Market Commentary: SP500 And DOW Make Surprising Move To The Upside Marking New Historical Highs On Low Volume
Written by Gary
Closing Market Commentary For 02-20-2015
I beg forgiveness on 'guessing' wrong this morning as the SP500 and the DOW wiggled their way up to new highs surprising many investors who are still scratching their collective heads.
By 4 pm there are some investors that seem to know that there won't be a Grexit, war in Ukraine or that oil will not fall further taking the averages with it. Going into the weekend on 'Hopium' vapor that all will be well on Monday could be viewed to be a bit optimistic considering the risks ahead.
This continual creeping upwards scoring new highs, on low volume, has me worried, but at the same time pleasantly surprised. The trend is your friend until it isn't. One would think seeing the markets continuing to rise would be a good thing and more folks would want to jump on the train, but that is not happening and that is what concerns me. (Along with poor earnings, wars, oil and Greece)
The classic signs of a top have not appeared, so expecting the financial bottom to fall out anytime soon seems to be remote. But, on the same hand, this continual climbing and registering new highs is insane in some respects and if you are not worried, you should be at least cautious.
I did mention yesterday that there were analysts that have presented some plausible bullish papers and it appears they were right. However, in my own defense, yesterday I saw a fellow outside with a sign that said the end was near. Looks like the fellow I saw 3 years ago; should I be worried?
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 35 % 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 up, but remains above zero at 17.74.
Having some cash on hand now is not a bad strategy as negative market changes are happening everyday. Many investors are starting to take in some profits from 'high-fliers' as a precaution and to build a better cash base for the 'dips'.
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 67 % Bearish.
CNN's Fear & Greed Index is 72 falling from 77. 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.
StockChart.com Overbought / Oversold Index ($NYMO) is at +10.74. (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 58.49 %. (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.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 21.33. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 (11-2012).
Chris Ciovacco says, "As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy." This chart clearly shows that dropping below 65.00 / 62.75 (and staying there) should be of a great concern to bullish investors.
StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 11,099. (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 18140 up 155 or 0.86%. (Historical High 18,144.29)
The SP500 is at 2110 up 13 or 0.61%. (Historical High 2,110.61)
SPY is at 211.20 up 1.26 or 0.60%.
The $RUT is at 1232 up 4 or 0.32%.
NASDAQ is at 4956 up 31 or 0.63%. (Historical High 5132.52)
NASDAQ 100 is at 4443 up 31 or 0.71%.
$VIX 'Fear Index' is at 14.30 down 0.99 or -6.47%. Bullish 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 net positive and the current bias is positive.
WTI oil is trading between 52.46 (resistance) and 50.72(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 trending down and is currently trading down at 50.74. (Chart Here)
Brent Crude is trading between 61.09 (resistance) and 59.83 (support) today. The support currently is ~50.40 and the next resistance is ~62.00. The session bias is trending down and is currently trading down at 60.05. (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. 2014 to Aug. 2015). Goldman Sachs estimates that gold will fall to $1,050 an ounce, a drop of nearly 19%.
Gold fell from 1214.75 earlier to 1198.40 and is currently trading up at 1201.20. The current intra-session trend is trending down. (Chart Here)
Dr. Copper is at 2.601 falling from 2.622 earlier. (Chart Here)
The US dollar is trading between 94.89 and 94.10 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading down at 94.45, 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 ~93 is the current support and is substantial. The ~95 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