Written by Gary
Closing Market Commentary For 04-09-2014
Well the breakout went to the upside, but on low volume which is a concerning factor regarding market 'staying power' and the ability to hold onto gains. The $VIX dropped to the high 13's, the small caps still remain in a down turn channel and the SP500 is smack dab in the middle of the sideways channel formed at the beginning of March. We remain cautious and are on a 'Hold' status.
By 4 pm the averages were still climbing and volume was picking up as the closing bell rang. The Bull's are in a party mood.
The market appears to be 'ripe' for a decline and GS thinks so too.
While quick to explain how next year will be better (even though he keeps his year-end 1900 target for the S&P 500), Goldman's chief US equity strategist David Kostin warns there is a good chance of a 10% drop sometime in the next 12 months.
The recent 6% pullback (sparked by EM concerns) is only one-third of typical historical corrections and as Kostin notes, the market has gone way too long without a so-called correction (10% from peak to trough).
It's been 22 months (and 50% gains) since the last 10% drop and, based on Kostin's quant work, there is a 67% probability that we'll see that correction - which would take the S&P to around 1700.
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 important DMA's, volume and a host of other studies have not turned, only a past 6% correction (and recovery) and that is not enough for me to start shorting. The MACD has turned down slightly, but remains above zero. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 8 % buy. (Remember this has been negative for weeks.)
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The DOW at 4:00 is at 16437 up 181 or 1.11%.
The SP500 is at 1872 up 20 or 1.09%.
SPY is at 187.02 up 1.99 or 1.08%.
The $RUT is at 1160 up 16 or 1.37%.
NASDAQ is at 4184 up 71 or 1.72%.
NASDAQ 100 is at 3600 up 62 or 1.76%.
$VIX 'Fear Index' is at 13.82 down 1.07 or -7.19%. Bullish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is sideways, the past 5 sessions have been mostly down and the current bias is elevated, but negative trending.
WTI oil is trading between 102.05 and 103.75 today. The session bias is positive and is currently trading down at 103.30.
Brent Crude is trading between 107.13 and 108.07 today. The session bias is elevated, but sideways and is currently trading up at 107.78.
Gold fell from 1314.24 earlier to 1301.29 and then shot back up to 1314.94 and is currently trading down at 1311.60. The current intra-session trend is positive.
Dr. Copper is at 3.047 rising from 3.006 earlier.
The US dollar is trading between 79.95 and 79.54 and is currently trading up at 79.60, the bias is currently slightly negative.
Real Time Market Numbers
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Written by Gary