Written by Gary
Closing Market Commentary For 11-10-2014
The DOW edged up for another high this afternoon beating its old high by 3.41 points. All of the other averages traded sideways since 11:30 this morning as at time there seemingly there was no treading at all. By 3 pm there was spikes occasionally of red or green volume and during the last minute some BTFDers jumped in and fractionally moved the markets higher.
By 4 pm the averages had jumped out of the sideways trend moving up a 'tad' higher. From the looks of the volume today only traders, speculators and the HFT computer crowd are the only ones doing any trading.
I do not like what I am seeing in the technicals. First we were to have a double bottom after the 9% 'correction' and that didn't happen. Second, the inflowing liquidity has climbed up into an area where there is great concern.
Inflowing Liquidity is trending higher ...Good News or Bad News? (StockTiming.com)
(Updated as of November 7th.'s data)
Well, it is is good on the short term, but unless the medium term changes, it won't be good.
In order to understand what we mean, take a look at today's chart.
Take a hard look at the red Inflowing Liquidity line during June, July, September, and then where it is now. If you followed its action, you can see that it has made lower/highs and lower/lows..
What's wrong with that?
It is a down trend of Inflowing Liquidity which will eventually become a problem for the stock market if it doesn't see a reverse in this trending soon.
FYI ... down trending on Inflowing Liquidity is not a good thing because the stock market follow's the direction of money flows. (Note: The action since October 15th. has been an up trend which still has not taken out the previous high of September 18th.)
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the short-term market direction meter is bearish reversing from Bullish earlier. 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 sudden reversals. The SP500 MACD has turned up, but remains above zero at 23.26. 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 65 % Bearish (falling from 70% and now rising from 33%).
StockChart.com Overbought / Oversold Index ($NYMO) is at 53.58. (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. (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 57.00 %. (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 ($BPNYA) is at 55.62. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.59. (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 10,884. (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 17614 up 40 or 0.23%. (Historical High 17,621.87)
The SP500 is at 2038.26 up 6.34 or 0.31%. (Historical High 2,038.70)
SPY is at 203.98 up 6.34 or 0.31%.
The $RUT is at 1180 up 6 or 0.53%.
NASDAQ is at 4652 up 19 or 0.41%.
NASDAQ 100 is at 4176 up 15 or 0.37%.
$VIX 'Fear Index' is at 12.67 down 0.45 or -3.43%. 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 elevated and trending sideways.
WTI oil is trading between 79.84 (resistance) and 77.12 (support) today. The session bias is negative and is currently trading down at 77.25. (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 fell from 1174.46 earlier to 1146.72 and is currently trading up at 1151.10. The current intra-session trend is negative. (Chart Here)
Dr. Copper is at 3.018 falling from 3.050 earlier. (Chart Here)
The US dollar is trading between 87.93 and 87.30 and is currently trading down at 87.91, 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