Written by Gary
Midday Market Commentary For 11-04-2014
Shortly after publishing the morning commentary the averages started a slow decent to the -0.8% range with many heavy red spikes in the volume.
By the noon hour the averages were very much in the red, sea-sawing basically trading sideways in narrow range as volume continues to fall.
One down day does not make a trend, but we need to pay attention to short-term market direction as analysts are expecting a small downturn before a Santa Claus rally can become a reality. The $NYMO is at levels not seen in a long time and I normally would expect a correction to began at any time when it reached these levels.
Lots of indicators, but none expressly points in one direction leaving investors nervous. Lot's of forecasts and movement scenarios, but just about every one was never on the money, so use caution.
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the short-term market direction meter has moved from very bearish to VERY BEARISH. We remain mostly, at best, negative and conservatively bullish, neutral in other words. The important DMA's, volume and a host of other studies have now turned and may be enough for some to start shorting. Right now now I am getting very concerned any downtrend could get more aggressive in the short-term and volatility may also promote sudden reversals. The SP500 MACD has turned up, but remains above zero at 15.06. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a 'long-term' reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members' sentiments are 56 % Bearish (falling from 70% and now rising from 33%) and it seems to be a good sign for being bearish. The 'Sheeples' always seem to get it wrong.
StockChart.com Overbought / Oversold Index ($NYMO) is at 71.67. (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 $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
Today it represents the lowest levels seen since the beginning of the October, 2011 rally. Eric Parnell says, "If nothing else, given that relatively fewer stocks are trading above their 200-day moving average at a time when the market is just off of its all-time highs suggests that an increasingly narrowing group of stocks is driving the rally at this stage, which does not bode well for the future sustainability of the uptrend. It also strongly suggests there has been a 'stealth bear market' underway in recent months."
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) is at 56.34 %. (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 ($BPNYA) is at 52.07. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.25. (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 10,718. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600/700, watch to see if these numbers decline back down. If they don't then there an excellent possibility for the markets going higher now that we have topped 10800. Next stop down is 10600, 9750, then 9250, and 8500.
The DOW at 12:00 is at 17351 up 15 or 0.09%.
The SP500 is at 2008 down 10 or -0.49%.
SPY is at 200.77 down 1 or -0.50%.
The $RUT is at 1164 down 6 or -0.55%.
NASDAQ is at 4608 down 31 or -0.66%.
NASDAQ 100 is at 4140 down 29 or -0.70%.
$VIX 'Fear Index' is at 15.26 up 0.53 or 3.60%. Bearish 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 negative and trending higher.
WTI oil is trading between 78.43 (resistance) and 75.93 (support) today. The session bias is trending down and is currently trading up at 76.46. (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...
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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 1174.06 earlier to 1165.58 and is currently trading down at 1167.90. The current intra-session trend is neutral and volatile. (Chart Here)
Dr. Copper is at 3.016 falling from 3.073 earlier. (Chart Here)
The US dollar is trading between 87.49 and 86.98 and is currently trading up at 87.16, the bias is currently trending down. (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
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Written by Gary