Market Commentary: SP500 Opens To New High, Then Falls Dramatically

November 25th, 2014
in Gary's blogging, market open

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Opening Market Commentary For 11-25-2014

Premarkets were up +0.2% after the US GDP came in at 3.9% and the SP500 gaped up at the opening to set another new historic high while the DOW remained 40 points below its high mark. Opening volume was also a dichotomy with very high red volume holding back the BTFDers.

By 10 am the averages had fallen off the opening highs leaving the large caps flat and in the red and the small caps were following closely on moderate volume. Heavy red red volume spikes are signaling some investors to exit for now.


Follow up:

It would appear we are back to where good news is bad for the markets. Some analysts are stating that the this bull market still has some steam and any pull back now is going to be an opportunity for some buying opportunities.

US economy grew at 3.9 percent rate in July-September quarter, stronger than initial estimate

WASHINGTON (AP) - The U.S. economy grew at a solid 3.9 percent annual rate in the July-September period, even faster than first reported, giving the country its strongest six months of growth in more than a decade.

The third quarter growth rate climbed from an initial estimate of 3.5 percent because of greater spending by consumers and businesses, the Commerce Department reported Tuesday.

The figure followed a 4.6 percent surge in the spring, which resulted in the biggest consecutive quarters of growth since 2003. Analysts believe growth could slow to around 2.5 percent in the current quarter but then accelerate again in 2015.

They expect growth of around 3 percent, representing a sustained acceleration in activity six years after the Great Recession.

Our medium term indicators are leaning towards sell portfolio of non-performers at the opening and the short-term market direction meter is bullish. 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 any volatility may also promote sudden reversals. The SP500 MACD has turned flat, but remains above zero at 25.78. 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%).

Investors Intelligence sets the breath at 55.7 % bullish with the status at Bear Correction. (Chart Here ) I expect a market reversal at or before ~25.0 should the markets start to descend.

StockChart.com Overbought / Oversold Index ($NYMO) is at 30.39. (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 NYSE Bullish Percent Index ($BPNYA) is at 61.17. (Chart Here) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 75.40. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction.

StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.94. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.

StockChart.com Consumer Discretionary ETF (XLY) is at 70.83. (Chart Here)

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 11,049. (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".

Secular Bull and Bear Markets


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.

More...

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.

If you want to receive occasional Trader Alert 'Tweets' click here:

 

The DOW at 10:15 is at 17798 down 19 or -0.11%. (Historical High 17,894.83)

The SP500 is at 2069 down 0.36 or -0.02%. (Historical High 2,074.21)

SPY is at 207.28 up 0.03 or 0.01%.

The $RUT is at 1187 down 0.16 or -0.01%.

NASDAQ is at 4760 up 5 or 0.11%. (Historical High 5132.52)

NASDAQ 100 is at 4293 up 8 or 0.19%.

How the Popular 'VIX' Gauge Works

$VIX 'Fear Index' is at 12.76 up 0.14 or 1.11%. Bearish to Neutral 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 mixed and trending down.

Oil Prices: How On Earth It Works

Gundlach: Rates not going anywhere; oil headed lower

A believer in the shale boom, Goldman cuts oil price forecasts -

WTI oil is trading between 76.57 (resistance) and 75.51 (support) today. The session bias is trending up and is currently trading down at 76.30. (Chart Here)

Brent Crude is trading between 80.43 (resistance) and 79.14 (support) today. The session bias is positive and is currently trading down at 80.23. (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 1203.00 earlier to 1190.62, reversed course and is currently trading down at 1199.30. The current intra-session trend is volatile, trending sideways. (Chart Here)

Currency Corruption Weighs on Copper

Dr. Copper is at 2.996 falling from 3.024 earlier. (Chart Here)

The Consequences Of A Strengthening U.S. Dollar

The US dollar is trading between 88.40 (highest since 2009) and 87.90 and is currently trading up at 88.03, the bias is currently volatile and 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 next resistance is at ~88.72 set in June, 2010.

 

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

Leading Stock Quotes powered by Investing.com

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

Written by Gary

 









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