Written by Gary
Opening Market Commentary For 11-24-2014
Premarkets were up +0.3% this morning but failed to carry over in the opening. Markets did open higher but drifted down during the first half hour of the session.
By 10 am the large caps were still in the green, but flat while the small caps were up +0.5%. Many analysts are calling for additional bullish moves this week prior to the Thanksgiving holiday, but the low volume doesn't bode well for the bulls.
Our medium term indicators are leaning towards sell portfolio of non-performers at the opening and the short-term market direction meter is bearish. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and volatility may also promote sudden reversals. The SP500 MACD has turned flat, but remains above zero at 25.39. 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 69 % Bearish (falling from 70% and now rising from 33%).
StockChart.com Overbought / Oversold Index ($NYMO) is at 23.77. (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.
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 58.48 %. (Chart Here) 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 10 Year Treasury Note Yield Index ($TNX) is at 23.26. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
Chris Ciovacco says, "As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy." This chart clearly shows that dropping below 65.00 / 62.75 (and staying there) should be of a great concern to bullish investors.
StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 11038. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600/900, 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 10900. Next stop down is 10600, 9750, then 9250, and 8500.
It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility. Historically, accordingly to Eric Parnell, "major bull markets have almost never reached their final peak in a sideways grinding pattern. Instead, they have almost always peaked with flourish including one final crescendo toward a new all-time high before finally rolling over and succumbing to the forces of the new bear market".
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without a crystal ball, we simply don't know. One thing we can do is examine the past to broaden our understanding of the range of possibilities.
An obvious feature of this inflation-adjusted is the pattern of long-term alternations between up-and down-trends.
The longer 6 month outlook is now 45-55 sell and will remain neutral until we can see what the effects are in the Fed's game plan. Investors should employ the first thing one learns while in a foxhole; keep their head down.
The DOW at 10:15 is at 17831 up 21 or 0.12%. (Historical High 17,894.83)
The SP500 is at 2068 up 5 or 0.24%. (Historical High 2,071.46)
SPY is at 207.19 up 0.49 or 0.24%.
The $RUT is at 1181 up 9 or 0.75%.
NASDAQ is at 4738 up 25 or 0.53%. (Historical High 5132.52)
NASDAQ 100 is at 4272 up 20 or 0.46%.
$VIX 'Fear Index' is at 12.84 down 0.06 or -0.47%. Bullish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is positive, the past 5 sessions have been positive and the current bias is elevated and sideways.
WTI oil is trading between 76.93 (resistance) and 75.84 (support) today. The session bias is negative and is currently trading up at 76.30. (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 1204.41 earlier to 1192.86 and is currently trading up at 1198.90. The current intra-session trend is neutral. (Chart Here)
Dr. Copper is at 3.034 falling from 3.045 earlier. (Chart Here)
The US dollar is trading between 88.51 (highest since 2009) and 88.22 and is currently trading down at 88.26, 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