China to Boost Markets

Bloomberg reports China’s Securities Regulatory Commission is considering letting investors to sell bonds that can be swapped for shares in an effort to deter stock sales and support the nation’s stock market. The government is hoping to boost investor confidence and limit massive share sales. China’s benchmark index is the worst performing market this year and to date, has dropped 56%. The commission is still studying the plan and has not made an official public announcement. See Professor Vitaliy Katsenelson’s China, Starbucks Share Same Problems.

From the Bull Pen: “Chinese Google” Baidu (BIDU) popped up on the radar yesterday. Bulls can look for an upside trade with sell stops near $315.

From the Bear Cave: China bears can consider the Ultrashort China 25 (FXP). Sell stops can be set near $83.


S&P Cuts S&P

According to the Wall Street Journal, analysts at Standard & Poor’s say that preliminary figures show that earnings for members of its S&P 500 index are down by 29% for the second quarter. The drop would mark the fourth consecutive quarter of falling profits. Ex financials, earnings would be up 3.2%. Consumer discretionary companies fell 52%, but all other sectors showed growth including IT companies and utilities which gained 23% and 15% respectively. For the third quarter, earnings are expected to rise a combined 4.3% from a year earlier. See Professsor Bennet Sedacca’s view in Dead Banks Walking?

From the Bull Pen: Although the big picture continues to be bearish, tactical bulls can look to the Ultra S&P 500 (SSO) for a short term upside trade. Sell stops can be set below $59.

From the Bear Cave: Bears can consider retail plays like J.C. Penney (JCP) and Sears (SHLD). Buy stops can be set above $41 and $95.50 respectively.


For more ideas in real time throughout the trading day, check out Minyanville’s Buzz & Banter.


Quick Check Around the World

Asian trading closed with the Hang Seng -0.23%, Nikkei -0.78%, Sensex +0.22%, Taiwan -0.94% and Shanghai -2.62%.

A quick check of Europe has the CAC -0.80%, DAX -0.11%, FTSE -1.55%

As of 8:40 AM EST, S&P Futures are lower -0.80 points to 1265, and Nasdaq futures are down -2 points to 1893.


A Look At Commodities

Crude oil is down -0.31 to 114.80. Gold is off -9 to 816.70. Silver is lower -0.255 to 13.170, and copper is higher +1.05 to 351.90.

The dollar index is up +0.697 to 77.489.


On the Radar

Economics

9:00 S&P/CaseShiller Home Price Index: 168.5 prior.
9:00 S&P/CS Composite-20 (y/y): -16.2% cons.
10:00 Consumer Confidence: 53.0 cons.
10:00 New Home Sales: 524 k cons.
10:00 New Home Sales (m/m): -1.2% cons.
10:00 House Price Purchase Index (m/m): -0.4% cons.
10:00 House Price Purchase Index (q/q)
10:00 Richmond Fed Mfg Index: -10
2:00 Minutes of August 5 FOMC meeting

Good luck today!