The VIX is in the cellar again. No fear. The stock market has been chopping sideways over the last six weeks. This kind of stock market lullaby can be dangerous.
In today’s brief market video I look at the NYSE Composite Index (NYA) on a daily and weekly basis, check a couple of indicators and 3 key ETFs.
I also look at the Baltic Dry Index for the first time in quite a while. Here we go again? Continue reading
China closed its exchanges twice last week when the drops hit 7%. The Shanghai Composite Index (SSEC) is down 15% in 9 trading days this year alone. It is down 41.8% from its June 12, 2015 high…7 months!
Yes it did bounce today. But one day does not a bottom make. Look at the bounces on January 5th and 6th. Look at the bounces in the decline during June to July.
Intra-day today the SSEC approached the August lows but did not break through it. Do I think it will hold? I doubt it. The China Large Cap ETF (FXI) did not hold its August lows. The China breakdown continues. See the chart below. Continue reading
You know those machines. The ones that go beep…beep…beep as they monitor your heart rate. Well one that is monitoring global economic activity is barely beeping. The Baltic Dry Index just hit another new all-time low yesterday. Continue reading
I’ve talked about the Baltic Dry Index many times before. This index is created by the London Baltic Exchange and tracks shipping rates around the globe. They call it a dry index because it measures the shipment of dry goods that are primarily considered raw material to either the production process or to products themselves.
Things like coal, iron ore, steel and cement. Material that drives the world’s economic engines.
The chart below shows that the Baltic Dry Index has just plunged to a new all-time low. In February it first broke to a new all-time low below the July 1986 level. But Friday the Baltic Dry Index fell even further to 498.
The Baltic Dry Index is seen as a leading economic indicator as it is clearly a reflection of the movement of the raw materials that drive economic expansion. Now the skeptics will say hold on here, the supply of ships also affects the price. And yes indeed it does.
And as the Baltic Dry Index rose to a record high in 2008, I can imagine the number of ships being built was increasing as they assume demand would go to the heavens. The experts are also quick to say that it takes about 2 years to build a new ship.
According to data attributed to IHS Global Limited, the orders for new dry bulk ships peaked around the end of 2008 and the peak in new ship construction occurred around spring of 2012…almost 4 years ago.
Yet the Baltic Dry Index has continued bouncing back forth drifting lower. And in February 2015 it plunged to an all-time low. This was followed by a bounce and new hope.
But now a plunge since the end of July has resulted in a new all-time low of 498 on Friday. I find it very interesting the recent plunge began about the time that China started devaluing its currency. The first devaluation occurred on August 11 and was the largest single drop in 20 years. Actions speak louder than words.
But no worries, the experts say it’s all because of a glut of ships.
I’ve been talking about another move down now for a while and today’s price action sure looks like a possible reversal bar on the DJIA. Of course we need continuation to confirm. The DJIA was down 48 points with the SPX down almost 12 and the Nasdaq Composite down 41.
In tonight’s Weekday Market Wrap video, in addition to our normal look at the U.S. markets, I look at the German DAX, Shanghai Composite Index and the Baltic Dry Index. Stocks tonight are Apple (AAPL), Goldman Sachs (GS), Twitter (TWTR) and Boeing (BA). I also show the disaster of the day…Valeant Pharmaceuticals (VRX). Continue reading
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