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21Jul2016 Market Update: Markets Fractionally Down, DOW Off Nearly Triple Digits, Volume Remains Active As Investors Try To Decide If The Bears Are Taking Over

Written by Gary

US markets opened down and flat, climbed to the unchanged line and sunk to moderate negative values as disappointing earnings reports from Intel and others outweighed the handful of promising reports. US home resales hit their highest level in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week. Short-term indicators are running somewhat bearish.


Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.02%, while the S&P 500 is leading the Bovespa lower. They are down 0.35% and 0.19% 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 87%
Investors Intelligence sets the breath Above 50 bullish 65%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 25.61
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
81%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 70%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 74%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value

15.73

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 81.29
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,761

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street falls on disappointing reports from Intel, others

(Reuters) - U.S. stocks dipped in early afternoon trading on Thursday, after staying flat for most of the morning, as disappointing earnings reports from Intel and others outweighed the handful of promising reports.

GM says it may recall 4.3 million vehicles over Takata air bags

WASHINGTON (Reuters) - General Motors Co said on Thursday it may be forced by U.S. regulators to recall another 4.3 million vehicles for potentially defective Takata air bag inflators, a call-back that would cost it $550 million.

U.S. jobless claims hit three-month low; factory activity weakens

WASHINGTON (Reuters) - U.S. home resales hit their highest level in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.

GM raises full-year forecast after strong second-quarter profit

DETROIT (Reuters) - General Motors Co on Thursday raised its forecast for full-year profits after reporting a record second-quarter profit as it continued to capitalize on strong sales of pickup trucks and sport utility vehicles in the United States.

U.S. regulators sue to block Anthem-Cigna, Aetna-Humana insurer mergers

NEW YORK (Reuters) - U.S. antitrust officials on Thursday moved to block an unprecedented consolidation of the national health insurance market, filing suit against Anthem Inc's proposed purchase of Cigna Corp and Aetna Inc's planned acquisition of Humana Inc .

ECB keeps door open to easing after holding rates steady

FRANKFURT (Reuters) - The European Central Bank kept interest rates unchanged on Thursday but left the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook.

Corzine, others settle with MF Global trustee over collapse

NEW YORK (Reuters) - Jon Corzine has reached a settlement with the trustee for the former New Jersey governor's collapsed brokerage MF Global Holdings Ltd, as part of a series of accords expected to provide about $132 million to creditors, according to court papers.

Exxon snaps up InterOil in LNG push as Oil Search bows out

(Reuters) - ExxonMobil Corp said on Thursday it would buy InterOil Corp for more than $2.5 billion in stock, adding a gas field to expand exports from Papua New Guinea and better positioning it to meet Asian demand for liquified natural gas.

Fed to hold rates ahead of November election; inflation still low: Reuters Poll

(Reuters) - The U.S. Federal Reserve will wait until the fourth quarter before raising interest rates, likely in December after the presidential election, according to a Reuters poll which once again showed subdued inflation expectations.

Are VIX ETFs A Powder-Keg Waiting To Explode?

Authored by Peter Tchir, originally posted at Forbes.com,

I have been following several 'bearish' ETFs and ETNs lately - UVXY, TVIX, VXX and SDS. All seem to have the following characteristics recently:


After some initial post Brexit selling - they are all seeing steady, if not accelerating inflows

Rather than showing signs of being 'stopped' out as the daily losses mount - more money is coming into these funds

This is occurring at the same time many sentiment indicators, such as this one on CNN Money, are showing Greed overtaking Fear

At the same time the short VIX ETPs are experiencing outflows and the short interest in the VIX ETPs seems to be shrinking

So basically money continues to flow into these products in spite of losses and shows no signs of abating:

Source: Bloomberg

So with the fund inflows continuing and approximately 40% of the VIX August futures held by UVXY I think there is a real possibility that the re-balancing needs of this ETF could accentuate any move higher in VIX - which would push stocks down.

A few months ago I thought VIX flows were scary for bears but right now, given the trading patterns exhibited, I think the growth in VIX positions in leveraged products coupled with the increasingly bullish sentiment is a potentially e ...

Wall Street's Wishful Thinking - Debunking The "Abundance Of Strong Data" Meme

Authored by Alhambra Investment Partners' Jeffrey Snider (h/t Contra Corner blog),

Back in January and even into February, the idea of recession no longer seemed so far-fetched. The FOMC and orthodox economists had been claiming since late 2014 that the only economic fate was "full employment" and the satisfying economic conditions that accompany it. Instead, the latter half of 2015 turned uncomfortably close to the "impossible" nightmare scenario. What was totally unrealistic by 2014's standards was suddenly very, very real and quite close.

Then as quickly as it seemed to rush on, markets abruptly shifted and the world suddenly appeared much less dark. Having flirted with recession and escaped that fate, the mainstream assumes that "it" is all over and that prior expectations should only resume. The message now is that it was far too close for comfort, but thankfully it is now all in the past.

This binary arrangement has clearly colored recent analysis, and as such it has led to really unhinged commentary. Bloomberg reports today that the dollar index is rising again as currency markets reassess the Fed's potential stance in light of "strong data." The most recent updates in economic accounts, according to Bloomberg, suggest that the US economy is "set to continue to expanding." If it isn't recession, ...

Amazon To Issue Student Loans To New "Prime" Shoppers

On the off chance the US didn't already have a big enough problem thanks to a staggering $1.3 trillion in student loans which contrary to White House' claims, are crushing an entire generation under their interest expense weight, earlier today none other than billionaire Jeff Bezos announced he was entering the student loan business, when Amazon unveiled a partnership with Wells Fargo in which the bank's student-lending arm would offer interest-rate discounts to select Amazon shoppers.

In Amazon's latest attempt to entice shoppers into its premium Prime program, Wells Fargo will cut half a percentage point from its interest rate on student loans to Amazon customers who pay for a "Prime Student" subscription, which provides the traditional Prime benefits such as free two-day shipping and access to movies, television shows and photo storage. The subscription-based service will cost $49 a year, half the regular Amazon Prime fee.

Wells Fargo, Buffet's favorite US bank, will benefit by expanding the size of its student loan portfolio. The third largest U.S. bank by assets and the second-largest private student lender by origination volume, is interested in "meeting our customers where they are - and increasingly that is in the digital space," John Rasmussen, head of Wells Fargo's Personal Lending Group, said in a news release. The bank had $12.2 billion in student loans outstanding at the end of 2015, compared with $11.9 billion at the end of 2014.

WSJ adds that Wells Fargo and Amazon have been in discussions for more than a year about the partnership, which is set to be announced and made available Thursday. As the WSJ muses, "the discount could be used to encourage more students to sign up for the Prime service." ...

ECB: Waiting and Watching

No action from the ECB hasn't damped expectations of a future move.

No Miracle Cures for Biogen

Biogen's strong results will support the stock price, but the new drug pipeline is thin.

European Airlines: Back to Earth With a Bump

For European airlines, valuations are cheap, but merely signal a new normal: price wars.

June 2016 Existing Home Headlines Say Sales Improved But The Data Says Otherwise.

Written by Steven Hansen

The headlines for existing home sales say "looking ahead, it's unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing.". Our analysis of the unadjusted data shows that home sales declined relative to last month, and the rolling averages declined. Sales price rate of growth accelerated.

The Tell: Here's why a new bull market might just be getting started

One financial blogger says we're actually not even in a bull market right now.

Tech investors should embrace their inner wimp and buy dividend stocks

The investment strategy that works in a slow-growth economy is a mix of some growth and relatively high income — even in Silicon Valley.

Deep Dive: How to save for retirement without trying very hard

There are a lot of opportunities 'staring Americans right in the face.'

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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