Written by Gary
Closing Market Commentary For 01-16-2015
Afternoon markets drifted upwards on falling volume ending the week on a positive note. WTI oil also melted upwards gaining 2 points while Brent traded sideways trying to penetrate the 50 resistance. Gold and copper were up while the US dollar closed above the now support of 93.
By 4 pm the averages moved higher to break their five day loosing streak, but remained down 1.3% for its 3rd straight weekly loss. The DOW closed 191 points up with the $RUT closing almost 2% higher.
The leading weekly indicators still point downward. It will take the entire next week of sideways trading or upwards movement to reverse these trends. Right now that doesn't seem likely.
The market will be closed on Monday in observance of Martin Luther King, Jr. Day.
Stocks staged a broad advance to break their five-session losing streak as higher oil prices lifted energy stocks, but the Dow and S&P 500 still finished with ~1.3% losses for the week.
Nymex crude oil rose steadily through the day to settle higher by 5.3% at $48.69/bbl, which boosted the energy sector (+3.2%) to the top of the leaderboard.
The financial sector lagged as Goldman Sachs fell 0.7% despite better than expected quarterly results; also, forex broker FXCM agreed to a $300M lifeline from Leucadia National after yesterday's Swiss franc surge caused ~$225M in negative client balances.
Friday's participation was higher than average, with 950M shares changing hands at the NYSE floor.
Treasury prices fell for the first time this week, sending the yield on the benchmark 10-year bond up by 11 bps to 1.82%.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the session market direction meter is 100+ % bullish. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals. The SP500 MACD has turned down, but remains below zero at -8.33. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warnings of a 'long-term' reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members' sentiments are 41 % Bearish.
CNN's Fear & Greed Index is 24. Above 50 = greed, below 50 = fear.(Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at -38.36. (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 45.37 %. (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 18.15. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For 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 10,660. (Chart Here) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors. It is a very important index for investors to watch. We are above the support (10,301) but is this a test of the next resistance (triple top) at ~11,000 to 11,108, 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 17512 up 191 or 1.10%. (Historical High 18,103.45)
The SP500 is at 2019 up 27 or 1.34%. (Historical High 2,093.55)
SPY is at 201.69 up 2.61 or 1.31%.
The $RUT is at 1177 up 22 or 1.90%.
NASDAQ is at 4634 up 64 or 1.39%. (Historical High 5132.52)
NASDAQ 100 is at 4142 up 52 or 1.28%.
$VIX 'Fear Index' is at 20.90 down 1.44 or -6.43%. Bullish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net negative, the past 5 sessions have been negative and the current bias is positive.
WTI oil is trading between 48.83 (resistance) and 46.41 (support) today. The session bias is positive and is currently trading up at 48.49. (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 1255.44 earlier to 1282.29 and is currently trading up at 1278.10. The current intra-session trend is elevated, volatile and sideways. (Chart Here)
Dr. Copper is at 2.627 rising from 2.544 earlier. (Chart Here)
The US dollar is trading between 93.56 (highest since 2005 and ~92 is a very substantial support with 92.53 representing a triple top) and 92.32 and is currently trading down at 92.99, the bias is currently elevated, trending down 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 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