Written by Gary
Midday Market Commentary For 10-02-2014
Well the sell-off continues on low volume and there have been spikes of investors selling and those BTFD. A bit too early for BTFD, but we will see.
By noon the SP500 and DOW were testing the 145 DMA, long heralded as the stop-gap point of averages before heading unobstructed to the 200 DMA.
The medium term indicators are leaning towards the hold side at the midday and the short-term market direction meter is bearish. We remain mostly, at best, neutral and conservatively holding and that could change tomorrow. 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 below zero at -7.07. 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 67 % Bearish and it seems to be a good sign for being bullish. The 'Sheeples' always seem to get it wrong.
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 52.99. (Chart Here) Below support zone and apparently going further down. Next stop was ~57 and now it is ~44, below that is where we will most likely see the markets crash.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 24.04. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -67.57. (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.
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.
This $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
Today it represents the lowest levels seen since the beginning of the October, 2011 rally. Eric Parnell says, ' If nothing else, given that relatively fewer stocks are trading above their 200-day moving average at a time when the market is just off of its all-time highs suggests that an increasingly narrowing group of stocks is driving the rally at this stage, which does not bode well for the future sustainability of the uptrend." It also strongly suggests there has been a 'stealth bear market' underway in recent months.
The DOW at 12:15 is at 16732 down 72 or -0.43%.
The SP500 is at 1934 down 12 or -0.62%.
SPY is at 193.23 down 1.11 or -0.57%.
The $RUT is at 1081 down 4 or -0.38%.
NASDAQ is at 4390 down 32 or -0.72%.
NASDAQ 100 is at 3957 down 28 or -0.70%.
$VIX 'Fear Index' is at 17.30 up 0.59 or 3.59%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net negative, the past 5 sessions have been negative and the current bias is negative.
WTI oil is trading between 91.02 (resistance) and 88.22 (support) today. The session bias is neutral and is currently trading up at 90.33. (Chart Here)
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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 1222.82 earlier to 1209.21 and is currently trading down at 1216.90. The current intra-session trend is net neutral. (Chart Here)
Dr. Copper is at 2.993 falling from 3.038 earlier. (Chart Here)
The US dollar is trading between 86.01 and 85.60 and is currently trading down at 85.77, the bias is currently net neutral. (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
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Written by Gary