Market Commentary: Morning Highs Fall As Good Corporate Earnings Euphoria Wears Off

January 13th, 2015
in Gary's blogging, midday post, syndication

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Midday Market Commentary For 01-13-2015

The averages have moved off their morning highs fractionally and are trending down.

By noon the averages were comfortably in the green, low volume and with some happy investors reflecting on corporate earnings. Unlikely today's session will move higher, traders have left the room.

Follow up:

FoxNews commented on today's session surge this morning.

U.S. stocks surged Tuesday, with technology shares leading broader benchmarks higher.

Traders noted that riskier sectors were outperforming, but said no particular news item was driving the move higher. Small-cap shares in the Russell 2000 Index rallied 1.6% and biotechnology shares in the tech-heavy Nasdaq Composite jumped 1.6%.

"There's been volatility and pullbacks in a lot of the Internet [stocks], so investors are looking to pick their spots" ahead of earnings season, said Brian Fenske, head of sales trading at brokerage ITG in New York.

Signs of strengthening global economic demand supported U.S. stocks' advance. Chinese exports jumped a better-than-expected 9.7% in December, on the back of robust overseas demand, particularly from the U.S., Europe and Southeast Asia.

"People feel like fundamentals are solid," said ITG's Mr. Fenske. "Some of the risks out there are [already] talked about... [which] gets priced in pretty quickly" to stock prices.


Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the session market direction meter is 0.05 % 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 flat, but remains below zero at -0.94. 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. members' sentiments are 48 % Bearish. (The Sheeples may be right for a change.)

Investors Intelligence sets the breath at 51.9 % 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. Overbought / Oversold Index ($NYMO) is at -13.58. (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 $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. NYSE % of stocks above 200 DMA Index ($NYA200R) is at 48.47 %. (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. NYSE Bullish Percent Index ($BPNYA) is at 57.94. (Chart Here) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. S&P 500 Bullish Percent Index ($BPSPX) is at 69.20. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 10 Year Treasury Note Yield Index ($TNX) is at 19.29. (Chart Here) 10-year Treasury yield drops below 2% for first time in 7 months Consumer Discretionary ETF (XLY) is at 71.33. (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. NYSE Composite (Liquidity) Index ($NYA) is at 10,741. (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.

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The DOW at 12:00 is at 17847 up 207 or 1.17%. (Historical High 18,103.45)

The SP500 is at 2048 up 20 or 0.99%. (Historical High 2,093.55)

SPY is at 204.56 up 1.91 or 0.94%.

The $RUT is at 1190 up 10 or 0.86%.

NASDAQ is at 4730 up 65 or 1.40%. (Historical High 5132.52)

NASDAQ 100 is at 4232 up 63 or 1.50%.

How the Popular 'VIX' Gauge Works

$VIX 'Fear Index' is at 18.69 down 0.81 or -4.13%. Bearish to Neutral 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 positive and the current bias is elevated and trending down.

Brent crude falls below $50 as Goldman cuts outlook

WTI oil is trading between 46.16 (resistance) and 44.21 (support) today. The session bias is trending up and is currently trading up at 45.70. (Chart Here)

Brent Crude is trading between 47.94 (resistance) and 46.41 (support) today. The session bias is trending sideways and is currently trading up at 47.38. (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 1244.38 earlier to 1232.17 and is currently trading down at 1237.50. The current intra-session trend is trending sideways. (Chart Here)

Can Dr. Copper Heal Thyself

Dr. Copper is at 2.643 falling from 2.712 earlier. (Chart Here)

The Consequences Of A Strengthening U.S. Dollar

Will 2015 be the Year of the Greenback?

The US dollar is trading between 92.61 (highest since 2005 and ~92 is a very substantial resistance with 92.53 representing a triple top) and 62.03 and is currently trading up at 92.45, the bias is currently elevated and trading 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


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