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30Aug2016 Market Update: US Markets Fractionally In The Red, US Dollar Continues To Rise, Crude Prices Plunge, Short-Term Indicators Neutral With A Bearish Twist

Written by Gary

The afternoon session has the markets down (SPY - 0.3%) and trading sideways since 10 am on falling volume. Home prices in 20 major U.S. metro areas rose 0.8% in June, while expecting a 5.3% rise. Consumer confidence rose in August at 101.1 from a revised 96.7, while expecting the gauge to rise to 97.0. Short-term indicators are neutral.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in U.S. off the most. The S&P 500 is down 0.28% while Brazil's Bovespa is off 0.20% and Mexico's IPC is lower by 0.16%.

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 64%
Investors Intelligence sets the breath Above 50 bullish 67%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -11.72
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
85%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 71%
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 15.73
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 80.84
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,803

What Is Moving the Markets

Here are the headlines moving the markets.

Washington warns of strain on EU economic relationship after Apple ruling

WASHINGTON (Reuters) - A European Commission order requiring Apple Inc to pay $13 billion euros ($14.5 billion) in taxes on Tuesday drew swift and angry rebukes from the Obama administration and lawmakers in Congress, while re-igniting calls for international tax reform.

U.S. consumer confidence hits 11-month high; house prices gain

NEW YORK (Reuters) - U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labor market, in a further sign that the economy was regaining steam after faltering in the first half of the year.

Financials help European shares to hit 2-week high

LONDON (Reuters) - European equities climbed to a two-week high on Tuesday, with financial stocks gaining ground on mounting expectations of a possible U.S. rate hike this year.

Twitter to share ad revenue on videos by U.S. individual users

(Reuters) - Twitter Inc said it would share some of the advertising revenue on videos created by its individual users in the United States as part of an expanded video advertising program.

Mitsubishi says overstated mileage for more vehicle models

TOKYO (Reuters) - Mitsubishi Motors Corp said on Tuesday more of its vehicle models were involved in a mileage cheating scandal than initially stated, and that it would temporarily stop domestic sales of affected vehicles and compensate owners.

Shell's U.S deal to unlock global oil asset disposals

LONDON (Reuters) - Royal Dutch Shell's first oil field sale after its $54 billion BG Group acquisition bodes well for its disposal talks in the North Sea, Gabon and New Zealand, according to sources, signaling buyers will meet its expectations on value.

Google cloud unit close to winning PayPal business: CNBC

(Reuters) - Alphabet Inc's Google is close to winning PayPal Holdings Inc as a client for its cloud business, potentially beating out Amazon.com Inc and Microsoft Corp, CNBC reported on Tuesday.

Abercrombie no longer sees comparable sales improving this year

(Reuters) - Teen apparel retailer Abercrombie & Fitch Co posted its 14th straight quarter of declining sales and said it no longer expects comparable sales to improve this year, highlighting its struggles to win back shoppers.

Chevron wins dismissal of claims of poor savings plan oversight

NEW YORK (Reuters) - A U.S. judge has dismissed a lawsuit by Chevron Corp workers who said the oil company breached its fiduciary duties by putting costly and poorly performing investment options in a $19 billion employee savings plan.

Low-Volatility Stocks At Risk As Credit Cycle Ends, UBS Warns A Crash Is Coming

UBS' Paul Winter believes we are witnessing the end of the credit cycle - earnings growth rates are flat, and the stock market impact has been increasing. Importantly, from a risk perspective, Winter warns that Systemic Risk is rising, and Economic Policy Uncertainty has hit all-time highs, warning that the key risk today lies in low-volatility stocks and the broad market's equity risk premia - "either earnings need to pick up dramatically, or alternately, equities would need to correct by around 20% to bring the equation back into equilibrium."

The age of excess liquidity and inexpensive debt is over, according to Winter, and that makes it harder for management to use credit to satiate investors' demands for corporate profits

UBS notes that "77% of stock crashes are driven by earnings announcements," and more companies are likely to disappoint the market in the future.

We are currently witnessing the end of the credit cycle. Credit spreads have been increasing, global earnings growth rates are in aggregate flat and market impact has been increasing.

Market impact is currently running at 80bps across developed markets, a level that tends to be commensurate with negative returns and an elevated risk of correction. The risk today, oddly is in so-called 'low risk' assets. We show that low volatility assets are generally more highly geared than higher volatili ...

Greater Fool Theory (In 1 Simple Chart)

Authored by SG Value Investor via ValueWalk.com,

What is the Greater Fool Theory?

The Greater Fool Theory is when the price of a good is not determined by its intrinsic value, but rather by irrational beliefs and expectations of market participants. Essentially, it is about buying a good at a price then offloading it to the next fool at a higher price. This vicious cycle would continue till the point where market participants 'wake up' and realize that the good is no longer worth that value. The best example would probably be the tulip mania where the Dutch were trading houses and lands just for plots of tulips. As absurd as it may sound, back then even the most rational were engaged in such madness. With such irrational beliefs and expectations of the market, it would ultimately result in a 'bubble'.

You only find out who is swimming naked when the tide goes out

- Warren Buffett

What does it mean for investors?

Companies with solid earnings and fundamentals trading at higher valuations are justifiable. However, not all companies that are trading at such high valuations have the same fundamentals backing it. Companies belonging to the latter category can be further divided into three sub-categories.

Firstly, it would be those that lack the fundamentals and earnings. These companies are constantly raising add ...

EU's Apple Tax Hit: Ire In Ireland, Confusion Elsewhere

Frosty reactions to the European Commission's ruling that Apple needs to pay 13 billion to Ireland's tax authority show why international tax agreements are so hard.

Unloved Banks Might Get a Profit Boost

Loan growth was robust in the second quarter, an encouraging sign, but will it stay strong if rates start to rise? ‚Äč

How Prada's New-Look Accounting Flatters Figures

Prada's surprising operating-profit growth came primarily from a subtle change in its accounting policy.

September 2016 Economic Forecast: Outlook Again Improves But Growth Forecast Remains Weak

Written by Steven Hansen

Econintersect's Economic Index has shown better growth for the second month in a row - but the economic outlook remains weak. The index remains near the lowest value since the end of the Great Recession. There remain recession warning flags in some of the data.

Buying a house as an Airbnb investment strategy is a risky move

Some real-estate investors see Airbnb as a way to make better returns, but experts warn that strategy may not last or apply in every city as regulations change.

How free college can affect you later in life

The impact of an affordable education.

Commodities Corner: Oil futures at risk for drop as data indicate buyers are overstretched

High levels of long positions in WTI and Brent crude puts oil at risk for a big selloff, analysts say.

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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