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21Oct2015 Market Update: Averages In The Green, But For How Long Some Investors Ask? Crude Prices Falling, U.S. Dollar Rising

Written by Gary

U.S. stocks opened fractionally higher and almost immediately slipped into the red for most of the morning session. The averages have moved back up to the green side, but staying there is not assured. Healthcare stocks resumed their slide for a second day, offsetting gains by General Motors and technology stocks.

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.19%, while the IPC is leading the Bovespa lower. They are down 0.21% and 0.16% respectively.

As long as the S&Ps maintain in the channel above 2020, despite having hit critical resistance at 2040, there is little on this end to nibble on from the short-side...but not much doing into resistance from the long-side either. A break below the channel and 2020 will pique selling interest. (from

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 73%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 52%
Investors Intelligence sets the breath Above 50 bullish 42.0% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 46.76 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 33.71% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 47.92% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 56.40% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.25 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 78.83 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,373

What Is Moving the Markets

Here are the headlines moving the markets.

Credit Suisse to raise $6 billion as new CEO shows his hand

ZURICH (Reuters) - Credit Suisse plans to raise 6 billion Swiss francs ($6.3 billion) from investors, slim down its investment bank and cut jobs as new chief Tidjane Thiam embarks on the biggest overhaul of the Swiss bank in almost a decade.

Boeing lifts 2015 outlook as profit jumps 25 percent

(Reuters) - Boeing Co reported a 25 percent rise in quarterly profit and lifted its financial guidance for the year, as a rise in commercial aircraft deliveries boosted revenue.

GM profit tops estimates on strong truck demand, improved China

DETROIT (Reuters) - General Motors Co reported record quarterly earnings for the third quarter, as strong demand for trucks in North America and improved profit margins in China overcame declining revenues.

EU rules Starbucks, Fiat tax deals illegal, rocking system

BRUSSELS (Reuters) - The European Commission ruled on Wednesday that Starbucks and Fiat benefited from illegal tax deals with the Dutch and Luxembourg authorities, dealing a heavy blow to profit-shielding arrangements used by many multinationals.

Oil down on crude build; gasoline draw helps pare some loss

NEW YORK (Reuters) - Oil prices hit three-week lows on Wednesday on worries over rising U.S. crude stockpiles, although a larger-than-expected drawdown in gasoline and distillates tempered the market's bearish sentiment.

Wall St. little changed as healthcare stocks limit gains

(Reuters) - U.S. stocks were little changed on Wednesday as healthcare stocks resumed their slide for a second day, offsetting gains by General Motors and technology stocks.

Ferrari shares race 15 percent in Wall Street debut

MILAN (Reuters) - Shares in Ferrari rose 15 percent to $60 in the luxury group's Wall Street debut on Wednesday after it priced its share offering at the top end of an indicated range as investors vied to grab a slice of the maker of sportscars for the super rich.

Western Digital to buy SanDisk in $19 billion deal

(Reuters) - Hard-disk drive maker Western Digital Corp said it would buy SanDisk Corp in a deal valued at about $19 billion to expand its business that makes flash memory storage chips used in smartphones and mobile devices.

Embattled Theranos Founder Elizabeth Holmes Makes First Public Appearance Since Crushing WSJ Report

One day Palo Alto-based medical-laboratory-services company Theranos was worth $9 billion (with its 31 year old CEo Elizabeth Holmes owning about half of this), a day later - following a crushing review of the company's business practices - not only is the company (and Holmes) worth far less, but the venture investors who gave the company hundreds of millions in cash have quickly become the "due diligence-free" laughing stocks of Silicone Valley.

Moments ago, in her first public appearance since the WSJ article, Elizabeth Holmes started speaking at the WSJDLive 2015 conference. Will she be successful in defending her company or will doubts about one of the biggest unidonkeys grow even more: watch live video of the interview
below, and follow along on WSJ's live blog.

We Didn't "Financially Engineer" Our Way Out Of The Great Depression, We Won A World War

Excerpted from Artemis Capital Management letter to investors,

The arms race of devaluation is not free and has come at the cost of massive global debt expansion. There is no precedent in financial history for a robust economic recovery absent either debt reduction or rampant inflation. We never deleveraged, in fact we just doubled down. According to a recent McKinsey study the world has reached $200 trillion of debt in 2014 (286% of global GDP), which is a staggering 40% increase from 2007 levels (+$57 trillion). In China, debt has grown four times faster than GDP since 2007, and half of that debt is linked to their property market. The world has simply shifted private debt to the public balance sheet.

The private risk transfer to the public balance sheet can also be seen in the evolution of credit default swap pricing since 2007. Notice the sharp divergence between global sovereign CDS (red) and financial corporate CDS (blue) starting in 2013. The next major global crash will likely be driven by unhealthy sovereign credit rather than corporate credit. The next Lehman moment will be the financial collapse of a major developed country instead of a bank.

There are those who point to aggressive central banking of the late-1930s as the model for de-leveraging post-depressio ...

If Ackman Is About To Blow Up, This Is What Plunges Next

With Valeant having collapsed over 30% today alone, now under $100 for the first time in a year (from highs over $260 in August 2015):

... we - and others - thought a glance at Bill Ackman's largest holdings was worthwhile in case things start to escalate even quicker: after all, losing nearly a billion dollars in one day will make even the most hardeneded LP nervous and one wonders how long before the rest of Pershing Square's holdings are liquidated

With these sizable positions, even the slightest fear of liquidation will spark investor front-running in these names, and it seems they already are:

And then there is Ackman's "Big Short" - Herbalife...

Charts: Bloomberg

Carl Icahn Launches Super PAC To Promote "No Brainer" Tax Reform, Combat Tax Inversions

While not vocally warning investors about the dangers of the market bubble this time (except in AAPL, where buybacks are encouraged), moments ago Carl Icahn released a letter in which he said that he is launching a Super PAC "with an initial commitment of $150 million from me personally. The first thing the PAC will do is focus on the pernicious effects that are occurring and will continue to occur as a result of Congress’s failure to immediately stop so many of our great companies from leaving our country." In other words, Icahn is taking on tax-inversions: "Many individuals are asking me to take action and I have obviously decided to do so."

We expect the ultimate outcome of Carl Icahn's Super PAC will be to make it easier for activists to pressure management teams into buying back even more of their shares - perhaps by granting them a tax amnesty on repatriating some of the $2 trillion in offshore cash if used for shareholder friendly activity - but then again we tend to be cynical.

Full letter:

Letter Discussing Desperately Needed Legislation

October 21, 2015

I have sent the following letter to all members of the House Ways and Means Committee, the Senate Finance Committee, and the Majority and Minority Leaders of the Senate and the Speaker of the House.

For the past 40 years I have worked diligently to see that errant CEOs and boards were held accountable, and few would disagree that my efforts greatly enhanced the value of hundreds of companies, making many billions of dollars for shareholders. I believe the time has come to also hold Senators and Congressmen accountable for the current gridlock in Congress that prevents important legislation from being passed. This is why I’m currently preparing to form a Super PAC with an initial commitment of $150 million from me personally. The first th ...

Credit Suisse to Launch $6.3 Billion Capital Increase

Credit Suisse revealed details of a planned overhaul under its new chief executive, including raising roughly $6.3 billion in new capital, as the Swiss bank delivered a set of disappointing third-quarter results.

Carl Icahn to Invest $150 Million in Super PAC

Billionaire investor Carl Icahn said Wednesday he is launching a super PAC to advocate for corporate tax changes and has pledged to spend at least $150 million of his own money on the effort.

The Wall Street Journal: Joe Biden says window has closed on a presidential run

Vice President Joe Biden said he will bypass the 2016 presidential race, forgoing one final shot at the White House as he continues to mourn the death of his son Beau.

15 stocks for the Santa Claus rally (and beyond)

A rising equity market in November and December is more likely than not, says Michael Brush.

Europe Markets: European stock benchmark ends flat as traders await ECB

European equities swing between gains and losses as investors wade through a tide of corporate earnings reports, moving with caution ahead of the European Central Bank’s policy statement.

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