Written by Gary
Sea-saw Friday Opened lower and spent most of the morning into early afternoon trading sideways as oil continued its march upward and pausing at the mid 45 level as expected. Markets look exposed after having relieved much of its oversold positions and covered shorts. After some of the most turbulent market days in recent memory, the weekend can’t come soon enough for many investors.
Here is the current market situation from CNN Money | |
 | North and South American markets are mixed. The Bovespa is higher by 2.23%, while the S&P 500 is leading the IPC lower. They are down 0.34% and 0.21% respectively. |
Traders Corner – Health of the Market
| Index | Description | Current Value |
| Investors.com Members Sentiment: | % Bullish (the balance is Bearish) | 46% |
| CNN’s Fear & Greed Index | Above 50 = greed, below 50 = fear | 13% |
| Investors Intelligence sets the breath | Above 50 bullish | 26.5% |
| StockChart.com Overbought / Oversold Index ($NYMO) | anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. | +2.47 |
| StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) | $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. | 23.23% |
| StockChart.com NYSE Bullish Percent Index ($BPNYA) | Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. | 33.81% |
| StockChart.com S&P 500 Bullish Percent Index ($BPSPX) | In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. | 31.00% |
| StockChart.com 10 Year Treasury Note Yield Index ($TNX) | ten year note index value | 21.72 |
| 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 | 75.26 |
| StockChart.com NYSE Composite (Liquidity) Index ($NYA) | Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors | 10,207 |
What Is Moving the Markets
| Here are the headlines moving the markets. | |
| Autos lift U.S. consumer spending; sentiment slips WASHINGTON (Reuters) – U.S. consumer spending rose in July as households stepped up automobile purchases, offering further evidence of strength in the economy that keeps the door open to a Federal Reserve interest rate hike this year. |
| Carmakers scramble to adapt to slowing Chinese demand NEW YORK (Reuters) – China’s demand for luxury cars used to move in one direction – up. Now, the prospect of a sustained slump in Chinese demand, prompted by sharp declines in Chinese equity markets and a devaluation of the yuan, has global auto manufacturers scrambling to find new markets to sell goods. |
| Atlanta Fed Cuts Q3 GDP Forecast To A Paltry 1.2%Earlier today, following the disappointing July personal spending data and yesterday’s record surge in inventories as part of the spike in Q2 GDP, we predicted that the Atlanta Fed would cut its already painfully low Q3 GDP forecast of 1.4%.
Moments ago, it did just that, when the Atlanta Fed GDPNow “nowcast” was revised lower to just a 1.2% annualized growth rate, more than two-thirds below the BEA’s first revision of Q2 GDP. If officially confirmed in two months, this would be the lowest GDP since Q1 2014, and just fractionally higher than the “harsh winter” double-seasonally adjusted GDP print from the first quarter which economists tell swear was due only to harsh weather. So what was the culprit this time: the record hot July?
Here are the reasons:
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| Fed hawks acknowledge market turmoil may delay rate hike JACKSON HOLE, Wyo. (Reuters) – Federal Reserve officials who are most anxious to hike interest rates said on Friday that continued turmoil in financial markets may cause the central bank to delay tightening monetary policy beyond next month, even though the U.S. economy remains strong. |
| The Central Bankers’ Malodorous War On SaversSubmitted by David Stockman via Contra Corner blog, Well, that didn’t take long! After just three days of market turmoil the monetary politburo swung into action. This time they sent out B-Dud to promise still another monetary sweetener. Said the head of the New York Fed,
Needless to say, “B-Dud” is a moniker implying extreme disrespect, and Bill Dudley deserves every bit of it. He is a crony capitalist fool and one of the Fed ring-leaders prosecuting a relentless, savage war on savers. Its only purpose is to keep carry trade speculators gorged with free funding in the money markets and to bloat the profits of Wall Street strip-mining operations, like that of his former employer, Goldman Sachs. The fact is, any one who doesn’t imbibe in the Keynesian Kool-Aid dispensed by the central banking cartel can see in an instant that 80 months of ZIRP has done exactly nothing for the main street economy. Notwithtanding the Fed’s gussied-up theories about monetary “accommodation” and closing the “output gap” the litmus test is real simple. To wit, artificial suppression of free market interest rates by the central bank is designed to cause households to borrow more money than they otherwise would in order to spend more than they earn, pure and simple. Its nothing more than a modernized version of the original,&n … |
| Wall Street slips after Fischer’s remarks (Reuters) – U.S. stocks slipped on Friday after comments from an influential member of the U.S. Federal Reserve appeared to suggest an interest rate hike next month remained a possibility. |
| Moody’s cuts 2016 global growth forecasts LONDON (Reuters) – Credit rating firm Moody’s cut its 2016 global economic growth forecasts on Friday, with China and United States both trimmed and Russia and Brazil seen staying in recession. |
| “Oil Cheap Or Gold Rich” Answered (For Now)A week ago we noticed something extreme in the price relationship between gold and oil. At the time we asked “is gold rich or oil cheap?” It appears we have our answer… perfectly tagging the January highs in the gold/oil ratio, the screaming rally in oil has pushed the ratio back into a less extreme region… From a week ago…Is Oil Cheap? Is Gold Expensive?
And now…
The same level we saw in early 2009 before oil surged…
And in the last few days post FOMC Minutes, the oil-USD correlation regime has shifted dramatically… |
| Fed’s Fischer says still undecided on whether to hike in September WASHINGTON (Reuters) – The U.S. Federal Reserve is waiting to see how data and markets unfold over the coming weeks before deciding whether to raise interest rates at its September meeting, Vice Chair Stanley Fischer said on Friday. |
| Fair Game: S.E.C. Settlement With Citigroup Holds No One Responsible The Citi employees whose strategy led to $2 billion in investor losses have not been pursued or even identified. |
| Dollar Spikes, Risk Slides After Fed’s Fischer Seen As “Not Dovish Enough”It appears the economy is doing just well enough and the reflexive bounce in stocks showing that everything is awesome is all that Fed’s vice chair Stan Fischer appeared to need to note that “we are heading [a September rate hike]direction.” This has been judged as “not dovish enough” and sparked some turmoil… Key Fischer points:
And the reaction is ‘hawkish’ – USD spike, Stocks/bonds lower, gold down…
and rate-hike odds soar…
And yet the only question that matters, was not asked: how does the Fed hike rates now that China’s reserve accumulation is going into reverse, and will lead to dumping of hundreds of billions in Treasurys at a time when the US budget deficit will still … |
| Brazil’s Big Bet on China Turns SourBrazil’s big bet on China is turning sour as the Asian country’s once voracious appetite for Brazilian exports dims. |
| Fed Fails – American Spending Growth Is Weakest Since March 2011Core personal consumption growth in July was just 1.2% – the weakest since March 2011. Whatever The Fed is doing to grow the middle class (yes, yes, we know: that’s not in the mandate – only the “wealth effect” is) is not workingm and as the following chart suggests hasn’t worked for the past 35 years.
Chart: Blooomberg Lower rates is not helping, and higher rates didn’t work in the 90s: maybe The Fed is all talk and CONfidence after all. |
| Oil Prices Resume RallyOil prices rose Friday, erasing earlier losses, as a surprise one-day rally extended to a second day. |
| BNY Mellon glitch roiled pricing on U.S. funds with $404 billion in assets (Reuters) – BNY Mellon Corp’s computer glitch this week has disrupted pricing on nearly 5 percent of U.S. mutual funds and exchange-traded funds with about $404 billion in assets, according to data from Morningstar Inc and Lipper Inc. |
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