Market Commentary: Markets Descend Further As Investors Become Increasingly Worried

July 31st, 2014
in Gary's blogging, midday post

Written by

Midday Market Commentary For 07-31-2014

By noon the averages continued to melt downward on low to moderate volume suggesting more than just a few investors were bailing out. This moderate decline is not all unexpected and I would be more worried about a sudden reversal upwards AFTER selling.

The SP500 and the DOW have dipped below a minor support and the 50 day MA and may continue downward tomorrow repeating a similar declining pattern we see every month or so.

Follow up:

We may see a recovery in the next several session, but the fly in the ointment is the $RUT. Not only has it gone below its 200 DMA, but has crossed over a support at 1125 indicating this correction may go to deeper depths where the SP500 could go to 1895. At this level I would become concerned about a really major correction starting if this support is broken.

The medium 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 down, but remains above zero at 3.78. I would advise caution in taking any position during this uncertain period. members' sentiments are 55 % bearish and Investors Intelligence sets the breath at 65.7 % bullish with the status at Bear Correction. (Chart Here ) NYSE Bullish Percent Index ($BPNYA) is at 67.43. (Chart Here) S&P 500 Bullish Percent Index ($BPSPX) is at 78.60. (Chart Here)

The Market Is Overpriced But The Correction Will Likely Be Shallow Overbought / Oversold Index ($NYMO) is at -52.27. (Chart Here) (Need to type in $NYMO) Consumer Discretionary ETF (XLY) is at 66.09. (Chart Here)

Chris Ciovacco says, "As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above 67.06, all things being equal, it is a good sign for stocks and the U.S. economy." (Actually the support looks to be in the 66.88 range) We have entered an area that concerns me should the XLY drops any further. This chart clearly shows that dropping below 65.50 would be of a great concern to bullish investors.

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 16661 down 220 or -1.32%.

The SP500 is at 1939 down 31 or -1.57%.

SPY is at 193.90 down 3 or -1.57%.

The $RUT is at 1122 down 25 or -2.17%.

NASDAQ is at 4378 down 85 or -1.91%.

NASDAQ 100 is at 3901 down 75 or -1.89%.

$VIX 'Fear Index' is at 15.93 up 2.60 or 19.50%. Bearish 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 negative and the current bias is negative.

How Oil Really Gets Priced

WTI oil is trading between 100.37 (resistance) and 99.06 (support) today. The session bias is depressed, volatile and is currently trading down at 99.11.

Brent Crude is trading between 106.81 (resistance) and 105.53 (support) today. The session bias is down, volatile and is currently trading down at 105.70.

Gold fell from 1298.61 earlier to 1285.98 and is currently trading up at 1289.30. The current intra-session trend is negative and volatile.

Dr. Copper is at 3.231 falling from 3.257 earlier.

The US dollar is trading between 81.66 and 81.42 and is currently trading down at 81.53, the bias is currently neutral and volatile.


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Written by Gary


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