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17Aug2015 Market Update: Averages Rise Off Morning Lows, Session Highs Sea Sawing Sideways As Volume Slides And Investors Remain Unsure Of A Continuing Market Climb

Written by Gary

Markets opened sharply lower after poor manufacturing data, paused and climbed back into the green but remaining near the unchanged line as volume started to fall. Oil has climbed fractionally and the U.S. dollar is volatile, sea-sawing in a slightly upward trend as analysts are wondering if the session highs are going to hold. Markets are expected to fall fractionally and close in the green.


Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.26%, while the Bovespa is leading the IPC lower. They are down 0.20% and 0.09% respectively.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 53%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 11%
Investors Intelligence sets the breath Above 50 bullish 42.1%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 16.33
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 41.02%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 48.56%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 52.80%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.57
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 78.79
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,784

What Is Moving the Markets

Here are the headlines moving the markets.

In Venezuela, Economists Improvise to Track Economy

Venezuela's government has stopped publishing key statistics, so experts are turning to other measures, such as the cost of corn cakes, to keep tabs on consumer prices and economic growth.

Donald "I Am Batman" Trump Reports For Jury Duty After Failing To Respond To Five Prior Summonses

Over the weekend, the Donald came to Iowa, saw, and then left in his chopper. But not before declaring himself to be America's latest caped crusader:

Into the helicopter went William, 9; Sean, 6; Brendan, 5; and Henry, who just turned 3. Their mother went with them. Henry got scared just before takeoff and left the aircraft to be with his father. The other boys remained. William brought a GoPro camera to capture the experience; a clip later wound up on Facebook.

"Mr. Trump," he said, aiming the camera at his benefactor.

"Yes," Trump said, pulling on the lapels of his jacket.

"Are you Batman?" the boy asked.

"I am Batman," Trump said.

The helicopter roared to life, causing another windstorm, hurling more dust at the people outside. William looked out the window, marveling at the power of the machine.

Here was Trump's vantage point: a comfortable seat in the eye of the storm, a place to watch the rotor wash without messing up your hair. To William, this was the best moment of the whole ride. It felt just like a video game.

So having gone back to New York, what is keeping the Donald occupied today? The answer: jury duty.

Reuters reports that the republican frontrunner for presidential candidate, "appeared in Manhattan Supreme Court to join fellow New Yorkers to possibly be selected to cast a verdict in a trial." He did so in the way he does everything else: as a star in his own reality show: "The Real President Of The US"

Arriving in a black limo, Trump, 69, was greeted by a throng of reporters and television crews numbering around 100 people. He signed an autograph on way in and fist-b ...

Is The 'Dumb' Money Doing Something Smart?

Submitted by John Rubino via DollarCollapse.com,

At the peak of bull markets, when stock prices have been rising long enough for people who just recently started paying attention to conclude that they always go up — that's when retail investors traditionally go all-in to snag some of that apparently easy Dow Jones money. That's also when markets tend to peak and then roll over, once again transferring a sizable chunk of societal wealth from late-to-the-party "dumb money" investors to the pros who have been here before and recognize a peak when they see one.

So it's interesting to hear that retail investors are departing from the script in 2015. Instead of piling in at the very top, they've greeted year six of this steady, robust bull market with a financial slap in the face, withdrawing near-record amounts of money from US equity funds:

Money flees US stocks at highest level since 1993

(CNBC) - The flight of investor money from U.S. stocks has turned into a stampede.

In fact, the $78.7 billion leaving domestic equity-focused funds has been worse in 2015 than it was even during the financial crisis years, when the S&P 500 tumbled some 60 percent, according to data released Friday by Morningstar. The total is the highest since 1993.

Domestic equity funds surrendered $20.4 billion in July alone and have seen $158.6 billion in redemptions over the past 12 months. Even a strong flow of money into passively managed exchange-tr ...

U.S. Stocks Turn Positive

U.S. stocks turned positive after opening lower following a weak read on the manufacturing sector.

Turkey Declares Curfew In Latest Wartime Escalation, Lira In Record Plunge On More Government Turmoil

The tension continues to rise in Turkey as the country hurdles towards civil war and political gridlock.

President Recep Tayyip Erdogan is keen on sending the country back to the polls in an effort to nullify a stunning ballot box victory by the pro-Kurdish HDP in June. Erdogan - who hopes to consolidate his power by rewriting the constitution - has launched a renewed military offensive against the PKK and has been accused of obstructing lawmakers' efforts to form a coalition government, leading at least on opposition leader to compare the President to Hitler.

In what looks like the latest escalation in a string of wartime crackdowns, Turkey has declared a curfew for citizens of Lice, a district of Diyarbakir province. As Bloomberg reports, "citizens are prohibited from going out on streets from 9pm tonight until 7am on Tuesday."

Additionally, "the Governor of Diyarbakir [has] declared â€'special security zones' in Silvan, Lice, Kulp and Dicle," citing the PKK "terror" threat.

Meanwhile, the lira had plunged to a new low against the dollar amid the political turmoil, although amusingly, the currency pared some losses after reports indicated Prime Minister Ahmet Davutoglu is set to make "very nice statements" after another round of coalition talks.

Here's the latest from Bloomberg on the negotiations which appear to have reached a stalemate:

"I believe I've tried all paths for a government," acting prime minister and AK Party leader Ahmet Davutoglu says in televised remarks after meeting nationalist MHP leader Devlet Bahceli today in Ankara.

Dow Surges 200 Points "Off The Lows"

We suspect Goldman's buyback desk is busy again...

But did the algo-manic stop run just hit its limit at overnight highs?

It appears for now that stocks are being led by the surge in crude (Thailand explosion?) as JPY has faded...

Charts: Bloomberg

U.S. investigates Citigroup ties to Mexican billionaire: report

MEXICO CITY (Reuters) - The U.S. Justice Department is looking into Citigroup Inc's dealings with companies linked to Mexican billionaire Carlos Hank Rhon as part of an expanding investigation into the bank's money-laundering controls, Bloomberg reported on Monday.

Why Everyone Is So Nervous About What China Does Next, In One Chart

Whether the motive behind China's stunning August 11 devaluation announcement was to get one step closer to the SDR basket by promoting a market-based FX regime demanded by the IMF, to further ease financial conditions in China, to boost exports, or merely to telegraph to the Fed that with the US preparing to hike rates China will no longer be pegged to the USD, is unclear, but one thing that is certain is just how much everyone (if not this website) was shocked by the PBOC announcement. Goldman summarizes it best: "The sharp 3% devaluation in the CNY fix last week was a surprise to us."

What happens next? Clearly more devaluation, or else China would not have pursued this step, especially since the paltry 4% deval in one week will hardly move the needle on Chinese exports, which is the real reason why China did this move (weeks after it boosted its official gold holdings by 57%). Goldman also admits as much: "It is hard to have a high degree of conviction in anticipating the increasingly fitful reactions of the Chinese policymakers, and by extension the near-term direction of the CNY. But on a longer horizon, the risks are tilted towards further CNY weakness."

The weakness is further guaranteed when one considers that China has all but tapped out its credit capacity (where even the IMF admits China's debt/GDP is headed to 250%), forcing the country to seek growth not from within (via credit creation), but without, in the form of beggaring its neighbors and promoting its competitiveness using external devaluation (a similar internal devaluation to what Greece has undergone in the past 5 years would result in a very violent civ ...

Liberty Interactive to buy online retailer Zulily in $2.4 billion deal

(Reuters) - Liberty Interactive Corp , which owns home shopping network QVC, said it would acquire Zulily Inc in a deal valued at $2.4 billion to tap into the online retailer's younger clientele and its strong mobile presence.

Oil slips closer to six-year low on Japan data, oversupply

LONDON (Reuters) - Oil prices fell towards six-year lows on Monday on data showing the economy of Japan, the world's third-biggest oil consumer, contracted in the second quarter.

Volume Crash Sparks Monday Meltup In Stocks

The US equity markets stumbled out of the gate as the S&P 500 slipped back down to test its 200-day moving average. Then as volume dried up, the inevitable occurred - an algo-driven vertical melt-up pushing stocks back to unchanged... Crucially, undelying this 'panic-buying' is only 35% of stocks are advancing!!

Who could have seen that coming? Well, anyone who remembered at the open that the only right move - allowing HFTs to levitate stocks - is not to trade.

as a reminder, zero volume levitation algos can't levitate stocks until volume returns to zero

— zerohedge (@zerohedge) August 17, 2015

And then the green light:

Volume declining.

— zerohedge (@zerohedge) August 17, 2015

Even if credit ain't buying it (or rather, no central banks are buying junk bonds here).

Wall St. Slips as Global Markets Drift

Fears over China's next move outweighed the positive progress found in the bailout of Greece, one analyst said.

Home builder sentiment rises in August: NAHB

NEW YORK (Reuters) - U.S. homebuilder sentiment rose in August to its highest level since a matching reading almost a decade ago, the National Association of Home Builders said on Monday.

Homebuilder Confidence Jumps To 10 Year Highs As Lumber Prices, New Home Sales Slump

NAHB Sentiment jumped to 61 - the highest since 2005 - despite weakening new home sales and collapsing lumber prices. Housing Starts also remain tepid (especially compared to 2005 levels) but hope springs eternal for an industry almost 100% reliant on hope. Prospective buyer traffic rose 2 points as Northeast saw a drop as West and South saw modest increases.

10 Year highs!!!

And then again there is this...

And this...

Charts: Bloomberg

Funds For Fracking Finally Dry Up: One Last Hail Mary Pass Remains

Is Saudi Arabia on the verge of winning the war on US Shale firms? It appears the spigot of malinvestment-subsidizing liquidity that kept numerous zombie energy firms alive has been shut off almost entirely. As oil prices return to cycle lows, so credit risk has spiked to record highs and issuance of life-giving bonds has collapsed. As Reuters reports, this has opened up opportunities for deep-pocketed private equity firms to push for restructuring or buy assets as many oil companies need cash to replenish banks' slimmed-down lending facilities, service their bonds and finance drilling of new wells to keep pumping oil and sustain cash flow.

Credit risk has soared back to record levels...

As public market demand for this sector has collapsed...

And as Reuters reports, this has pushed Shale firms into the willing-to-deal-at-much-lower-prices private equity business...

Throughout much of the crude market rout that started in mid-2014 oil firms could rely on generous cap ...

Target promotes CFO John Mulligan to newly created COO role

(Reuters) - Target Corp promoted Chief Financial Officer John Mulligan to the newly created role of chief operating officer, and appointed Express Scripts Holding Co's CFO, Cathy Smith, as his replacement.

IMF involvement in Greece bailout indispensable: German Finance Minister

BERLIN (Reuters) - The International Monetary Fund's involvement in Greece's third bailout remains indispensable for Germany, a Finance Ministry spokesman said on Monday.

The Credit Industry Signals a Recession is Here… and Possibly Even a Credit Crunch

Those looking for accurate data regarding the US economy should look into credit card applications and credit card company earnings.

Regarding the former, consider the recent rejections of credit applications data:

Here we see a data point not experienced since the "credit crunch" era of 2008-2009: a time in which the economy was imploding and most people thought the world was ending.

This data point is not unique.

Consider Capital One's (COF) recent earnings disaster.

COF gets more than HALF of its revenues from credit cards. Because of this, it is VERY sensitive to consumer spending habits and economic growth. With that in mind, COF recently posted a MASSIVE miss on earnings because it decided to increase its provisions for credit card losses.

Capital One Financial Corp., the bank that gets more than half of its revenue from credit cards, reported profit that missed analysts' estimates as the lender set aside $1.1 billion to cover credit losses.

http://www.bloomberg.com/news/articles/2015-07-23/capital-one-s-profit-misses-estimates-on-credit-loss-provisions

This represents a 60% increase in provisions for credit card losses. COF would only do this if it expects a MASSIVE spike in credit card delinquencies (meaning consumers are so broke they cannot make credit card payments anymore.

COF shares fell over 15% on the news.

8 Reasons Why The Telegraph Thinks The Market Doomsday Clock Is One Minute To Midnight

"Time is now rapidly running out," warns The Telegraph's John Ficenec as the British paper takes a deep dive into the dark realities behind the mainstream media headlines continued faith in central planning. Sounding very "Zero Hedge", Ficenec warns that from China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.

There are signs things could get a whole lot worse.. (via The Telegraph)

1 - China slowdown

China was the great saviour of the world economy in 2008. The launching of an unprecedented stimulus package sparked an infrastructure investment boom. The voracious demand for commodities to fuel its construction boom dragged along oil- and resource-rich emerging markets.

• Ambrose Evans-Pritchard: China cannot risk the global chaos of currency devaluation

• Why China has devalued the renminbi

The Chinese econom ...

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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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