Written by Gary
Closing Market Commentary For 01-28-2015
Investors were obviously not impressed with the Fed's FOMC report as the averages tumbled within minutes of its release and continued to fall until the close.
By 4 pm the markets fell where the DOW was off triple points, the $RUT was off -1.64% all on moderate to heavy volume. I have some thoughts about today's FMOC report and were we are headed. Do not try to stick you fist into the bears mouth and expect it to come out unscathed.
I am confused as to what investors were expecting from the FMOC today? The Fed reiterated its prior firm position to hold interest at historic lows and be "patient" until they think the U.S. economic data suggests a more robust U.S. economy. Was Ms. Yellen supposed to do? Prance out in her Maleficent gown and point a bony finger at Wall Street and see the streets suddenly paved with gold?
Come on boys and girls this investing business isn't a make-believe Saturday matinee you used to go to when you were in your pre-teens. The bad guy always got cap in the bum and the 'white hat' always rode off into the sunset in his Bentley.
You should know the Fed can't do anything right now as they would lose any credibility they might have left. What was said today has been reported here and elsewhere that NOTHING was going to be changed. If you lost a bunch today, that is your slap on the hand for being naive and not paying attention. Fortunately, it was only a fractional loss, it could have been a lot worse.
Now for the bad news. Oil is going to continue to fall, get used to it. Greece is falling apart and the Keynesian politicians in the EU don't have a clue on how to fix Greece or the EU, so get used to it. The Russians and Iran are going to wish for the tooth fairy to leave some cash under their pillow and the U.S. is suddenly going to announce the 'Great Recession' is over and we are only ten trillion in debt**.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the session market direction meter (for day traders) is 86 % 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 flat, but remains below zero at -3.84. 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 42 % Bearish.
CNN's Fear & Greed Index is 28. Above 50 = greed, below 50 = fear. (At 'Fear') (Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at 19.69. (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 51.13 %. (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 17.24. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 and we are headed there.
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 10,604. (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 17191 down 196 or -1.13%. (Historical High 18,103.45)
The SP500 is at 2002 down 27 or -1.35%. (Historical High 2,093.55)
SPY is at 199.73 down 2.60 or -1.28%.
The $RUT is at 1175 down 20 or -1.64%.
NASDAQ is at 4638 down 44 or -0.93%. (Historical High 5132.52)
NASDAQ 100 is at 4140 down 25 or 0.60%.
$VIX 'Fear Index' is at 20.44 up 3.22 or 18.70%. 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 net positive and the current bias is negative.
WTI oil is trading between 45.73 (resistance) and 44.14 (support) today. The resistance ceiling currently is ~46.70. 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 down, volatile and is currently trading down at 44.31. (Chart Here)
Brent Crude is trading between 49.69 (resistance) and 48.35 (support) today. The resistance ceiling currently is ~50.30. The session bias is trending down and is currently trading down at 48.44. (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 from 1293.71 earlier to 1284.58 and is currently trading up at 1281.27. The current intra-session trend is trending down. (Chart Here)
Dr. Copper is at 2.459 falling from 2.497 earlier. (Chart Here)
The US dollar is trading between 94.89 (highest since 2003 and ~92 is a very substantial support with 92.53 representing a triple top that has been broken) and 94.20. U.S. dollar is currently trading down at 94.87, 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 Outstanding Public Debt as of 28 Jan 2015 is $18,092,420,182,530.26
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