Written by Gary
Closing Market Commentary For 08-25-2014
It is never good when a new important psychological market level is reached and no one gives a hoot. The SP500 finally reached 2000 and then nothing!
By 4 pm the SP500 and the averages just ran out of steam and, unfortunately, closed below 2000, but set a new closing high - expected. The volume for the day was overall anemic and not at all supportive of the SP500's historic high with investors worried.
There is a lot of talk on the TV financial channels that a correction could become a reality soon. I have said there will be a slow motion one begin at the end of December and gain speed as the QE liquidity dries up.
As we noted early on, by the time the cash markets opened this morning, the narrative of compliant Kuroda and drug-peddling Draghi had been painted as worth more than a yellowing Yellen's hawkish comments.
And so it was that stocks, despite weak macro data this morning in the US - bad news is great news - surged as cash markets opened and tagged S&P 2,000 for the first time ever. However, once Europe closed, that exuberance faded in stocks.
Treasuries rallied (30Y closed -2bps) with the front-end weakening very modestly. USD strength (on notable EUR weakness) sent oil and precious metals modestly lower on the day but Copper had a good day (+0.6%).
Today was the lowest S&P futures (non-holiday) trading of the year as the Nasdaq rose for the 9th day in a row.
The medium term indicators are leaning towards the hold side at the close. 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,but I am now concerned. The SP500 MACD has turned up, but remains above zero at +9.06. I would advise caution in taking any position during this uncertain period although some technical indicators have starting to turn bearish.
Investing.com members' sentiments are 56 % 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.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.87. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at 30.17. (Chart Here) (Need to type in $NYMO) It is now around the area where it turns and starts 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. Wednesday, 8-20-2014, $NYMO climbed to 58.24 is signaling a market reversal in our near future.
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 8-25-2014, XLY edged up to 68.98 and that is another notch in the gun signaling that we might have another reversal very soon - at least to cover the gap below. Protect thyself!
The DOW at 4:00 is at 17077 up 76 or 0.44%.
The SP500 is at 1998 up 10 or 0.48%.
SPY is at 200.07 up 1 or 0.51%.
The $RUT is at 1165 up 5 or 0.42%.
NASDAQ is at 4557 up 19 or 0.41%.
NASDAQ 100 is at 4067 up 15 or 0.36%.
$VIX 'Fear Index' is at 11.70 up 0.23 or 2.01%. 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.
WTI oil is trading between 93.94 (resistance) and 93.07 (support) today. The session bias is neutral and is currently trading down at 93.41. (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 102.77 (resistance) and 101.78 (support) today. The session bias is fractionally positive, but very volatile and is currently trading down at 102.70. (Chart Here)
Gold fell from 1282.08 earlier to 1275.16 and is currently trading up at 1276.00. The current intra-session trend is negative and volatile. (Chart Here)
Dr. Copper is at 3.240 rising from 3.202 earlier. (Chart Here)
The US dollar is trading between 82.65 and 82.36 and is currently trading down at 82.59, the bias is currently sideways and quiet. (Chart Here) NOTE: There is a large gap at 82.38 and the dollar is expected to fall and close that gap.
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
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Written by Gary