Written by Gary
Closing Market Commentary For 08-26-2014
The DOW Made a new high but closed below the previous closing high, but above 17000. The SP500 also made a new historic high, but made a new closing high and importantly, closed AT 2000.02. These events are more psychological than anything, but savvy investors pay attention to such menial statistics.
By 4 pm there was a brief and fractional selloff which the BTFDers took advantage of and saved the SP500 from closing below 2000. I can't seem to get into the bullish spirit, market action just doesn't seem right.
This low volume is the harbinger of bad things to come. Like an automobile gas tank, you can't go very far when it is empty, the financial markets work the same way. It used to be that a volume spike associated with a new high signaled a top. Welcome to the new reality.
For the last 2 weeks, the US Dollar has surged - hitting new 13-month highs today amid JPY and EUR weakness - and for the last 2 weeks, US stock and bond markets have rallied (leaving 30Y yields implying the S&P is 130 points rich or yields are 25bps too low).
S&P tops 2,000, Nasdaq closed up for 10th day in a row, Russell outperformed on major short-squeeze, Trannies slid red for the week. Today saw modest Treasury weakness (30Y +2bps, 2Y -1bps) but still lower on the week; gold ($1285), silver ($19.50), and oil ($94) gained on the day - despite USD strength - as copper dropped 1%.
Credit markets remain unimpressed by record-er highs in stocks. VIX decoupled from equity strength today as NASDAQ options feeds broke. Volume was an utter disaster... that is all.
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 now I am very concerned. The SP500 MACD has turned up, but remains above zero at +10.59. I would advise caution in taking any position during this uncertain period although some technical indicators have starting to turn bearish. The mornings market direction meter is slightly bullish, but the $VIX is 'slightly' trending from neutral to bearish. In other words, anything could happen.
Investing.com members' sentiments are 55 % bearish and when it switches over to bullish, as it did on Tuesday 8-5, watch for the market bottom to fall out some are saying as the markets usually go against 'Sheeple' buying high and selling low.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.91. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at +35.40. (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. Monday, 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 17107 up 30 or 0.17%.
The SP500 is at 2000.02 up 2.10 or 0.11%.
SPY is at 200.40 up 0.37 or 0.17%.
The $RUT is at 1173 up 8 or 0.69%.
NASDAQ is at 4570 up 13 or 0.29%.
NASDAQ 100 is at 4071 up 4 or 0.10%.
$VIX 'Fear Index' is at 11.61 down 0.09 or -0.77%. 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 elevated, but trending down.
WTI oil is trading between 94.32 (resistance) and 93.38 (support) today. The session bias is neutral, volatile and is currently trading down at 93.84. (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 103.35 (resistance) and 102.35 (support) today. The session bias is negative, sideways and is currently trading down at 102.47. (Chart Here)
Gold rose from 1276.18 earlier to 1291.71 and is currently trading down at 1283.50. The current intra-session trend is neutral, but trending down. (Chart Here)
Dr. Copper is at 3.212 falling from 3.232 earlier. (Chart Here)
The US dollar is trading between 82.73 and 82.47 and is currently trading up at 82.69, the bias is currently positive and volatile. (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
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Written by Gary