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31Aug2015 Market Close: Markets Close Down, Oil Remains High, But Sliding As All Market Indicators Are Becoming Bearish Again

Written by Gary

Markets closed down, moderately compared to previous sessions, where the DOW is off 115, Nasdaq off 1.07% and oil skirting sideways in the 48's. The big thing to note is that several of the key stock indicators have closed with a 'spinning-top' candle which means a reversal is coming if confirmed tomorrow. History shows that such reversals have occurred 75% of the time during the past year.

Todays S&P 500 Chart

Technically, we are still within a neutral area where the markets could move in either direction and now is not the time to make large or rash decisions. Oil prices soared Monday on doubts that the global glut of crude would be as long-lasting as many investors and traders had earlier believed. Oil jumped todat after the Energy Department cut its estimate for the country's oil production. Going against the grain, I did take a very small position in DWTI (@ 95.50) and we will see how that turns out over the next several sessions.

The Market in Perspective

Here are the headlines moving the markets.

Stocks Suffer Biggest Montly Drop In Five Years As Oil Spike Most Since 1990

Only one thing for it really...

Forget stocks, today was all about crude oil again...

WTI pushed into the green for August!!!

3 Bear markets and 3 Bull markets now in 2015 so far... perfectly tagging the 50-day moving-average today...

This is the biggest 3-day rise in WTI since 1990!!

Oil Volatility and credit markets were not squeezed into euphoria at all...

Trade accordingly!!

* * *

Having got that out of the way...Dow's worst monthly drop since May 2010

Stocks got some lift from the momo-igniters -but once NYMEX closed, it was over. Stocks ...

Oil up 8 percent on lower U.S. output, OPEC talk; biggest surge since 1990

NEW YORK (Reuters) - Oil futures soared on Monday for a third consecutive day, rising more than 8 percent, as a downward revision of U.S. crude production data and OPEC's readiness to talk with other producers helped extend the biggest price surge in 25 years.

Guest Post: Stanley Fischer Speaks - More Drivel From A Dangerous Academic Fool

Submitted by David Stockman via Contra Corner blog,

With every passing week that money markets rates remain pinned to the zero bound by the Fed, the magnitude of the financial catastrophe hurtling toward main street America intensifies. That's because 80 months—- and counting—-of zero interest rates are fueling the most stupendous gambling frenzy that Wall Street has ever witnessed or even imagined. Sooner or later, therefore, this mother of all financial bubbles will splatter, bringing untold harm to millions of households which have been lured back into the casino.

The truth is, zero cost in the money market is irrelevant to main street. As we have repeatedly demonstrated the household sector is stranded at "peak debt" and, consequently, there is no interest rate low enough to elicit a spree of pre-crisis style consumer borrowing and spending. Based on the clueless jawing that occurred this weekend at Jackson Hole, the following simple chart that I laid out last week bears repeating:

On the eve of the financial crisis in Q1 2008, total household debt outstanding—including mortgages, credit cards, auto loans, student loans and the rest——- was $13.957 trillion. That compare to $13.568 trillion outstanding at the end of Q1 2015.

Nerves on edge as Chinese authorities probe market mayhem

BEIJING/LONDON (Reuters) - The head of hedge fund manager Man Group Plc's China business has been taken into custody to help authorities in a probe into recent market volatility, Bloomberg reported on Monday, while separately a local financial reporter confessed on national TV to having spread false information that caused "panic and disorder".

Citi Slams Today's Historic Oil Surge: "Another False Start, Time To Fade The Rally"

Earlier today we were wondering how long it would take the big banks - many of whom are short the commodity - to jump in the path of the oil momentum train, and we didn't have long to wait for the answer.

Just before the NYMEX close, Bank of America revised its year end and 2016 oil forecasts lower, from $58 and $62 to $55 for 2015 and $61 for 2016. But the real downgrade came moments ago from Citi's Ed Morse who, together with Goldman, has been bearish on oil for a good part of the past year, just slammed today's crude breakout and doubled down on his double-dead cat skepticism, when he released a report titled "Another False Start…Time to Fade the Rally" whose punchline is that "Citi foresees that WTI and Brent prices should post another fresh leg lowerâ€"perhaps making new 2015 lowsâ€"before year-end."

More from Morse:

The Oil Price Surge

Another False Start…Time to Fade the Rally

The bullish c20-25% crude oil price spike since late last week looks driven more by sentiment than by reality.

Bottom Line: Citi foresees that WTI and Brent prices should post another fresh leg lowerâ€"perhaps making new 2015 lowsâ€"before year-end.

In Citi's view, it's time to "sell the news and buy the facts." This is reinforced by today's strong intra-day gains around 8%, which appear driven by a misread of market data and financial headlines.

Notably, nearby timespreads are lagging the move higher in flat price, which is consistent with weak fundamentals.

Sharp gains over the past three trading sessions were driven by a combination of short covering and chart-readers again looking to call a bottom falsely.

As recently as last Wednesday, both WTI and Brent we ...

China state media announce confessions in stock market investigations

SHANGHAI (Reuters) - Chinese state media announced a slew of confessions on Monday following investigations into dramatic stock market fluctuations, including from a reporter who said he had spread false information that had caused "panic and disorder".

Saudi Arabia's Stock Market Just Logged Its Worst Month Since Lehman

If someone asked you what the worst performing stock market in the world was in August, you might well be tempted to say the SHCOMP or the ASE, considering the fanfare around China's equity turmoil and the fact that Greek stocks plunged after coming off a five-week halt.

But what you might be surprised to learn is that in fact, Saudi stocks fared worse than Chinese equities for the month and one more Sunday like 8/23 could well have brought the total slide to more than 20%, just a shade better than Greek shares.

Of course the comparison is distorted by the fact that the ASE was halted until August 3 and also by the fact that were it not for the efforts of China's plunge protection "national team" there's no telling where the SHCOMP might be today, but nevertheless, it serves to underscore how nervous investors are getting about what is an increasingly perilous financial situation in the kingdom.

As detailed here on a number of occasions of late, the country is staring down a current account/ fiscal account deficit outcome that makes Brazil look favorable by comparison, and although FX reserve draw down slowed in July, it came at the cost of reentering the bond market - i.e. raising debt to offset the petrodollar burn.

"A cloudy fiscal policy along with unattr ...

September 2015 Economic Forecast: Some Improvement Over Last Month's Terrible Forecast

Written by Steven Hansen

Econintersect's Economic Index improved from last month's lowest index level since April 2010. The tracked sectors of the economy generally improved somewhat or the growth remained unchanged. Still, our economic index has been in a long term decline since late 2014.

Internet entrepreneurs back Chinese Tesla rival NextEV

FRANKFURT/DETROIT (Reuters) - A group of deep-pocketed China-based internet entrepreneurs and financial investors, including Tencent  and Hillhouse Capital, is backing an effort to create NextEV, a new rival to U.S. electric car maker Tesla Motors Inc .

Wall Street falls as investors fret about rate-hike timing

(Reuters) - Wall Street was lower on Monday afternoon as investors worried that the Federal Reserve may start raising interest rates in September, although a rally in oil boosted energy stocks.

Why So Much Oil Price Volatility? Blame The Speculators

Submitted by Nick Cunningham via OilPrice.com,

Oil prices crashed last week only to rebound at lightning speed. On August 28, oil prices surged 10 percent, the largest one-day gain in seven years. So, what happens next for oil prices?

On the face of it, the crash and massive rebound makes little sense, with many oil market analysts undoubtedly left shaking their heads.

But there is a logic to what unfolded, just not the logic of the physical market for crude. Oil prices, as if we needed a reminder, are largely driven by speculation. Why else would oil prices plummet by five percent, then spike by 10 percent just a few days later? Not much changed in terms of actual supply and demand of oil in the intervening days.

Sure, Royal Dutch Shell declared force majeure on some oil shipments from Nigeria, as two pipelines had to be shut down. That could interrupt some oil supplies. But other than that, the physical market for crude didn't see a whole lot of change in just a few days' time.

In financial markets, however, a lot changed. Last Monday, fears that the meltdown of China's stock market would lead to global contagion sparked a worldwide sell off. Crude prices suffered a massive one-day fall.

Several days la ...

Say Goodbye To Normal - We're Going Medieval

Submitted by James H. Kunstler via Kunstler.com,

The tremors rattling markets are not exactly what they seem to be. A meme prevails that these movements represent a kind of financial peristalsis - regular wavelike workings of eternal progress toward an epic more of everything, especially profits! You can forget the supposedly "normal" cycles of the techno-industrial arrangement, which means, in particular, the business cycle of the standard economics textbooks. Those cycle are dying.

They're dying because there really are Limits to Growth and we are now solidly in grips of those limits. Only we can't recognize the way it is expressing itself, especially in political terms. What's afoot is a not "recession" but a permanent contraction of what has been normal for a little over two hundred years. There is not going to be more of everything, especially profits, and the stock buyback orgy that has animated the corporate executive suites will be recognized shortly for what it is: an assest-stripping operation.

What's happening now is a permanent contraction. Well, of course, nothing lasts forever, and the contraction is one phase of a greater transition. The cornucopians and techno-narcissists would like to think that we are transitioning into an even more lavish era of techno-wonderama — life in a padded recliner tapping on a tablet for everything! I don't think so. Rather, we're going medieval, and we're doing it the hard way because there&r ...

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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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