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11Jul2016 Market Update: SP 500 Makes New Historic High, WTI Crude Melts Back Upwards, Investors Worried About Global Events

Written by Gary

The S&P 500 hit an all-time high soon after today's open by breaking above the prior May 20, 2015 record of 2,134.72 points, while oil staged a turnaround in early North American trading by trading above 45.70. Even after last Friday's employment report gave indications of a strong labor environment, markets remained skeptical about the odds of a Fed rate hike this year.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 1.37% while Mexico's IPC is up 0.85% and U.S.'s S&P 500 is up 0.53%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 71%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 82
Investors Intelligence sets the breath Above 50 bullish 57%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 48.63
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
72%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 62%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 63%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

1425

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 81.23
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,646

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. stocks at new record, earnings key for more gains

NEW YORK (Reuters) - Despite the worst start to the year in history for U.S. stocks, the benchmark S&P 500 index rallied to a record intraday high on Monday, surpassing the previous intraday peak set on May 20, 2015.

S&P hits record high as U.S. economic outlook brightens

(Reuters) - The S&P 500 hit a record intraday high on Monday as investors were more optimistic about the U.S. economy amid lingering concerns about global growth.

Starbucks to raise wages for U.S. workers in October

(Reuters) - Starbucks Corp will raise the wages of all workers in its U.S. stores this autumn, after being accused by employees of "extreme" cutbacks in work hours at its American cafes.

Pentagon unveils new cost-cutting initiatives for F-35 fighter jet

FARNBOROUGH, England (Reuters) - The U.S. Defense Department on Monday extended by two years a project that has cut the cost of Lockheed Martin Corp's F-35 fighter plane by more than $1 million per jet, and kicked off a similar project to cut operating and maintenance costs.

Thomson Reuters to sell IP & science unit for $3.55 billion

(Reuters) - Thomson Reuters Corp on Monday said it agreed to sell its intellectual property and science business to private equity firms Onex Corp and Baring Private Equity Asia for $3.55 billion in cash.

Judge rejects new trial for Sumner Redstone's ex-girlfriend

NEW YORK (Reuters) - An ex-girlfriend of media mogul Sumner Redstone will not be granted a new trial over her lawsuit that challenged the 93-year-old's mental competence, a California judge said in a tentative ruling on Monday.

Microsoft confirms Finnish site closure and job cuts

HELSINKI (Reuters) - Microsoft on Monday confirmed it will close its Finnish mobile phone unit and cut up to 1,350 jobs in the Nordic country.

Planemakers shrug off economy worries as travel demand grows

FARNBOROUGH, England (Reuters) - Airbus and Boeing raised their long-term forecasts for new aircraft demand on Monday, betting that rising wealth in Asia would continue to boost air travel and offset any short-term hits to the global economy.

Burberry to replace Bailey as CEO with Céline's Gobbetti

LONDON (Reuters) - British luxury brand Burberry has recruited Marco Gobbetti, the Italian boss of French brand Celine, to succeed Christopher Bailey as chief executive next year, freeing Bailey to focus again on the design role that made his name.

Are Collapsing Rates Good Or Bad: Hedge Fund CIO Takes On "Today's Most Important Question"

As One River's Chief Investment Officer, Eric Peters, put it over the weekend, "today's most important question is whether the inexorable trend toward zero is good or bad for stocks."

He then lays out his answer in the form of one of his inimmitable whimsical, "fictional" responses - which not accidentally hints at Tesla - as presented below.

Anecdote

"Today's most important question is whether the inexorable trend toward zero is good or bad for stocks," explained Lithium, hands free on Highway One.

"The more we have considered this simple question, the better we've become at articulating a simple answer." Low rates are quite obviously supportive for stocks, at least in America. Where the S&P 500 now trades at all-time highs, with bond yields at historic lows.

"While declining interest rates are good, really low rates are bad," he said. "When long-term rates decline you can assume growth is declining."

The lower cost of capital supports higher equity multiples, which is good initially. But high multiples reward entrepreneurs for building new businesses, and in a low-growth economy they cannot grow quickly by profiting from a rapidly expanding pie.

"New businesses are built to target fat margins earned by incumbents. They come in and disrupt everything." Any time there are big profits, you find fat around them, inefficiencies, empires.

New capital doesn't need those things. And it doesn't require fat margins, it simply needs high revenues. So when rates get low enough, all the corporate moats that had protected profits get breached. Whi ...

Nasdaq Tops 5,000 For First Time In 2016 - Best Streak In 5 Years

Having now rallied for 8 of the last 9 days, the Nasdaq Composite just broke above 5,000 for the first time since Dec 31 2015.

This is the biggest 9-day run in the Nasdaq since October 2011...

Yep - makes sense...

Deutsche Bank CoCo Bonds Soar To 11.5% Yield Following Bailout Demands

Submitted by Anthony Sanders via Confounded Interest blog,

No, a Coco bond is not a new Chanel perfume or a Hersheys product. Rather, CoCo stands for contingent convertible capital instrument (CoCo) are is a hybrid capital security that absorbs losses when the capital of the issuing bank (such as Deutsche Bank) falls below a certain level.

dbcomp

Italy's Unicredit and Spain's Banco Santander have higher CoCo bond yields.

Deutsche Bank raised nearly 20 billion in 2010 and 2014, by selling shares, which diluted existing shareholders, and by issuing CoCo bonds, spread over four issues in dollars, euros, and pounds. CoCo bonds have no maturity and are perpertual. The coupons range from 6% (EUR demoninated) to 7.50% (US Dollar denominated).

db4

The purpose? To prop up Tier 1 capital, And yes, the capital trigger is mechanical, not arbitrary.

dbtier1

And now that 'protective' capital is collapsing...

Dallas Police Chief's Advice To Young Black Men Everywhere

In an extremely frank and honest press conference Dallas Police Chief David Brown has unleashed an avalanche of uncomfortable truths and mainstream narrative-breakers. When asked what advice he would have for young black men protesting, he recollected his own experience: "I wouldn't protest, I'd get involved and do something about it... become part of the solution, serve your communities... we're hiring."

#Dallas Police Chief Brown shares his story: "I probably wouldn't protest...I'd get involved & do something about it." pic.twitter.com/kXLfKG1T0g

— Fox News (@FoxNews) July 11, 2016

#Dallas Police Chief's advice to young black men: "Become a part of the solution, serve your communities." pic.twitter.com/zAqLNdWwDe

— Fox News (@FoxNews) July 11, 2016

How Panasonic Can Speed Ahead on More Than Tesla

Panasonic's Tesla surge seems overdone, but the Japanese electronics giant is still a reasonable bet on the future of cars.

Software's Sale Window Hasn't Closed Just Yet

M&A interest in software likely to remain high as valuations haven't fully recovered.

In Mobile Payments War, Big Banks Strike Back

Banks have key advantages as they start to compete with popular online payment platforms.

June 2016 Conference Board Employment Index Improves But Suggests Only Moderate Growth

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months increased but its authors state "the Employment Trends Index has been moving sideways in the first half of 2016, suggesting only moderate job growth in the coming months."

London Markets: FTSE 100 charges into bull market, closing at 11-month high

U.K. stocks are gaining Monday, with miners and housing shares guiding the blue-chips benchmark toward a third session of gains.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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