Market Commentary: SP500 Makes New Historic High On Low Volume Thanks To HFT Algo Computers, Savvy Investors Not Very Excited
Written by Gary
Closing Market Commentary For 02-17-2015
The SP500 reached up and made a new high on low volume thanks to the HFT algo computers this afternoon. Whoopee maybe, but we have see this before where new highs are made and then the market retracts only to climb back up again and repeat the cycle. I guess I am so cynical because the manipulators on Wall Street are so transparent.
By 4 pm the averages were off their sessions high marks and were trending down except for a last minute, literally, burst of some BTFDers jumping in pushing numbers up fractionally. The SP500 closes above 2100 for the first time but the savvy investors are not all that excited . . . Caution!
What may be expected now is for the markets to start a 'correction', just like the last time and the time before that when the SP500 set new highs and then buy into the dip. The problem with this exercise is that if oil starts to fall again there might not be that climb back up setting, again, a new high.
I wish we could see the classic shooting star formation and gobs of high volume to signal the start of a bear market so many have been warning of. Then again, maybe there will NOT be a bear market in the near future and the markets will continue climbing. You can't believe everything you read. If I was so smart, I would be driving my Bentley and laughing at all the blog writters. Where do you stand?
One thing to watch is oil. It has NOT broken out of it resistance, close, but a continuing of a consolidation of sideways trading that may be the precursor of a downward trend in the near future. I do not expect a waterfall like before, but a continual erosion of prices.
Our medium term indicators are leaning towards Hold portfolio of non-performers at the close and the session market direction meter (for day traders) is 21 % 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 13.65.
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.
Investing.com members' sentiments are 63 % Bearish.
CNN's Fear & Greed Index is 76. Above 50 = greed, below 50 = fear. (At 'Extreme 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.
StockChart.com Overbought / Oversold Index ($NYMO) is at +31.98. (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 58.03 %. (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.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 21.45. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 (11-2012).
Chris Ciovacco says, "As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy." This chart clearly shows that dropping below 65.00 / 62.75 (and staying there) should be of a great concern to bullish investors.
StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 11,043. (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 18047.58 up 28 or 0.16%. (Historical High 18,103.45)
The SP500 is at 2100.34 up 3.35 or 0.16%. (Historical High 2,101.30)
SPY is at 210.06 up 0.33 or 0.16%.
The $RUT is at 1225 up 2 or 0.15%.
NASDAQ is at 4899 up 5 or 0.11%. (Historical High 5132.52)
NASDAQ 100 is at 4385 up 1 or 0.03%.
$VIX 'Fear Index' is at 15.80 up 1.11 or 7.56%. Bearish to Neutral 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 sideways, but elevated near its session highs.
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 t30 Asia. The market is oversupplied, and storage tanks are topping out. Read More >>
WTI oil is trading between 54.83 (resistance) and 52.00 (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 and sideways and is currently trading down at 53.87. (Chart Here)
Brent Crude is trading between 62.99 (resistance) and 60.28 (support) today. The support currently is ~50.40 and the next resistance is ~62.00+. The session bias is elevated and sideways and is currently trading down at 62.20. (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 fell from 1229.40 earlier to 1203.38 and is currently trading up at 1208.00. The current intra-session trend is negative and sideways. (Chart Here)
Dr. Copper is at 2.592 rising from 2.550 earlier. (Chart Here)
The US dollar is trading between 94.53 and 93.84 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading down at 94.15, the bias is currently neutral with a negative slant. (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 ~93 is the current support and is substantial. The ~95.00 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 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
If you would like to get advanced buy/sell tweets, sign-up in the column to the right of this post by clicking on the 'Follow' button. Write me with suggestions and I promise not to bite.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary