Market Commentary: New SP500 Highs, Low Volume, Few Human Participants Trading, Long Weekend Ahead

February 13th, 2015
in Gary's blogging, market close, syndication

Written by

Closing Market Commentary For 02-13-2015

The afternoon session did the 'normal' sea-sawing on vacation-time low volume as investors were clearly unresponsive to the SP500's attack to its previous historic high. Closing session BTFDers and HFT computers pushed the averages higher on ridiculously low volume.

By 4 pm the averages closed at the session highs instead off slightly setting up a nice profit taking session next week while the sheeples are starry-eyed. Stay tuned, Tuesday is going to be a tough one and here are some thoughts for the long weekend ahead.

Follow up:

This afternoon session looked like any ordinary day on low volume except when out of the blue the SP500 spiked up over 4 points, setting another high, on anemic volume, then another, then another. When is the SEC going to do something about HFT algo computers and their 'stuffing' practices? Clearly manipulation going on, but that is not new.

But what about next week: The Greeks are still in a world of hurt and it is unlikely the end result is going to please anyone, especially investors. Oil is believed by many to have reached its resistance and little hope of going further up as World reserves are piling up, ultimately driving prices down. Then we have the ongoing Ukraine war, with heavy fighting continuing, that is supposed to cease on Sunday. Anyone want to take a guess how many hours this cease fire will last - give me your thoughts? I have a heavy cash position awaiting the correction that will surely happen as a reaction to this rise.

DailyFX reports:

The first 24 hours of trading next week will be risky. No US liquidity due to holiday yet high level event risk:

Crude Oil Prices Fail to Reach Key Level - XAU/USD Threatens Bearish Momentum:

If you've been following the Ukraine story, its 4Q GDP figure is due Monday (no time given). Consensus is for an incredible -13.4% drop YoY

Our medium term indicators are leaning towards Hold portfolio of non-performers at the midday and the session market direction meter (for day traders) is 55 % 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 11.36.

Having some cash on hand now is not a bad strategy as negative 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. members' sentiments are 52 % Bearish.

CNN's Fear & Greed Index is 72. Above 50 = greed, below 50 = fear. (At 'Greed') (Chart Here) The number of stocks hitting 52-week highs exceeds the number hitting lows and is at the upper end of its range, indicating extreme greed.

Investors Intelligence sets the breath at 57.5 % bullish with the status at Bear Correction. (Chart Here ) I expect a market reversal at or before ~25.0 should the markets start to descend. Overbought / Oversold Index ($NYMO) is at +25.57. (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 $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. NYSE % of stocks above 200 DMA Index ($NYA200R) is at 56.83 %. (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.

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. NYSE Bullish Percent Index ($BPNYA) is at 62.22. (Chart Here) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. S&P 500 Bullish Percent Index ($BPSPX) is at 70.80. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 10 Year Treasury Note Yield Index ($TNX) is at 20.21. (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). Consumer Discretionary ETF (XLY) is at 74.81. (Chart Here)

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. NYSE Composite (Liquidity) Index ($NYA) is at 11,037. (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 18019 up 47 or 0.26%. (Historical High 18,103.45)

The SP500 is at 2096.99 up 8.51 or 0.41%. (Historical High 2,097.03)

SPY is at 209.86 up 0.86 or 0.41%.

The $RUT is at 1223 up 6.86 or 0.56%.

Don't Invest In The Russell 2000

NASDAQ is at 4894 up 36 or 0.75%. (Historical High 5132.52)

NASDAQ 100 is at 4384 up 36 or 0.83%.

How the Popular 'VIX' Gauge Works

$VIX 'Fear Index' is at 14.74 down 0.60 or -3.91%. Bullish Movement

(Follow Real Time Market Averages at end of this article)

The longer trend is up, the past months trend is positive, the past 5 sessions have been positive and the current bias is positive.

Citi: Oil Could Plunge to $20, and This Might Be 'the End of OPEC'

The recent surge in oil prices is just a "head-fake," and oil as cheap as $20 a barrel may soon be on the way, Citigroup said in a report . . . Despite global declines in spending that have driven up oil prices in recent weeks, oil production in the U.S. is still rising, wrote Edward Morse, Citigroup's global head of commodity research. Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia. The market is oversupplied, and storage tanks are topping out. Read More >>

WTI oil is trading between 53.41 (resistance) and 51.61 (support) today. The support currently is ~46.70 and the next resistance is ~54.00. 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 much lower prices to come. The session bias is elevated, sideways and is currently trading down at 52.66. (Chart Here)

Brent Crude is trading between 61.73 (resistance) and 59.61 (support) today. The support currently is ~50.40 and the next resistance is ~62.00. The session bias is elevated, sideways and is currently trading down at 61.49. (Chart Here)

Citi reduced its annual forecast for Brent crude for the second time in 2015. Prices in the $45-$55 range are unsustainable and will trigger "disinvestment from oil" and a fourth-quarter rebound to $75 a barrel, according to the report. "Prices this year will likely average $54 a barrel".

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 1223.11 earlier to 1234.79 and is currently trading down at 1228.00. The current intra-session trend is trending down and volatile. (Chart Here)

Dr. Copper in Need of Some Medicine?

Dr. Copper is at 2.599 falling from 2.638 earlier. (Chart Here)

The Consequences Of A Strengthening U.S. Dollar

Will 2015 be the Year of the Greenback?

The US dollar is trading between 94.41 (highest since 2003 and ~92 is a very substantial support at ~93.69) and 93.97. U.S. dollar is currently trading down at 94.22, the bias is currently neutral and trading 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


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