Written by Gary
Closing Market Commentary For 12-04-2014
Markets made a sudden spike upward at 12:30 pushing the DOW and SP500 to new historic highs on news of reports that the European Central Bank could be preparing a new stimulus package for its meeting next month.
By 4 pm the markets closed in the red with the large caps flat and $RUT down over -0.5%. Volume today was moderate, but the swings were a traders delight and we will probably see more of this action in the coming sessions.
NEW YORK (AP) - U.S. stock indexes recovered most of their losses after news outlets reported that Europe's central bank is considering unveiling a stimulus package next month. The Dow Jones industrial average fell 12 points, or 0.1 percent, to close at 17,900 Thursday.
It had been down almost 100 points earlier. The Standard & Poor's 500 index lost two points, or 0.1 percent, to 2,071. The Nasdaq composite declined five points, or 0.1 percent, to 4,769. Bloomberg News said the European Central Bank is considering a large bond-purchasing program.
That would be a relief to investors, who have been worrying that Europe could slip into a recession again.
In the U.S., Barnes & Noble fell 5 percent after the company said it was ending its agreement with Microsoft for its Nook e-reader.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the short-term market direction meter is bearish and has been all day. 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 down, but remains above zero at 21.64. 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 70 % Bearish (falling from 70% and now rising from 33%).
StockChart.com Overbought / Oversold Index ($NYMO) is at +9.21. (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 55.77 %. (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.
Many indicators are showing markets leveling off or rounding indicating market softness that could lead to lower values and investor's should watch carefully. The SP500 MACD, $BPNYA, $BPSPX, $TNX and the $NYA all show rounding off the tops which in the past has lead to a downturn.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.57. (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 10,952. (Chart Here) Markets move inverse to institutional selling. We are above the resistance (10,301) but is this a test of the next resistance (triple top) at ~11,109, watch to see if these numbers decline back down. Next stop down is 10600, 9750, then 9250, and 8500.
The DOW at 4:00 is at 17900 down 13 or -0.07%. (Historical High 17,937.96)
The SP500 is at 2072 down 2 or -0.12%. (Historical High 2,077.34)
SPY is at 207.78 down 0.23 or -0.11%.
The $RUT is at 1173 down 6 or -0.51%.
NASDAQ is at 4769 down 5 or -0.11%. (Historical High 5132.52)
NASDAQ 100 is at 4312 down 1 or -0.02%.
$VIX 'Fear Index' is at 12.38 down 0.09 or -0.72%. 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 sideways and the current bias is positive.
WTI oil is trading between 68.20 (resistance) and 66.12 (support) today. The session bias is trending sideways and is currently trading up at 66.78. (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 1201.50 earlier to 1213.52 and is currently trading down at 1205.90. The current intra-session trend is neutral and volatile. (Chart Here)
Dr. Copper is at 2.910 rising from 2.866 earlier. (Chart Here)
The US dollar is trading between 89.18 (highest since 2009) and 88.46 and is currently trading up at 88.66, the bias is currently neutral. (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/support ??? 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
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Written by Gary