Market Commentary: Indices Gap Up On Anemic Volume, Indicators Turning Bearish

August 19th, 2014
in Gary's blogging, market open

Written by

Opening Market Commentary For 08-19-2014

Premarkets were up +0.25% on news US Housing Starts and US Consumer Prices were higher. Markets did gap up +0.35% as expected and immediately started to sea-saw, remaining in the green.

By 10 am the averages were all in the green, melting upwards on very low volume. Some indicators have switched over to bearish - CAUTION is warranted, but the averages still have a way to go, but maybe not today.


Follow up:

In an earlier commentary I suggested the SP500 needed to close a gap (Jul 31) which it did yesterday and another one at 1987 (Jul25) very near the top. The SP500 is certainly climbing higher and when, not if, it closes the last gap investors should take a hard look at their portfolios for 'dogs'. The historical top for the SP500 is just a few point higher and will probably be surpassed one last time. From there I see significant danger in the markets remaining in nosebleed territory.

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 up, but remains above zero at 0.10. I would advise caution in taking any position during this uncertain period although some technical indicators have started to turn bearish.

Investing.com members' sentiments are 48 % 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 58.7 % bullish with the status at Bear Confirmed. (Chart Here )

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 63.18. (Chart Here) Very close to support, but rising.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 72.00. (Chart Here) Remains below support, now resistance.

StockChart.com Overbought / Oversold Index ($NYMO) is at 52.97. (Chart Here) (Need to type in $NYMO) It is now around the area where it turns and start to descend, but any thing below -30 / -40 is a concern. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. Today's 52.97 might mean a reversal in our near future.

StockChart.com Consumer Discretionary ETF (XLY) is at 68.04. (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. Today it gaped up to 66.04 and that is another notch in the gun signaling that we might have another reversal very soon - at least to cover the gap. Protect thyself!

One thing to keep in mind is that stocks may not be setting up for a fearsome bear market. History shows that there are two types of corrections -- sharp, brutal downturns that clear the air fairly quickly and prolonged periods of backing-and-filling that gradually remedy built-up imbalances. Time will tell which one lies ahead.

Eric Parnell, in his timely article below points out the obvious and we may very well see the starting of it right now.

The Slow And Perilous Death Of Bull Markets

Summary

  • A primary worry among many stock investors today is that the long running bull market may soon come to an end.

  • At the heart of their concern is the worry that the subsequent decline into the next bear market could quickly become swift and severe.

  • History has shown that the transition from a bull market to a bear market is a process filled with rallies and correction that plays out over an extended period of time.

  • Bull markets die long slow deaths, and it is this prolonged dying process that causes so many investors to find themselves unwittingly trapped in the next bear market.

A primary worry among many stock investors today is that the long running bull market may soon come to an end. At the heart of their concern is exactly what lies beyond the bull market peak, as many worry that the subsequent decline into the next bear market could quickly become swift and severe.

But history has shown that the transition from a bull market to a bear market is often a gradual and drawn out process filled with rallies and correction that plays out over an extended period of time. In short, bull markets die long slow deaths, and it is this prolonged dying process that causes so many investors to find themselves unwittingly trapped in the next bear market long before they even realize it.

The DOW at 10:15 is at 16892 up 53 or 0.31%.

The SP500 is at 1977 up 6 or 0.29%.

SPY is at 198.05 up 0.69 or 0.35%.

The $RUT is at 1164 up 6 or 0.48%.

NASDAQ is at 4520 up 11 or 0.25%.

NASDAQ 100 is at 4028 up 8 or 0.20%.

$VIX 'Fear Index' is at 12.13 down 0.19 or -1.54%. Neutral Movement

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

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

How Oil Really Gets Priced

WTI oil is trading between 94.36 (resistance) and 93.58 (support) today. The session bias is negative and is currently trading down at 93.58. (Chart Here) There is a very large gap at 97.06 and these types of gaps are usually filled sooner rather than later. It would not surprise me to see the oils move back up in the very near future. (Chart Here) (Look at the 60 minute time scale.)

Brent Crude is trading between 102.07 (resistance) and 101.28 (support) today. The session bias is negative and is currently trading down at 101.28. (Chart Here)

Why Gold Will Rise When The Dollar Falls

Gold fell from 1303.33 earlier to 1295.88 and is currently trading up at 1297.40. The current intra-session trend is negative and volatile. (Chart Here)

Dr. Copper is at 3.101 falling from 3.122 earlier. (Chart Here)

The US dollar is trading between 81.92 and 81.61 and is currently trading up at 81.90, the bias is currently positive. (Chart Here)

 

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

"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation inequities, they should try to be fearful when others are greedy and greedy only when others are fearful." - Warren Buffett

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.

Real Time Market Numbers

Leading Stock Quotes powered by Investing.com

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

gary@econintersect.com

Written by Gary

 









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved