Written by Gary
Closing Market Commentary For 10-29-2014
Interesting session today. Fed ends QE 3 and gold and copper drop like a rock, US dollar shoots to $86.11, oils remain neutral and the US market averages barely make a move.
By 4 pm the markets closed quietly with volume anemic and mostly in the red. I am really surprised that there wasn't small sell-off as it appears the bull has taken a nap. There are a couple of technical items you should be aware of in this closing chart of the SP500.
The one thing to take careful notice of is that the major averages closed with a reversal Doji candle, the $NYMO is at the 2014 high and the $NYA backed off its high - very bearish. I should have did a small trade in a reverse ETF towards the session end, unfortunately I didn't.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the short-term market direction meter is bullish down from very bullish. We remain mostly, at best, negative and conservatively bullish, neutral in other words. The important DMA's, volume and a host of other studies have now turned and may be enough for some to start shorting. Right now now I am getting very concerned any downtrend could get more aggressive in the short-term and volatility may also promote sudden reversals. The SP500 MACD has turned upward, but remains above zero at +1.16. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a 'long-term' reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members' sentiments are 48 % Bearish (falling from 70% and now rising from 33%) and it seems to be a good sign for being bearish. The 'Sheeples' always seem to get it wrong.
StockChart.com Overbought / Oversold Index ($NYMO) is at 80.30. (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. (Now were are high enough to descend again - watch out!) Highest since November, 2013 which was followed by a steep decline.
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 53.10 %. (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 ($BPNYA) is at 447.96. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.23. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
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 10,651. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600/700, stay tuned. Next stop down is 9750, then 9250, and 8500.
When Institutional Investors (who are the largest group of stock owners) keep reducing their selling, it allows smaller investors or smaller upside volumes to drive the market higher because the anchor has been eliminated.
If you look at today's chart (below), you can see that Institutional Investors have been in a selling down trend since October 17th. when there was a downside cross-over on the selling's trend lines.
The DOW at 4:00 is at 16974 down 31 or -0.18%.
The SP500 is at 1982 down 2.74 or -0.14%.
SPY is at 198.06 down 0.30 or -0.15%.
The $RUT is at 1146 down 3 or -0.27%.
NASDAQ is at 4549 down 15 or -0.33%.
NASDAQ 100 is at 4091 down 16 or -0.39%.
$VIX 'Fear Index' is at 14.88 up 0.50 or 3.47%. Bullish to 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 neutral and trending down.
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.
"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 82.85 (resistance) and 81.55 (support) today. The session bias is neutral and is currently trading down at 82.27. (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."
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 1230.32 earlier to 1208.25 and is currently trading down at 1211.00. The current intra-session trend is negative. (Chart Here)
Dr. Copper is at 3.081 falling from 3.113 earlier. (Chart Here)
The US dollar is trading between 86.12 and 85.25 and is currently trading up at 86.11, the bias is currently positive and volatile. (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
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary