Written by Gary
Opening Market Commentary For 12-04-2014
Back from financial meetings with Mickey and Minnie and found the premarket up 0.1% this morning only to have it fall to -0.3% after a poor reports on the Continuing and Initial Claims. Markets opened down -0.2% with the small caps in the green but flat on moderate volume.
By 10 am the DOW was down almost 0.3% and trending down while the SP500 was in the red at -0.17% and sea-sawing sideways. The small caps were fractionally trending upwards.
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 any volatility may also promote sudden reversals. The SP500 MACD has turned down, but remains above zero at 21.59. 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 55.69 %. (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 22.71. (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 10,947. (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.
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".
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 17853 down 59 or -0.32%. (Historical High 17,924.15)
The SP500 is at 2070 down 5 or -0.22%. (Historical High 2,076.28)
SPY is at 207.47 down 0.39 or -0.19%.
The $RUT is at 1174 down 5 or -0.41%.
NASDAQ is at 4780 up 5 or 0.11%. (Historical High 5132.52)
NASDAQ 100 is at 4321 up 8 or 0.20%.
$VIX 'Fear Index' is at 12.57 up 0.10 or 0.80%. 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 negative.
WTI oil is trading between 68.20 (resistance) and 66.12 (support) today. The session bias is trending down and is currently trading up at 66.90. (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 up at 1209.40. The current intra-session trend is neutral and volatile. (Chart Here)
Dr. Copper is at 2.909 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 down at 88.64, the bias is currently negative. (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