US markets opened lower and slipped further when materials and financial stocks started to melt down. Consumer confidence fell more than expected, but home prices in 20 major U.S. metro areas remained unchanged in December. WTI crude is currently trading in the high 31's and the US dollar is trading mostly sideways in the 97's. Volume levels have fallen to almost anemic levels signaling the end of volatile trading for the day.
Here is the current market situation from CNN Money
$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.
(Reuters) - Macy's Inc's sales fell less than expected for the first time in four quarters, helped by a last-minute blast of cold weather in January, and the department store operator said there was a "high degree" of interest among parties it approached for real estate deals.
(Reuters) - Apple Inc on Monday urged the creation of a government panel on encryption, the latest salvo in a standoff over a locked iPhone linked to the San Bernardino shooting that has escalated into a public relations battle between the revered technology company and the U.S. Federal Bureau of Investigation.
(Reuters) - Johnson & Johnson was ordered by a Missouri state jury to pay $72 million of damages to the family of a woman whose death from ovarian cancer was linked to her use of the company's talc-based Baby Powder and Shower to Shower for several decades.
(Reuters) - JP Morgan will increase provisions for expected losses on bad energy loans by more than 60 percent in the first quarter as a sharp drop in the price of oil looks set to further ravage the sector, and it gave itself another year to meet one its most important profit goals as hopes of interest rate rises fade.
FRANKFURT/LONDON (Reuters) - Mars Inc has recalled chocolate bars and other products in 55 countries, mainly in Europe, after bits of plastic were found in a Snickers bar in Germany, the U.S. chocolate maker said on Tuesday.
(Reuters) - Home Depot Inc , the world's largest home improvement chain, reported better-than-expected sales, boosted by an improving housing market and mild weather in the holiday quarter that encouraged customers continue outdoor activities and home renovations.
BERLIN (Reuters) - Volkswagen's chief executive expects the carmaker to win back the trust of its customers following the emissions test-rigging scandal after its core autos division swung back to growth in January, German news agency DPA reported on Tuesday.
Yesterday, we reported that at least one prominent money manager, Geneva Swiss Bank, had called "time" on the bear market rally, and after scooping up a 7% profit following the post-February 11 short squeeze, cashed out.
This followed another post of ours from yesterday morning, in which we showed quite vividly that while stocks are surging on the latest algo-driven stop hunt and CTA squeeze, bonds could care less.
It appears at least one trader read between the lines of what was happened. As Bloomberg's Richard Breslow wrote in his overnight note, he was one of the few who were not fooled by yesterday's price action. Below he explains why.
Don't Chase Parked Cars
There was such a strong emotional pull yesterday to get swept up in the feel-good atmosphere. Equities were flying, oil prices looked robust, top line credit spreads looked to be tightening after a horrible week and China had a new securities regulator to sort everything out. G-20 is coming and they are promising global cooperation. Sure, the U.K. might be blowing up the European Union, but that's four months off.
What kept me from totally losing my heart was, yet again, the bond market. If animal spirits are alive, and the underlying fundamentals improving, how come bond yi ...
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The class war is already underway, and the petit bourgeois media is clueless.
The typical bourgeois mainstream media pundit is confused and alarmed by Donald Trump's ascendancy. The typical pundit is a member of the petit bourgeois who has zero contact with the working class in America, other than saying "hello" to his/her auto mechanic, hair salon employee, etc.
The standard-issue pundit has an overweening sense of their own insight due to their academic/media success; nobody gets air time for confessing "I'm clueless."
Their failure to grasp Trump's appeal has revealed their absolute lack of insight and understanding of the real world beyond the media, Wall Street and D.C.
The conventional MSM pundit compares Trump to the politicos of the past and finds him wanting. He's no FDR, Reagan, etc., they pout.
The pundits are outraged by Trump's success as a candidate because in their blindered view of the political/economic landscape, he shouldn't be successful and so something is amiss with the Universe.
The standard petit bourgeois media hack is comfortable with the conventional politico stereotype: Slick Willy I feel your pain small-town mayor gone bigtime, check; ambitious, duplicitous Lady Macbeth (Hillary), check:
Lady Macbeth suppresses her instincts toward compassion, motherhood, and fragility — associated with femininity — in favour of ambition, ruthlessness, and the singleminded pursuit of power.
frat-boy fly-boy, got a nickname for everybody, just put one over on you grin G.W. Bush, tail-end of a dy ...
Back in November, when Martin Shkreli had just unleashed his ill-fated manipulation of Kalobios stock, one trader got crushed. As we reported then, one "E-trader", Joe Campbell, decided to go $35,000 short KBIO the night before the massive ramp in the stock following the Shkreli press release and ended up owing ETFC "a wonderful $106K" margin call.
His response was to launch a GoFundMe website opening up his plight to generous online donors. Surprisingly, many appeared on short notice, providing several thousand in online donations to help him fill his margin hole.
Now another trader finds himself in a comparable predicament, this time it is 24 year old Matt Reed, who yesterday suffered a massive loss after he decided to bet it all on FitBit calls (on margin) and lost everything, as the following Fidelity screengrab from his P&L indicates:
Here is his narrative as documented last night on the momentum trading website StockTwits:
I'm down 200k aka basically everything and pretty much suicidal right now
kept buying on margins as it went up. Held too long as it went down
started small then after it did well I took figured why not put more in. Got behind kept trying to break even. Never did
Put just about what I had left in 15.5 calls here...my life is totally fucked right no; what I have left is fit 15.5 calls which will most likely be worthless on the open tomorrow
"To double bottom or not to double bottom" asks BofAML's Stephen Suttmeier...
S&P 500 closes in on the big 1950 level
The S&P 500 gapped up once again and is knocking on the door of key resistance at 1947-1950 with the falling 50-day moving average near 1951. There are plenty of similarities between now and early-to-mid October, which was when the S&P 500 rallied sharply and broke out from a double bottom off the late-August and late-September 2015 lows on the move above 2020. The key level now is 1950 and a decisive push above 1950 is required for another double bottom in the S&P 500.
Mind the S&P 500 gap; below would suggest exhaustion
The S&P 500 has gapped up three times in the last five sessions. Continue to mind the upside price gaps, as they are nearby supports. Yesterday's gap offers initial support at 1924-1918 and it would take a break below this gap to suggest upside exhaustion. The next gap supports come in at 1899-1895, which held on Friday, and 1871-1864.
And we are testing that gap now...
But this double bottom does not project the SPX to new highs
Unlike the double bottom off the late-August and late-September 2015 lows, a double bottom off the January and February 2016 lows would not project the S&P 500 to new highs.
The headlines for existing home sales say "existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015". Our analysis of the unadjusted data shows that home sales did improve, and the rolling averages improved.
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