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06Sep2016 Market Update: US Markets Flat, Crude Prices Down, US Dollar Fall Sharply, Gold Climbs And This Morning's ISM Data Disappoints Investors

Written by Gary

US markets opened higher before the disappointing ISM report at 10 am and now are moderately in the green (SPY +0.1%). The ISM said its non-manufacturing purchasing manager's index fell to 51.4 from 55.5. Analysts had expected the index to drop to 55.0. The potential for the Fed's to raise rates fell to 47%, compared to 56% before the ISM data arrived.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 0.16% while the S&P 500 gains 0.13%. The IPC is off 0.68%.

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 63%
Investors Intelligence sets the breath Above 50 bullish 67%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -1.15
StockChart.com NYSE % of stocks above 200 DMA Index ($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. 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 15.53
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 80.70
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,861

The first column is what was reported this morning. The second column is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

Bayer sweetens Monsanto bid as talks enter final stretch

FRANKFURT/NEW YORK (Reuters) - German pharmaceutical and crop chemicals manufacturer Bayer AG says talks with Monsanto Co have advanced and it is now willing to offer more than $65 billion, a 2 percent increase on its previous offer for the world's largest seeds company.

Wall Street pares gains on weak services data

(Reuters) - The S&P 500 index and the Dow pared gains on Tuesday as financial stocks were weighed down by weak services data.

Construction worker shortage weighs on hot U.S. housing market

DENVER (Reuters) - The drumbeat of hammers echoes most mornings through suburban Denver, where Jay Small, the owner of company that frames houses, is building about 1,300 new homes this year.

EU finance ministers to discuss how to make tax policy more evenhanded

BRUSSELS (Reuters) - European Union countries should better coordinate tax rules to avoid hitting corporations too hard, the Slovak presidency of the European Union proposed, in an effort to provide more balance to an EU campaign against tax avoidance by multinational companies.

Exclusive: Renault sees diesel disappearing from most of its European cars

PARIS (Reuters) - Renault expects diesel engines to disappear from most of its European cars, company sources told Reuters, after the French automaker reviewed the costs of meeting tighter emissions standards following the Volkswagen scandal.

Volkswagen takes $256 million Navistar stake in trucks push

FRANKFURT (Reuters) - Volkswagen has agreed a wide-ranging technology and purchasing deal with U.S. truck maker Navistar in exchange for a 16.6 percent stake, an alliance forged in part by the need to meet stringent emissions regulations.

European fund firms largely resist tobacco divestment campaign

LONDON (Reuters) - Eighteen months after the launch of a global campaign to persuade money managers to black-list tobacco stocks, just one major European investor has answered the rallying cry.

PayPal, MasterCard reach deal for store payments

(Reuters) - MasterCard Inc said on Tuesday it had expanded its deal with payment processor PayPal Holdings Inc, which would allow customers to use PayPal's payment services in stores.

Toy maker LEGO builds more plant capacity to revive growth in U.S. sales

COPENHAGEN (Reuters) - LEGO A/S reported a decline in revenue growth and profits for the first half of 2016, but only because the Danish toymaker needed time to add production capacity to meet increased demand for its colorful building bricks in North America, the company said on Tuesday.

Silver Surge Continues For 5th Day - Strongest To Gold Since Fed Minutes

Silver is up almost 8% from last week's lows, surging back towards $20 and above its 50-day average ($19.70). Gold is also rising but we note that the post-Fed-Minutes outperformance of gold over silver (as both fell) has been erased...

Silver has outperformed Gold (back under 68x) in the last 2 weeks, erasing the shift after the Fed Minutes...

As Precious metals are bid post-payrolls...

Oil Slide Stalls As Saudi Hints At Massive Budget Cuts

WTI crude has dropped back to a $43 handle this morning - erasing the Saudi-Russia statement hype ramp - after China inventories and disappointing 'freeze' talk but for now the plunge has stalled as Saudi Arabia is set to review thousands of contracts aiming to cancel up to $20 billion of projects. This suggests hope for higher oil prices (improved revenues) are fading.

Crude resumed its fall

As Bloomberg reports, Saudi Arabia is intensifying efforts to shrink the highest budget deficit among the world's biggest 20 economies, aiming to cancel more than $20 billion of projects and slash ministry budgets by a quarter, people familiar with the matter said.

The government is reviewing thousands of projects valued at about 260 billion riyals ($69 billion) and may cancel a third of them, three people said, asking not to be identified as the discussions are private. The measures would impact the budget for several years, two of the people said.

A separate plan includes merging some government ministries and eliminating others, two people said, also speaking on condition of anonymity.

The world's biggest oil exporter has taken unprecedented steps to rein in a budget shortfall that ballooned to 16 percent of gross domestic product last year, curtailing fuel and utility subsidies as well as cutting billions of dollars in spending. The International Monetary Fund expects the shortfall to drop to below 10 percent of GDP in 2017.

5 Reasons To Be Worried About US Stock Markets

Submitted by John Mauldin via MauldinEconomics.com,

The NYSE and NASDAQ stock markets have been on a historic bull run since 2009. The NYSE has bounced back to just under 11,000 from a low of 4,716 during the Financial Crisis. The other major indices have put in similar performances.

There was a 10% or so correction early this year, but US stock markets rebounded strongly.

It's rare for stocks not to see a major market correction in more than eight years. Many analysts also argue that macroeconomic fundamentals aren't strong enough to support stock valuations... even if the US is performing better than Europe and other global economies.

The stock markets, though, have ignored these analysts and have moved up steadily.

Nothing lasts forever. It seems more and more likely that stock markets will begin a correction phase soon. The presidential election is coming up. Historically, this event has been a catalyst for major market moves.

With a bear bias in mind, let's look at five worries about US stock markets.

US stock indices are approaching all-time highs

With the Dow topping 18,500, the S&P 500 pushing close to 2200, and the NASDAQ breaking through 5200, US stock markets keep flirting with all-time highs. Some technicians might argue this is a good sign, as the markets are basing for an upside breakout.

...

Why Online Fashion Retailers Are Worth Their Dizzying Valuations

Investors shouldn't worry too much about earnings multiples in excess of 50 times—as long as they can also stomach volatility

Investment Banks Shrinking Problems Aren't Going Away

Some investment banks are making better use of the fraying fabric of finance than others.

Why Chinese Bank Stocks Can't Fly Too High

Once Chinese bank shares rise high enough, an equity raise will suddenly be on the table.

August 2016 Conference Board Employment Index Declines

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months declined and its authors state "with the ongoing massive retirement of baby boomers, even moderate job growth is enough to continue to tighten the US labor market"

August 2016 ISM Services Index Growth Declines

Written by Steven Hansen

The ISM non-manufacturing (aka ISM Services) index continues its growth cycle, but declined from 55.5 to 51.4 (above 50 signals expansion). Important internals declined but remain in expansion. Markit PMI Services Index also declined but remains in expansion..

Economic Report: Fed's labor-market conditions index sinks back into negative territory in August

The Federal Reserve's labor-market conditions index retreated to a reading of negative 0.7 in August from a revised positive 1.3 in July.

Metals Stocks: Gold at 2-week high as dollar dips amid Fed interest-rate uncertainty

Gold advances Tuesday as some investors pare forecasts for a U.S. interest-rate hike as soon as this month, though most have maintained cautious expectations for at least one rate hike this year.

Earnings Summary for Today

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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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