Interesting Divergence
From the July Highs
Dow Jones Industrial Average: Unched
Dow Jones Transportation Average: -3.0%
General Electric: -5.5%
Bloomberg
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click hereThere were a lot of happy faces last week when the Dow and S&P 500 got back on record highs, but hold the high fives.
Both General Electric and the Dow Jones Transportation Average have NOT confirmed the celebration. Even more challenging, the CBOE Volatility Index is 4.5% ABOVE this month’s low, another NONE confirmation.
Years ago, back in our Morgan Stanley days Barton Biggs warned us of the “GE – Transports non-confirmation omen.” It’s a classic sign that unsustainable factors are holding up stock prices, not solid fundamentals. We have an equity market positioned on a loose clay foundation with NO sign of bedrock.
Our 21 Lehman Systemic Risk Indicators are telling us something, pick them up here, click on this link:
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click hereVIX Now Up 9% off this Month’s Low
Spread between UX2 (2 month VIX Future) and UX8 (8 month VIX Future) back out at 4.64, widest since November 2013. LOTS of vol sellers out there on a lazy August Monday. The curve is crazy steep, rich contango.
Core PPI Plunge
The Labor Department said on Friday its producer price index for final demand dropped 0.4 percent last month, the first decline since March and the largest since September 2015. It increased 0.5 percent in June.
In the 12 months through July, the PPI slipped 0.2 percent after rising 0.3 percent in the 12 months through June. Economists polled by Reuters had forecast the PPI edging up 0.1 percent last month and gaining 0.2 percent from a year ago
