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13Jul2016 Market Update: Surprise Global Glut News Sends Crude Prices Spiraling Downwards, US Indexes Recover Somewhat From Morning Session Lows, Some Analysts Say Take Profits Now

Written by Gary

Morning trading took a reverse course sending major US indexes back to flat levels after the SP500 shoot up to a new historic high at the opening. WTI crude prices fell more than 4 percent after the U.S. government stunned the market with a raft of bearish inventory data that added to concerns over a global glut of oil.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in Mexico off the most. The IPC is down 0.37% while Brazil's Bovespa is off 0.28% and U.S.'s S&P 500 is lower by 0.02%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 73%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 85%
Investors Intelligence sets the breath Above 50 bullish 62%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 62.96
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
73%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 67%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 70%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 14.69
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 81.01
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,713

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street record-setting rally peters out

(Reuters) - U.S. stocks took a breather on Wednesday, with investors turning their focus to corporate earnings reports to justify valuations following a three-day record-setting rally.

Tesla cuts prices again as sales miss targets

DETROIT (Reuters) - Tesla Motors Inc has cut the starting price of its Model X crossover, the second time this year the electric vehicle maker has lowered prices after missing sales targets.

Teva says Allergan deal to close 'any time', expects U.S. antitrust clearance

NEW YORK/TEL AVIV (Reuters) - Teva Pharmaceutical Industries Ltd said on Wednesday it expected its $40 billion deal to buy Allergan Plc's generics business to close "at any time," even as the companies extended the deadline for completing the transaction to October to allow more time for the U.S. antitrust review.

Bank of England readies new blast of QE for post-Brexit Britain

LONDON (Reuters) - Hailed by investors as a weapon to fight off recession but slammed by critics for fuelling inequality, quantitative easing looks set for a comeback in Britain as the Bank of England tries to shield the economy from the fallout of Brexit.

Cyclical stocks eyed to extend the U.S. market's rally

NEW YORK (Reuters) - Wall Street's rally, fed primarily by defensive stocks embraced by worried investors, may be spreading to some of the growth companies that more typically lead a market forward.

Fed's Kaplan urges 'slow, gradual, careful' approach on rates

HOUSTON (Reuters) - Global headwinds are undercutting the Federal Reserve's efforts to boost the U.S. economy, making low interest rates not nearly as stimulative as they were when the rest of the world economy was growing faster, a top Fed official said on Wednesday.

Oil slides 4 percent; U.S. stockpile data feed glut caution

NEW YORK (Reuters) - Oil prices fell more than 4 percent on Wednesday after the U.S. government stunned the market with a raft of bearish inventory data that added to concerns over a global glut of oil.

U.S. SEC takes another step toward tighter swaps regulation

WASHINGTON (Reuters) - The top U.S. securities regulator on Wednesday took another step toward tightening its oversight of security-based swaps by proposing new reporting requirements for transactions, nearly six years after Congress directed it to build a regulatory regime for the derivatives.

GM not protected from ignition switch claims: U.S. appeals court

NEW YORK (Reuters) - In a blow to General Motors Co , a federal appeals court on Wednesday reversed part of a bankruptcy court ruling that protected the automaker from some lawsuits over an ignition switch defect that prompted the recall of 2.6 vehicles in 2014.

Steller 30Y Auction Sees Highest Foreign Central Bank Buying On Record, Helped By Short Squeeze

Heading into today's 30Y auction, Stone McCarthy said that "specials galore", noting that "though pressure might have eased up on the 3-year and 10-year, it has tightened on the 5-year and 2-year notes. Both issues are trading special at zero basis points this morning. Most off the run issues are still trading near GC, though the old 30-year bond is a bit tight at 25 basis points."

That hinted to us that there may be a small short squeeze as the US sells $12 billion in 30Y bonds today, helping the auction following this week's disastrous 3 and 10Y auctions, and sure enough moments ago the high yield on the 30Y printed at 2.172%, stopping through the 2.176% When Issued.

However, the high yield was just the beginning for this spectacular auction.

The bid to cover jumped from 2.423 to 2.485, the highest since last September's 2.536.

But the real story was the internals, where 68.5% was allotted to Indirect Bidders - this was the biggest allottment to foreign central banks and official buyers on record. Directs took down 8.4% of the auction and Dealers were left with 23.1%, the lowest on record as well.

So while demand may have been lacking for shorter maturities, when it comes to longer durations, 2.17% is seemingly a tremendous bogey and everyone wants a piece.

Spoofing Trader Who Outsmarted Citadel And HFTs Gets 3-Year Jail Sentence

Back in November, when we last recounted the story of Michael Coscia, who was the first ever criminally convicted spoofer, we said that HFTs (and Citadel) have officially issued a warning "Outsmart Us, And You Go To Jail."

Here is a quick reminder for those who are unfamiliar with Mike Coscia's story:

.

He grew up in Brooklyn. His father was a subway token clerk and he was the first in his family to go to college. During the day he was a mail carrier and went to Brooklyn College at night and graduated with a business management degree in 1986. He has been married for 25 years and his son attends the University of Michigan.

He testified that he first became interested in the markets after his father bet on a horse race and turned a $2 bet into a $55,000 winner. His father put the profit in the market and Coscia tracked his father's investments, sparking his interest in finance. Coscia had a cousin who worked on the floor of the New York Mercantile Exchange and that's how he got started on the floor, beginning as a clerk. He was a trader for 27 years.

What happened then is the same thing that happened with the other two notorious "spoofers" who have gained prominence in the recent year, Nav Sarao and Igor Oystacher: they got too good. So good in fact the HFTs - mostly Citadel - were consistently losing money to them. As a result, Coscia et al had to be punished. He was accused of entering large orders into futures markets in 2011 that he never intended to ...

Beware the Squishy Math of ComScore's Pay Plan

Amid worries about comScore's internal-accounting investigation, investors also should examine the numbers behind the company's lucrative executive-compensation plan.

Why UniCredit Stake Sales Are Tonic But No Cure

Italy's biggest lender has raised $1.1 billion from two quick-fire sales, but this is far less than it needs.

Can Nintendo's 'Pokémon Go' Stick Around?

Keeping new hot games going against big, older titles is a major challenge.

Tesla quietly kills guarantee of Model S resale value

Tesla Motors Inc. quietly discontinued its resale value guarantee program as of July 1, the electric-car maker confirmed Wednesday. .

Exxon is using drones -- to scout for whales

Exxon Mobil this year successfully used a drone along the coast of Santa Barbara, Calif. to contribute to a continuing research project of tracking whales.

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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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