Written by Gary
Closing Market Commentary For 05-09-2014
The DOW made a new historical closing high and for once the SP500 lagged behind. Overall, the volume was anemic and the $VIX plunged below 13, while proprietary indicators inched over to negative.
By 4 pm even the bulls were worried about future sessions next week, especially if the Ukraine erupts in war. The $RUT closed below the 200 DMA and the small caps in general are trending down off of highs set back in early March, 2014. So what is the verdict? Time to exit?
I think the markets are going to consolidate some more and then correct downward because of Equity Market Weakness and some Bear Market Conditions. If you listen to the bulls, the markets will eventually trend higher, my question is, in what year? This is going to be a scary weekend for some investors who failed to take some off the table if the Ukraine goes to war - I mean full time, not this cowboy western shootem up crap we have seen lately.
Every day this week saw early weakness (the dump) succumb to a rampathon (pump) but as those dump-and-pumps progressed the gap between small-cap/high-beta and large-cap/blue-chip widened and widened.
The Russell (and the S&P) had its worst week in a month but the Dow (and just Trannies) managed to close the week green and new record highs. Homebuilders were the worst sector on the week (-2.5%) and Staples best with a modest gain.
Away from stocks, the USD surged 0.55% on the week (its biggest jump in 7 weeks) led by EUR weakness (250 pips on Draghi promise). The biggest news was in bond-land where the 30Y yields exploded post-Yellen (+10bps on the week) and the short-end rallied (-4bps) for the biggest steepening in 20 months.
Gold closed the week at its lowest in 3 months. Much was made of the shift lower in VIX today (back under 13) - especially ahead of the Donetsk referendum - but given the market's relative underperformance it would appear hedges were lifted and positions derisked simultaneously.
The short term indicators are leaning towards the hold side at the close, but tensions in the Ukraine signal to favor risk off. The all important signs of reversal, up or down, have not been observed on the large caps so we are mostly, at best, neutral and conservatively holding. The important large cap 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 SP500 MACD has turned down, but remains above zero at 5.35. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 32 % buy. (Could be right, I have seen some weird markets before.) Investing.com members' sentiments are 71 % bearish.
If you would like to get advanced buy/sell tweets, sign-up in the column to the right of this post by clicking on the 'Follow' button. Write me with suggestions and I promise not to bite.
The DOW at 4:00 is at 16583 up 32 or 0.20%.
The SP500 is at 1878 up 2.85 or 0.15%.
SPY is at 187.96 up 0.29 or 0.15%.
The $RUT is at 1107 up 10 or 0.89%.
NASDAQ is at 4072 up 20 or 0.50%.
NASDAQ 100 is at 3556 up 15 or 0.43%.
$VIX 'Fear Index' is at 12.92 down 0.51 or -3.80%. 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 sideways and the current bias is volatile and positive.
WTI oil is trading between 101.15 (resistance) and 99.75 (support) today. The session bias is negative and is currently trading down at 100.10.
Brent Crude is trading between 109.02 (resistance) and 107.66 (support) today. The session bias is negative and is currently trading up at 107.98.
Gold fell from 1294.50 earlier to 1285.61 and is currently trading up at 1289.30. The current intra-session trend is positive and volatile.
Dr. Copper is at 3.085 rising from 3.053 earlier.
The US dollar is trading between 79.37 and 79.96 and is currently trading down at 79.92, the bias is currently positive.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary