Written by Gary
Closing Market Commentary For 12-09-2014
The afternoon session has progressed well for the bulls. Those who bought in at the opening chose the right time as the averages, for the most part, have steadily melted back up shaving the Large cap one-percentage losses to less that 0.1%.
By 4 pm the small caps were mostly in the green and topping +0.3% on moderate to heavy volume. The Nasdaq swung from a minus one percent to a plus 0.5% while other averages melted up from surprising morning opening lows to flat status. Today's session may not be the harbinger of dreaded declines to come, but caution is warranted.
We may have another down session tomorrow, but the charts, tea leaves, mystic musings and cloudy crystal balls all continue to point upwards. Of course anything can happen, but the power behind this bull run is significant and won't be derailed easily.
On the eve of the last October 9% decline there were sign posts foretelling 'something' was going to happen and there are none as of today. My prediction is to hold steady for now and BTFD and be part of the Santa Claus Rally. (Just be ready to duck if a Black Swan flies directly overhead.)
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the short-term market direction meter is bearish moving from fractionally bearish this morning. 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 17.77. 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 64 % Bearish.
StockChart.com Overbought / Oversold Index ($NYMO) is at -29.20. (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 51.35 %. (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 22.84. (Chart Here) Flattening Yield Curve Signaling Slowing Economic Growth?
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 10,833. (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 17801 down 51 or -0.29%. (Historical High 17,991.19)
The SP500 is at 2060 down 0.49 or -0.02%. (Historical High 2,079.47)
SPY is at 204.41 down 0.14 or -0.07%.
The $RUT is at 1188 up 21 or 1.79%.
NASDAQ is at 4766 up 26 or 0.54%. (Historical High 5132.52)
NASDAQ 100 is at 4295 up 16 or 0.38%.
$VIX 'Fear Index' is at 14.93 up 0.72 or 5.07%. Bullish to neutral Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is up, the past 5 sessions have been net positive and the current bias is positive.
WTI oil is trading between 64.08 (resistance) and 62.29 (support) today. The session bias is elevated, volatile and is currently trading down at 63.77. (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 1199.52 earlier to 1233.68 and is currently trading up at 1230.30. The current intra-session trend is positive. (Chart Here)
Dr. Copper is at 2.925 rising from 2.865 earlier. (Chart Here)
The US dollar is trading between 89.28 (highest since 2009) and 88.15 and is currently trading down at 88.74, the bias is currently trending higher and volatile. (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