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12Oct2016 Market Update: Negative Technical Indicators Still In Play, A 5% Plus Correction Could Come At Any Time Analysts Warn, Major Commodities Off Session Highs

Written by Gary

US markets climbed steadily from the opening lows to trading fractionally in the green (SPY + 3%). Financial stocks rose in anticipation of the minutes of the Fed's minutes release and tech stocks drag down Nasdaq.

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.20%, while the Bovespa is leading the IPC lower. They are down 1.05% and 0.14% respectively.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 71%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 45%
Investors Intelligence sets the breath Above 50 bullish 61% 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.

-52.84 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)

68% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 64% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 64% 10 Year Treasury Note Yield Index ($TNX) ten year note index value

17.90 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 79.43 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,569

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. job openings hit eight-month low, labor market still strong

WASHINGTON (Reuters) - U.S. job openings fell to an eight-month low in August and hiring was little changed, suggesting some easing in labor market conditions amid an aging economic recovery.

Wall St. rises ahead of Fed minutes

(Reuters) - The S&P 500 and the Dow Jones industrial average inched up on Wednesday as financial stocks rose ahead of the release of the minutes of Federal Reserve's September policy meeting.

Deutsche Bank to pay $9.5 million penalty over research info: SEC

(Reuters) - Deutsche Bank will pay a $9.5 million penalty to settle civil charges that it failed to properly safeguard material non-public information generated by its research analysts and publishing an improper research report, U.S. regulators said Wednesday.

Samsung sends fireproof packaging and gloves for Note 7 returns

NEW YORK (Reuters) - Samsung Electronics Co Ltd said it was sending fireproof packaging and gloves to customers who bought the Galaxy Note 7 phone on its website, so they could safely return the devices after a recall and reports that some replacement phones went up in flames.

Energy ministers from OPEC and Russia hold informal talks in Istanbul

ISTANBUL (Reuters) - Energy ministers from Qatar, the United Arab Emirates, Algeria, Venezuela and Russia began informal closed-door talks with the secretary general of OPEC in Istanbul on Wednesday as they try to coordinate efforts to rebalance the oil market.

Russia says completes Bashneft sale to Rosneft for $5.3 billion

MOSCOW (Reuters) - The Russian government has completed the sale of a controlling stake in mid-sized oil producer Bashneft to the Kremlin-owned Rosneft for 329.69 billion roubles ($5.30 billion), the economy ministry said on Wednesday.

U.S., Canada to continue lumber trade talks as deadline passes

WASHINGTON (Reuters) - The top U.S. and Canadian trade negotiators said on Wednesday they would continue talks toward a new trade agreement on softwood lumber, despite the expiration of a "standstill" period prohibiting legal challenges over the long-standing dispute.

ChargePoint urges judge to revise VW settlement

WASHINGTON (Reuters) - ChargePoint Inc, the world's largest electric vehicle charging network, has asked a U.S. judge to order changes to Volkswagen AG's $2 billion agreement with the Justice Department to boost zero emission vehicle (ZEV) infrastructure.

Fed can be 'gentle' in hiking rates, Dudley says

ALBANY, N.Y. (Reuters) - The Federal Reserve can be "gentle" in removing monetary stimulus since U.S. inflation remains low and the economic expansion could last five or more years, one of the most influential Fed policymakers said on Wednesday.

Consumer Spending Deteriorates In September; BofA Finds No iPhone 7-Linked Sales Jump

Over the past few months, the Bank of America report on internal debit and credit card spending has become arguably the most accurate predictor of any given month's government retail sales print. Recall that last month's report, as noted in "The US Consumer Taps Out: BofA Internal Credit Card Data Shows Retail Spending Tumbles", showed a substantial slowdown in US consumer spending, an observations which was confirmed just days later by a very disappointing retail sales report from the Department of Commerce.

As BofA observed one month ago, "the BAC aggregated card data showed that retail sales ex-autos declined 0.1% mom SA in August. This follows the 0.3% mom decline in July and pushes the 3-month average down to -0.2% mom." It was right, as the official, seasonally adjusted data confirmed shortly after.

Fast forward to today when we skim the latest aggregated BAC credit and debit card data, and we find that retail sales ex-autos increased 0.4% mom seasonally adjusted in September. This partly reversed the decline over the prior two months. This means that after several disappointing prints in the past few months, the headline retail sales print is likely set to surprise to the upside. However, as BofA also notes, probing further into the data, while Census retail sales ex-autos will likely improve in September, "given that part of the pickup owes to gasoline and building materials, we think the risk is that core control sales (retail ex-autos, gasoline and building materials) are softer."

Here are the details:

The BAC aggregated card data showed that retail sales exautos increased 0.4% mom SA in September. This reversed the decline over the prior two months, leaving the 3-month average to show a small increase ...

Germany To Cut Off Welfare Benefits For EU Citizens

In what may be the latest indication that Merkel's immigration policy blowback is being heard by the government, Germany's Handelsblatt reports that Merkel's government plans to prohibit foreign E.U. citizens from receiving welfare benefits for five years if they haven't worked in Germany before.

Labor Minister Andrea Nahles, a center-left Social Democrat, introduced a corresponding draft measure during a cabinet meeting of Chancellor Angela Merkel's coalition government on Wednesday, according to the news agency Reuters. Under the draft law, E.U. citizens can claim one-time assistance for the period of a month to pay for food and shelter. They can also receive a loan to cover the cost of the trip back to their home country if they fail to find work.

Nahles is seeking to close a loophole which arose from a ruling by the Federal Social Court in 2015. The court ruled that unemployed E.U. citizens have a right to welfare benefits after six months. Ms. Nahles said in the daily Frankfurter Allgemeine Zeitung on Wednesday that the "free movement of labor doesn't mean one can claim German welfare benefits after a short stay without working." She called for a legal framework within the European Union to coordinate member states social welfare systems to prevent people from making unjustified claims

Ms. Nahles has received backing for her draft measure from the arch-conservative Christian Social Union, or CSU, the sister party of Ms. Merkel's center-right Christian Democrats. Gerda Hasselfeldt, head of the CSU's Bavarian faction, said the draft law sends the "right signal."

"Germany cannot afford to allow immigration into the social security system," Ms. Hasselfeldt told Reuters.

On the other hand, considering the ECB's dire need to find more debt to monetize, paying for im ...

Russian Foreign Minister Trolls US Elections: "So Many Pussies On Both Sides"

Presented with little it appears Russian Foreign Minister Segey Lavrov nails it...

Lavrov has trolled Donald Trump and Hillary Clinton during a CNN interview, telling host Christiane Amanpour that the US presidential campaign was full of "pussies".

"There are so many pussies around your presidential campaign on both sides that I prefer not to comment," Lavrov answered when Amanpour asked him about Trump's "Pussy Riot moment."

Lavrov pre-empted his answer by saying "I don't know if I would sound indecent" before the comment left Amanpour laughing hysterically...

Lavrov on Trump tapes: "so many pussies around your pres. campaign on both sides that I prefer not to comment."

— Christiane Amanpour (@camanpour) October 12, 2016

Strong Demand For $24 Billion In 3 Year Paper In Today's First Treasury Auction

In the first of two Treasury auctions today, moments ago the US Treasury sold $24 billion in 3 Year paper at a high yield of 1.045%, stopping through the when issued by 0.5bps. The strong headline performance was somewhat unexpected in light of today's curve action, as well as the lack of any "specialness" in the 3Y repo market. Underscoring the strength of the auction, the bid to cover jumped from last month's 2.773 to 2.922, well above the 6 month trailing average of 2.815.

The internals were unremarkable, with Indirects getting 52.1% of the auction, Directs stepping up from last month's unexpectedly low 4.7% and Dealers left holding 37.7% of the final allotment.

And so with the short end well bid in primary, we now look to today's second auction, the sale of $20 billion in 10Y paper set to price just after 1pm and ahead of today's FOMC minutes.

Mainland China's Property Bubble Leaks Into Hong Kong

Owning property in Hong Kong has an added benefit for mainland Chinese: an escape from the constant cheapening of the yuan.

Smart or Lucky, Google Can Feast on Samsung's Misfortune

Google's new Pixel phones can benefit from demise of Galaxy Note 7 and take on Apple in high-end market.

These Health Insurance Mergers Aren't Alike

Two health insurance mergers under regulatory scrutiny seem to be taking different paths.

London Markets: FTSE 100 closes in the red with oil prices yanked lower, Fed in focus

U.K. stocks fall Wednesday, as oil prices sell off while blue-chips are pinched by gains for the pound on Brexit-related developments.

Chromebooks destroyed Apple in back-to-school shopping

Apple Inc. had a rough back-to-school season in personal-computer sales, and the culprit appears to be Alphabet Inc.'s low-price Chromebooks, according to two third-party analyses released Tuesday.

How Apple could bring overseas cash home to help fix America's crumbling infrastructure

Standard & Poor's argues that a program that would allow companies bring back cash on a tax-free basis but invest 15% in infrastructure bonds would help the economy and create jobs.

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