Written by Gary
Closing Market Commentary For 03-17-2014
A very boring afternoon with spurts of high volume to get ones attention, but nothing ever came of these moments. The DOW, SP500 and SPY reached up to the morning highs, but never climbed above those numbers, while the NASDAQ actually had a very slight downward trend.
By 4 pm everyone in the office had had it with this slow day and was ready to file out, call it a day and catch a train to the burbs. The averages started to melt off their high about 3:40, but didn't go anywhere as the bulls and bears battled it out on low volume. What is for tomorrow?
I would not be at surprised to see the markets melt up or down in tomorrows session, but I do not expect any drastic moves either. (Watch out for that Black Swan though.)
All in one blurb explaining what must happen to keep this bull run going.
. . . but it will rise on an "increase in the level of profits" and "we expect an 8% rise in the level of earnings this year",
. . . even though "we expect many firms will issue negative earnings guidance ahead of 1Q 2014 reporting season that takes place from mid-April to mid-May."
The short term indicators are leaning towards the hold side at the close. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The 50DMA, MACD, volume and a host of other studies have not turned, only a 6% correction (and recovery) and that is not enough for me to start shorting. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 56 % sell. (was 100% sell at the opening)
Several notes of negativity are that the daily volume is very low matching the period of historical highs in the past which could set the stage for addition weakness and market decline. The longer MACD view is starting to turn downhill, but not convincingly signaling a down trend as it is very weak. Lastly, the markets are oversold and the margin debt for stock purchases are at an all time high.
In looking at the 50 DMA the current SP500 is above that line, but way above the 200 DMA and on 02-06-14 crossed above the 100. I can not see, as of right now where the MA's are rolling over to indicate any permanent bear run in fact quiet the opposite. The 50 DMA is flatting slightly, but not descending which is always the first sign the bears are smacking their lips in anticipation of a medium rare steak.
What is currently causing problems for the Emerging Markets is directly related to the tapering and most investors are considering this factor along with the Argentine Peso and the Chinese Banking woes. The tension in Ukraine and Crimea along with proposed sanctions against Russia are also negatively effecting the World markets. All along we have assumed the Fed's will continue the taper program - so far, they are moving ahead and a lot of 'sheeples' are jumping in the markets on what I think is a sinking ship of fools.
The Best Stock Market Indicator Update says the market is untradable. The OEXA200R ended the week at 80%, down from 82% last weekend.
Of the three secondary indicators:
- RSI is NEGATIVE (below 50).
- MACD is NEGATIVE (black line below red).
- Slow STO is POSITIVE (black line above red).
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The DOW at 4:00 is at 16247 up 182 or 1.13%.
The SP500 is at 1859 up 18 or 0.96%.
SPY is at 186.35 up 2 or 0.90%.
The $RUT is at 1188 up 7 or 0.58%.
NASDAQ is at 4280 up 35 or 0.81%.
NASDAQ 100 is at 3663 up 35 or 0.95%.
$VIX 'Fear Index' is at 15.69 down 2.13 or -11.95%. Neutral Movement
The longer trend is up, the past months trend is positive, the past 5 sessions have been negative and the current bias is sideways.
WTI oil is trading between 98.90 and 97.03 today. The session bias is negative and is currently trading down at 97.47. (But have you noted the higher prices at your local pump as they are jacked up because of Spring Break?)
Brent Crude is trading between 108.58 and 106.25 today. The session bias is negative and is currently trading down at 106.16.
Gold fell from 1392.43 earlier to 1362.57 and is currently trading up at 1367.50. The current intra-session trend is negative.
Dr. Copper is at 2.950 up from 2.922 earlier.
The US dollar is trading between 79.69 and 79.41 and is currently trading down at 79.50, the bias is currently negative.
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Written by Gary