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18Sep2015 Market Update: Markets Open Lower, DOW Off 200 Points, Oil Sliding, Investors Upset With Yellen

Written by Gary

Averages stalled trying to melt up from the morning opening lows and are now melting back down with the DOW down triple digits. Charts, graphs, tea-leaves and other indicators are completely useless in the short-term as investors wait for Mr. Market to settle down.

Oil is now down and steady and the U.S. dollar has risen off its lows and remains quiet for now.

Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.52%, while the Bovespa is leading the S&P 500 lower. They are down 1.38% and 1.29% respectively.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 63%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 17%
Investors Intelligence sets the breath Above 50 bullish 34.2% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 52.72 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 26.12% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 41.30% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 43.60% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.50 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 76.17 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,073

What Is Moving the Markets

Here are the headlines moving the markets.

Wary Fed has markets recalling years of Japan disappointment

LONDON (Reuters) - If Japan's experience in the 1990s is anything to go by, central banks that serially disappoint market expectations of higher interest rates will soon see those expectations fall to zero.

U.S. accuses Volkswagen of clean air violations

WASHINGTON (Reuters) - U.S. and California environmental regulators on Friday accused Volkswagen AG of deliberately circumventing clean air rules on nearly 500,000 diesel cars and the company could face penalties of up to $18 billion.

Central banks fret stimulus efforts are falling short

LONDON (Reuters) - The world's leading central banks are facing the risk that their massive efforts to revive economic growth could be dragged down again, with some officials arguing for bold new ideas to counter the threat of slow growth for years to come.

Chinese Propaganda Full Retard: Burst Stock Bubble Declared A Good Thing

Having blamed the entire financial crisis on one reporter (despite the implicit government encourage of people to "invest in stocks"), detained "malicious sellers" (which killed the entire futures market), and now cracking down on overly-aggressive stock-pumping by "sinister stock squads," we thought we had seen it all from China. Until now... CHINA OFFICIAL: LUCKY THAT STOCK BUBBLE BURST BEFORE TOO LATE...

"Too Late"? or "Just Right"? for a bubble to burst...

So now - the bursting of the Chinese self-created bubble is a good thing. It seems opposite world is here - just as not hiking rates is the new negative.

* * *

Of course this is not the first time Chinese propaganda went full retard...

If these are the directives China's Ministry of Truth, in this case the China Daily "style council", gives out to editors to pretend that the Yuan devaluation is not, in fact, a devaluation we can't wait to find out just how long Steve Liesman will need to teach everyone in Beijing that QE, when the PBOC inevitably announces it, is really just a blessing in disguise for the middle class.

Banks to Fed: Thanks for Nothing

The Fed's signal that interest rates will stay lower for longer keeps up the pressure on bank loan profits.

In Thrall To The Federal Reserve

Submitted by Jeff Deist via The Mises Institute,

Perhaps no economic pronouncement in history has been anticipated, discussed, predicted, dissected, and reported like the Federal Reserve's momentous decision today not to raise interest rates.

The outpouring of relief witnessed today by the financial press is nothing short of cathartic. Fear and anxiety, built up over months, is replaced by relief, even euphoria.

This is not to say the hype is unwarranted. On the contrary, the decision to raise interest rates even just 25 basis points would have represented nothing less than the end of an era, as one Bank of American analyst described (courtesy of Zerohedge):

On Wall Street only 2 things matter: interest rates and earnings. Everything else is noise unless it impacts rates and earnings. No one impacts interest rates more than the Fed. So the ... rate hike decision is a big deal.

Should the Fed decide to raise interest rates, it will be the first Fed hike since June 29th 2006. In the 110 months that have since past, global central banks have cut interest rates 697 times, central banks have bought $15 trillion of financial assets, zero interest rate policies have been adopted in the US, Europe & Japan. And, following the Great Financial Crisis of 2008, both stocks and corporate bonds have soared to all-time highs thanks in great part to this extraordinary monetary regime.

As noted above, a rate hike with a stroke ends this era.

A stroke indeed. By unelected, unaccountable, anti-market bureaucrats whose identities are completely unknown to virtually all Americans.

After so many years of ...

Bank Of England Economist Calls For Cash Ban, Urges Negative Rates

Just three short years ago, Bank of England chief economist Andy Haldane appeared a lone voice of sanity in a world fanatically-religious Keynesian-esque worshippers. Admissions in 2013 (on blowing bubbles) and 2014 (on Too Big To Fail "problems from hell") also gave us pause that maybe someone in charge of central planning might actually do something to return the world to some semblance of rational 'free' markets. We were wrong! Haldane appears to have fully transitioned to the dark side, as The Telegraph reports, he made the case for the "radical" option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

Speaking at the Portadown Chamber of Commerce in Northern Ireland, as The Telegraph reports, Mr Haldane's support for a possible cut in rates came as the Bank as a whole has signalled that the next move in rates would be up.

Wall St. slumps as Fed fuels global growth concerns

(Reuters) - Wall Street fell sharply on Friday after the Federal Reserve's decision to keep interest rates near zero fueled concerns about global growth, muddying the outlook for stocks.

Hawks, Doves & Chickens

Submitted by Pater Tenebrarum via,

Gallus Gallus Domesticus and the Ghost of 1937

Just before writing this comment, we happened to come across a truly funny tweet by the WSJ's Greg Ip, which you can see below, including our reply:


Jon Hilsenrath seems to seriously believe the markets weren't "prepared" enough for a ridiculous rate hike of 25 bps at most, from the current level of - zero!

Of course we would like to thank Ms. Yellen and the merry pranksters for helping to set up a better shorting opportunity, but all kidding aside, we actually believe that Hilsenrath is in a way correct. They are dead scared of being seen as setting off a market crash, and they know of course that more than six years of humungous money printing have achieved little besides blowing another bubble. In fact, the real economy, though not yet in recession, looks decidedly lame.

FOMC members are probably wondering why that is so, considering their intellectual background. Their economic theorizing seems to be an odd mixture of Keynesianism and Monetarism, sort of mixing the worst aspects of the two schools of thought. We happen to believe that Joseph Salerno was actually on to something when he referred to this as the "John Law School of Economics", because that's what it basically is. In "Money, Sound and Unsound" Salerno writes:


THe RiSiNG FaRCe...


U.S. is now Japan

Well, the "most anticipated" September FOMC meeting has come and gone, and no hike yet again. After the release of the FOMC statement, SPX rallied to a high of 2020, then sold down 30 handles into the close, and another -28 handles at today's open. Why? Well maybe people have finally realized the Fed is absolutely clueless, and that they have been completely misleading.

Two major surprises happened yesterday. First was the introduction of a negative dot on the FOMC's infamous dot plot, despite the "Fed hike anytime now" mantra. Second, was when Reuters reporter Ann Saphir asked Yellen about never lifting off from zero.

Fed Dot Plot from Yesterday's Statement. After talking about lifting off since 2009, and especially all the talk this year alone, "prepping markets for a lift-off", we now have a negative dot on the dot plot.

The second major surprise was the exchange between Reuter's Saphir and Yellen:

Ann Saphir: "say the U.S. economy has been growing, are you worried with the global interconnectedness, the low inflation globally.... that you may never escape from this zero lower bound?"

Yellen: "I would be very surprised if that's the case. That is not the way I see the outlook, or the way the commitee sees the outlook. Can I completely rule it out? I cannot completely rule it out. Really that's an extreme downside risk that in no way in the center of my outlook"

Well, as I mentioned multiple times over the years, my biggest fear was that we are heading in the way of Japan, where they have had ZIRP for over 15 years now. We are now 7 years into a ZIRP policy, and the Fed cannot even move a quarter of a percent. What does that say, when afte ...

Oil down awaiting U.S. rig count; worry over high global supply

NEW YORK (Reuters) - Oil prices fell on Friday, with U.S. crude down about 3 percent, as investors and traders waited to see if the U.S. oil rig count will drop further while OPEC members indicated they would do little to slash output.

11 September 2015: ECRI's WLI Growth Index Slides Insignificantly Deeper Into Contraction

ECRI's WLI Growth Index which forecasts economic growth six months forward - slid insignificantly further into negative territory. This index had spent 28 weeks in negative territory then 15 weeks in positive territory - and now is in its fifth week in negative territory.ECRI released their concident index this week and is discussed below.

J.P. Morgan's Dimon Reiterates He Isn't Ready to Retire

J.P. Morgan Chase & Co. Chief Executive James Dimon reiterated he isn't ready to retire when asked at an investor conference Friday morning.

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