Written by Gary
Midday Market Commentary For 01-07-2015
WTI oil's first attempt to challenge the 50 dollar resistance was met with a solid rebuff, but suspect that the challenge is not over. The markets rise was also met with resistance as oil backed off and began a down trend. The EU's financial cauldron is seriously boiling and will eventually spill over to the US market place tempering any further attempt to gain new historical highs.
By noon the U.S. Markets were sea-sawing in a downward trend as the U.S. Dollar pauses at the 92.50 level. The FOMC minutes this afternoon is expected to give the markets a boost and new highs could be seen over the near term, but is not expected to last.
If the U.S. Dollar breaks through the triple top at $92.50, it will have a negative effect on the U.S. Markets only to add downward pressure along with falling oil prices.
There is also an undercurrent of disruptive financial events going on just below the visible market surface that most likely will return the U.S. markets to its previous downturn trend sooner rather than later. Greece is in dire financial straits which could explode in a financial Armageddon spelling 'Grexit' sending not only that small island nation into a tail-spin, but would then would spill over to the EU. Need I point out how that would affect the U.S. Markets?
ZeroHedge reports, ". . . who has the leverage? Is it still Greece, which can play the Eurozone like a fiddle demanding anything, and knowing that a Grexit, while suicidal for Athens, would be just as suicidal for [Brussels].
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the session market direction meter is 61% Bullish falling from 92 % Bullish this morning. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals. The SP500 MACD has turned down, but remains below zero at -1.12. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warnings of a 'long-term' reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members' sentiments are 48 % Bearish. (Lately this has been a good forward indicator.)
StockChart.com Overbought / Oversold Index ($NYMO) is at -38.93. (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 46.30 %. (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 $NYA all show rounding off the tops which in the past has lead to a downturn.
Also, the SP500 10 DMA has crossed over the 20 DMA (12-11-14) always indicating a 'correction' underway. The 50,100, 145 and 200 DMA are all going flat which is never a good omen for a continuing bull run. Watch for the 50 DMA to cross over the 100,145 and 200 DMA to indicate how deep the correction will be.
These are not 'leading' indicators as such, but depicting 'trends' in the making showing data accumulated over the past several months, but needs to be watched.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 19.73. (Chart Here) 10-year Treasury yield drops below 2% for first time in 7 months
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 10,560. (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 ~11,900, watch to see if these numbers decline back down. Next stop down is 10600, 9750, then 9250, and 8500.
The DOW at 12:00 is at 17510 up 152 or 0.89%. (Historical High 18,103.45)
The SP500 is at 2022 up 19 or 0.96%. (Historical High 2,093.55)
SPY is at 201.92 up 2 or 1.07%.
The $RUT is at 1170 up 9 or 0.74%.
NASDAQ is at 4641 up 49 or 1.06%. (Historical High 5132.52)
NASDAQ 100 is at 4158 up 49 or 1.19%.
$VIX 'Fear Index' is at 19.69 down 1.51 or -7.15%. 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 negative and the current bias is positive.
WTI oil is trading between 49.31 (resistance) and 46.84 (support) today. The session bias is volatile, trending sideways and is currently trading up at 48.12. (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 1218.36 earlier to 1209.19 and is currently trading down at 1212.40. The current intra-session trend is neutral, but trending down. (Chart Here)
Dr. Copper is at 2.754 falling from 2.776 earlier. (Chart Here)
The US dollar is trading between 92.50 (highest since 2005 and ~92 is a very substantial resistance with 92.53 representing a triple top) and 91.90 and is currently trading up at 92.40, the bias is currently positive, but trending 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 current level (~91 / 92) is the resistance (substantial) and could be a triple top of sorts. Historical chart Here.
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