Market Commentary: Santa Clause Rally Underway, DOW Up 244 Points

December 18th, 2014
in Gary's blogging, market open, syndication

Written by

Opening Market Commentary For 12-18-2014

Premarket was up over one percent this morning signaling a robust opening. The number of Americans filing for first-time unemployment benefits fell last week to 289,000 which fractionally pushed the futures upward. Markets opened up as expected and quickly pushed the numbers past one percent.

By 10 trading was moderate, sea-sawing sideways and volume falling off but fractionally melting up continued.


Follow up:

This 'rally' was not unexpected, but the measure of equity ascent today is not proportional to the volume and was not expected to be as robust considering the global problems facing investors.

Oil is still falling, the U.S. Dollar is rising and both are deterrents to a continuing rising market. In face of the many negative's out there, the higher this market rises the harder it will fall - count on it.

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 below zero at -3.16. 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 warnings 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 67 % Bearish.

Investors Intelligence sets the breath at 50.2 % bullish with the status at Bear Confirmed. (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 -30.24. (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 47.06 %. (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.

Also, the SP500 10 DMA has crossed over the 20 DMA (12-11-14) always indicating a 'correction' underway. The 50,100, 145 and 200 DMA are all going flat which is never a good omen for a continuing bull run. Watch for the 50 DMA to cross over the 100,145 and 200 DMA to indicate how deep the correction will be.

These are not 'leading' indicators as such, but depicting 'trends' in the making showing data accumulated over the past several months, but needs to be watched.

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 55.72. (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 70.60. (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 22.08. (Chart Here) Flattening Yield Curve Signaling Slowing Economic Growth?

StockChart.com Consumer Discretionary ETF (XLY) is at 70.42. (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 10,736. (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 longer 6 month outlook is now 40-60 sell and will remain bearish until we can see what the effects are from the oil slide, ECB and the U.S. Fed possibly triggering a deflationary slide. Investors should employ the first thing one learns while in a foxhole; keep their head down.

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The DOW at 10:15 is at 17612 up 255 or 1.47%. (Historical High 17,991.19)

The SP500 is at 2044 up 32 or 1.58%. (Historical High 2,079.47)

SPY is at 205.14 up 3 or 1.65%.

The $RUT is at 1186 up 11 or 0.92%.

NASDAQ is at 4721 up 76 or 1.63%. (Historical High 5132.52)

NASDAQ 100 is at 4240 up 74 or 1.78%.

How the Popular 'VIX' Gauge Works

$VIX 'Fear Index' is at 16.75 down 2.69 or -13.84%. Bullish Movement

(Follow Real Time Market Averages at end of this article)

The longer trend is up, the past months trend is net neutral, the past 5 sessions have been net neutral and the current bias is positive.

Gundlach: Rates not going anywhere; oil headed lower

Everything You Need To Know About The Geopolitics Surrounding Crude Oil

WTI oil is trading between 59.01 (resistance) and 56.50 (support) today. The session bias is negative and is currently trading up at 56.97. (Chart Here)

Brent Crude is trading between 63.65 (resistance) and 60.98 (support) today. The session bias is neutral, trading down and is currently trading down at 61.74. (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 1213.74 earlier to 1194.94 and is currently trading down at 1196.10. The current intra-session trend is negative. (Chart Here)

Can Dr. Copper Heal Thyself

Dr. Copper is at 2.864 falling from 2.885 earlier. (Chart Here)

The Consequences Of A Strengthening U.S. Dollar

The US dollar is trading between 89.61 (highest since 2009) and 89.13 and is currently trading up at 89.53, the bias is currently elevated, quiet and sideways. (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

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.

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

gary@econintersect.com

Written by Gary

 









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