation Report."

Fast forward to today, not even a week later, when we find that Gartman is about to be stopped out. To wit:

We were convinced that a top has been formed over the course of the last several months and we were willing to be short but the Chinese devaluation has wrought havoc upon us, catching us and everyone else out. As we write, the September t-note future is trading 128 ¼ and that is ¼ point above our "close only" stop.

Uhm, "everyone else"? In any case, this is where the 10Y trading now?

It goes without saying that once Gartman blows up on a t ...

Italian Bond Futures Flash-Crash Into Close

Fat-Finger, Flash-Crash, or Forced Liquidation... either way, something broke in the Italian bond futures market...

Fat finger?

or forced liquidation?

Charts: Bloomberg

Boeing sees strong jetliner demand; focus on cost-cutting

NEW YORK (Reuters) - Boeing Co is still seeing strong demand for civilian aircraft and pressure to increase its production rates, despite concerns about slowing growth in China and several years of record aircraft orders.

S&P briefly turn negative for the year as yuan tumbles

(Reuters) - Wall Street was down more than 1 percent for the second day in a row, with the S&P 500 briefly turning negative for the year, as the continued decline in the yuan exacerbated fears about a global economic slowdown.

Macy's cuts full-year sales forecast, forms China venture

(Reuters) - U.S. retailer Macy's Inc lowered its full-year sales forecast on Wednesday and reported weaker-than-expected quarterly results, hurt by heavy discounts and a strong dollar that curbed spending by foreign tourists.

Blood On The European Streets As EUR-Yuan Carry Unwinds Crush Stocks

EURCNH was among the most popular carry trades - a stable long leg and central bank sponsored weakness in the sell leg. That is why, now that The PBOC has peed in the punchbowl, all that easy money carry has been forced to unwind as volatility forces traders to buy EUR and sell CNH en masse, shuttering the carry-funded trades as they go. No where is that more clearly visible than the plunge in European stocks.

*EUROPEAN SHARES CLOSE LOWER; STOXX 600 FALLS 2.7%

This is the biggest 2-day drop since 2014.

And no, there is no rotation to US of this 'money' as it is all credit-created positioning, once the carry-trade is unwound the entire funding position is removed from market liquidity.

Charts: Bloomberg

< ...

Dong Unleashed: Vietnam Preserves Currency Shrinkage With Wider Trading Channel

Many years ago, we said that the real comedy in the world of FX won't start until Vietnam start devaluing its currency. And even as Vietnam decided to slash its Dong on numerous occasions over the years...

... we were looking forward to all the amusement the Asian country, once engaged in physical war with the US would provide us in its response to the just launched FX war with China, in order to preserve its currency's ongoing shrinkage.

We got the answer overnight when Vietnam announced it would widen the dong's trading band on Wednesday to further weaken the Dong in response to the comparable shrinkage by China, its biggest trading partner.

The immediate result: the latest dong prolapse, which shrank just as expected as part of its entry in the currency war launched by China earlier this week.

The newly lubricated dong can therefore now slide as much as 2% on either side of the fixing channel, up from 1 percent previously, the central bank said in a statement. And while under similar c ...

China lets yuan fall further, fuels fears of currency war

SHANGHAI (Reuters) - China's yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it, and sources said clamor in government circles to help struggling exporters would put pressure on the central bank to let it drop lower still.

Alibaba shares hit record low after earnings miss

BEIJING (Reuters) - Alibaba's shares skidded to a record low in New York on Wednesday after China's biggest e-commerce company posted its slowest revenue growth in over three years.

Gold Price Rises After Currency Wars Reignite As China Devalues

DAILY PRICES
Today's AM LBMA Gold prices were USD 1,116.80,
EUR 1003.23 and GBP 717.18 per ounce.
Yesterday's AM LBMA Gold prices were USD 1,113.25, EUR 1008.97 and GBP 713.74
per ounce.

Gold in USD - 1 Year
Gold and silver rose on the COMEX yesterday - up 0.5% to $1,108.70 and silver was up 0.6% to $15.34 per ounce.
This morning, gold is 0.85% higher to $1,119 per ounce. Silver is up 0.1% to $15.47 per ounce.
Platinum and palladium are 0.5% and 1% higher to $996 and $610 per ounce respectively.

Gold Rises After Currency Wars Reignite As China Devalues


China surprised global markets yesterday by devaluing its currency on concerns about sharply decelerating Chinese economy

We were not surprised as had said that this was likely as the Chinese economic numbers are bogus

The devaluation was condemned by U.S. politicians as a grab for an unfair export advantage

Mark Hill via Merck Investments


China's ...

Are The Saudis Winning? US Crude Production Slows To Lowest In 3 Months

US crude production declined 0.74% last week to its lowest level since May 15th. US crude inventories dropped for the 4th week of the last 5, but considerably less than expected.

And inventories dropped again...

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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