THURSDAY 8/21/14; Global PMI's; DLTR; SHLD; Existing Home Sales; Philly Fed; Leading Indicators; CRM; GPS; GME; MRVL

Japan PMI is up strongly to 52.4 versus the 50.5 last month. The yen remains weak with the dollar/yen elevated at 102.80 pumping the NIKK stock market higher that gains +0.9%. The weak yen benefits auto manufacturers with TM, HMC, Nissan and Suzuki all up from +0.5% to 2.5


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 4 sales. INTU earnings disappoint and guidance is lowered creating a -2.1% drop. MRVL beats on EPS but is only in line on top line revenue. BRCM trades higher on an earnings beat.

The pentagon and Defense Secretary Hagel say ISIS is an imminent threat to the US and a more dangerous terror group than Al-Qaida. A few months ago, President Obama called the ISIS militants moving into Iraq from Syria the “JV team.” In the States, high school sports teams consist of the top senior-class players on the varsity team and the up and coming underclassman and less talented athletes on the junior varsity team (JV). In other words, the president was dismissing the ISIS threat as if they were a rag-tag group of a few dozen fighters that pose no significant threat. He was wrong.

Both republicans and democrats are calling for a clearer foreign policy since it appears the president is figuring it out as he goes. In addition, the optics of President Obama frolicking on the golf course each day laughing it up with friends as beheadings occur in Iraq is raising eyebrows in America. The US, UK, Canada and other Western nations are becoming more concerned over a potential increase in domestic terrorism. Dozens, and perhaps as many as 500, of the ISIS militants in Iraq and Syria hold passports to Western countries allowing these nutcases to easily enter and commit violent terrorist acts.

On CNBC business television, Investor Dennis Gartman of the Gartman Letter says equities are in melt-up mode and this will continue going forward. Gartman advises viewers to not short the equity markets. Market technician Tom McClellan calls for a market selloff in September but as he speaks he is watering down the prognostication. McClellan comments on the stronger NYAD line with robust advancers and strong market breadth in recent days that will prohibit another market top like 2000 or 2007 occurring. He expects a September swoon but after that markets will continue higher. McClellan says the third year of a presidential term is strong and the move higher in stocks typically begins in October in the second year (which is this October 2014). He is also bullish on gold and expects a bottom to be placed over the next month.

Nearly every analyst, trader or strategist that waxes worry over high stock prices and a potential pull back, in the next sentence will say that equities will be higher over the next couple years. In other words, there are only two trading groups now both bullish. First, the bulls that expect markets to continue higher without interruption and second, those that expect minor pull backs but all are buying opportunities for higher highs going forward. This week’s rally has whipped long traders into frenzy that expect Fed Chair Yellen to provide a very dovish speech from Jackson Hole Symposium tomorrow. Extremely few traders, call it no one, expect a major multi-year top to print like 2000 or 2007 to occur (think of this from a contrarian perspective). The CPC put/call ratio drops to 0.72 verifying that traders remain very complacent (complacency creates market tops).