Market Commentary: Relatively Quiet Session Produces New Historic Highs For the SP500 And DOW – Is That It?
Written by Gary
Closing Market Commentary For 02-24-2015
And for the sixth time today the SP500 and DOW set new historical record highs. Volume levels have been low all day, financial news from the EU and Greece quiet and the Ukraine remains the same; no news is good news, but remains suspect.
By 4 pm the new SP500 and DOW highs were just above where they closed. Investors question the most hated bull run in history and can it continue?
The answer is probably yes if oil doesn't fall, which is expected, but that is another story. I am not quiet sure what is keeping the averages up, maybe 'Hopium', but even that produces a hangover eventually. I'll say it again, the trend is your friend until it isn't.
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 01 % Bullish sliding down from the 50's this morning. 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 19.71.
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. If you are not worried, then at least be cautious.
Brett Arends described the U.S. stock market as "one of the most dangerous in the world ," based on the research of Wellershoff & Partners, and suggested it may be a good idea to diversify with some international or emerging markets funds.
Investing.com members' sentiments are 67 % Bearish.
CNN's Fear & Greed Index is 77. 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 +17.98. (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 59.29 %. (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.
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 11,121. (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 18209 up 92 or 0.51%. (Historical High 18,231.09)
The SP500 is at 2115 up 6 or 0.28%. (Historical High 2,117.94)
SPY is at 211.84 up 0.60 or 0.28%.
The $RUT is at 1234 up 2.15 or 0.17%.
NASDAQ is at 4968 up 7 or 0.14%. (Historical High 5132.52)
NASDAQ 100 is at 4451 up 1.54 or 0.03%.
$VIX 'Fear Index' is at 113.69 down 0.87 or -5.98%. 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 trending up.
WTI oil is trading between 50.29 (resistance) and 48.71 (support) today. The support currently is ~49.00, then ~45.06 and the next resistance is ~54.40+. 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 49.03. (Chart Here)
Brent Crude is trading between 60.24 (resistance) and 58.13 (support) today. The support currently is ~58.60, next ~58.13 and the next resistance is ~62.00. The session bias is trending down and is currently trading down at 58.59. (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 1203.37 earlier to 1190.50 and is currently trading up at 1200.00. The current intra-session trend is trending up and volatile. (Chart Here)
Dr. Copper is at 2.637 rising from 2.566 earlier. (Chart Here)
The US dollar is trading between 95.06 and 94.50 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading down at 94.53, the bias is currently volatile, trending down. (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
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Written by Gary