Market Commentary: Markets open Higher On Elevated Volume, Still Not Convincing

August 7th, 2014
in Gary's blogging, market open

Written by

Opening Market Commentary For 08-07-2014

Premarkets were up 0.40% and briefly climbed to +0.45% at the opening before melting down fractionally on low to moderate volume.

By 10 am the BTFDers were very active moving the averages back up to opening numbers on elevated volume. Bulls are happy this morning, but we have seen this before and until the averages move up and out of this crossroads zone of indecision, there is a good chance of seeing lower lows.

Follow up:

We are in another sideways trading zone, the like we have seen many times over the past several years and it has always been the precursor to climbing higher, but somehow things ARE different now. I did hear the bear roar yesterday, but it has quieted down somewhat. Our proprietary indicator, although in the positive side of things, but by a very thin margin. More on that in the midday commentary.

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 -8.76. I would advise caution in taking any position during this uncertain period although some technical indicators are starting to turn bearish. members' sentiments are 44 % bearish and when it switches over to bullish, as it did on Tuesday 8-5, watch for the market bottom to fall out some are saying as the markets usually go against 'Sheeple' buying high and selling low.

Investors Intelligence sets the breath at 58.5 % bullish with the status at Bear Confirmed. (Chart Here ) NYSE Bullish Percent Index ($BPNYA) is at 62.52. (Chart Here) Very close to support. S&P 500 Bullish Percent Index ($BPSPX) is at 70.80. (Chart Here) Closed below support.

The Market Is Overpriced But The Correction Will Likely Be Shallow Overbought / Oversold Index ($NYMO) is at -58.32. (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? Tuesday's (8-5) numbers are definitely not a good sign, but today they are improving. Consumer Discretionary ETF (XLY) is at 66.03. (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.

Do You Trust The Fed?

By Bret Jensen

My own opinion is that the Federal Reserve should have taken off the "training wheels" some time ago. The economy would have taken a short-term hit, but I think we would be much further along in our recovery by taking our lumps earlier in the cycle before the Federal Reserve expanded their balance sheet to such a massive level.

So, going forward; Do you trust the Fed? There are myriad reasons I do not and I believe rough times are ahead in the market.

Bottom line here is that I have not seen any serious bears jumping out of the woods just yet, although I am VERY concerned that ANY minor correction could turn nasty in a heart beat. One significant signal would be daily losses in any of the major averages that go over the 'magic' 3 % and then you need to pay close attention to risk-off tactics. There hasn't been a 10% correction in several years and some investors are becoming increasingly concerned an imminent correction is on the way.

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 16484 up 39 or 0.24%.

The SP500 is at 1926 up 6 or 0.30%.

SPY is at 192.64 up 0.60 or 0.31%.

The $RUT is at 1129 up 4 or 0.32%.

NASDAQ is at 4373 up 18 or 0.41%.

NASDAQ 100 is at 3890 up 15 or 0.40%.

$VIX 'Fear Index' is at 15.58 down 0.78 or -4.76%. Neutral 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 neutral and the current bias is elevated and sideways.

How Oil Really Gets Priced

Crude oil prices fall to six-month lows on refinery outlook

WTI oil is trading between 97.42 (resistance) and 96.55 (support) today. The session bias is neutral, volatile and is currently trading up at 97.08.

Brent Crude is trading between 105.11 (resistance) and 104.16 (support) today. The session bias is positive and is currently trading up at 105.08.

Gold has sea-sawed from 1309.91 earlier to 1303.40 and back and is currently trading down at 1306.00. The current intra-session trend is neutral and volatile.

Dr. Copper is at 3.174 falling from 3.185 earlier.

The US dollar is trading between 81.72 and 81.44 and is currently trading up at 81.70, the bias is currently positive and volatile.


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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

Written by Gary


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