Written by Gary
The averages tumbled after a green open, WTI oil jumped higher and the U.S. dollar fell like a rock. Oil has since fallen again into a major support and gold and the dollar have risen somewhat.
Shares of companies in the energy industry declined after weak earnings reports from the oil giants Exxon Mobil and Chevron and the markets look weak going into the afternoon session.
Here is the current market situation from CNN Money | |
 | North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 1.51% while Mexico’s IPC is up 0.73% and U.S.’s S&P 500 is up 0.12%. |
Traders Corner – Health of the Market
| Index | Description | Current Value |
| Investors.com Members Sentiment: | % Bullish (the balance is Bearish) | 61% |
| CNN’s Fear & Greed Index | Above 50 = greed, below 50 = fear | 20% |
| Investors Intelligence sets the breath | Above 50 bullish | 42.7% |
| StockChart.com Overbought / Oversold Index ($NYMO) | anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. | +4.79 |
| StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) | $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. | 41.30% |
| StockChart.com NYSE Bullish Percent Index ($BPNYA) | Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. | 49.12% |
| StockChart.com S&P 500 Bullish Percent Index ($BPSPX) | In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. | 52.60% |
| StockChart.com 10 Year Treasury Note Yield Index ($TNX) | ten year note index value | 22.03 |
| 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 | 80.46 |
| StockChart.com NYSE Composite (Liquidity) Index ($NYA) | Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors | 10,926 |
What Is Moving the Markets
| Here are the headlines moving the markets. | |
| Steep Losses Hit Carlyle Commodity Hedge-Fund FirmPrivate-equity firm Carlyle Group has split with the founders of its Vermillion commodity hedge-fund firm after its flagship fund shrank from $2 billion to less than $50 million in assets. |
| Wall St. Edges Higher Despite Energy Earnings Shares of companies in the energy industry declined after weak earnings reports from the oil giants Exxon Mobil and Chevron |
| The Fed’s Bathtub Economics Brigade Blathers On, Part 1Submitted by David Stockman via Contra Corner blog, In case you are wondering what the meaning of “some” is—-don’t bother. It’s just the same old Fed ritual incantation, chanted in 2/2 “cut time”. That means there are only two beats to each of its monthly meeting measures—-employment and inflation. Like in the musical world, each beat is a half-note. But they might be better described as half-assed notes. The denizens of the Eccles Building are using BLS junk statistics to measure both variables. They don’t have a clue that they are rhythmically chanting a pretentious chorus about nothing more significant than short-run economic noise. We got a load of evidence on that point with this weeks Q2 GDP release and the accompanying benchmark revisions reaching back to 2012. What these fresh reports show is that this “recovery” has been even more of a dud than was previously evident, and that the Fed’s monthly claims that the US economy is inching toward some kind of Keynesian full-employment nirvana are pure rubbish. In fact, our monetary politburo is driving the US economy in the opposite direction. That is, toward dis-employment of its true, wealth-creating economic resources—-human labor, entrepreneurial talent and market driven gains in economic factor efficiency. Contrary to yesterday’s self-congratulatory statement, all is not well and its not getting weller. Instead, what we really have is net business destruction, faltering investment in productive assets, massive unutilized … |
| The Swiss National Bank Is Long $94 Billion In Stocks, Reports Record Loss Equal To 7% Of Swiss GDPExactly three months ago, the Swiss National Bank issued a report which everyone was eagerly anticipating: its interim results for the quarter ended March 31 in which it laid out just how much it had loss after it took on an “artificially strong” Swiss Franc market back in September 2011… and admitted defeat when on January 15 in a shocking statement, it announced it would remove the EURCHF 1.20 peg despite reiterating just days earlier the peg was rock solid. The result: a record loss of CHF 29.3 billion ($32 billion). Earlier today, the SNB which is perhaps the most transparent hedge fund of all central banks and actually lays out its financial statements in a respectable manner every quarter, released its results for the second quarter (and first half) of 2015. The result: another absolutely epic loss, amounting to €50.1 billion ($51.8 billion) of which €47.2 billion on currency positions – a whopping 7% of Swiss GDP – meaning that in Q2 the SNB lost another €20 billion even though the CHF crosses barely registered any of the mammoth moves experienced in the first quarter, suggesting that the SNB was hit by the double whammy of its own currency devaluation in Q1, followed by the launch of ECB’s QE which crushed the EUR in Q2, and which happens to be the currency in which the bulk of SNB FX holdings are denominated. Amusingly, the FX loss was despite a CHF530 gain resulting from negative deposit rates charged on sight deposit account balances since January 22, 2015 when Switzerland went full-NIRP. This is how tthe SNB described its loss:
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| U.S. employment costs post smallest gain on record in second-quarter WASHINGTON (Reuters) – U.S. labor costs in the second quarter recorded their smallest increase in 33 years amid tepid gains in the private sector, but it likely was a temporary setback against the backdrop of diminishing labor market slack. |
| UPS bolsters full-truckload business with $1.8 billion deal (Reuters) – United Parcel Service Inc said it would buy Coyote Logistics from private equity firm Warburg Pincus for $1.8 billion to expand its full-truckload services, the latest deal in a rapidly consolidating logistics industry. |
| Wealth Matters: Modern Families and Modern Money Worries Financial advice is normally geared toward traditional families, but single-parent, same-sex or multigenerational households may gain from tailored advice. |
| Bad Data… Buy It AllFOMC inflation fears… Weak GDP… Piss-poor wage growth… buy it all
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| Tumbling oil prices slam profit at Exxon Mobil, Chevron (Reuters) – Weak oil prices shriveled quarterly profit at Exxon Mobil Corp and Chevron Corp , compelling both companies to rethink operations and plan for what many expect to be a sustained period of cheap crude. |
| The Cost of Stagnation: We’re Living In LimboSubmitted by Charles Hugh-Smith of OfTwoMinds blog, This erosion of opportunities to complete life’s stages and core dramas is rarely recognized, much less addressed. The idea that human life subdivides rather naturally into stages is based on our natural progression from childhood into adulthood and eventual (if we’re lucky) old age. Confucian thought views life as a developmental process with seven stages, each roughly corresponding to a decade: childhood, young adulthood (16-30), age of independence (30-39), age of mental independence (40-49), age of spiritual maturity (50-59), age of acceptance (60-69), and age of unification (70 – end of life). Each stage has various tasks, goals and duties, which establish the foundation for the next stage. Each stage is centered on a core human challenge: for the teenager, establishing an identity and life that is independent of parents; for the young adult, finding a mate and establishing a career; for the middle-aged, navigating the challenges of raising children and establishing some measure of financial security; for those in late middle-age, helping offspring reach independent adulthood and caring for aging parents; early old age, seeking fulfillment now that life’s primary duties have been accomplished and managing one’s health; and old age, the passage of accepting mortality and the loss of vitality. The End of Secure Work and the diminishing returns of financialization are disrupting these core human challenges and frustrating those who are unable to proceed to the next stage of life:
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| Wall St. edges up after wage growth data (Reuters) – Wall Street edged higher in late morning trading on Friday after an historically weak reading of U.S wage growth lent weight to the view that the U.S. Federal Reserve could delay a rate increase. |
| U.S. job market set for more than just ‘some’ attention LONDON (Reuters) – Now that U.S. Federal Reserve chief Janet Yellen has made it clear she’s looking out for “some” improvement in the job market before voting for the first Fed interest rate rise in nearly a decade, so is everyone else. |
| This Is What A Total Breakdown In Market Internals Looks LikeBelow-the-surface breakdowns strengthen BCA Research’s conviction that investors should stay defensive. Technically, the S&P 500 looks weak. Breadth has thinned considerably this year. Less than 50% of S&P 500 industry groups are trading above their 40-week moving average and/or have a positive 52-week rate of change. This is what a total breakdown in market internals looks like…
We interpret this week’s relatively unchanged FOMC statement to mean that unless payroll data seriously disappoints, a September rate rise is a go. It would buck the historical trend if U.S. equity prices were to come out unscathed in the run-up to a rate rise. This, at a time when the potential for further global growth disappointment abounds. Bottom Line: Given the weak technical backdrop, there is little incentive to put fresh money to work in stocks at the moment, even despite the lack of attractive investment alternatives. Read more here… Source: BCA Research |
| LinkedOut – Social Media Superstar Enters Bear Market OvernightWell that escalated quickly…
Charts: Bloomberg |
| VIX Crushed Back To 11 Handle As “Investors” Seek Safety Of BiotechsBecause nothing says “sell vol with both hands and feet” and buy Biotechs like a collapse in the wage growth meme and consumer sentiment… Investors flood into the saftey of Biotechs…
As they dump any kind of protection en masse…
Who could have seen that coming?
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| 24 July 2015: ECRI’s WLI Continues In Positive Territory Again Insignificantly DecliningECRI’s WLI Growth Index which had spent 28 weeks in negative territory – is now in its 13th week in positive territory but continues to creep back towards contraction.. |
| Final July 2015 Michigan Consumer Sentiment Small Decline but Still Positive Trendby Doug Short, Advisor Perspectives/dshort.com The University of Michigan Final Consumer Sentiment for July came in at 93.1, a decrease from the 96.1 June final reading. Investing.com had forecast 94.0 for the July Final. The Index is at its highest eight month average since 2004. |
| Head Trader Of World’s 4th Largest Hedge Fund Caught In HFT Frontrunning ScandalShortly after we reported the latest market-rigging scandal, in which ITG was busted for frontrunning sellside clients in its dark pool in what has been since dubbed a “trading experiment” (because it sounds better than criminal conspiracy to defraud clients), and which will cost the company a record for a private Wall Street firm $22 million settlement, we had one question for AQR’s Cliff Asness yesterday morning:
Here is a quick bio of Hitesh from FX Week:
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| Gold Surges Back Above $1100 As Dollar Dumps After Wage DataPaper gold prices continue their extreme volatility ride, spiking $20 as the dismal ECI data hit this morning (as we pre-suppose weak data means moar money printing inevitably coming down the pike)…
as The Dollar dumps…
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| IMF is participating fully in Athens debt talks: European Commission BRUSSELS (Reuters) – The International Monetary Fund is participating fully in the ongoing talks for a new bailout program for Greece, a spokeswoman for the European Commission said on Friday, dismissing reports the IMF could be abandoning the rescue plan. |
| U.S. consumer sentiment slips in July NEW YORK (Reuters) – U.S. consumer sentiment fell in July, according to a survey released on Friday. |
Hitesh is the head of AQR’s Global Trading Strategies group, running the firm’s trading desk and overseeing the group that builds automated trading models and does transaction cost analysis for equities, futures and FX globally. Prior to AQR, he was the global head of liquidity management at Investment Technology Group, where he built its algorithmic trading platform and managed its crossing network, POSIT. He has published several papers on market structure, algorithmic trading, dark pools and transaction cost analysis, and is listed …
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