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Tuesday, August 11, 2015

Daily update Wholesale sales

About face.  Yesterday they were buying stocks because poor economic data in China was likely to induce more stimulus.  Today they sold stocks because that stimulus was in the form of a currency devaluation. 

SPX did not give back all of yesterday's gains.  It is also still in the triangle.  Breadth was only -63% after starting out -79%.  There was some buying of the weakness.  New highs dropped to 45 and new lows picked up to 159.   Volume increased over yesterday, but we ended well off the lows.  Somebody was out doing some buying.

The futures dropped back below all key MAs once again.  What a choppy mess.

I have written about economic weakness in China for many months now.  The pundits have ignored problems there completely.  I guess they won't be able to ignore them now.  The Chinese economy is in serious trouble.  Nobody devalues their currency because things are good.  This really should not surprise anybody with the way commodity prices have been falling.  There were plenty of warning signs.  This may change people's perception of the global economy.  I have showed plenty of things that showed the economy was not good, but I don't think most investors realized that.  Today was certainly a wake up call.  Will it dampen the dip buyers enthusiasm?  Time will tell.

Once again wholesale sales were weak.  That led to an inventory build again.


I would not say we are in a recession yet.  However, there is clearly an increased risk of production cuts.  This next chart is a bit more troublesome actually.

Since the government went to the big banks in March of 2013 and told them to lower the credit standards for an auto loan down to a breathing human sales have been quite robust.  However, we are now starting to see signs of a potential inventory build the last few months.  Are sales starting to tail off?  As weak as the economy is that would not be good.


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