Written by Gary
Closing Market Commentary For 11-06-2014
Volume remained low for most of the afternoon session while the averages slowly melted upwards making new highs in the process.
By 4 pm the averages closed within fractions their new highs begging the question how long is this low volume bull run going to continue? Place your bets.
Take it for what it is worth, our proprietary direction indicators have never been so bearish at market levels where we are today. Today this session leaves us in uncharted territory and I would not be surprised to see anything happen, up or down.
The trend is your friend until it isn't, but I am getting worried that a sudden reversal could wipe out a lot of profits. Typically, when the US dollar goes up the equities go down and the US dollar just climbed to new highs. The $NYMO) is ripe to correct downward and the $NYA is having a problem with the resistance. I can not see a Santa Claus rally without a correction first and now if the markets continue to climb, I can see a falling market before the year end. What do you think?
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the short-term market direction meter is very bearish. We remain mostly, at best, negative and conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get more aggressive in the short-term and volatility may also promote a sudden reversal from where the market is now. The SP500 MACD has turned up, but remains above zero at 20.16. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a 'long-term' reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members' sentiments are 62 % Bearish (falling from 70% and now rising from 33%).
StockChart.com Overbought / Oversold Index ($NYMO) is at 53.54. (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 55.65 %. (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 ($BPNYA) is at 53.42. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.75. (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 10,845. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600/800, 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 4:00 is at 17554 up 70 or 0.40%. (New High @ 17560.31 )
The SP500 is at 2031.21 up 7.64 or 0.38%. (New High @ 2031.61 )
SPY is at 203.31 up 0.81 or 0.40%.
The $RUT is at 1172 up 5 or 0.41%.
NASDAQ is at 4638 up 18 or 0.38%.
NASDAQ 100 is at 4164 up 11 or 0.26%.
$VIX 'Fear Index' is at 13.88 down 0.42 or -2.96%. Bullish 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.
WTI oil is trading between 79.33 (resistance) and 77.13 (support) today. The session bias is trending sideways and is currently trading down at 77.97. (Chart Here)
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 rose from 1137.78 earlier to 1148.73 and is currently trading down at 1141.90. The current intra-session trend is sideways. (Chart Here)
Dr. Copper is at 3.014 rising from 2.993 earlier. Very volatile today. (Chart Here)
The US dollar is trading between 88.22 and 87.23 and is currently trading down at 88.22, the bias is currently positive. (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