Market Commentary: Markets Quiet, Volume Anemic, DOW Up 60 Points

October 28th, 2014
in Gary's blogging, midday post

Written by

Midday Market Commentary For 10-28-2014

The market place is VERY quiet, trading is sideways in a VERY narrow range and that is bearish.

By noon the averages were in the green and about where they started this morning. Investors must remain alert.


Follow up:

The analysts outlook is for the markets to recover, make new highs possibly through a Santa Claus Rally. At least that was the thinking last week, now no one is quiet sure what the hell is going on. It is possible we are experiencing a consolidation before moving back up as some financial gurus are suggesting, but investor enthusiasm seems to be lacking as the recent melt up can be linked to the HFT computers and not humans.

There are numerous indicators that suggest that a partial retrace of the previous 'correction' is in the cards and would be helpful in the long run. In the meantime I would especially alert for both bull and bear traps as there signs the market could move in either direction - easily!.

Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the short-term market direction meter is bullish. We remain mostly, at best, negative and conservatively bullish, neutral in other words. The important DMA's, volume and a host of other studies have now turned and may be enough for some to start shorting. Right now now I am getting very concerned any downtrend could get more aggressive in the short-term and volatility may also promote sudden reversals. The SP500 MACD has turned up, but remains below zero at -3.47. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound.

Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a 'long-term' reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.

Investing.com members' sentiments are 48 % Bearish (falling from 70% and now rising from 33%) and it seems to be a good sign for being bearish. The 'Sheeples' always seem to get it wrong.

Investors Intelligence sets the breath at 42.3 % bullish with the status at Bear Confirmed. (Chart Here ) I expect a market reversal at or before ~25.0 should the direction continue to descend.

StockChart.com Overbought / Oversold Index ($NYMO) is at 52.99. (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. (Now were are high enough to descend again - watch out!)

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.

StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) is at 47.66 %. (Chart Here) The downside decent has reversed, but will it continue to rise above 50%? The next support is ~37.00, ~25.00 and ~15.00 below that. December, 2011 was the last time we saw numbers in the 20's.

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 45.40. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 51.00. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction.

StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.75. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.

StockChart.com Consumer Discretionary ETF (XLY) is at 66.85. (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 65.00 / 62.75 (and staying there) should be of a great concern to bullish investors.

StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 10,610. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600, stay tuned. Next stop down is 9750, then 9250, and 8500.

The DOW at 12:15 is at 16878 up 60 or 0.35%.

The SP500 is at 1973 up 11 or 0.57%.

SPY is at 197.23 up 1 or 0.54%.

The $RUT is at 1137 up 20 or 1.78%.

NASDAQ is at 4535 up 49 or 1.09%.

NASDAQ 100 is at 4083 up 37 or 0.90%.

How the Popular 'VIX' Gauge Works

$VIX 'Fear Index' is at 15.61 down 0.43 or -2.68%. Neutral 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 positive and the current bias is positive, but trading sideways.

Gundlach: Rates not going anywhere; oil headed lower

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.

A believer in the shale boom, Goldman cuts oil price forecasts -

"We believe that OPEC will no longer act as the first-mover swing producer and that U.S. shale oil output will be called upon to fill this role," says Goldman, cutting its 2015 Q1 oil price forecasts by $15 per barrel - WTI to $75, Brent to $85. "Our forecast also reflects the realization of a loss of pricing power by core-OPEC."

The Goldman team believes OPEC's largest members - rather than responding to price declines by cutting production - are attempting to defend market share by reducing prices.

WTI oil is trading between 81.64 (resistance) and 80.36 (support) today. The session bias is neutral, volatile and is currently trading up at 81.03. (Chart Here)

According to Rob Kurzatkowski, Senior Commodity Analyst at OptionsExpress.com, ". . . we see the December Crude Oil contract holding above the $80 level. To this point, the contract has held up at this technical support level. More stout support can be found around the $75 mark, should Oil fail to hold $80. The result of recent price weakness has been oversold technical levels. The 14-day RSI is in the mid-teens, which could be supportive of prices in the near term. In order to gain some traction, Crude Oil prices may need to post several closes north of the $85 mark."

Brent Crude is trading between 86.32 (resistance) and 85.09 (support) today. The session bias is neutral, volatile and is currently trading up at 85.89. (Chart Here)

Not so "Golden" Anymore"

Monday, October 20, 2014 For those traders who really take a long view of market trends, looking at the monthly continuation chart for Gold futures, we notice that the bull market that began back in 2001 when Gold prices were... Read More...

- 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 1235.25 earlier to 1227.99 and is currently trading down at 1228.80. The current intra-session trend is neutral and volatile. (Chart Here)

Currency Corruption Weighs on Copper

Dr. Copper is at 3.089 rising from 3.056 earlier. (Chart Here)

The US dollar is trading between 85.74 and 85.29 and is currently trading down at 85.38, the bias is currently down and sideways. (Chart Here) Resistance made in Aug., 2013 (~85.00) has been broken and now is support. This support has gotten much stronger since August, 2014 and isn't likely to fall easily.

 

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

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

Written by Gary

 









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