Market Commentary: Markets Open Flat, Large Caps Fall Into Red, Volume Low

September 8th, 2014
in Gary's blogging, market open

Written by

Opening Market Commentary For 09-08-2014

Premarkets were down -0.10% with some unusual action. The markets opened down, quickly climbing to flat status on moderate volume (low by historical standards) and then turned around.

By 10:30 the large caps were solidly in the red and the small caps were green and healthy which lead me to believe the SP500 will improve by the close, or so the bulls hope.


Follow up:

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, but now I am very concerned. The SP500 MACD has turned flat, but remains above zero at 13.19. 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 69 % 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 61.4 % bullish with the status at Bear Confirmed. (Chart Here )

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 65.82. (Chart Here) Very close to resistance now and rising.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 76.00. (Chart Here) Remains below support, now resistance. Bearish flatting.

StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 24.28. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.

StockChart.com Overbought / Oversold Index ($NYMO) is at +6.92. (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 and apparently it has started.

StockChart.com Consumer Discretionary ETF (XLY) is at 69.12. (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) This chart clearly shows that dropping below 65.50 should be of a great concern to bullish investors. Wednesday, 9-3-2014, XLY edged up to 69.25 and that is another notch in the gun signaling that we might have another reversal very soon - at least to cover the gap below at 67.85.

Why You Should Not Be Comfortable With The Level Of The Stock Markets

Summary

  • The Dow Jones has set a new record above 17,000.

  • The NFP came out with a stronger than expected number of 288,000 new jobs for June.

  • Wage growth remains low, well below the level the Fed would like to see.

The U.S. economic recovery is not on sure footing yet. There are foundation issues, especially in the housing market and with wages. The Fed should take into account these problems before raising rates. The Fed is in the middle of tapering its massive bond buying program, hoping to end it by end of October 2014. They have continued to keep short term rates near zero, amid speculation they will raise them soon. The Fed is correct in keeping them as is. It is still too early to raise rates. While 200K new jobs a month is a good thing, a print of 300K would point to a stronger economic recovery.

There are reasons to be concerned. While there is a feeling of euphoria over the Dow Jones hitting 17,000 and closing above it, do not expect it to stay at this level. There is no real economic growth supporting it.

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.

Sometime in the future, there will be another three percent drop, only it will go to four, recover somewhat and the BTFDers will cry halleluiah and buy again. Only this time it doesn't recover fully like in the past and drops again, increasing the net drop to seven percent and so on.

Investors are currently unhappy, unenthusiastic, skittish and ready to jump ship every time it nudges against a small financial iceberg. They remain long for now unable to afford to sell and live off cash savings that have negative real rates thanks to the Feds. They feel in their guts, correctly, that a real 'correction' is coming and can't do anything about it until it is too late. Greed rules the day and investors should be very cautious.

  • 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.

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".

As long-time readers know, says David Moenning, "I believe it is VITAL to have systems and/or models to guide one in their investing journey. As the late Marty Zweig used to say, 'Those who rely on a crystal ball will wind up with an awful lot of crushed glass in their portfolio'." This basically states our views on the market too, although it is best to be ready for the unexpected if you are bullish.

The DOW at 10:30 is at 17089 down 50 or -0.29%.

The SP500 is at 2001 down 7 or -0.33%.

SPY is at 200.58 down 0.55 or -0.27%.

The $RUT is at 1168 down 2 or -0.18%.

NASDAQ is at 4585 up 3 or 0.06%.

NASDAQ 100 is at 4093 up 3 or 0.08%.

$VIX 'Fear Index' is at 12.94 up 0.84 or 6.95%. Bearish Movement

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

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

How Oil Really Gets Priced

WTI oil is trading between 93.55 (resistance) and 91.81 (support) today. The session bias is negative and is currently trading down at 92.02. (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 5H time scale.)

Brent Crude is trading between 100.99 (resistance) and 99.39 (support) today. The session bias is negative and is currently trading down at 99.58. (Chart Here)

Why Gold Will Rise When The Dollar Falls

- and -

The general consensus is that gold prices will actually fall in the next twelve months (Sept to Aug. 2015). Goldman Sachs estimates that gold will fall to $1,050 an ounce, a drop of nearly 19%.

Gold fell from 1272.52 earlier to 1257.39 and is currently trading down at 1258.40. The current intra-session trend is negative. (Chart Here)

Dr. Copper is at 3.201 rising from 3.162 earlier. (Chart Here)

The US dollar is trading between 84.14 and 83.79 and is currently trading down at 84.11, the bias is currently positive. (Chart Here) There is a gap below between 83.92 and 83.79, watch out below as this rise is expected to be temporary.

 

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

 

Written by

Opening Market Commentary For 09-08-2014

Premarkets were down -0.10% with some unusual action. The markets opened down, quickly climbing to flat status on moderate volume (low by historical standards) and then turned around.

By 10:30 the large caps were solidly in the red and the small caps were green and healthy which lead me to believe the SP500 will improve by the close.

<<<<<<<<<<<>>>>>>>>>>

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, but now I am very concerned. The SP500 MACD has turned flat, but remains above zero at 13.19. 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 69 % 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 61.4 % bullish with the status at Bear Confirmed. (Chart Here )

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 65.82. (Chart Here) Very close to resistance now and rising.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 76.00. (Chart Here) Remains below support, now resistance. Bearish flatting.

StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 24.28. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.

StockChart.com Overbought / Oversold Index ($NYMO) is at +6.92. (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 and apparently it has started.

StockChart.com Consumer Discretionary ETF (XLY) is at 69.12. (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) This chart clearly shows that dropping below 65.50 should be of a great concern to bullish investors. Wednesday, 9-3-2014, XLY edged up to 69.25 and that is another notch in the gun signaling that we might have another reversal very soon - at least to cover the gap below at 67.85.

Why You Should Not Be Comfortable With The Level Of The Stock Markets

Summary

  • The Dow Jones has set a new record above 17,000.

  • The NFP came out with a stronger than expected number of 288,000 new jobs for June.

  • Wage growth remains low, well below the level the Fed would like to see.

The U.S. economic recovery is not on sure footing yet. There are foundation issues, especially in the housing market and with wages. The Fed should take into account these problems before raising rates. The Fed is in the middle of tapering its massive bond buying program, hoping to end it by end of October 2014. They have continued to keep short term rates near zero, amid speculation they will raise them soon. The Fed is correct in keeping them as is. It is still too early to raise rates. While 200K new jobs a month is a good thing, a print of 300K would point to a stronger economic recovery.

There are reasons to be concerned. While there is a feeling of euphoria over the Dow Jones hitting 17,000 and closing above it, do not expect it to stay at this level. There is no real economic growth supporting it.

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.

Sometime in the future, there will be another three percent drop, only it will go to four, recover somewhat and the BTFDers will cry halleluiah and buy again. Only this time it doesn't recover fully like in the past and drops again, increasing the net drop to seven percent and so on.

Investors are currently unhappy, unenthusiastic, skittish and ready to jump ship every time it nudges against a small financial iceberg. They remain long for now unable to afford to sell and live off cash savings that have negative real rates thanks to the Feds. They feel in their guts, correctly, that a real 'correction' is coming and can't do anything about it until it is too late. Greed rules the day and investors should be very cautious.

  • 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.

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".

As long-time readers know, says David Moenning, "I believe it is VITAL to have systems and/or models to guide one in their investing journey. As the late Marty Zweig used to say, 'Those who rely on a crystal ball will wind up with an awful lot of crushed glass in their portfolio'." This basically states our views on the market too, although it is best to be ready for the unexpected if you are bullish.

The DOW at 10:30 is at 17089 down 50 or -0.29%.

The SP500 is at 2001 down 7 or -0.33%.

SPY is at 200.58 down 0.55 or -0.27%.

The $RUT is at 1168 down 2 or -0.18%.

NASDAQ is at 4585 up 3 or 0.06%.

NASDAQ 100 is at 4093 up 3 or 0.08%.

$VIX 'Fear Index' is at 12.94 up 0.84 or 6.95%. Bearish Movement

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

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

How Oil Really Gets Priced

WTI oil is trading between 93.55 (resistance) and 91.81 (support) today. The session bias is negative and is currently trading down at 92.02. (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 5H time scale.)

Brent Crude is trading between 100.99 (resistance) and 99.39 (support) today. The session bias is negative and is currently trading down at 99.58. (Chart Here)

Why Gold Will Rise When The Dollar Falls

- and -

The general consensus is that gold prices will actually fall in the next twelve months (Sept to Aug. 2015). Goldman Sachs estimates that gold will fall to $1,050 an ounce, a drop of nearly 19%.

Gold fell from 1272.52 earlier to 1257.39 and is currently trading down at 1258.40. The current intra-session trend is negative. (Chart Here)

Dr. Copper is at 3.201 rising from 3.162 earlier. (Chart Here)

The US dollar is trading between 84.14 and 83.79 and is currently trading down at 84.11, the bias is currently positive. (Chart Here) There is a gap below between 83.92 and 83.79, watch out below as this rise is expected to be temporary.

 

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

 









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