Market Commentary: Markets Open Down, DOW Off Triple Digits on moderate volume

September 25th, 2014
in Gary's blogging, market open

Written by

Opening Market Commentary For 09-25-2014

The premarkets were basically flat even after mixed US financial news this morning. The futures seemed to have shrug ed off the bombing going on in Syria and investors are looking at the US markets for answers.

By 10 am the averages were solidly in the red with the DOW off triple digits on somewhat moderate volume. Several of the small cap averages had reached the 'off one percent' mark and the market as a whole is looking to fall deeper.

Follow up:

The $NYMO is in oversold territory this morning at -52.30 and the uptick in yesterday's session could have been simply a relief rally that didn't go anywhere. Additionally, the two day spikes in the VIX, such as that seen on Monday and Tuesday, tend to be followed by gains in stocks say some analysts. Today doesn't seem to be one of those times, but in this casino market, you never know.

Most of the investors I know are watching the $RUT with great interest because of its under-performance and its 50 DMA crossing its 200 DMA on Monday the 22nd. Currently the $RUT is testing a support at (or about) 1123. Below that is the next stop of 1090 which I believe we are going to see. Current expectation is that another relief rally will occur around the 1090 area and perhaps driving the large caps back up into nosebleed territory again.

The current 'dip' was started last Friday (19th.) and was expected to have continued into yesterday's session and didn't confusing many investors. Mostly these 'dips' ring up a 3 to 4 percent fall and we barely got a 2% maybe indicating there is still some speculative hunger out there that is being discounted.

The medium term indicators are leaning towards the hold side at the opening and the short-term market direction meter is bearish. We remain mostly, at best, neutral and conservatively holding. The important DMA's, volume and a host of other studies have not turned significantly and that is not enough for me to start shorting, but now I am getting very concerned. The SP500 MACD has turned down, but remains above zero at +4.14. I would advise caution in taking any position during this uncertain period although some technical indicators have starting to turn bearish. members' sentiments are 71 % Bearish and it seems to be a good sign for being bullish. The 'Sheeples' always seem to get it wrong.

Investors Intelligence sets the breath at 56.5 % bullish with the status at Bear Confirmed. (Chart Here ) NYSE Bullish Percent Index ($BPNYA) is at 60.93. (Chart Here) Below support zone and testing. S&P 500 Bullish Percent Index ($BPSPX) is at 70.60. (Chart Here) In support zone and testing. 10 Year Treasury Note Yield Index ($TNX) is at 25.31. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009. Overbought / Oversold Index ($NYMO) is at -52.30. (Chart Here) But anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. Consumer Discretionary ETF (XLY) is at 67.22. (Chart Here)

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.

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 DOW at 10:15 is at 17056 down 154 or -0.89%.

The SP500 is at 1980 down 19 or -0.93%.

SPY is at 197.66 down 2 or -0.95%.

The $RUT is at 1113 down 15 or -1.33%.

NASDAQ is at 4494 down 64 or -1.45%.

NASDAQ 100 is at 4035 down 60 or -1.45%.

How the Popular 'VIX' Gauge Works

$VIX 'Fear Index' is at 15.19 up 1.99 or 15.00%. Bearish 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 negative and the current bias is negative.

How Oil Really Gets Priced

WTI oil is trading between 93.53 (resistance) and 92.51 (support) today. The session bias is neutral, volatile and is currently trading down at 93.04. (Chart Here)

Brent Crude is trading between 97.54 (resistance) and 96.51 (support) today. The session bias is neutral, volatile and is currently trading down at 96.94. (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 rose from 1207.40 earlier to 1217.17 and is currently trading down at 1214.90. The current intra-session trend is elevated. (Chart Here)

Dr. Copper is at 3.028 falling from 3.063 earlier. (Chart Here)

The US dollar is trading between 85.60 and 85.16 and is currently trading up at 85.36, the bias is currently negative. (Chart Here) Resistance made in Aug., 2013 has been broken.


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.

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Written by Gary


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