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08Aug2016 Market Update: New Historic Highs Not Enough To Keep Wall Street Afloat, SP 500 Slips Into Negative Territory, WTI Crude Jumps 3%, US Dollar Steady, Volume Near Anemic Levels

Written by Gary

Wall Street made new historic highs at the opening, but slipped into the negative territory and has remained there sea-sawing sideways on very low volume as a drop in healthcare stocks offset the impact of higher oil prices and a strong jobs report. WTI crude has inched above the 43 handle after jumping nearly 3 percent and appears to be trending upwards.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The IPC is up 0.68% while the Bovespa gains 0.01%. The S&P 500 is off 0.12%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 75%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 83%
Investors Intelligence sets the breath Above 50 bullish 66%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -4.51
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
84%
StockChart.com NYSE Bullish Percent Index ($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 ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 76%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 15.85
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 81.37
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,791

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street flat as health stocks weigh

(Reuters) - The S&P 500 index failed to hold on to its gains after opening at a record high on Monday as a drop in healthcare stocks offset the impact of higher oil prices and a strong jobs report.

Delta flights resume after power outage strands passengers

(Reuters) - Delta Air Lines Inc's flights gradually resumed on Monday after an outage hit its computer systems, grounding planes and stranding passengers of one of the world's largest carriers at airports around the globe.

Wal-Mart buying Jet.com to lift online sales, battle Amazon

(Reuters) - Wal-Mart Stores Inc said on Monday it would buy online retailer Jet.com for about $3 billion, the largest-ever deal for an e-commerce startup, as it pushes to revive its underperforming Web business to compete with market leader Amazon.com Inc.

U.S. to auction $1.6 million of bitcoin from various cases

NEW YORK (Reuters) - The U.S. government said on Monday it plans to auction over 2,700 bitcoins that were forfeited during several cases, several of which stemmed from investigations of the online black market known as Silk Road.

AT&T to pay $7.75 million for allowing sham directory assistance calls

WASHINGTON (Reuters) - AT&T will pay $7.75 million after a federal investigation found it allowed unauthorized third-party charges on its customers' telephone bills, the U.S. Federal Communications Commission said Monday.

Chevron beats U.S. appeal in Ecuador pollution case

NEW YORK (Reuters) - A federal appeals court on Monday blocked the enforcement of a more than $8.6 billion pollution judgment obtained in Ecuador against Chevron Corp , letting stand a lower court ruling that said an American lawyer used "corrupt means" to win the award.

German court to speed up VW investor lawsuits

BERLIN (Reuters) - A German court will adopt a rarely used class-action style procedure to more efficiently process claims by investors seeking damages from Volkswagen over a diesel emissions cheating scandal, according to a ruling.

Valeant names new general counsel, says PR head to leave

(Reuters) - Canadian drugmaker Valeant Pharmaceuticals International Inc on Monday named a new general counsel and announced the departure of its public relations head.

Oil up 3 percent on OPEC speculation as glut grows

NEW YORK (Reuters) - Oil prices jumped nearly 3 percent on Monday amid renewed speculation that OPEC would try to restrain output, easing oversupply worries had pressured the market to three-month lows last week.

"Something Is Not Right"

Submitted by Pater Tenebrarum via Acting-Man.com,

Another Strong Payrolls Report - is it Meaningful?

This morning the punters in the casino were cheered up by yet another strong payrolls report, the second in a row. Leaving aside the fact that it will be revised out of all recognition when all is said and done, does it actually mean the economy is strong?

Factories, new vs old

Quo vadis, economy?

As we usually point out at this juncture: apart from the problem that US labor force participation has collapsed (i.e., millions of unemployed people have been defined out of existence), employment is a lagging economic indicator.

Nevertheless, payroll data and initial claims usually tend to give some advance warning ahead of recessions. As long as they remain strong, it is fair to conclude that a recession is probably still a few months away at a minimum. Note though that the warning signs from these indicators usually come very late in the game.

1-EMployment

Monthly change in non-farm payrolls: two strong reports in a row. As Mish notes, at least one market does not believe the message - rate hike odds barely increased - click to en ...

Video Captures Moment Of Horrific Suicide Bombing In Pakistan Hospital Which Kills At Least 70

A suicide bomber in Pakistan killed at least 70 people and wounded at least 112 on Monday in an attack on mourners gathered at a hospital in Quetta, according to Abdul Rehman Miankhel, a senior official at the government-run Civil Hospital, where the explosion occurred. Monday's attack was the worst in Pakistan since an Easter Day bombing ripped through a Lahore park, killing at least 72 people. Jamaat-ur-Ahrar also claimed responsibility for that atrocity.

The bomber struck as a crowd of mostly lawyers and journalists crammed into the emergency department to accompany the body of a prominent lawyer who had been shot and killed in the city earlier in the day, Faridullah, a reporter who was among the wounded, told Reuters. "There are many wounded, so the death toll could rise," said Rehmat Saleh Baloch, the provincial health minister.

Jamaat-ur-Ahrar, a faction of the Islamist militant Pakistani Taliban group, claimed responsibility for the attack in an email. Reuters adds that just last week, Jamaat was added to the United States' list of global terrorists, triggering sanctions.

It was not immediately clear if the group had carried out the bombing, as it is believed to have claimed responsibility for attacks in the past that it was not involved in. "The Tehreek-e-Taliban Pakistan Jamaat-ur-Ahrar (TTP-JA) takes responsibility for this attack, and pledges to continue carrying out such attacks," said spokesman Ehsanullah Ehsan in the statement. The motive behind the attack was likewise unclear, but several lawyers have been targeted during a recent spate of killings in Quetta, the provincial capital of Baluchistan which has a history of militant and separatist violence.

The latest victim, Bilal Anwar Kasi, was shot and killed while on his way to the city's main court complex, senior police official Nadeem Shah told Reuters. He was the president of Baluchistan B ...

Hope Springs Eternal

Via RealInvestmentAdvice.com's Lance Roberts,

Despite hopes by the more mainstream economists that earnings would be improving sooner rather than later, this has yet to be the case. As Eric Parnell recently noted:

"Roughly two-thirds of the companies in the S&P 500 Index have now reported their latest quarterly earnings. And while the headlines are filled with companies that continue to "beat" expectations, the reality is that the downward revisions in corporate earnings are even worse than what this stock market bear expected this quarter. And the readings for the latest week have almost assured that corporate earnings are going to fall short of the reasonable targets set at the beginning of the quarter."

However, the only reason that companies are currently beating estimates, is because those estimates had been dramatically lowered since the beginning of this year turning earnings season into a "participation event." In other words, if you lower the bar enough, eventually everyone "gets a trophy."

The chart below shows the evolution of earnings expectations since March of 2015, to present with the bottom part of the chart showing forward estimate changes from January, 2016.

SP500-Forward-Estimates-080416

As discussed ov ...

Venezuela's Inflation Plunges, Nigeria's Surges

At present, the countries with the highest annual inflation rates are Nigeria at 78.3 percent, Syria at 76.4 percent, Egypt at 56.2 percent, and Venezuela at 47.8 percent1. This is a dramatic change from a year ago, when Venezuela was holding down the top spot with an annual inflation rate of around 700 percent. The accompanying chart tells the story of Venezuela's inflation plunge, as well as Nigeria's surge to the ignominious inflation top spot.

It must be stressed that the official inflation rates reported for the "Big Four" are, in some cases, hopelessly out of date (Syria and Venezuela last released official inflation data in December 2015). In any case, all the official estimates are wildly inaccurate.

During episodes of elevated inflation, the most accurate method for estimating overall inflation rates is to employ purchasing power parity (PPP) theory. I use PPP to translate changes in black market (read: free market) exchange rates into annual implied inflation rates. This is a straightforward and accurate exercise which is conducted on a regular basis at the Johns Hopkins-Cato Institute Troubled Currencies Project.

  • 1. South Sudan reported an annual inflation rate of 661.3 percent in July 2016, but I have no way of determining the reliability of the reported rate. ...

Olympic Stocks' Brief Moment of Glory

Shares of Brazilian companies seen as Olympic Games beneficiaries are soaring, but new research suggests they may soon come back down to earth.

Quantitative Easing: Central Banks' Old Faithful

For a while, it looked like QE's star had faded a little. Negative rates had become the latest central-banking fad. But the Bank of England's decisions last week mark a break with that trend and a new strand in the policy divergence debate.

When Chinese State Support Evaporates on Investors

The twisted tale of a Chinese construction company's default casts a pall on the notion of government-backed companies.

July 2016 Conference Board Employment Index Improves But Suggests Employment Growth Is Surprising

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months increased but its authors state "it is surprising that hiring has been so robust, given the current slow economic growth environment."

Project Syndicate: U.S. should lock in today's ultra-low interest rates

The time has come for the U.S. government to lock in today's ultra-low borrowing costs by issuing longer-term debt, writes Kenneth Rogoff.

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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