US Major indexes have moved off the morning session lows to sea-saw upwards saving some losses. The DOW remains down 45 points, the $NDX is up +0.09%. WTI crude is still trending down, testing the 41 handle and short-term indicators remain neutral for now. The large caps edged lower today following weak economic data and a set of disappointing earnings from companies, including Ford.
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%. 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)
WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose more than expected last week, but the underlying trend continued to point to sustained labor market strength. Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 266,000 for the week ended July 23, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 fewer applications received than previously reported.
(Reuters) - A Massachusetts judge on Thursday rejected Sumner Redstone's bid to quickly end a case that will likely determine the future of the media mogul's $40 billion holdings, marking a victory for Viacom Inc Chief Executive Philippe Dauman.
PARIS (Reuters) - French media giant Vivendi is considering suing Mediaset for defamation after the Italian broadcaster denounced what it sees as an unacceptable u-turn on a deal regarding its pay-TV arm Premium.
DETROIT (Reuters) - Ford Motor Co reported weaker-than-expected profit in the second quarter and declared that the U.S. auto industry's long recovery was at an end, sending its stock and those of other auto companies tumbling.
(Reuters) - Business software maker Oracle Corp said on Thursday it would buy NetSuite Inc for about $9.3 billion in cash, a deal designed to help Oracle gain market share in the fast-growing cloud computing business.
TOKYO/BERLIN (Reuters) - Toyota Motor Corp reported a drop in first-half vehicle sales on Thursday following a series of production stoppages, falling behind Volkswagen which became the world's top-selling carmaker in the first six months of 2016 despite its emissions scandal.
WTI Crude (Sept 16) futures are within a hair of trading with a $40 handle - something that has not happened since the lows after the failed Doha talks in April. From the June highs at almost $53, oil is down 22% - a bear market -as inventories, rig counts, and production all rise.
The rally is over...
And while production is up in the US (along with rig counts and inventories), JPMorgan notes the global picture is not helping...
Overnight in Asia, weekly inventory data was reported in Singapore, with a build in both light and middle distillates stocks to 15,326kbbls (13,860kbbls last week) and 13,194kbbls (12,192kbbls last week), respectively. Last week's data has been restated and now shows builds (+905kbbls in middle distillates and +327kbbls in light distillates) versus draws (-304kbbls in middle distillates and -610kbbls in light distillates) reported last week.
Middle distillate stocks are approaching the upper end of the 5-year range, while light distillate (i.e. gasoline) stocks are trending well above the 5-year highs after recent builds (see charts below). Also this morning, European (ARA) weekly inventory data reported a draw in both gasoline and gasoil inventories to 1,284ktonnes (1,354ktonnes last week) and 3,236ktonnes (3,381ktonnes last week), respectively. ARA gasoil stocks are at the high end of the five-year range (5-year average 2,523ktonnes), while gasoline stocks are still well above the 5- year seasonal range (5-year average 786ktonnes).
In his latest Global Equity Strategy update piece, Credit Suisse strategist Andrew Garthwaite takes a random walk across Wall Street's trading desks, and confirms what many know: namely, that nobody actually knows anything.
Garthwaite writes that "his team has come across almost no one who seems to have outperformed or made decent returns this year." He cites data from Morningstar according to which in the year to July 1st, just 29 out of 242 funds in the Investment Association UK All Companies sector beat the performance of the FTSE All Share. Moreover, the Dow Jones Credit Suisse Long/Short equity index, which tracks hedge fund performance, fell by 5% year-to-date.
As a result, the reaction by active managers to outperform the broader market, or even their benchmark, in a time of surging redemptions, has led to what may be best described as performance paralysis, or better yet panic:
"we have never had so many client meetings starting with statements such as 'we are totally lost'."
What makes things worse, is that even as central banks push stocks to record highs and beyond, the "fundamental analyst" in every investor is screaming that prices are just too damn high. As Credit Suisse puts it, "clients are close to being as bearish on equities as we can remember. Clients do not find equity valuations attractive enough to compensate for the macro, political, earnings and business model risks."
And yet, the Fed keeps forcing every investor starved for yield, into risky assets, which are now trading at multiples exorbitant that even Goldman has repeatedly warned, most recently this weekend, will lead to a very unfortunate outcome.
Why are traders so gloomy?
"Clients do not find equity valuations attractive enough to c ...
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