Written by Gary
Opening Market Commentary For 09-11-2014
Premarkets were down -0.40% as employment claims miss forecasts, surging most since June. Markets opened down -0.40% and on low volume climbed to -0.10% recovering opening losses.
By 10 am the averages were steadily melting up on not-so-convincing low volume and might make flat status by noon, but the odds are not favoring that to happen. Yesterday's session was the start of a correction, although it might be very shallow I would be cautious in BTD. (Buying the dip)
The big news for today and exacerbating an already weak market, Initial Jobs Claims came in higher than expected.
For the 2nd week in a row, initial claims missed expectations and on the heels of last week's dismal payrolls data (which was "unbelievable" according to the smartest people in the room) it surged to 315k - the highest since June.
Perhaps most critically, on both an adjusted and unadjusted basis, initial claims are [higher] year-over-year (SA 315k vs 307k, NSA 234k vs 229k respectively). Is this noise? It has been 7 weeks now from the mid-July lows.
. . . and the 4-week-average many look at, has risen for 4 of the last 5 weeks.
The medium term indicators are leaning towards the hold side at the opening and our short-term market direction meter is pointing to the downside. 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 +9.70. 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 66 % 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 ($TNX) is at 25.25. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -31.54. (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 - which is short term bearish.
Chris Ciovacco says, "As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy." 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 was a signal that we might have another reversal as were are witnessing. Protect thyself!
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.
What I fear the most in relationship to the end of the infamous QE is that the FED has no backup plan to keep the markets from correcting as they have not done so for several years. As the liquidity starts to 'evaporate' that will in-turn deteriorate the props that have held the markets up so well. Each and every 'correction' will be deeper and deeper as this money phenomenon disappears.
Watch the Fund manages to keep an eye on the volume at AmeriTrade as the best indicator to what Maw and Pop 'Sheeples' retail trading are. Some analysts believe the Federal Reserve may raise interest rates more quickly than they have currently indicated but nothing from Janet Yellen has indicated this.
These managers are are closely monitoring any signals that Ms. Yellen is going to backtrack on exiting QE and these guys will exit the markets long before the 'Sheeples' if she doesn't. Watch the the fund managers!
The longer 6 month outlook is now 35-65 sell (probably should be 40-60 sell) and will remain bearish until we can see what the effects are in the Fed's game plan, Russia's annexing game playing and of course the World's newest player Iraq, ISIS and Israel. I would also take chart and other technical indicators with a lessor degree of reliability for the time being and watch what the Janet Yellen's Fed does over the next couple of months.
The DOW at 10:15 is at 17027 down 42 or -0.24%.
The SP500 is at 1991 down 4 or -0.22%.
SPY is at 199.69 down 0.35 or -0.17%.
The $RUT is at 1163 down 2 or -0.15%.
NASDAQ is at 4579 down 8 or -0.18%.
NASDAQ 100 is at 4085 down 10 or -0.24%.
$VIX 'Fear Index' is at 13.17 up 0.30 or 2.25%. 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 negative and the current bias is net negative and sea-sawing.
WTI oil is trading between 91.89 (resistance) and 90.44 (support) today. The session bias is positive and is currently trading down at 91.56. (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.)
- 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 1250.89 earlier to 1239.25 and is currently trading down at 1240.90. The current intra-session trend is net negative and volatile. (Chart Here)
Dr. Copper is at 3.084 falling from 3.114 earlier. (Chart Here)
The US dollar is trading between 84.49 and 84.22 and is currently trading down at 84.36, the bias is currently net neutral. (Chart Here) >>>> There is a gap below between 83.92 and 83.79, watch out below as any 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
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Written by Gary