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18Apr2017 Market Update: Wall Street Down, DOW Down Triple Points, US Dollar Slipping Sharply Downward, Bearish Clouds Overhead

Written by Gary

US stocks fell further in midday trading today as corporate heavyweights Goldman Sachs and Johnson & Johnson disappointed investors with their quarterly results. Geopolitical tensions continued to weigh on market sentiment sending the US dollar spinning downwards.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in Mexico off the most. The IPC is down 0.89% while Brazil's Bovespa is off 0.68% and U.S.'s S&P 500 is lower by 0.32%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 70%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 27%
Investors Intelligence sets the breath Above 50 bullish 64%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +8.06
StockChart.com NYSE % of stocks above 200 DMA Index ($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. 65%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 70%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.91
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 87.19
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,349

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street down as Goldman, J&J's results disappoint

(Reuters) - U.S. stocks fell further in midday trading on Tuesday as corporate heavyweights Goldman Sachs and Johnson & Johnson disappointed investors with their quarterly results, while geopolitical tensions continued to weigh on market sentiment.

In rare fumble, Goldman stuns Wall Street with weak trading

(Reuters) - Goldman Sachs Group Inc fell short of earnings expectations on Tuesday due to a drop in quarterly trading revenue, prompting analysts to demand explanations for underperformance in an area where the bank usually outshines rivals.

U.S. housing starts tumble, but building permits increase

WASHINGTON (Reuters) - U.S. homebuilding fell more than expected in March as the construction of single-family homes in the Midwest recorded its biggest decline in three years, but an increase in building permits suggested the housing market recovery remained intact.

U.S. business group urges Washington to 'use every arrow' against China

BEIJING (Reuters) - The United States should "use every arrow" in its quiver to ensure a level commercial playing field in China, a U.S. business lobby said on Tuesday, warning that 2017 could be the toughest year in decades for American firms in the country.

BofA posts solid growth boosted by trading, rates

(Reuters) - Bank of America Corp's quarterly profit rose 44 percent as its investment banking and trading units produced hefty gains, and higher long term interest rates also underpinned results for the second-largest U.S. bank.

J&J first quarter revenue misses estimates; new forecast includes Actelion

(Reuters) - Johnson & Johnson on Tuesday reported disappointing pharmaceutical and consumer product sales as revenue missed analyst estimates, sending its shares sharply lower.

Verizon, Corning agree to $1.05 billion fiber deal

NEW YORK (Reuters) - Verizon Communications Inc has agreed to buy optical fiber from Corning Inc for at least $1.05 billion over the next three years as the No. 1 U.S. wireless carrier aims to improve its network infrastructure, the companies said on Tuesday.

UnitedHealth plans for costly Obamacare tax in 2018

(Reuters) - UnitedHealth Group Inc reported stronger-than-expected quarterly results on Tuesday and said it was coping with uncertainty in U.S. healthcare laws by pricing its 2018 insurance plans to include a costly Obamacare tax.

Pence kicks off Japan talks, both sides seek 'near term' results

TOKYO (Reuters) - U.S. Vice President Mike Pence on Tuesday put Japan on notice that Washington wants results "in the near future" from talks it hopes will open markets to U.S. goods, adding that the dialogue could lead to negotiations on a two-way trade deal.

US Macro Data Crashes Most In 7 Years - What Happens Next?

The last week or so has seen both 'hard' real economic data and 'soft' survey data disappoint notably.

This has sent the Citi Macro Surprise Index plunging to 5-month lows with its biggest drop since 2010.

The question is - what happens to the stock market next?

Of course this is no surprise to bond traders...

Cardinal Health, Peers Tumble As Lower Generic Drug Prices Hurt Industry Outlook

Cardinal Health tumbled the most in almost six months after the healthcare product distributor warned its outlook would be toward the lower end of its forecast range for this year and gave initial fiscal 2018 guidance that missed analyst estimates.

The company is grappling with lower prices for generic medicines, a trend that several sellside analysts warned is likely to also hit competitors McKesson and AmerisourceBergen. After the poor guidance, CAH fell as much as 12%, most since Oct. 28; Comps ABC and MCK were down as much as 6.2% and 5.7%, respectively. Prior to today, CAH was up 14% YTD vs S&P 500 Health Care Index up 7.6%; ABC had gained 11%, MCK was up 2.7%.

Additional CAH announced today it would acquire the patient care, deep vein thrombosis and nutritional insufficiency businesses of Medtronic for $6.1 billion in cash. The deal would give Cardinal Health access to 23 product categories that "are used in nearly every U.S. hospital," the company said. The divisions have more than 10,000 employees and generated $2.3 billion in revenue in the 12 months ended in October, with more than 70 percent of sales in the United States.

Here is a brief summary of Wall Street's responses courtesy of Bloomberg:

Mizuho (Ann Hynes)



Weaker forecast raises concerns for drug distributors; expects generic deflation also will be headwind for MCK and ABC heading into their earnings

CAH sees FY18 EPS growth flat to down mid-single digits, implies range of $5.03-$5.35; at the midpoint, that's 12% below average analyst ests. and includes 21c of gains from purchase of MDT businesses

Says CAH-MDT deal was largely expected

Rates ...

Buchanan Warns Trump's War Cries Drown Out "America First"

Authored by Patrick Buchanan via Buchanan.org,

"Why would I call China a currency manipulator when they are working with us on the North Korean problem?" tweeted President Donald Trump on Easter Sunday.

Earlier, after discovering "great chemistry" with Chinese President Xi Jinping over "the most beautiful piece of chocolate cake" at Mar-a-Lago, Trump had confided, "I explained ... that a trade deal with the U.S. will be far better for them if they solve the North Korean problem!"

"America First" thus takes a back seat to big-power diplomacy with Beijing. One wonders: How much will Xi end up bilking us for his squeezing of Kim Jong Un?

Trump once seemed to understand how America had been taken to the cleaners during and after the Cold War. While allies supported us diplomatically, they piled up huge trade surpluses at our expense and became virtual free-riders off the U.S. defense effort.

No nations were more successful at this than South Korea and Japan. Now Xi is playing the game — and perhaps playing Trump.

What is the "North Korean problem" Beijing will help solve in return for more indulgent consideration on future U.S.-China trade deals?

North Korea's nuclear arsenal. As 80 percent of Pyongyang's trade comes through China, Trump believes that Beijing can force Kim to stop testing missiles and atomic bombs before he produces an intercontinental ballistic missile that could hit the U.S.

But what is to prevent Xi from pocketing Trump's concessions and continuing on the strategic course China has long pursued?

For in many ways, Pyongyang's goals parallel China's.

Neither could want an all-out war on the Kore ...

"It's Very Shocking" - Georgia's Cobb County Waited 2 Days Before Admitting Critical Voting Machines Stolen

In a stunning report, Cobb County's Channel 2 Action News has learned that critical voting machines were stolen just days before polls will open for a special election.

Goldman's Mighty Traders Strike Out

A weak quarter could put pressure on Goldman Sachs to cut costs further.

Unicorns Looking Less Magical Through IPO Lens

Cloudera is cutting its last private valuation to sell its IPO, which bodes ill for other tech unicorns.

Cardinal Health Feels Pain of Falling Drug Prices

Drug distributor Cardinal Health cuts earnings guidance as rising competition among generic drugmakers pressures the industry.

March 2017 Headline Industrial Production Was Up, Manufacturing Down

Written by Steven Hansen

The headlines say seasonally adjusted Industrial Production (IP) strongly improved, but headline manufacturing unexpectedly declined. Our view is similar to the headlines.

MarketWatch First Take: What's a 'snap election' and why does U.K. Prime Minister Theresa May want one?

From a risk-reward perspective, U.K. Prime Minister Theresa May's decision to call an early election makes sense.

ETF Focus: Are thematic ETFs gimmicks or smart strategic plays?

It has become something of a joke on Wall Street: if the industry exists, there is an ETF for it.

How the Trump stock market ranks as he nears his 100th day in office

Here's how President Donald Trump's performance on Wall Street stacks up against other presidents, as he approaches his first 100 days in office.

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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