Today the NYSE is 56 points from a “death cross.”
That's something we discussed regarding the Dow on Friday, so we won't get all into it again just because another major index looks like it's about to flash a major bearish signal – it's just something else we can enjoy ignoring while we wait to see if the S&P can take back 2,100 on all the “good” news out of China.
That's right, the Shanghai Composite jumped 3.69% last night as China made it even harder to short their market, requiring short sellers to wait 24 hours to cover their positions and repay loans used to buy shares. That means there is a longer period to short a Chinese stock than to buy a gun in the US! All this financial manipulation did not cheer up the copper market, which remained down at $2.36/lb along with Aluminum, both at 6-year lows.
A private Chinese factory gauge released on Monday fell to a two-year low in July and an official index on Saturday slipped to the weakest in five months, adding to a near-$4 trillion rout in Chinese stocks and declining car sales that are threatening economic growth. The country uses about 40 percent of the world's copper and half its aluminum. In the U.S., manufacturing cooled in July from the highest level in five months.
Commodity prices have slumped to the weakest level in 13 years as supply gluts emerged in everything from oil to metals and crops. Zinc joined aluminum, nickel, lead and tin in bear markets on Friday amid the slowdown in China. The Bloomberg Industrial Metals Subindex reached the lowest since April 2009. “Copper could still go lower from here before it starts to pick up pace again,” said Wayne Gordon, an analyst at UBS Group AG in Singapore. “We now are pushing that recovery out a little bit into the fourth quarter.”
This is not isolated to China, of course. As we've discussed, it's already clearly spreading to Asian trading partners and Europe is feeling the effects of China's slowdown and so, apparently are we as July's Gallup Economic Confidence Index got 50% worse, falling from -8 to -12, though still a far cry from the kind of crisis mentality that gripped us in 2008. Still, does this really look like the confidence underlying a market that is making record highs?
