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13Oct2015 Market Update: SP500 2020 Support Tested Again, Oil And Dollar Volatile As Bulls Pray For A Miracle

Written by Gary

SP500 tests, yet again, the resistance at 2020 and fails, for now anyway. WTI oil is repelled from its support at 46.80 and the U.S. dollar remains volatile, but basically unchanged from early morning trading. Markets open lower and immediately began climbing to test the all important resistance all done on low volume. Short term indicators were very bullish this morning, but have turned neutral as the markets trade sideways.


Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.16%, while the Bovespa is leading the S&P 500 lower. They are down 3.11% and 0.20% respectively.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 66%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 41%
Investors Intelligence sets the breath Above 50 bullish 39.4%
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.

78.37

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 31.60%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 46.12%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 51.80%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.63
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 77.94
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,336

What Is Moving the Markets

Here are the headlines moving the markets.

VW looks to cutbacks and electric cars to overcome scandal

BERLIN (Reuters) - Volkswagen will cut investment plans at its biggest division by 1 billion euros ($1.1 billion) a year and step up development of electric vehicles, it said on Tuesday, as it battles to cope with the fallout from its cheating of diesel emissions tests.

EMC to pay up to $2.5 billion to Dell if it opts for rival bid

(Reuters) - EMC Corp said it would pay Dell Inc [DI.UL] up to $2.5 billion in termination fees if the data-storage company accepts a "superior proposal".

J&J third-quarter sales miss mark, hurt by strong dollar

(Reuters) - Johnson & Johnson reported third-quarter sales well below Wall Street estimates, hurt by the stronger dollar and disappointing demand for its Remicade arthritis drug and its Xarelto blood clot preventer.

Wall St. recovers but China concerns weigh

(Reuters) - Wall Street recovered from earlier losses in muted trading on Tuesday, helped by a rise in health care stocks, but gains were constrained by renewed fears of slowing growth in China.

GE to sell $30 billion specialty finance business to Wells Fargo

(Reuters) - General Electric Co took a big step on Tuesday in its plan to unload most of its financing operations, saying it has agreed to sell commercial lending and leasing businesses worth more than $30 billion to Wells Fargo & Co .

AB InBev wins over SABMiller at fifth attempt

BRUSSELS/LONDON (Reuters) - The world's two biggest brewers agreed on Tuesday to create a company making almost a third of the world's beer after SABMiller received an improved offer worth more than $100 billion from larger rival Anheuser-Busch InBev .

Twitter announces layoffs as CEO Dorsey looks to revive growth

(Reuters) - Twitter Inc will lay off up to 336 employees, or about 8 percent of its workforce, as co-founder Jack Dorsey readies to revive growth in the microblogging service provider's user base in his second stint as chief executive.

Axel Merk: Got Gold?

Submitted by Axel Merk via MerkInvestments.com,

While some continue dancing, the music might have already stopped: are we already in a bear market in stocks? In this context, we study past bear markets to see whether gold may serve as a valuable diversifier for what's ahead.

Are we in a bear market?
A "bear market" is frequently defined as a decline of at least 20% in the S&P 500 index. Trouble is that by the time pundits provide their seal of approval that we are indeed in a bear market, the index has already lost 20% from its peak. Many of them will likely have told investors to buy the dips all the way down.

In our August 4 Merk Insight Coming Out - As a Bear!, we argued that a bear market is about to commence. Mind you, that was just before the surge in volatility. At the time, some wondered why a "currency and precious metals" guy like myself would have anything to say pertaining to the stock market; just about a week later, there were numerous media reports blaming the currency markets for turmoil in the stock market. Go figure.

We are not going to repeat the entire bear case again, except to summarize that we believe we have shifted from an environment where investors think the glass is half full to one where the glass may be half empty. This is largely induced by the Fed's attempt to extricate itself from its 0% interest rate policy; that's because, in our analysis, just as the Fed's extraordinary policies have fostered complacency, any attempt to move away ...

The "1%" Own Half The World's Assets: The Stunning Chart

On of the key things to understand about the massive, coordinated, global easing effort on which central banks have embarked since the financial crisis is that these policies have served to widen the gap between the rich and poor.

Ben Bernanke - and plenty of other vaunted central planners for that matter - will tell you a different story. They’ll tell you that by creating jobs and boosting the economy, QE and ZIRP have actually done more for the middle- and lower-classes than they have for the wealthy.

Obviously, that’s nonsense. When you adopt a set of policy measures specifically designed to inflate the value of the assets that are most likely to be concentrated in the hands of the rich, you perpetuate inequality and exacerbate class segregation by default - indeed, by definition. Here's proof:

If it wasn't for Ben "the Hero" Bernanke's courage to print like a drunken Keynesian madman, none of this would have been possible, and by "this" we of course mean that the net worth of the top 0.1% of Americans is about to surpass the wealth of the bottom 90% of US households.

This is everywhere apparent and has been documented by the Fed itself on at least one occasion this year. Meanwhile, asset bubbles in things like high end art and mega mansions u ...

Short Squeeze, Liquidity, Margin Debt & Deflation

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Some things you CAN see coming, in life and certainly in finance. Quite a few things, actually. Once you understand we're on a long term downward path, also both in life and in finance, and you're not exclusively looking at short term gains, it all sort of falls into place. The only remaining issue then is that so many of you DO look at short term gains only. Thing is, there's no way out of this thing but down, way down.

Yeah, stock markets went up quite a bit last week. Did that surprise you? If so, maybe you're not in the right kind of game. You might be better off in Vegas. Better odds and all that. From where we're sitting, amongst the entire crowd of its peers, this was a major flashing red alarm late last week, from Investment Research Dynamics:

September Liquidity Crisis Forced Fed Into Massive Reverse Repo Operation

Something occurred in the banking system in September that required a massive reverse repo operation in order to force the largest ever Treasury collateral injection into the repo market. Ordinarily the Fed might engage in routine reverse repos as a means of managing the Fed funds rate.

However, as you can see from the graph below, there have been sudden spikes up in the amount of reverse repos that tend to correspond the some kind of crisis - the obvious one being the de facto collapse of the financial system in 2008. You ca ...

Fortress Confirms Novogratz-Led Macro Fund Closure After Bad Brazil, China Bets

Following last night's 'reports' that Fortress Investment Group will shutter its once colossal macro hedge fund (and Mike Novogratz will leave), FIG shares bounced back into the green after tumbling 10% overnight. However, FIG shares have just been halted, news pending...

We presume this is the "news" that confirms the reports...

Fortress Statement

Fortress Investment Group LLC today announced that it will close the Fortress Macro Funds and managed separate accounts ("FMF" or "the Funds") and return all capital to investors by the end of the year. Fortress Principal Michael Novogratz, who founded the firm's Liquid Markets business in 2002, is expected to retire from the firm and its Board of Directors at year end.

In conjunction with today's announcement, Fortress will redeem all of Mr. Novogratz' Fortress Operating Group Units, representing beneficial ownership of approximately 56.8 million class A or equivalent shares as of September 30, 2015. The company will repurchase Mr. Novogratz' ownership interests at a price of $4.50, equivalent to a 17% discount to the closing price of Fortress Class A shares on October 12, 2015. As a result of this transaction, Fortress's dividend-paying share count will be reduced by approximately 13%. Fortress will fund the transaction through a combination of available cash and a note issued to Mr. Novogratz. The transaction is subject to completion of definitive documentation and ...

U.S. Stocks Slightly Higher Despite Poor China Trade Data

U.S. stocks drifted higher on Tuesday as investors looked past the latest evidence that China’s economy is slowing. Opening declines in the U.S. tracked losses in Europe and Asia, but then they diverged.

GE to Sell Commercial Lending, Leasing Units to Wells Fargo

GE agreed to sell a major chunk of its U.S. commercial lending business to Wells Fargo, a milestone in the company’s rapid exit from financial services that could allow it to shed a tough regulatory regime.

Earnings Summary for Today

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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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