Written by Gary
Markets opened flat, traded sideways for the first hour then started to slide where the DOW is down triple digits and the session is expected to end in the red. Investors are obviously not impressed with this solid job growth report points to an improving economy, opening the door wider for an interest rate hike in September.
U.S. dollar having shot up almost a point has since fallen to its previous lows while WTI oil is still flirting with its support.
Here is the current market situation from CNN Money | |
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Traders Corner – Health of the Market
| Index | Description | Current Value |
| Investors.com Members Sentiment: | % Bullish (the balance is Bearish) | 60% |
| CNN’s Fear & Greed Index | Above 50 = greed, below 50 = fear | 14% |
| Investors Intelligence sets the breath | Above 50 bullish | 42.1% |
| StockChart.com Overbought / Oversold Index ($NYMO) | anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. | -4.26 |
| StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) | $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. | 39.27% |
| StockChart.com NYSE Bullish Percent Index ($BPNYA) | Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. | 47.68% |
| StockChart.com S&P 500 Bullish Percent Index ($BPSPX) | In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. | 51.00% |
| StockChart.com 10 Year Treasury Note Yield Index ($TNX) | ten year note index value | 21.98 |
| 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 | 77.93 |
| StockChart.com NYSE Composite (Liquidity) Index ($NYA) | Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors | 10,742 |
What Is Moving the Markets
| Here are the headlines moving the markets. | |
| Oil down, heads for sixth weekly loss on gasoline glut NEW YORK (Reuters) – Crude oil dipped on Friday, plumbing multi-month lows and headed for a sixth straight week of losses, pressured by tumbling gasoline prices as the approaching end of the U.S. summer driving season suggested a growing surplus in fuel supply. |
| Greece says expects to pass bailout in parliament on August 18 ATHENS (Reuters) – Greece expects the third bailout it is negotiating with its international lenders to be passed by parliament on August 18, in time to secure funds to cover a key payment to the European Central Bank, the government’s spokeswoman said on Friday. |
| EU officials to review progress in Greek bailout talks BRUSSELS/ATHENS (Reuters) – Senior EU officials will confer by telephone late on Friday on progress in negotiations between Greece and its international creditors on a third bailout for the near-bankrupt euro zone country with Germany reported to be warning against haste. |
| July Job Numbers Keep Fed Rate Hike on TrackFriday’s jobs numbers were in line with the Federal Reserve’s narrative for how the economy is developing—solid job growth and diminished slack in labor markets but no sign of wage or inflation pressure—keeping a September rate increase a possibility, writes Jon Hilsenrath. |
| Improving U.S. jobs market bolsters case for Fed rate hike WASHINGTON (Reuters) – U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that could open the door wider to a Federal Reserve interest rate hike in September. |
| U.S. Stocks Continue LowerEarly losses in U.S. stocks deepened after a key employment report kept the Federal Reserve on track to raise interest rates as soon as September. |
| Deja Deja Deja Vu For Energy StocksFool me once, shame on me. Fool me twice, shame on you. Fool me thrice, happy jack. Fool me a fourth time… dude, seriously!!
Charts: Bloomberg |
| Wealth Matters: Navigating Tougher I.R.S. Rules for Family Partnerships The I.R.S. is expected to release restrictions on the partnerships, abused by some very wealthy families to avoid estate taxes, as soon as mid-September. |
| Wall St. falls as jobs data supports September rate hike (Reuters) – U.S. stocks were lower on Friday, with the major indexes poised to close in the red for the week, after solid job growth in July pointed to an improving economy, opening the door wider for an interest rate hike in September. |
| Why A Fed Rate Hike Will Almost Certainly Lead To A RecessionIt was back in March when we were delighted to report that we had finally solved “The Mystery Of America’s Missing Wage Growth” – “mystery” because while those employees in positions of power had been abusing the availability heuristic for years, and extrapolating their own wage growth to the broader population, the reality was what we had said 5 years ago: there is simply no notable wage growth for the vast majority of the US population, period, and certainly none even remotely close to the Fed’s preferred threshold of 4.5% to justify a “mission accomplished” banner. As per our findings, this was easily explained: there was indeed a surge in wages… for supervisory workers: bosses, managers, shift leaders and the like, while non-supervisory workers had been getting the short end of the stick since 2008. The problem: non-supervisory workers account for 82% of all workers, and unless their wages also rebound, there is no hope that the US economy can even grow at anything resembling historical levels ever again. Unfortunately, with the bulk of US labor growth focused on such sectors as bartenders and waiters, whose ranks have increase in 64 of the past 65 months…
… there simply can not be broad wage growth period. So what does this mean for wage growth? Well, the headline number as we showed earlier is going nowhere: |
| S&P 500 Tumbles Into Red For 2015, Breaks Below Key Technical SupportThe S&P 500, having broken below its 200-day moving average again…
Has joined The Dow Transports, Dow Industrials, and Russell 2000 (small caps) in negative territory year-to-date…
Charts: Bloomberg |
| Icahn Group Holds 8.18% of CheniereA group including activist investor Carl Icahn has disclosed an 8.18% stake in Cheniere Energy Inc., saying it intends to have talks with the company’s management and board about a range of issues. |
| Why a Boring Jobs Report Is Great News for the Fed There are no great mysteries for Janet Yellen and her colleagues to sort out, as the economy continues to improve at a slow but steady rate. Above, a job fair in Sunrise, Fla. |
| The Financial Media Was Wrong on Greece… and They’re Wrong on the Next Crisis TooLet’s talk about the Greek issue. More than enough ink has been spilled on this from the mainstream financial media. However, I do think we there are a few key takeaways we should note from this whole debacle. 1) Elements of the financial media is either unbelievably lazy or completely complicit in helping to maintain the illusion of success for the Centralized powers (large governments and Central Banks). 2) The political class and Central Banks are unable to resolve debt issues in any meaningful way. 3) The real “bottom” or level of “price discovery” is far lower than anyone expects due to the fact that the run up to 2008 was so rife with accounting gimmicks and fraud. Regarding #1, it is worth noting that the Greek Crisis actually first started in 2009 when the country’s credit ratings were cut by all three credit rating agencies: Moody’s, Standard and Poor’s, and Fitch. The first actual request for a Greek bailout came in April 2010, over five years ago. Since that time, Greece has received two formal bailouts, its credit ratings have been dropped to “junk,” and its GDP has collapsed over 20%: an amount roughly equal to the economic collapse experienced by Argentina during its 2000-2001 crisis. Throughout this entire process, the financial media media has run thousands of articles proclaiming the Greece crisis was “over” or “fixed.” Below is a spate of headlines from this period. ECB chief Mario Draghi says worst of euro crisis … |
| Silver Surges Above $15 – Biggest Jump In 3 Months – Royal Mint Issues New CoinSpot Silver prices are spiking this morning after an initial drop post-payrolls. The 2.9% jump, breaking back above $15, is the biggest daily jump since early May… This is happening as UK’s Royal Mint releases 50,000 new GBP100 silver coins…having previously run out of supply to meet physical demand.
Charts: Bloomberg |
| 31 July 2015: ECRI’s WLI Continues In Positive Territory and Was UnchangedECRI’s WLI Growth Index which had spent 28 weeks in negative territory – is now in its 14th week in positive territory and was unchanged this week.. ECRI released their inflation gauge today and is discussed below. |
| Dow Down 1000 Points From Highs, Small Caps Swing Red Year-To-DateBut but but… the smart men on TV said a) rate-hikes are priced-in, 2) rate-hikes are bullisher for stocks than rate-cuts (why would The Fed raise rates if everything was not awesome?), and thirdly) buy the dip! It appears The Fed knows it is going to need some ammo sooner rather than later… From 18,351.36 on May 19th, The Dow (cash) is now at 17,345…
But it’s not just the mega-caps, The Russell 2000 (small caps) has tumbled back into the red year-to-date…
Charts: Bloomberg |
| Germany’s Telecoms Experience Could Scramble Italian AirwavesHopes that consolidation can prompt a recovery in mobile markets may be misplaced. |
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