Written by Gary
Closing Market Commentary For 12-10-2014
Not exactly a good day for the bulls, but I haven't completely written off a Santa Claus Rally just yet. I have seen reversals that blew the socks off bears feet and there isn't any reason, chart and technical wise, that it can't happen in the days ahead.
By 4 pm the averages were near the session lows ending on moderate volume. The bull train leaving the station appears to be backing up but I wouldn't be surprised to see a monster reversal in the near term.
The choice investors have to make, not including EOY tax considerations, is if now is the time to pick up some bargains.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the short-term market direction meter is very, very 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 13.60. 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 63 % Bearish.
StockChart.com Overbought / Oversold Index ($NYMO) is at -17.92. (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 52.62 %. (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 21.69. (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 10,662. (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 17648 down 268 or -1.51%. (Historical High 17,991.19)
The SP500 is at 2026 down 34 or -1.64%. (Historical High 2,079.47)
SPY is at 203.25 down 3.31 or -1.60%.
The $RUT is at 1162 down 26 or -2.21%.
NASDAQ is at 4684 down 82 or -1.73%. (Historical High 5132.52)
NASDAQ 100 is at 4225 down 70 or -1.63%.
$VIX 'Fear Index' is at 18.53 up 3.64 or 24.45%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net positive, the past 5 sessions have been sideways and the current bias is negative.
WTI oil is trading between 63.24 (resistance) and 60.47 (support) today. The session bias is sideways and is currently trading down at 61.30. (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 1238.86 earlier to 1225.40 and is currently trading down at 1226.70. The current intra-session trend is neutral and volatile. (Chart Here)
Dr. Copper is at 2.892 falling from 2.926 earlier. (Chart Here)
The US dollar is trading between 88.81 (highest since 2009) and 88.19 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 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