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14Oct2015 Market Update: Averages Tumble After Opening, Mal-Mart Declines 10% After Poor Financial Report, DOW Recovers After Falling Triple-Digits

Written by Gary

The SP500 made a feeble attempt to retest the 2020 level after the opening, but ending up sliding below 2000 instead. WTI crude and the US dollar are aggressively testing their supports in relatively quiet trading. The Dow saw a triple-digit tumble after Wal-Mart cuts outlook, sending its shares down 10 percent wiping more than $20 billion off the retailer's market value.

Volume is very low suggesting the markets will continue trading near today's session lows and close at best mixed.


Here is the current market situation from CNN Money

North and South American markets are mixed to lower. Shares in Brazil are off as the Bovespa drops 1.08%. The IPC is down 0.30% while the S&P 500 in U.S. is unchanged.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 68%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 36%
Investors Intelligence sets the breath Above 50 bullish 40.2%
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.

44.88

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 29.58%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 45.95%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 51.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.05
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 77.16
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,246

What Is Moving the Markets

Here are the headlines moving the markets.

Wal-Mart shares slide on forecast of earnings drop next year

(Reuters) - Wal-Mart Stores Inc said earnings per share would decline as much as 12 percent next fiscal year due to investment in technology, higher wages and lower prices, sending its shares down more than 8 percent.

Wall Street lower on bank earnings; Wal-Mart hammered

(Reuters) - U.S. stocks retreated on Wednesday as investors absorbed mixed earnings from major banks and Wal-Mart's weak forecast wiped more than $20 billion off the retailer's market value.

Twitter names ex-Google executive Kordestani chairman

(Reuters) - Twitter Inc appointed former Google executive Omid Kordestani as its executive chairman, holding good on a promise to appoint an outsider to work alongside co-founder Jack Dorsey in his second stint as CEO.

BofA's cost cuts cushion blow from weak rates, muted trading

(Reuters) - Bank of America Corp reported a profit for the third quarter, compared with a year-earlier loss, as Chief Executive Brian Moynihan's cost-cutting efforts helped the bank mitigate the impact of weak revenue in three of its four main businesses.

South African trade union body opposes SABMiller deal

(Reuters) - South Africa's Congress of South African Trade Unions (COSATU) said the government, regulators and pension funds should not agree to the $106 billion takeover of SABMiller Plc by Anheuser-Busch InBev SA over concerns that jobs and tax revenue would be lost.

VW veteran lined up to be North America boss quits

HAMBURG/BERLIN (Reuters) - The man Volkswagen lined up less than three weeks ago to head its North American business resigned on Wednesday, dealing a blow to the German carmaker's efforts to recover from a scandal over its rigging of U.S. diesel emissions tests.

Airline partners Delta, Gol expect to apply for immunity from antitrust law soon

(Reuters) - Delta Air Lines Inc expects the United States and Brazil to reach an aviation deal that removes restrictions on flights between the countries in the next year, the airline's president told investors on a call Wednesday.

Weak U.S. retail sales, inflation data cast doubt on rate hike

WASHINGTON (Reuters) - U.S. retail sales barely rose in September and producer prices recorded their biggest decline in eight years, raising further doubts about whether the Federal Reserve will raise interest rates this year.

GE loan book helps Wells Fargo report first profit rise in three quarters

(Reuters) - Wells Fargo & Co , the biggest U.S. residential mortgage lender, reported a rise in quarterly profit for the first time in three quarters on Wednesday, helped by its purchase of commercial loans from General Electric Co .

Ludicrous Proposal By Venezuela's Maduro To Combat Oil Price Damage

Submitted by Michael McDonald via OilPrice.com,

Venezuela's economy is in desperate trouble. The country is highly dependent on oil reserves and has no significant substitute for black gold in the near term. That reality makes Venezuelan President Nicolas Maduro's recent efforts to tout the country's technology industry laughable.

Maduro was quoted as saying "We need to generate new sources of revenue besides oil that will force us to produce more and better quality products. In addition, a large percentage of those currencies will go back to the industry for investment." A deeper look at the numbers here reveals that Maduro is doing the equivalent of rearranging deck chairs on the Titanic and then holding a press conference about it.

Prior to the oil price crash, exports of that commodity accounted for roughly 96 percent of Venezuela's export earnings, 45 percent of budget revenues, and 12 percent of national GDP. With Venezuelan GDP around $400 billion by purchasing power parity, that means that the oil industry accounted for just under $50 billion in annual economic activity, or roughly $1,600 in annual income for every man, woman, and child in the country (based on ~$13,500 in GDP per capita).

With oil prices having crashed by more than half over the course of the last two years, this means that the economic value of the oil industry to Venezuela is likely around $25 billion. Not all of that economic impact will hit Venezuela though since some of the revenues went to foreign firms. That percentage of value sent abroad for fore ...

WalMart Carnage: Stock Plummets Most In 17 Years After Slashing Earnings Guidance, Blames Wage Hikes

Do you see what happens Larry when Wal-mart succumbs to "progressive" pressure and hikes wages? This:

WMT CFO: NEW HIRES TO START AT $10 PER HOUR NEXT YEAR

WMT CFO: 2017 RISE IN WAGES TO COST $1.5B

WMT PLANS REDUCTION IN CAPITAL EXPENDITURES THROUGH FY19

WAL-MART SEES FY2017 EPS DECREASING 6-12% VS FY2016

More from Reuters:

Company says strong dollar expected to hurt full-year revenue by $15 bln

Company says full-year net sales growth expected to be "relatively flat", mainly due to strong dollar; Walmart had earlier forecast 1-2 pct growth

Says expects fiscal 2017 earnings per share to fall by 6-12 pct due to higher wages and training costs

Company's $20 bln share buyback shrugged off in another sign that allure of buybacks is fading

Up to Tuesday's close, stock had fallen about 22 pct this year

The summary from WSJ:

Wal-Mart, which is hosting a meeting with analysts today, also said it projects per-share earnings to decline by 6% to 12% in its next business year. Analysts, according to Thomson Reuters, have anticipated $4.73 in per-share profit for fiscal 2017, higher than the $4.54 expected for 2016.

"Fiscal year 2017 will represent our heaviest investment period," said Charles Holley, Wal-Mart's Chief Financial Officer. Operating income will be affected by previously announced investments, Mr. Holley said. Those investments include about $1.1 billion in e-commerce and digital initiatives.

By fiscal 2019, Wal-Mart said it expects earnings per share to rise 5% to 10%. Separately on Wednes ...

US Housing Rolling Over Wells Fargo Confirms, As Mortgage Applications Plunge

Throughout the past 7 years, even as the stock market hit new all time highs, the biggest missing link of the overhyped US recovery (starting in August 2010 with Tim Geithner's infamous NYT Op-ed), was the failure of housing to participate. Sure, Chinese oligarchs were happy to launder their illicit funds in NYC triplexes and Wall Street Private Equity firms took advantage of zero-cost Fed money to buy distressed properties in bulk and convert them to rental units, but for the average American consumer there has simply been no recovery as the "Old Normal" housing dream is now forgotten and an entire generation is forced to rent the roof over their heads.

Whether this is due to lack of demand, or far stricter mortgage supply remains a topic debate, but one thing is undisputed: after a terrible 2014, mortgage applications in early 2015 saw a modest rebound. Alas, it has since proven to be merely the latest headfake in a long series of false starts.

The evidence: earlier today the largest U.S. mortgage lender Wells Fargo reported results that beat expectations by the smallest possible increment. What caught our attention, however, was the fuel that keeps Wells Fargo's engine humming: mortgage applications. Unfortunately for the housing bulls, there was no good news here because after rushing higher in early 2015 on the latest false hope of an economic recovery or due to fears rates are rising, Wells' mortgage applications and the associated pipeline have declined ever since.

As a reminder, without a strong pipeline of mortgages entering the Wells Fargo Net Interest Income engine, the future for the one bank that is most reliant on the recovery of th ...

Bank of America Posts Profit as Legal Bills Fall, Trading Hangs On

Bank of America said it swung to a larger-than-expected third-quarter profit, after legal expenses dropped from last year and trading revenue proved more resilient than analysts feared.

U.S. Examines Goldman Sachs Role in 1MDB Transactions

The FBI and Justice Department are gathering information about Goldman Sachs’s role in a series of transactions at 1Malaysia Development.

August 2015 Business Sales Decline, Headline Inventories Unchanged.

Written by Steven Hansen

Econintersect's analysis of final business sales data (retail plus wholesale plus manufacturing) shows unadjusted sales declined compared to the previous month - but there was an improvement of the rolling averages. With inflation adjustments, business sales are in contraction. The inventory-to-sales ratios remain at recessionary levels.

Europe Markets: European stocks end lower for third consecutive day

European stocks sag Wednesday, suffering a third straight loss, as Chinese economic data once again highlight worries about the impact a slowdown in that country may have on economies world-wide.

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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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