Written by Gary
Midday Market Commentary For 02-04-2015
A traders delight with all those swings today and very heavy volume at the end. The BTFDers were out in numbers and saved the averages from the 'waterfall' effect. WTF oil closed below 49, but the DOW close up in the green, flat, but green.
By 4 pm the $VIX climbed back into the 18's, SP500 closed below the 50 DMA, SPY down -0.4% and the DOW right at the 50 DMA mark. Market looks very weak and if oil drops more, which it is expected to do, expect the equities to follow. Caution flags are out.
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the session market direction meter (for day traders) is 98 % bearish (complete reversal from yesterday's 100% bullish). We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned up, but remains below zero at -2.94. I would advise caution in taking any position during this period and I hope you have returned your 'dogs' to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do see some leading indicators that are warning of a 'long-term' reversal within six months. I believe one is most likely to occur later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members' sentiments are 46 % Bearish.
CNN's Fear & Greed Index is 46. Above 50 = greed, below 50 = fear. (At 'Near Neutral') (Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at +37.26. (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 53.89 %. (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.
For example on XLY it has made a double top and $NYA there are higher lows and lower highs forming a triangle that at some point breaks out to the top or the bottom. Which way will it goes and that is where you the investor have to follow World events and get your 'gut feeling' in check.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 17.97. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 (11-2012) and we are trending 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 10,761. (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 support down is 10600, 9750, then 9250, and 8500.
The DOW at 4:00 is at 17673 up 7 or 0.04%. (Historical High 18,103.45)
The SP500 is at 2042 down 9 or -0.42%. (Historical High 2,093.55)
SPY is at 203.77 down 0.78 or -0.38%.
The $RUT is at 1191 down 6 or -0.46%.
NASDAQ is at 4717 down 11 or -0.23%. (Historical High 5132.52)
NASDAQ 100 is at 4221 down 8 or -0.19%.
$VIX 'Fear Index' is at 18.31 up 1.01 or 5.83%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is neutral, the past 5 sessions have been net positive and the current bias is mixed and trending down.
WTI oil is trading between 52.55 (resistance) and 47.99 (support) today. The support currently is ~46.70 and the next resistance is ~53.20. 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 and is currently trading down at 48.85. (Chart Here)
Brent Crude is trading between 58.05 (resistance) and 53.53 (support) today. The support currently is ~50.40 and the next resistance is ~59.33. The session bias is trending down and sideways and is currently trading down at 54.77. (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 1257.11 earlier to 1272.68 and is currently trading down at 1264.50. The current intra-session trend is volatile and sideways. (Chart Here)
Dr. Copper is at 2.590 rose from 2.556 earlier. (Chart Here)
The US dollar is trading between 94.36 (highest since 2003 and ~92 is a very substantial support with 92.53 representing a triple top that has been broken) and 93.77. U.S. dollar is currently trading up at 94.36, the bias is currently trending sideways. (Chart Here)
Resistance made in Aug., 2013 (~85.00) and now is support and much stronger since August, 2014 and isn't likely to fall easily. The level of ~92 is the current support and is substantial. The ~94.25 area appears to be a minor resistance for those interested and it closed above that line. 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