Market Commentary: New Highs, Falling Volume, Nervous Bulls

July 1st, 2014
in Gary's blogging, midday post

Written by

Midday Market Commentary For 07-01-2014

A steady march upward since the opening bell pushes the SP500 to new highs (1974.63), yet volume falls. So who is buying or is this another Wall Street manipulation?

By noon I remain a very nervous bull.

Follow up:

These two articles by Cam Hui are timely, accurate, disturbing and a must read.

This Will End In Tears, But When? (Part 1)

  • I have outlined in the past my long-term concerns over expected equity returns. Valuations are stretched, but there are no immediate signs of a bearish trigger.

  • Too much complacency has shown up in low volatility in all asset classes. Such an environment encourages investors to take on too much risk.

  • There's also little margin of safety built into valuations. With bond yields edging down this year and inflation gaining momentum, real interest rates (adjusted for inflation) are again approaching zero.

  • The metaphor about the cracked tree that has a crack in it, you worry it's vulnerable to a storm in the backyard perfectly captures the current environment.

'Ending In Tears' Doesn't Mean The Market Goes Down Right Away (Part 2)

The markets are getting frothy. The combination of too much complacency, which leads to excessive risk appetite, and diminishing margins of safety will magnify the downside effect of any negative catalysts. However, the existence of such a high risk environment doesn't mean that stock prices go down right away.

I examine the likely bearish triggers for risky assets such as stocks. In summary, there are four broad categories of risks to the U.S. equity market:

  • Geopolitics

  • U.S. politics

  • Inflation scare

  • Earnings growth scare

The short term indicators are leaning towards the hold side at the midday. 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 flat, but remains above zero at 14.97. I would advise caution in taking any position during this volatile period. shows a 88 % buy. members' sentiments are 62 % bearish and Investors Intelligence sets the breath at 68.9 % bullish with the status at Bear Correction. NYSE Bullish Percent Index ($BPNYA) is at 73.86. S&P 500 Bullish Percent Index ($BPSPX) is at 83.20.

(Click on $BPNYA or $BPSPX to see chart)

The markets are still susceptible to climbing on 'Bernankellen' vapor, use caution!

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 12:15 is at 16955 up 128 or 0.76%.

The SP500 is at 1973 up 13 or 0.67%.

SPY is at 197.08 up 1.37 or 0.71%.

The $RUT is at 1207 up 14 or 1.20%.

NASDAQ is at 4458 up 50 or 1.14%.

NASDAQ 100 is at 3893 up 43 or 1.12%.

$VIX 'Fear Index' is at 11.10 down 0.47 or -4.06%. Bullish Movement

(Follow Real Time Market Averages at end of this article)

The longer trend is up, the past months trend is positive, the past 5 sessions have been net even and the current bias is elevated and sideways.

How Oil Really Gets Priced

WTI oil is trading between 106.08 (resistance) and 105.01 (support) today. The session bias is negative and volatile and is currently trading down at 105.14.

Brent Crude is trading between 112.81 (resistance) and 112.08 (support) today. The session bias is negative and volatile and is currently trading down at 112.12.

Maybe I'm Wrong - Justifying $2,000+ Gold by Jeffrey Dow Jones

Gold fell from 1333.03 earlier to 1324.71 and is currently trading down at 1328.00. The current intra-session trend is sideways and quiet.

Analysts forecast a corrosive year for copper prices

Dr. Copper is at 3.204 rising from 3.194 earlier.

The US dollar is trading between 79.89 and 79.79 and is currently trading up at 79.84, the bias is currently sideways and quiet.

Real Time Market Numbers



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Written by Gary


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