Written by Gary
Closing Market Commentary For 10-13-2014
From around noon the major averages slipped downward to crash major supports, 200 DMA's all on heavy volume.
By 4 pm the DOW was off triple digits, the SP500 down over 1.5% and the NASDAQ closing in on a major support. The bears have won this one by a landslide.
The good news is that this may mark the bottom - and then, maybe it doesn't! Unfortunately, guessing tops and bottoms is a waste of time usually, but in this case it might be helpful in determining portfolio strategy - maybe. Probably by now you stuck where you are and need to ride out the storm, but if you got rid of some of your 'dogs' as I suggested, then you might be in good shape to BTFD.
The reverse ETF I got last week is doing exceptionally well and I hope you did the same. The heavy volume sometimes marks the end of a trend and that is why I mentioned perhaps we are at a bottom.
Before jumping ship, I would like to see the various indicators (below) drop below the major supports mentioned and for the 50 DMA cross over the 100 DMA. Play close attention to the next several session as the markets could shoot up significantly simply to relieve oversold conditions (Chart Here).
Our medium term indicators are leaning towards the sell to lighten portfolio of non-performers at the close and the short-term market direction meter is fractionally bearish. We remain mostly, at best, slightly negative and conservatively bullish. The important DMA's, volume and a host of other studies have are now turning and that is still not enough for me to start shorting, but now I am getting very concerned the current downtrend will get more aggressive. The SP500 MACD has turned down, but remains below zero at -19.31. I would advise caution in taking any position during this uncertain period except to return your 'dogs' to the pound. Having some cash on hand now is not a bad strategy.
Investing.com members' sentiments are 38 % Bearish (falling from 70%) and it seems to be a good sign for being bearish. The 'Sheeples' always seem to get it wrong.
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 43.52. (Chart Here) Below support zone and apparently going further down. Next stop was ~57 and now it is ~44, below that is where we will most likely see the markets crash. We are there and need a reversal pronto.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.86. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -61.58. (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 65.00 (and staying there) should be of a great concern to bullish investors. Going below 33.00 is approaching an area of support that will be difficult to push through, but will mark a black day on Wall Street if it does. The 10% correction might just turn out to be 20%, or more.
This $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
Today it represents the lowest levels seen since the beginning of the October, 2011 rally. Eric Parnell says, ' If nothing else, given that relatively fewer stocks are trading above their 200-day moving average at a time when the market is just off of its all-time highs suggests that an increasingly narrowing group of stocks is driving the rally at this stage, which does not bode well for the future sustainability of the uptrend." It also strongly suggests there has been a 'stealth bear market' underway in recent months.
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) is at 33.64 %. (Chart Here) Unless this downward trend reverses itself soon, we are going to see further downside. The next support is ~37.00 and ~25.00 below that.
The DOW at 4:00 is at 16321 down 223 or -1.35%.
The SP500 is at 1875 down 31 or -1.65%.
SPY is at 187.25 down 3.13 or -1.64%.
The $RUT is at 1049 down 4 or 0.38%.
NASDAQ is at 4214 down 63 or -1.46%.
NASDAQ 100 is at 38.08 down 63 or -1.62%.
$VIX 'Fear Index' is at 24.64 up 3.40 or 16.01%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is negative, the past 5 sessions have been negative and the current bias is negative.
Saudi Arabia has reportedly been telling oil-market investors and analysts that it is ready to accept oil prices below $90 per barrel, and even as low as $80, for up to a year or two. If true, it would represent a major change in policy for Riyadh, which may be looking to slow the expansion of rivals such as the U.S. Oil was -1.45% at $84.57 at the time of writing.
WTI oil is trading between 85.83 (resistance) and 84.07 (support) today. The session bias is trending up, volatile and is currently trading down at 84.98. (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 1237.96 earlier to 1225.32 and is currently trading up at 1235.00. The current intra-session trend is trending up and quiet. (Chart Here)
Dr. Copper is at 3.045 falling from 3.053 earlier. (Chart Here)
The US dollar is trading between 58.82 and 85.41 and is currently trading down at 85.44, the bias is currently trending down and volatile. (Chart Here) Resistance made in Aug., 2013 (85.00) 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