Written by Gary
Opening Market Commentary For 10-03-2014
Premarkets were up +0.6% this morning before the BLS slanted stats came out heralding the lowering of the US Employment Rate to 6.0% as suggested they would yesterday. Basically the futures remained the same because the rate is comprised of part-time workers. The markets opened about the same level then retreated fractionally, but remaining in the green on moderate volume.
By 10 am the averages were enjoying a nice comeback being up almost one percent.
The SP500 has climbed back above its 100 DMA and the DOW has squeaked back above its 50 DMA, not sure this will remain this way for the short term, but it is possible we have seen the bottom of this dip. The single worry that is disturbing is that many, many investors feel we have NOT seen the bottom and persistent negative thinking has a way of becoming true.
Another concern is that the US dollar is rising and that usually doesn't reflect well in the markets.
The medium term indicators are leaning towards the hold side at the opening and the short-term market direction meter is fractionally 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 flat, but remains below zero at -6.69. 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 63 % Bearish and it seems to be a good sign for being bullish. The 'Sheeples' always seem to get it wrong. Now they are moving towards the bullish side which is interesting.
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 24.61. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -53.47. (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.
As I predicted when it happened, the 2,000 level on the S&P 500 has proven to be a very stubborn resistance level for the market to breach decisively.
The recent downturn in the market has accelerated recently due to some of the concerns I highlighted for investors in another column.
These worries could remain for a while and the market started the fourth quarter with a thud. What I see ahead and how I am playing the market given these concerns.
My opinion continues to be no reason to go out on the risk scale until the environment improves.
The economy continues to slowly muddle along here. Despite massive largesse from the Federal Reserve that has quintupled its balance sheet since the crisis, some $7 trillion in deficit spending and a failed $800 billion stimulus package in 2009; the economy continues to post just 2% GDP annual growth. This is a level that is less than half the average rate of growth of the nine post war recoveries that preceded it. Inflation adjusted median income still remains 7% below the peak in 2007 and is actually down 4% since the recession officially ended in June 2009.
. . . I am starting to get a bit more positive on retail despite a still challenged consumer. Holiday spending growth is predicted to be up this year compared with 2013 and a strong dollar.
Sooner or later brighter skies will return over the market. Until then, investors should employ the first thing one learns in a foxhole and keep their head down.
The DOW at 10:00 is at 16963 up 164 or 0.98%.
The SP500 is at 1965 up 19 or 0.97%.
SPY is at 196.31 up 2 or 1.01%.
The $RUT is at 1107 up 11 or 0.97%.
NASDAQ is at 4479 up 49 or 1.11%.
NASDAQ 100 is at 4031 up 45 or 1.12%.
$VIX 'Fear Index' is at 14.67 down 1.49 or -9.22%. Bullish 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 positive.
WTI oil is trading between 91.78 (resistance) and 90.23 (support) today. The session bias is negative and is currently trading down at 90.43. (Chart Here)
- 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 1215.90 earlier to 1194.60 and is currently trading down at 1194.60. The current intra-session trend is negative. (Chart Here)
Dr. Copper is at 3.014 rising from 2.998 earlier. (Chart Here)
The US dollar is trading between 86.79 and 85.53 and is currently trading up at 86.79, the bias is currently positive. (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.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary