Sliding Crude Oil Puts Equities On Slippery Slope

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

A combination of mixed earnings results and sliding crude prices along with a pullback in the US dollar pulled the major indexes off their lofty levels. Other domestic news contributing to this slippery day were fewer than expected job openings, while gold bucked the trend and rose modestly along with bonds.

As has been the case lately, volume has been atrocious making it questionable whether there is enough upside momentum left to continue towards record highs, especially when considering the lack of world-wide growth, weak corporate earnings and general concerns about the domestic economy.

However, not to worry, with the right combination of seducing headlines designed to trigger the computer algos into action, and some soothing words by the Fed about continued lower interest rates, we should be able to reach the S&P 500 2,200 level in no time, unless some sense of reality sets in all of a sudden with some analysts already having expressed fears that the markets are overvalued by some 30%; a fear which is certainly justified in my opinion.

Read More

Bad News Is Good News Again; Worst Productivity Numbers In 37 Years

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

In the face of the worst productivity numbers in some 37 years, the markets did what they do best; rally! Although early enthusiasm gave way to a sell-off, the S&P 500 managed to climb back above the unchanged line by a fraction of a percentage after making new intra-day highs. But, investors also wrestled with an earnings miss from retailer Gap.

In earnings news, The Walt Disney Co (DIS) the media giant that owns ESPN and ABC, said its fiscal third quarter net income rose 5% on the strength of its theme park resorts and a hefty revenue gain in the movie production business.

In retail earnings, shares of Gap (GPS) were down 6.2% after the retailer reported disappointing July sales for both its Gap and Banana Republic brands. Shares of high-end retailer Coach (COH) were trading 1.8% lower as investors reacted to earnings that on the surface topped expectations.

Job listings site Monster Worldwide said that it had agreed to sell itself for $429 million, including the assumption of debt, to Netherlands-based global recruiter Randstad Holding.

As you know, I like looking at charts to get a better view as to where the major indexes are compared to underlying economic realities, because eventually we will correct to fair value again—it’s just a matter of time.

Here are 3 charts, courtesy of ZH that clearly demonstrate the lone position the S&P 500 holds in nosebleed territory:

Read More

Stocks Retreat In Directionless Trading

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks retreated a bit from last week’s record closes on the heels of an alleged strong jobs report. Equities, which had been stuck in a holding pattern after hitting fresh highs in late July, rallied Friday after the government reported that a better-than-expected 255,000 jobs were created in July. It was the second straight month of employment gains, which reinforced the hope that the U.S. economy and consumers remains alive after a weak start to the year.

In M&A news, we heard that Walmart (WMT) will acquire e-commerce start-up Jet.com in a $3 billion cash deal aimed at helping the world’s largest retailer become an online shopping powerhouse that can take on Amazon.com. Online sales are still just a fraction of Walmart’s overall business, coming in at $13.6 billion last year out of $482 billion in total revenue.

This week’s release of data on June retail sales, a slew of earnings reports from U.S. retailers and the first look at August consumer confidence will be critical to potentially keeping alive a stock rally. Tuesday, we’ll hear from Coach (COH) and Walt Disney (DIS). Wednesday comes apparel maker Ralph Lauren (RL), followed by Macy’s (M) and Nordstrom (JWM). Friday will be the release of July retail sales.

Read More

One Man’s Opinion: A Psychiatric Diagnosis of the U.S. Market: Schizophrenic Disconnect From Reality, Bipolar Mania, Psychotic Delusions of Wealth

Ulli Market Review Contact

By Charles Hugh Smith

Pic1Sun

If you think a delusional market is healthy, it’s time for a psychiatric exam.

What diagnosis would an experienced psychiatrist offer when presented with the bizarre behavior of the U.S. stock market? We assume that the wild mood swings of greed and fear are “normal” for markets devoted to short-term profit and speculation, but the stock market’s disconnect from reality is far beyond mere mood swings.

The stock market thinks it’s solidly on pavement, but in reality it’s like a car flying off a cliff: the Wiley E. Coyote moment is just ahead. There’s nothing but air beneath the stock market.

Consider the reality of PE expansion from a price-earnings (PE) of 10 at the bottom in 2009 to 18+ today, while profits are stagnant. And what is driving this expansion other than a delusional belief that profits will magically reverse and log massive gains in the second half of 2016?

Read More

ETFs On The Cutline – Updated Through 08/05/2016

Ulli ETFs on the Cutline Contact

Below please find the latest High Volume ETF Cutline report, which shows how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 367 High Volume ETFs ETFs, defined as those with an average daily volume >$5 million, of which currently 313 are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line from those that have dropped below it.

Take a look:

The HV ETF Master Cutline Report  

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

ETF Tracker Newsletter For August 5, 2016

Ulli ETF Tracker Contact

ETF Tracker StatSheet

————————————————————-

https://theetfbully.com/2016/08/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-08042016/

————————————————————

Market Commentary

ALGOS PLAY HEADLINE HOCKEY WITH JOBS NUMBERS

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

On the surface, the jobs report was awesome as payrolls rose by 255,000 month over month compared to an expected 180,000 gain. June was revised upwards from 287,000 to 292,000 with the total upward revision for May and June being 18,000.

Computer algos had a field day by pushing the indexes higher.

In the end, what it means is that after 2 months of missing expectations, the numbers have “miraculously” come in above forecasts due to seasonal adjustments. One strategist pointed out that today’s jobs report was “nowhere near as strong as the headline and that private payrolls were unadjusted +85k in July vs seasonally adjusted +217k.”

Stock market investing has now been made extremely simple. The S&P 500 climbed into record territory with the help of a better than expected jobs report which, if the numbers are actually correct, has just increased the interest rate hike odds. Simply said, higher interest rates are now good news too, while bad economic numbers are even greater news as it means the Fed will stay pat with the rate hike game. See how logical this all is?

Of course, I am being facetious; the reality is you can’t have it both ways for any length of time, something has to give, i.e. a strengthening economy will cause rates to be hiked at some point, which will cause equities to pull back.

To demonstrate the above that, no matter what, “all” news is good news, ZH featured this incredible chart, which tells it all:

Read More