Written by Gary
Closing Market Commentary For 02-06-2015
The averages started to fall around 12:30 and continue to fall fractionally to the session end. The markets closed down for the day but the SP500 is up 3% for the week. The DOW fell more than 127 points from its session high. Oil rig counts hit a 5 year low.
By 4 pm the bull were licking their wounds: down but not out while savvy economists argue their Bullish Vs. Bearish agendas.
Some FX skillful traders have been using the USD/JPY monetary pair to accurately predict the U.S. Market direction. Looking at the current daily chart no wonder why some are calling for further equity decline. Until the down-trend resistance is broken, the markets are not going anywhere except down some say.
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 37 % 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 above zero at +1.45. 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 47 % Bearish.
CNN's Fear & Greed Index is 55. Above 50 = greed, below 50 = fear. (At 'Neutral') (Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at +36.84. (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 55.65 %. (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 19.38. (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 10,848. (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 17824 down 61 or -0.34%. (Historical High 18,103.45)
The SP500 is at 2055 down 7 or -0.34%. (Historical High 2,093.55)
SPY is at 205.76 down 0.57 or -0.28%.
The $RUT is at 1205 down 3 or -0.27%.
NASDAQ is at 4744 down 21 or -0.43%. (Historical High 5132.52)
NASDAQ 100 is at 4229 down 28 or -0.65%.
$VIX 'Fear Index' is at 17.29 up 0.44 or 2.61%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net positive, the past 5 sessions have been positive and the current bias is elevated and sideways.
WTI oil is trading between 53.13 (resistance) and 50.96 (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 volatile, sideways and is currently trading down at 52.09. (Chart Here)
Brent Crude is trading between 59.02 (resistance) and 56.89 (support) today. The support currently is ~50.40 and the next resistance is ~59.33. The session bias is sideways, volatile and is currently trading down at 58.22. (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 1268.98 earlier to 1228.61 and is currently trading up at 1234.80. The current intra-session trend is negative and sideways. (Chart Here)
Dr. Copper is at 2.590 falling from 2.614 earlier. (Chart Here)
The US dollar is trading between 94.91 (highest since 2003 and ~92 is a very substantial support with 92.53 representing a triple top that has been broken) and 93.68. U.S. dollar is currently trading down at 94.76, the bias is currently elevated and 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 level of ~92 is the current support and is substantial. The ~94.25 area appears to be a minor resistance for those interested. Historical chart Here.
The markets are still susceptible to climbing on 'Bernankellen' vapor, use caution!
"Investors should Hinge Kir Businessremember 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