After falling for the first time this year last week, Baker Hughes reports US oil rig count rose once again (as perhaps Cindy impacted drilling last week) for the 23rd week in the last 24.
With The Fed is full 'taper' mode and The ECB hinting, the world is left to rely on Kuroda to single-handedly buy-the-dip in stocks and maintain bond yields at the mandated level. With Japanese stocks fading in the last two weeks (as bond yields spike), it appears the ubiquitous 'hand of god' has disappeared...
And judging by the biggest Japanese equity fund outflows in 8 years, the fear is spreading...
Stocks are now in very serious trouble.
The S&P 500 has fallen to test its “election rally” trendline. If the market breaks down here, there’s essentially one giant “air pocket” down to 2,200 or so.
The bad news is that high yield credit (HYG), which leads the S&P 500, has already broken its respective trendline. This is a serious “risk off” signal.
Indeed, it gets worse. HYG is in fact breaking out of a massive rising wedge pattern that could very well mark the end for the 9 year bull market in risk.
What would this mean for stocks?
Moments ago the Fed released its July Monetary Policy Report which forms the basis of Janet Yellen's testimony to Congress next week, and while it does not traditionally discuss monetary policy it does provide a snapshot of the Fed's take of the economy and capital markets at any given moment. Here are some of the highlights courtesy of BBG:
Authored by Charles Hugh Smith via OfTwoMinds blog,
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