Overnight and Into the A.M. Trade

First let me make clear something I should have in last night's post on breadth. At the end of the post I noted how markets can be manipulated even when a strong percentage of stocks are moving down, a stock that has been rising can't be over it's 40 day moving average (or 1 or 2 standard deviations above its 40 day moving average ) one month and be below it the next without that stock having declined for the most part. I  mentioned how the weighting effects the markets and how the large cap stocks are heavily weighted, remember yesterday's performance of small caps, mid caps and large caps? If you don't, small caps were down nearly .90% while large caps closed slightly in the green.

In any case, over night things weren't great for China again, from Bloomberg

Bloomberg News

China’s Foreign Direct Investment Falls for Fourth Month

Foreign investment consensus was +14.6%, it came in at -0.9%


Elsewhere in Europe, France and Spain had successful debt auctions, lifting sentiment in Europe.


In the US:

• Initial claims: 351K vs 356K Expected, previous revised higher from 362K to 365K

• Empire Fed: 20.21 on consensus of 17.50,  19.53 previously
• New Orders dropped 6.84 vs 9.73
• Prices Paid explodes to 50.62, 25.88 previous. Biggest Rise since January 2009

New orders and Prices paid are indicative of a margin squeeze for companies.

• PPI: 0.4% vs  consensus ar 0.5%, 0.1% Previously
• PPI ex food and energy: 0.2%, Exp 0.2%

I usually don't like posting other people's charts, but in this case with the breadth post so fresh in our minds, I thought this chart looked a lot like some we have seen recently in breadth, 3C and Credit/Risk assets as far as deterioration and timing...

In yellow, the aggregate of US economic indicators, in blue the S&P-500. I didn't draw in the arrows, but they are pointing out divergences from last year.


Still ahead we have the EIA Natural Gas report at 10:30