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20Aug2015 Market Close: Markets Close Down Over Two Percentage Points DOW Off 358, Red Volume Higher Than Usual, Don't Panic Just Yet

Written by Gary

The markets closed down two percentage points suffering steep losses amid a global market selloff, DOW off 358 sliding to their lowest finish of the year. Also closing below the 200 DMA and deeply penetrating the lower Bollinger band which probably means an up day tomorrow, but remaining in a serious down trend. Oil fell close to yesterday's lows and the U.S. dollar fell below yesterdays lows. Volume was much higher than usual as sellers outnumbered buyers by a wide margin, expect more volatility in the coming sessions.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. sells off on global slowdown concern; Disney slumps

(Reuters) - The S&P 500 hit a five month low on Thursday on concern a deceleration in the Chinese economy would translate into slower global growth.

3 Things: Fed Stumbles, Buybacks, Stock Decline

Submitted by Lance Roberts via STA Wealth Management,

The Fed Stumbles

Yesterday, the Federal "inadvertently" released early the minutes of the July FOMC meeting momentarily sending stocks soaring. Well, that was until somebody actually READ the minutes which were less than optimistic. Stocks dove a few minutes later. As Jon Hilsenrath noted:

"The Federal Reserve's next policy meeting is four weeks away, and officials show no clear sign of having settled on a decision about whether to raise short-term interest rates at that time.

Their assertion that they were approaching a rate move might be read as a hint that they saw a September move in the cards, but the minutes showed that officials had wide-ranging views about taking that step and some notable trepidation.

Some also worried about moving prematurely and lacking tools to address downside shocks to the economy, and about downside risks to the economy from developments abroad, particularly China.

There was push back against hesitating. A number of officials argued that a rate increase could convey confidence to the world about the economic outlook and that the Fed needed to move in acknowledgment of the progress the economy had already made toward normalcy."

The admission by the Fed the economy remains far weaker than headline statistics have suggested, was not surprising. It is also the major issue for ...

Bank Of America: "The Only Reason To Be Bullish Right Now Is There Are No Reasons To Be Bullish"

The latest research report by BofA's Michael Hartnett, from the very start where we see a chart of CDS levels of Glencore and Noble Group...

... a credit event in commodities (note CDS is widening sharply for resources companies â€" front page chart) may be necessary to cause policy-makers to panic.

... to his comments about the launch of the Chinese currency war, predicted here 2 days before its start:

Stocks have meaningfully underperformed bonds in the past few months as global growth concerns have caused assets related to Emerging Markets, commodities and the resources sector to lurch lower, and the US dollar is threatening an overshoot (it is just 2% from all-time highs as measured by the effective exchange rate), while the China devaluation has sparked renewed concerns over an FX war.

Home sales near eight-and-a-half-year high, brighten economic outlook

WASHINGTON (Reuters) - U.S. home resales rose to a near 8-1/2-year high in July and factory activity in the mid-Atlantic region picked up this month, fresh signs of steady economic growth that likely keeps the Federal Reserve on track to raise interest rates this year.

Deutsche's "Seven Signs" Flash Red-er

Two short weeks ago, Deutsche Bank's cross-asset-class research group suggested "caution" in markets as their "seven signs" signals were flashing red. Today, there are now 13 'cautionary' indicators - up from the 10 previously as the red caution flag just got red-er...

And for some context... it's been a while since we 'corrected'...

Source: Deustche Bank

Low Oil Prices Could Break The "Fragile Five" Producing Nations

Submitted by Nick Cunningham via OilPrice.com,

Persistently low oil prices have already inflicted economic pain on oil-producing countries. But with crude sticking near six-year lows, the risk of political turmoil is starting to rise.

There are several countries in which the risks are the greatest - Algeria, Iraq, Libya, Nigeria, and Venezuela - and RBC Capital Markets has labeled them the "Fragile Five."

Iraq, facing instability from the ongoing fight with ISIS, has seen its problems compounded by the fall in oil prices, causing its budget to shrink significantly. The government is moving to tap the bond markets for the first time in years, looking to issue $6 billion in new debt.

Revenues have been bolstered somewhat by continued gains in production. Iraq's oil output hit a record high in July at 4.18 million barrels per day, up sharply from an average of 3.42 million barrels per day in the first quarter of this year. But with Brent crude now dropping well below $50 per barrel, Iraq's finances are worsening. According to Fitch Ratings, Iraq may post a fiscal deficit in excess of ...

Twitter Down 65% From Highs - Crashes Below IPO Price

But, but, but...

The Analysts said...

This summed it all up nicely...

Emergency Meeting At Twitter pic.twitter.com/EHcQK4Hyjg

Ivan the K ?â„¢ ? (@IvanTheK) August 20, 2015

AAPL Is No Longer The "Most Important Stock": Presenting The Top 50 Hedge Fund Longs And Shorts

Earlier today we observed that in a world in which central banks have implicitly banned risk with their actions over the past 7 years, hedging long exposure is meaningless (and when central banks do lose control, a few shorts will have zero impact when the market is simply shut down and all trades or liquidations are promptly banned) and as a result hedge funds are set to underperform the S&P500 for the 7th year in a row.

Yet riding on the laurels of a business model that is no longer relevant, many still are fascinated to analyze and over-analyze the holdings of hedge funds at any given time: just observe the frenzy that surrounds 13-F release day 45 days after the end of any given quarter (especially when it comes to central bank 13-F filings, such as those by the Swiss National Bank).

So for all those who need validation that they are part of a big hedge fund hotel club, which implicitly means there are few if any incremental fast money buyers left, and wish to know the top hedge fund holdings, here is a list of the 50 stocks which according to Goldman "matter the most" to hedge funds, the stocks which appear among the largest 10 holdings of hedge funds.

There are few surprises in this list which traditionally sees very little changes among the top 20 holdings, but what is most notable is that as of June 30, AAPL (nor FB) is no longer the most beloved stock by the hedge fund community. These have both been replaced with the latest pharmaceutical serial acquirer of companies, and a stock which has seen the activist presence of both Carl Icahn (via Forest Labs) and Bill Ackman (via Valeant), Allergan which is now the stock that has the largest number of funds with AGN as a top 10 holding.

Refineries Could Push Oil Over the Edge

Oil's drop into the $30s could come from U.S. refiners throttling back after an intense summer.

Why Are So Many People Freaking Out About A Stock Market Crash In The Fall Of 2015?

Submitted by Michael Snyder via The Economic Collapse blog,

Is the stock market going to crash by the end of 2015? Of course stock market crashes are already happening in 23 different nations around the planet, but most Americans don't really care about those markets. The truth is that what matters to people in this country is the health of their own stock portfolios and retirement accounts. There are a lot of people out there that are very afraid of what could happen if the money that they have worked so hard to save gets wiped out in a sudden financial collapse. And right now there is an unprecedented amount of buzz about the potential for a giant stock market crash by the end of this calendar year. In fact, I don't think that I have ever seen more experts come out with bold predictions that a stock market crash will happen within a very specific period of time.

The following is a sampling of some of the experts that have made very bold proclamations about the rest of this year over the past few weeks. Many of these individuals are putting their credibility on the line by proclaiming that a stock market crash is just around the corner...

-Tom McClellan says that we are heading for an "ugly decline" and that there will be

Draghi Failed: European Inflation Expectations Slide To Pre-QE Level

On March 9th 2015, ex-Goldman Sachs'er Mario Draghi unleashed his long awaiated bond buying program with the premise that it would fix everything... Well, it hasn't!!

Short-term inflation swaps have swung negative once again...

h/t @ReutersJamie

And across the spectrum risk is higher...

It appears, Mr. Draghi, your "whatever it takes" was simply not enough! And remember - this Q€ was front-loaded!!

Charts: Bloomberg

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