Written by Gary
Volatility rules the markets, but volume is only ‘moderate’. Markets gaped down on the opening bell and have sea-sawed sideways throughout the morning while WTI oil has dropped almost 4 points. Weak manufacturing data in China fueled investors’ worries about the world’s second-largest economy. Which showed activity in August had slipped to a three-year low
Here is the current market situation from CNN Money | |
 | North and South American markets are sharply lower today with shares in U.S. off the most. The S&P 500 is down 2.04% while Brazil’s Bovespa is off 2.01% and Mexico’s IPC is lower by 1.30%. |
Traders Corner – Health of the Market
| Index | Description | Current Value |
| Investors.com Members Sentiment: | % Bullish (the balance is Bearish) | 58% |
| CNN’s Fear & Greed Index | Above 50 = greed, below 50 = fear | 9% |
| Investors Intelligence sets the breath | Above 50 bullish | 28.1% |
| StockChart.com Overbought / Oversold Index ($NYMO) | anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. | +14.82 |
| StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) | $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. | 23.00% |
| StockChart.com NYSE Bullish Percent Index ($BPNYA) | Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. | 34.43% |
| StockChart.com S&P 500 Bullish Percent Index ($BPSPX) | In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. | 31.20% |
| StockChart.com 10 Year Treasury Note Yield Index ($TNX) | ten year note index value | 21.83 |
| 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 | 73.87 |
| StockChart.com NYSE Composite (Liquidity) Index ($NYA) | Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors | 9,954 |
What Is Moving the Markets
| Here are the headlines moving the markets. | |
| Survey: Growth in US manufacturing drops again in August, slips to lowest level since May 2013WASHINGTON (AP) — A strong dollar and China’s economic slowdown dragged growth at U.S. factories to the lowest level since May 2013. The Institute for Supply Management reported Tuesday that its manufacturing index slid to 51.1 last month from 52.7 in July. It was the second straight drop; economists had been expecting the index to rebound modestly in August. Anything above 50 signals growth. Growth fell in production, employment and exports. Raw materials prices dropped for the 10th straight month. The index from a trade group of purchasing managers is down from 58.1 last August. The report suggests that a strong dollar and slowing growth in China and other foreign markets may be taking a toll on U.S. manufacturers and perhaps the overall American economy. The rising dollar makes U.S. goods more expensive in foreign markets. Two surveys released Tuesday showed that Chinese manufacturers continue to struggle. |
| Wall St. slumps as weak China data stokes growth fears (Reuters) – Wall Street slumped on Tuesday, pushing all three major indexes into negative territory for the year, after weak factory data from China heightened fears of a slowdown in the world’s second-largest economy and its effect on global growth. |
| General Electric names Beth Comstock as vice chair (Reuters) – General Electric Co on Tuesday named Beth Comstock, a longtime marketing and communications executive who leads GE Business Innovations, as vice chair. |
| Exclusive: Mexico withheld millions in tax refunds from P&G, Unilever, Colgate MEXICO CITY (Reuters) – Mexico’s government withheld hundreds of millions of dollars in tax refunds owed to Procter & Gamble, Unilever, and Colgate combined as it sought to coax them and other multinationals to pay more income tax locally, according to people close to the talks. |
| OPEC magazine op-ed that fueled oil rally baffles insiders LONDON (Reuters) – An OPEC publication written by the exporter group’s public relations team helped oil prices jump and prompted speculation over a possible shift in output policy – to the bafflement of some OPEC insiders. |
| China manufacturing contracts, euro zone and U.S. slows LONDON (Reuters) – China’s giant manufacturing industry contracted and euro zone and U.S. growth eased in August in data published on Tuesday, while the International Monetary Fund cut its forecast for world growth this year. |
| China stock probes send shivers through investment community SHANGHAI (Reuters) – Investigations by Chinese authorities into wild stock market swings are spreading fear among China-based investors, with some unsure if they are simply helping with inquiries or actually under suspicion, executives in the financial community said. |
| Global factory growth at two-year low – PMI LONDON (Reuters) – Global factory activity expanded at its weakest pace in just over two years last month, even though discounted prices did drive a modest upturn in new orders, a business survey showed on Tuesday. |
| Peak Construction Spending?Construction spending grew at 13.7% YoY in July. It has only grown at a faster pace than that once – at the very peak of the idiocy in Q1 2006. Nope – no bubble here…
So that got us wondering… how is it that Construction Spending is surging as Lumber Prices are collapsing? (unless homes are now made of Twitter share certficates).
The answer is simple – lag… and we have seen this picture before… and it did not end well. Clearly, the exuberant construction industry jumps on Fed-induced signals of recovery and mal-invests en masse… until reality bites again. Charts: Bloomberg |
| Apple explores move into original programming business – Variety (Reuters) – Apple Inc is looking to move into the original programming business to compete with video streaming companies such as Netflix Inc , Variety reported on Monday. |
| Behold China’s 2PM Ramp CapitalFor the last few years, US equity traders have become conditioned to expect the miraculous arrival of some heavy-handed levitation in stock markets as 330pmET rolls by. This became ubiquitous enough to inspire a Twitter account. Well, it appears the Chinese have learnt a thing or two from the American manipulators… behold China’s 2pm Ramp Capital at work. As Bloomberg reports,
Sadly – for the Chinese manipulators – unlike in ‘Murica, where any momentum is good momentum, the ‘burned’ … |
| Law firm targets Google foes for private damages claims BRUSSELS (Reuters) – U.S. law firm and class action specialist Hausfeld launched a platform on Tuesday to help pursue claims against Google, posing a potential headache for the world’s No. 1 Internet search engine amid its regulatory troubles in Europe. |
| Weak China Aug factory, services point to further economic slowdown BEIJING/SHANGHAI (Reuters) – Activity in China’s factory sector shrank at its fastest rate in at least three years in August as domestic and export orders tumbled, hitting global markets and increasing fears that the world’s second-largest economy may be heading for a hard landing. |
| Nasdaq to Sell Surveillance Technology to ChinaNasdaq OMX Group will supply market-surveillance technology to a Chinese securities exchange and some mainland financial firms, as Beijing steps up scrutiny of its financial industry. |
| Hit by cheap oil, Canada’s economy falls into recession OTTAWA (Reuters) – The Canadian economy shrank again in the second quarter, putting the country in recession for the first time since the financial crisis, with a plunge in oil prices taking a toll as business investment fell and inventory accumulation slowed. |
| U.S. factory activity slows; construction spending up solidly WASHINGTON (Reuters) – U.S. factory activity hit a more than two-year low in August as manufacturers struggled with a strong dollar, weak global demand and the lingering effects of deep spending cuts in the energy sector. |
| July 2015 Construction Spending Growth Is Strong.Written by Steven Hansen The headlines say construction spending grew. The backward revisions make this series very wacky – but the backward revisions this month were upward making the data better than the headline view. Our view is that if the data is correct – this was another strong growth month. |
| WTI Crude Plunges 5.25% – Biggest Drop In A MonthWTI crude has retraced 50% of yesterday’s ridiculous gains and is now down 5.25% from the NYMEX close yesterday. It appears everything is not so awesome again…
and energy stocks are collapsing back to credit reality…
and USO catching back down to Oil VIX…
Charts:Bloomberg |
| Is George Soros Betting On The Long-Term Future Of Coal?Submitted by Michael McDonald via OilPrice.com, Perhaps the greatest nightmare for investors in a commodity stock is that the commodity in question goes the way of coal. After more than a century of dominance in the U.S. and abroad, coal appears to have entered into a structural decline. The EIA and others see coal export volumes declining, domestic U.S. demand remaining questionable, and intense competition from natural gas continuing. A funny thing happened on the way to the graveyard for coal companies though – one of the industries greatest detractors, George Soros, appears to be stepping in as a supporter. Soros, whose $24 billion fortune is built on successful trading, appears to have purchased several million dollars’ worth of stock in coal producers Peabody and Arch Coal according to filings reviewed by Britain’s The Guardian newspaper. Thermal coal has been hit hard by shifting utility company preferences for other power sources, while metallurgical has been hammered by the downturn in China which has hit demand for steel and other buildin … |
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