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13Jun2016 Market Update: US Markets Lower, Crude Prices Volatile, Deutsche Bank's Equity Strategist Says Next 5% Move Is Likely Lower

Written by Gary

U.S. stocks were lower (DOW - 62 points, SPY -0.4%) a day ahead of a Fed policy meeting as Microsoft shares dragged major indexes down after the company said it would buy LinkedIn. Crude prices and the US dollar moved in opposite directions this morning in volatile trading because of gloomy economic prospects in Europe and Asia and supply outages in Nigeria.


Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 0.34%, while the IPC is leading the S&P 500 lower. They are down 0.46% and 0.34% respectively.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 76%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 61%
Investors Intelligence sets the breath Above 50 bullish 62.7%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -13.39
StockChart.com NYSE % of stocks above 200 DMA Index ($OEXA200R) $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%. Following a major market correction, the conditions for safe re-entry are when:
a) Daily $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
74.00%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 67.42%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 71.80%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

16.39

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 78.49
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,446

What Is Moving the Markets

Here are the headlines moving the markets.

Microsoft to buy LinkedIn for $26.2 billion in its largest deal

(Reuters) - Microsoft Corp will buy LinkedIn Corp for $26.2 billion in its biggest-ever deal, combining the software giant's business-productivity tools with an online network of 433 million professionals.

Wall Street down for third-straight day as Microsoft drags

(Reuters) - U.S. stocks were lower a day ahead of a Federal Reserve policy meeting as Microsoft shares dragged all three major indexes down after the company said it would buy LinkedIn for $26.2 billion.

Apple set to showcase new powers for Siri at developer event

SAN FRANCISCO (Reuters) - Thousands of software developers crowded into an auditorium in San Francisco on Monday to hear Apple show off new abilities for its Siri digital assistant by debuting tools to let developers work with the company's artificial intelligence.

Britain's trade options after Brexit: no easy way out

LONDON (Reuters) - Britain's status as a trade power has become one of the most contentious issues in the European Union membership referendum on June 23.

Exclusive: Verizon, AT&T set to make final round of bids for Yahoo web assets - sources

NEW YORK (Reuters) - U.S. telecommunications rivals Verizon Communications Inc and AT&T Inc are set to go through to the third and final round of bidding in the auction for Yahoo Inc's core internet assets, according to people familiar with the matter.

South Korea's Hotel Lotte postpones $4.5 billion IPO indefinitely after raids

SEOUL (Reuters) - South Korea's Hotel Lotte Co Ltd said on Monday it was indefinitely postponing its IPO worth up to $4.5 billion, as the wider Lotte Group reeled from the impact of a series of raids on group firms by prosecutors.

FAA proposes fining Amazon $350,000 for hazardous package

WASHINGTON (Reuters) - The U.S. Federal Aviation Administration said on Monday it is proposing a $350,000 civil fine against Amazon.com Inc for allegedly violating hazardous materials regulations, the latest in a series of violations.

China's Midea seeking 49 percent Kuka stake: report

BERLIN (Reuters) - China's Midea Group Co Ltd is only seeking a 49 percent stake in German industrial robot maker Kuka , Handelsblatt reported on Monday, citing unnamed sources in the German government.

Oil prices dip on dollar strength, macroeconomic concerns

NEW YORK (Reuters) - Oil prices edged slightly lower on Monday, pressured by a strong U.S. dollar and gloomy economic prospects in Europe and Asia, but supported by ongoing supply outages in Nigeria.

Deutsche Bank Throws In The Bullish Towel, Says "Next 5% Move Is Likely Lower"

With Morgan Stanley, JPM, BofA and even Goldman Sachs having thrown in the towel on the ongoing stock market ramp, inspired in equal part by HFT momentum strategies, central banks, and a relentless short squeeze, Deutsche Bank's equity strategist, who until now valiantly was cheerleading to bullish case, has finally waved the white flag of surrender and in an overnight note admits that "the next 5% move is likely lower."

Here's his rationale:

Dips of 5%+ from 6-month highs generally happen at least once a year, usually stay under 10% and don't tend to last long. Sell-offs usually last 4-8 weeks; rallies 16-20 weeks. Only 3 years since 1960 didn't have a 5%+ dip (1964, 1993, 1995), while many mid- to late-cycle years saw more than one dip (late 1980s and late 1990s). Of the 80 5%+ sell-offs since 1957, about 2/3rd were under 10% with an average sell-off of 7% and duration of 27 trading days. S&P troughed at 1829 on Feb 11th this year, after it last troughed at 1868 on Aug 25th, 2015 (rolling 6-month basis, trough-to-peak), giving us back-to-back 10%+ corrections. This stood in sharp contrast to 915 trading days or 3.9 yrs between the prior two corrections.

UK Establishment Loses The Mainstream Media: "Why I Am Voting To Leave The EU"

With polls indicating "Leave" leading in the EU Referendum, one well-known mainstream media personality has come out against the establishment. As The Telegraph's Ambrose Evans-Pritchard explains "at its heart, the Brexit vote is about the supremacy of Parliament. All else is noise," adding "that is why I am voting to leave the EU."

With sadness and tortured by doubts, I will cast my vote as an ordinary citizen for withdrawal from the European Union.

Let there be no illusion about the trauma of Brexit. Anybody who claims that Britain can lightly disengage after 43 years enmeshed in EU affairs is a charlatan or a dreamer, or has little contact with the realities of global finance and geopolitics.

Stripped of distractions, it comes down to an elemental choice: whether to restore the full self-government of this nation, or to continue living under a higher supranational regime, ruled by a European Council that we do not elect in any meaningful sense, and that the British people can never remove, even when it persists in error.

For some of us - and we do not take our cue from the Leave campaign - it has nothing to do with payments into the EU budget. Whatever the sum, it is economically trivial, worth unfettered access to a giant market.

We are deciding whether to be guided by a Commission with quasi-executive powers that o ...

Brexit: Winners From The Plunging Pound

If you're looking for Brexit hedges, check out U.K. companies that manufacture locally but sell globally.

Why the European Bond Market Is on the Brink

German 10-year yields are flirting with zero. Central bank policy and risk aversion could yet send them lower still.

Lingering Pain of Banks' Bad Behavior: How About Another Decade?

New regulations mean ‹the effect of ‹bank penalties for crisis-era problems could persist as charges against capital for ‹many years to come.

Market Extra: Market's fear gauge hits highest level in 3 months

The CBOE Market Volatility Index, or VIX, on Monday climbed above the 19-mark for the first time since March 10 on rising uncertainty in global markets.

LinkedIn soars on deal to sell to Microsoft for $26.2 billion

The all-cash transaction amounts to $196 a share, a 50% premium to Friday's closing price.

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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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