Market Commentary: Markets Close At Cliff's Edge – Will The Markets Fall Off Tomorrow?

May 20th, 2014
in Gary's blogging, market close

Written by

Closing Market Commentary For 05-20-2014

The DOW closed below its 50 DMA, the SP500 stopped at its 50 DMA, the NASDAQ bounced off its support at 4073 and the $RUT bounced off its support at 1090. It seems the bull pulled off avoiding a major catastrophe, but that's not to say the markets couldn't 'crash' tomorrow.

The averages closed right at the edge of the chasm of no return on red volume that was 3 times as heavy as past sessions. (Feb 1st and Mar 1st were heavier) Should the markets continue the decline tomorrow, investors might as well throw in the towel as there will be a serious correction to contend with I am afraid.

Follow up:

The DOW and the $RUT action today was disturbing and places more pressure on the bulls to step in and correct this mess.

This afternoon's speech by Fed President Plosser, made some remarks that clearly upset investors and was the event that took the markets down.

Fed President Says It Is Fed's Fault Markets Ignore Fundamentals

Equity markets are not happy about the Fed's Charles Plosser's economic exuberance ("3% growth no matter the weather" which is 20% above consensus of 2.5%) and his 'good-news-bad-news' monetary policy hawkishness ("may need to raise rates sooner rather than later").

But perhaps the most crucial part of his speech this morning was what the headlines notably left out.

Plosser admonished his global central bank brethren: "if central banks do not limit their interventionist strategies and focus on returning to more normal policymaking aimed at promoting price stability and long-term growth, then they will simply encourage the financial markets to ignore fundamentals and to focus instead on the next actions of the central bank."

Simply put, he warned, "central bankers have become too sensitive and desirous of managing prices in the financial world.."

Stocks slide after US retailers report weak results; Staples, Dick's Sporting Goods plunge

NEW YORK (AP) - Stocks are closing lower after several major retailers reported disappointing results. Staples dropped 13 percent after the office supply chain said its earnings fell sharply in the latest quarter.

Dick's Sporting Goods plunged 18 percent after its earnings and revenue fell short of what investors were expecting.

The Dow Jones industrial average fell 137 points, or 0.8 percent, to close at 16,374 Tuesday.

The Standard & Poor's 500 index lost 12 points, or 0.7 percent, to 1,872. The Nasdaq composite fell 28 points, or 0.7 percent, to 4,096.

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 and that is not enough for me to start shorting. The SP500 MACD has turned down, but remains above zero at 4.38. I would advise caution in taking any position during this volatile transition period although shows a 64 % buy. (Hard to believe - seriously.) members' sentiments are 65 % 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 16374 down 138 or -0.83%.

The SP500 is at 1873 down 12 or -0.65%.

SPY is at 187.40 down 1.19 or -0.63%.

The $RUT is at 1098 down 17 or -1.48%.

NASDAQ is at 4097 down 29 or -0.70%.

NASDAQ 100 is at 3600 down 15 or -0.42%.

$VIX 'Fear Index' is at 12.96 up 0.54 or 4.35%. Neutral 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 net negative and the current bias is negative.

How Oil Really Gets Priced

WTI oil is trading between 102.55 (resistance) and 101.72 (support) today. The session bias is positive and is currently trading up at 102.52.

Brent Crude is trading between 109.99 (resistance) and 109.11 (support) today. The session bias is positive and is currently trading up at 109.78.

Gold rose from 1286.09 earlier to 1296.71 and is currently trading up at 1294.70. The current intra-session trend is sideways.

Analysts forecast a corrosive year for copper prices

Dr. Copper is at 3.143 falling from 3.174 earlier.

The US dollar is trading between 80.17 and 80.02 and is currently trading up at 80.10, the bias is currently sideways and volatile.

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Written by Gary


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