Written by Gary
Closing Market Commentary For 01-23-2015
Afternoon markets melted down off their 2 pm highs to test the 10:45 morning lows on low volume - where are the BTFDers when you need them? DOW off triple digits, small caps in the green but flat and WTI oil is testing the morning lows (45.35).
By 4 pm the SP500 slipped below the morning lows and closed on a low note leaving investors, again, wondering what Mr. Market has in store for them Monday.
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the session market direction meter (for day traders) is 48 % Bearish. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned up, but remains below zero at -1.60. I would advise caution in taking any position during this 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 see some leading indicators that are warning of a 'long-term' reversal within six months. I believe one is most likely to occur 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 30. Above 50 = greed, below 50 = fear. (At 'Fear') (Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at 27.11. (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 52.26 %. (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 $NYA all show rounding off the tops which in the past has lead to a downturn.
Also, the SP500 10 DMA has crossed over the 20 DMA (12-11-14) always indicating a 'correction' underway. The 50,100, 145 and 200 DMA are all going flat which is never a good omen for a continuing bull run. Watch for the 50 DMA to cross over the 100,145 and 200 DMA to indicate how deep the correction will be.
These are not 'leading' indicators as such, but depicting 'trends' in the making showing data accumulated over the past several months and needs to be watched.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 18.17. (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 10,793. (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 17673 down 141 or -0.79%. (Historical High 18,103.45)
The SP500 is at 2052 down 11 or -0.55%. (Historical High 2,093.55)
SPY is at 204.84 down 1.13 or -0.55%.
The $RUT is at 1189 down 1.44 or -0.12%.
NASDAQ is at 4758 up 7 or 0.16%. (Historical High 5132.52)
NASDAQ 100 is at 4278 up 8 or 0.18%.
$VIX 'Fear Index' is at 16.66 up 0.26 or 1.59%. Neutral to bearish 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 positive and the current bias is mixed and trending down.
WTI oil is trading between 47.40 (resistance) and 45.35 (support) today. The support floor currently is ~46.70 and now may be resistance. The Iranians say they are comfortable with $25 and I'll bet the Saudi's will do everything possible to make it painful for them, meaning even lower prices to come. The session bias is trending sideways at its support and is currently trading down at 45.40. (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%. So far that is not the case.
Gold fell (like a rock) from 1299.69 earlier to 1284.46 and is currently trading down at 1294.10. The current intra-session trend is trending up. (Chart Here)
Dr. Copper is at 2.501 falling from 2.554 earlier. (Chart Here)
The US dollar is trading between 95.77 (highest since 2003 and ~92 is a very substantial support with 92.53 representing a triple top that has been broken) and 94.49. U.S. dollar is currently trading up at 95.25, the bias is currently trending up. (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 level of ~92 is the current support and is substantial. 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