Market Commentary: Markets Open Down, Trading Sideways On Low Volume

August 5th, 2014
in Gary's blogging, market open

Written by

Opening Market Commentary For 08-05-2014

Premarkets were down -0.45% and remained in that area until the opening. Morning financial's were on the positive note with the US non-manufacturing composite bubbling up to 58.7 from 56.0 moving the futures upwards fractionally.

Markets opened down -0.40% and began the familiar sea-sawing on mostly low volume. It is Tuesday market up day, let's see if that actually hold true.

Follow up:

If I were a BTFDer, today would be a good day to jump in as the positives outweigh the negatives.

The medium term indicators are leaning towards the hold side at the opening. 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 below zero at -4.69. I would advise caution in taking any position during this uncertain period. members' sentiments are 54 % bearish and when it switches over to bullish, watch out for the market bottom to fall out.

Investors Intelligence sets the breath at 59.9 % bullish with the status at Bear Confirmed. (Chart Here ) NYSE Bullish Percent Index ($BPNYA) is at 63.78. (Chart Here) Very close to support. S&P 500 Bullish Percent Index ($BPSPX) is at 72.80. (Chart Here) Closed below support.

The Market Is Overpriced But The Correction Will Likely Be Shallow Overbought / Oversold Index ($NYMO) is at -39.17. (Chart Here) (Need to type in $NYMO) Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50, but this time things may be different - where have I heard this before? Consumer Discretionary ETF (XLY) is at 66.07. (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 should be of a great concern to bullish investors. The next green support line is a good guess to where the correction is going to go. XLY closed with a 'spinning top' candle on Friday 08-01-2014 indicating a reversal.

It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility. Historically, accordingly to Eric Parnell, "major bull markets have almost never reached their final peak in a sideways grinding pattern. Instead, they have almost always peaked with flourish including one final crescendo toward a new all-time high before finally rolling over and succumbing to the forces of the new bear market".

The longer 6 month outlook is now 35-65 sell and will remain bearish until we can see what the effects are in the Fed's 'Tapering' game plan, Russia's annexing game playing and of course the World's newest players Iraq and Israel. I would also take chart and other technical indicators with a lessor degree of reliability for the time being and watch what the Janet Yellen's Fed does over the next couple of months.

Charts and other technical tea reading exercises are, for the most part, not worth the effort to discern directions now that the Fed has refilled the sand box with gravel, rocks and old beer cans. That is just my view, but they have completely thrown a monkey wrench into the works and no one knows anything anymore with certainty.

It is the final ending of QE that worries me the most as many financial institution and emerging markets can not continue to push forward or upwards without the Fed's 'Market Viagra'. The debt stands at 4 trillion and will be at 5 trillion by the time the taper (October 2014) is completed and that is one hell of a debt that 'someone' has to pay. But, that is not all, Cris Sheridan writes in his article, What Happens When Quantitative Easing Ends, "Once liquidity starts to dry up at the end of this year it looks very likely that the yield on 10-year government bonds will go up. That will cause mortgage rates to go up... the property market to come down, a significant correction in the stock market, a negative wealth effect, less consumption and, I think, then the US will start moving back towards recession."

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 10:15 is at 16517 down 53 or -0.32%.

The SP500 is at 1931 down 8 or -0.41%.

SPY is at 193.13 down 0.77 or -0.40%.

The $RUT is at 1123 down 2 or -0.19%.

NASDAQ is at 4366 down 18 or -0.41%.

NASDAQ 100 is at 3888 down 21 or -0.53%.

$VIX 'Fear Index' is at 15.54 up 0.42 or 2.71%. 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 negative and the current bias is down and sideways.

How Oil Really Gets Priced

WTI oil is trading between 98.66 (resistance) and 97.92 (support) today. The session bias is negative and is currently trading up at 98.07.

Brent Crude is trading between 105.65 (resistance) and 104.78 (support) today. The session bias is negative and is currently trading up at 104.94.

Gold fell from 1294.39 earlier to 1283.79 and is currently trading down at 1284.30. The current intra-session trend is negative.

Dr. Copper is at 3.210 falling from 3.248 earlier.

The US dollar is trading between 81.68 and 81.37 and is currently trading up at 81.68, the bias is currently positive.


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Written by Gary


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