Written by Gary
Volatility, oil, gold and copper up as the U.S. Dollar and markets sink. The small cap averages have fallen below one percent while the large caps are trailing behind at a half percentage point down.
Here is the current market situation from CNN Money | |
 | North and South American markets are mixed today. The IPC is up 1.94% while the Bovespa gains 1.21%. The S&P 500 is off 0.68%. |
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 | 61 |
| Investors Intelligence sets the breath | Above 50 bullish | 59.6% |
| StockChart.com Overbought / Oversold Index ($NYMO) | anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. | -18.41 |
| StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) | $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. | 62.79% |
| StockChart.com NYSE Bullish Percent Index ($BPNYA) | Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. | 64.99% |
| StockChart.com S&P 500 Bullish Percent Index ($BPSPX) | In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. | 68.80% |
| StockChart.com 10 Year Treasury Note Yield Index ($TNX) | ten year note index value | 21.87 |
| 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 | 76.11 |
| StockChart.com NYSE Composite (Liquidity) Index ($NYA) | Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors | 11,135 |
What Is Moving the Markets
| Here are the headlines moving the markets. | |
| Vanguard Claims Title of World’s Largest Bond FundPimco’s flagship Total Return fund ceded its title as largest bond mutual fund to rival Vanguard Group, according to April data. |
| Greek Deal In Limbo After “Serious Disagreement” Between EU, IMFOn Monday afternoon, news broke that the IMF looked to be splintering from the rest of the Troika over just what conditions must be met in order for Greece to receive a €7.2 billion tranche of aid the country desperately needs to pay salaries, pensions and, ironically, the IMF. According to FT, Christine Lagarde and company are set to demand that Athens’ European creditors write-off enough of their Greek debt to bring the country’s debt-to-GDP ratio down to a ‘sustainable’ (whatever that means in the Greek context) level over the next several years. Otherwise, the organization argues, disbursing aid to Athens is equivalent to throwing money into a black hole, as the country’s fiscal situation is still in dire need of reform. Of course much of what Greece owes in May is due to the IMF itself and so, as we remarked yesterday, “Greeks are expected to smile and nod knowingly at this latest hollow IMF threat, in which it is now unclear if Lagarde is the Troika’s good cop (demands a debt haircut) or bad cop (refuses to pay Greece any more).” Today, we get yet another indication that negotiations are now not only complicated by Greece’s unwillingness to cross Syriza’s “red line” campaign promises, but by friction between the country’s creditors who, in an irony of ironies, now appear to be at odds over their own set of “red lines.” More via Bloomberg:
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| Dollar turns lower after strong ISM reportThe dollar traded lower against most of its rivals Tuesday, turning a brief bounce into a steep decline after a stronger-than-expected reading on service-sector activity in April. The buck has depreciated by 7.6% since hitting a more-than 12-year high against the euro in mid-March. It recorded a third straight week of losses Friday. Analysts said the services-sector data was the first of two important indicators for the strength of April’s nonfarm payrolls number, expected Friday. |
| Copper Hits 2015 High on Global Demand HopesCopper prices rose to their highest levels since December on Tuesday, buoyed by optimism about global demand for the industrial metal. |
| March 2015 Trade Data Still Shows a Mixed Picture of the Economy and Headwinds to GDPWritten by Steven Hansen A quick recap to the trade data released today shows a mixed picture. The general situation is that both imports and exports grew – but imports grew a lot more. The unadjusted value of imports three month rolling averages accelerating month-over-month, while exports decelerated. Many care about the trade balance (which was worse than last month and well above expectations), but trade balance simply has little correlation to economic activity. The growth in trade balance is a headwind to 1Q2015 GDP. Read more … |
| Netflix calls on FCC to reject proposed AT&T-DirecTV merger WASHINGTON (Reuters) – Netflix Inc officials urged the U.S. Federal Communications Commission to reject the pending $48 billion merger of AT&T Inc and DirecTV in a recent meeting, according to regulatory disclosures posted on Tuesday. |
| Greece steps up diplomacy to avert cash crunch ATHENS/BRUSSELS (Reuters) – Greece stepped up diplomacy with euro zone partners on Tuesday to try to avert a potentially catastrophic funding crunch this month, when it must make a big debt repayment to the IMF as cash reserves dry up. |
| Saudi oil chief: Only Allah knows where oil prices are headedAs many investors have found over the past year, the oil market is a tough nut to crack when it comes to predicting price moves. For those seeking guidance from Saudi Arabia’s oil minister, Ali al-Naimi, just follow his gaze to a higher authority. Asked by CNBC on Tuesday if there was a level for oil prices that would force the Saudis to cut production, he replied: “No one can set the price of oil — it’s up to Allah.” As for the potential for supplies coming to the market from other countries, such as Iran, he held firm in refusing to talk about oil prices. “I’m not worried about Iran crude nor will I try to predict where the price is. If I were to predict, I would be somewhere else, gambling.” |
| BG chief welcomes $70 billion Shell offer with ‘mixed emotions’ LONDON (Reuters) – BG Chief Executive Helge Lund on Tuesday welcomed with “mixed emotions” Royal Dutch Shell’s $70 billion takeover bid, which came only two months after he took office. |
| Bunds & Treasuries Test Key Technical LevelsThat escalated quickly… Shockingly fast moves in the increasingly illiquid bond markets…
with Bunds dramatically underperforming Treasuries…
Of course – the UST move could just be reflective of expectations for a heavy corporate calendar and the ‘transitory’ effects of rate-locks on an illiquid market… we shall see. Charts: Bloomberg |
| Oil Prices Rise Above $60 a BarrelOil prices surged after a protest in Libya shut down one of the nation’s crude-export hubs and Saudi Arabia’s national oil company raised prices for the U.S. and Europe, a bullish signal of strengthening demand. |
| April 2015 ISM Services Index Improved. Important Internals Improved More.Written by Steven Hansen The ISM non-manufacturing (aka ISM Services) index continues its growth cycle, and improved marginally from 56.5 to 57.8 (above 50 signals expansion). Important internals improved and remained in expansion. On the other hand, Market PMI Services Index was released this morning and declined. Read more … |
| US Non-Manufacturing Rises (ISM) & Falls (PMI) In April As Export Orders CollapseThe hope-strewn bounce in Services PMI over the last 3 months (despite collapsing macro data) has ended. Markit Services PMI dropped in April to 57.4, weakening notably from preliminary expectations of 57.8. Markit remains convinced that their survey implies 3% GDP growth and all is well in the world. ISM Services however smashed expectations, printing 57.8 vs 56.2, its highest since November – despite a plunge in new export orders into contraction. The bounce is over…
Markit remains very upbeat though…
Or Is It? ISM Services… |
| Renault-Nissan Alliance Needs Stronger TiesThe French government’s determination to win double voting rights for its stake in Renault has highlighted the weaknesses in the French auto maker’s alliance with Nissan. |
| Wall St. opens lower as trade data suggests GDP contraction (Reuters) – Wall Street opened lower on Tuesday after two sessions of gains after data showed that U.S. trade deficit rose in March, suggesting that economic growth contracted in the first quarter. |
| Einhorn Slams Mother FrackersBy EconMatters David Einhorn, the famous billionaire hedge fund manager, just found his next target: U.S. onshore E&Ps or the oil fracking companies. He laid out his short thesis during the annual Sohn Investment Conference in New York. The share price of Pioneer Natural Resources (PXD), EOG Resources (EOG), Concho Resources (CXO), Continental Resources (CLR) and Whiting Petroleum (WLL) dropped just as he mentioned them in his speech at the conference . He called shale oil fracking a “business that burns cash and doesn’t grow anything.” “The banks are clearly incentivized to help the frac-addicts” by financing “The most expensive method of extracting oil, the industry simply can’t withstand lower oil prices”. He specifically cited Pioneer Natural Resources as the ‘Mother Fracker’ (and EOG Resources, the ‘Father Fracker’, if you are wondering). Read: So David Einhorn is the Dumb Money on Apple |
| Energy Stocks Hit 6-Month High as Valuations Spike To 1999 PeaksHope springs eternal. The S&P Energy sector is surging once again this morning as crude prices top $60 with stocks now back at Nov 2014 levels (up 12% in the last month). What most do not realize as they blindly follow the momentum, excited that ‘something is working’ is that the valuations – based on analysts’ forward earnings projections – have only been marginally higher than this once… right at the peak in 1999. The S&P Energy sector trades at a 28x Fwd P/E! Everything is awesome…
And Expensive…
Charts: Bloomberg |
| U.S. services sector growth cools in April: Markit NEW YORK, (Reuters) – The pace of expansion in the U.S. services sector eased from a seven-month high in April on a dip in new business growth, but hiring in the sector accelerated to its highest since June, an industry report showed on Tuesday. |
| Disney revenue beats with lift from theme parks, media networks (Reuters) – Walt Disney Co’s quarterly revenue beat analysts’ expectations, helped by increased spending by visitors at its theme parks and higher ad sales and affiliate fees in the company’s media networks business. |
| Einhorn Hits Fracking StocksHedge-fund manager David Einhorn took aim at the hard-hit hydraulic-fracturing industry, unveiling bearish views on companies such as Pioneer Natural Resources and Concho Resources. |
| Adidas begins marathon turnaround in North America BERLIN (Reuters) – German sportswear company Adidas turned around its sales in North America in the first quarter, helped by a marketing campaign designed to win business from dominant rival Nike. |
| Yemen Rebels Shell Saudi Arabian City, Casualties Reported; Saudis Vow RetaliationAfter the Saudis allegedly halted their air campaign against Yemen’s Houthi rebels on April 21 (allegedly because it promptly resumed the very next day to almost no public announcement), the Yemen civil war and the “skirmishes” by Houthi rebels along the border with the world’s biggest oil exporter were quickly forgotten. Until this morning, when the Saudi press and social media has been overrun with reports that the Saudi city of Najran was shelled by Houthi mortars, an attack which Saudi advisor to the armed forces Ahmed Asiri said “will not pass without a response”. From Al Riyadh, google translated:
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| Myth Or Reality: “Sell In May”Submitted by Lance Roberts via STA Wealth Management, Over the weekend, Sam Ro at Business Insider wrote “The Truth About ‘Sell In May And Go Away’,” stating:
The article goes on to discuss analysis by FBN Securities’ JC O’Hara who ran numbers for the past 20 years. In my opinion, twenty years of history is too short of a time-frame to properly analyze the historical tendencies of the markets particularly given the impact of Central Bank interventions over more than a quarter of that time frame. Therefore, using the monthly data provided by Dr. Robert Shiller, let’s take a look at the seasonally strong versus weak periods of the year going back to 1900. The table below, which provides the basis for the rest of this missive, is the monthly return data from 1900-presen … |
| U.S. trade deficit largest since 2008 as imports surge WASHINGTON (Reuters) – The U.S. trade deficit surged to its highest level in nearly 6-1/2 years in March as imports rebounded strongly after being held down by a labor dispute at key West Coast ports, suggesting the economy contracted in the first quarter. |
| European Union Delays Action on Apple, Amazon and Starbucks Tax Inquiries The competition commissioner, who took office in November and did not set new deadlines, cited difficulties in obtaining information. |
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