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30Sep2015 Market Update: U.S. Markets Trending Down Off Morning Opening Highs, WTI Oil Trending Sharply Down, Watch For Possible Sell-Off

Written by Gary

U.S. markets opened 1.5% higher (bullish), above the lower Bollie Band (bullish), still within the month-long sideways trading channel (bullish), but remains in a two-week down trend (bearish). WTI oil very volatile trending short-term down, U.S. dollar rising along with copper. The averages are experiencing a fractional down turn that could develop into a accelerated session selloff, stay alert.

Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.77% while the IPC gains 0.66%. The Bovespa is off 0.50%.

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 19%
Investors Intelligence sets the breath Above 50 bullish 24.8% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -43.70 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 17.45% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 30.41% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 29.80% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.56 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 73.30 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,720

What Is Moving the Markets

Here are the headlines moving the markets.

Oil up on Syria, hurricane; U.S. crude build limits gains

NEW YORK (Reuters) - Oil prices rose on Wednesday on worries about an escalating Syrian war and a hurricane threatening energy infrastructure on the U.S. East Coast, but gains were limited by data showing a surge in U.S. crude inventories.

Softness in global economy to extend into 2016 as developing world drags: IMF

WASHINGTON (Reuters) - A relentless deceleration in the economies of the developing world will cause global growth to slow this year and only pick up a bit more pace in 2016, the head of the International Monetary Fund said on Wednesday.

Wall Street higher but indexes set for worst quarter since 2011

(Reuters) - Wall Street was sharply higher on Wednesday, helped by gains in technology stocks, but the three major indexes were set for their worst quarter since 2011.

Bob 'The Bear' Janjuah Warns "Fed 'Put' Unlikely Until S&P Hits 1500"

Via Nomura's Bob Janjuah,

A review

The titles of my last two notes pretty much speak for themselves. Since May and in particular since my July note my expectations for fundamentals (weak global growth, deep China concerns, "FX wars", disinflation/deflation outweighing inflation) and my outlook for markets (risk-off, volatility higher) have largely been borne out. China did indeed "devalue" (I think this is only the beginning), the Fed indeed passed in its September meeting, and my major market targets (that the S&P 500 would fall from the 2100 area to the low 1900s/1800s by end Q3/early Q4, with 10yr UST yields falling from the 2.4% area to below 2%) were met easily in late August. Since then markets have meandered around largely sideways as policymakers attempt to talk things up in the face of intense market concerns. Significant damage has yet again been done to the credibility of policymakers, and to the belief in normalisation, in inflation, and in the ability of risk markets to continue ignoring the harsh realities of weak growth, weak pricing power and weakening earnings.

Looking ahead

My bottom line is clear. I believe there is more weakness ahead - both fundamentally and within markets - over Q4 and perhaps into Q1 2016. Of course, there will be counter-trend moves and occasional data bright spots ahead. In particular, I expect more commentary from the ECB, more action from the BOJ and PBoC (markets are looking for effective game-changing moves in fiscal and monetary policy, but I believe China's devaluations are not over yet), and certainly by/in Q1 2016 I expect markets to be focused on/looking for/dealing with a much more dovish, perhaps even easing, Fed versus the current situation. I repeat my vi ...

JPY Surges, EUR Purges As Month-End Flows Spark FXnado

USDJPY is tumbling, cracking back below the 120.00 tractor beam (and catching down to Nikkei 225's decoupling). EURUSD is also plunging, down 100 pips in the last few hours... it appears it is not just EM FX that is seeing volatility increase as The Majors start flip-flopping ahead of Friday's payrolls data..

FX Majors are behaving like The Ringgit...

Is this where JPY is heading?

Charts: Bloomberg

U.S. jobs sector gains, Midwest manufacturing stumbles

NEW YORK (Reuters) - U.S. companies hired workers at a solid clip in September, but data showed factory activity in the U.S. Midwest contracted, muddying the economic picture for the Federal Reserve on whether to raise interest rates later this year.

Stocks Explode Higher As Gartman Doubles Down On Bear Market Call

Yesterday morning, we wrote a post in which we explained "Why The Market Is Poised For A Rebound: Gartman Says "Bear Market" Will Take S&P To 1420-1550" where we quoted from yesterday's Gartman letter, in which the confused "retirement fund" investor said that "there are still many who deny that this is a bear market, but it is that and we fear that it has a good distance to the downside yet to travel. Merely to get to "The Box" shall take the S&P to 1420-1550! Rallies are to be sold; weakness is not to be bought."

Stocks rallied.

Fast forward to today when as of this moment the S&P is soaring and is set for the 8th best gain in 2015. Why? Here is one reason, from the latest Gartman letter:

Essentially repeating what we said here yesterday, there are still many who deny that this is a bear market, we fear that it has a good distance to the downside yet to travel. Merely to get to "The Box" shall take the S&P to 1420? 1550! Rallies are to be sold.

And more:

As we write, with the rally… and a very strong rally too we shall admit… in Asian share dealing, stock index futures for the States are up quite sharply and there will be many who will argue that this is the start of the next bull market; that the worst is now behind us and that the global nearly 20% decline from the highs is sufficiently deep to have discounted all of the ill economic news that bear markets must do. We are of the opinion that the worst is not yet behind us; that a mere less-than-handful of months from the highs is insufficient as ...

U.S. business groups oppose exceptions in Pacific trade pact

ATLANTA (Reuters) - U.S. business groups have voiced their opposition to blocking specific products, like tobacco, from rules letting foreign companies sue governments over damage to investments as Pacific trade ministers gather to finalize an ambitious trade deal.

Every SINGLE Big Wall Street Got Stocks AND Rates Horribly Wrong, Except for... Here's Why It Will Always Happen!

I had some prognostications in December or 2014 for the new year. These are apparently quite contrarian in relation to the sell side. Let's take a quick peek and then compare to the smartest guys in the room (you know, the sell side analytical machine) year-to-date...

This is self explanatory, keeping in mind that the S&P 500 was somewhere around 2028 and the 10 yr Treasury was roughly 2.1% on January 1st of this year.


Notice how I also commented on real estate prices. We have definitive research which shows a definite correction coming, but more on that later. The question du jour is why so many (as in all) of the sell side banks proffer such bad (actually, inaccurate) research? Well...

Banks do three things, and three things only
  1. They amass capital from one group of people and/or entities and give it to another group, requiring substantial fees along the way, ie. lending and securities underw ...

Crude Dumped-And-Pumped After DOE Reports Huge Inventory Build & Lowest Production Since Nov 2014

Confirming API's reported data last night, DOE reported an even bigger 3.955 million barrel inventory build last week.

This is the 2nd biggest build since April and after rallying confidently all morning (on QE hopes and Middle East tensions), WTI Crude collapsed...

We also note that Total crude production also fell to its lowest since Nov 2014...

and that has sparked buying...

Charts: Bloomberg

September 2015 Chicago Purchasing Managers Barometer Production Growth Collapsed and New Orders Fell Sharply

The Chicago Business Barometer declined and is now in contraction.

Volkswagen braces for hit to business from emissions scandal

BERLIN (Reuters) - Volkswagen has imposed a hiring freeze at its financing business and cut a shift at a German engine factory as it braces for a hit to business from cheating in diesel emissions tests.

6 Out Of 6 Fed Surveys Say US Is In Recession

For the first time since 2009, all six major Fed regional activity surveys are in contraction territory. So, time to hike rates?

Charts: Bloomberg

This sums it all up nicely:

Chicago PMI, most important regional survey, puts ISM at 46.9%. Great time to begin a tightening cycle Janet.

â€" Not Jim Cramer (@Not_Jim_Cramer) September 30, 2015


â€" Not Jim Cramer (@Not_Jim_Cramer) September 30, 2015

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