Written by Gary
Closing Market Commentary For 02-26-2015
Trading range has been a bit wider than usual, but generally investors have moved the markets sideways today. WTI oil teased us again testing its support only to rise again dashing hopes for some bears although crude oil forecast remains bearish for March.
By 4 pm the averages were about where they were this morning at 10 am. This wasn't exactly a quiet day, but if you just arrived, you didn't miss anything. Large caps in the red, small caps in the green and the bull train remains stalled in the station on low volume.
Tomorrow there is more important US data to watch - the preliminary US GDP data that will certainly add volatility to the markets. Be careful not to slip on that black stuff called oil.
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 48 % 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 flat, but remains above zero at 19.96.
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 73 % 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 +22.80. (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 61.13 %. (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 ($TNX) is at 20.16. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 (11-2012).
Chris Ciovacco says, "As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy." This chart clearly shows that dropping below 65.00 / 62.75 (and staying there) should be of a great concern to bullish investors.
StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 11,084. (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 18207 down 18 or -0.10%. (Historical High 18,244.38)
The SP500 is at 2110 down 4 or -0.17%. (Historical High 2,119.59)
SPY is at 211.33 down 0.30 or -0.14%.
The $RUT is at 1239 up 3.50 or 0.28%.
NASDAQ is at 4986 up 19 or 0.37%. (Historical High 5132.52)
NASDAQ 100 is at 4460 up 20 or 0.44%.
$VIX 'Fear Index' is at 14.04 up 0.20 or 1.45%. 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 mixed and sideways.
WTI oil is trading between 50.94 (resistance) and 47.83 (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 up and is currently trading down at 48.91. (Chart Here)
Some believe Saudi Arabia is ready to call 'uncle' and cut oil production which would raise prices. But that would be in the face of NOT achieving their goals of financially hurting Iran or Russia. Kevin Kerr, president of Kerr Trading International is positive that "the Saudi's [will] announce a production cut" is a bit premature.
I am betting that the emergency meeting was more about what can they do to make oil fall further and faster, but that is just my opinion of course.
Brent Crude is trading between 62.61 (resistance) and 59.68 (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 60.49. (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. 2014 to Aug. 2015). Goldman Sachs estimates that gold will fall to $1,050 an ounce, a drop of nearly 19%.
Gold fell from 1219.80 earlier to 1206.64 and is currently trading up at 1209.30. The current intra-session trend is sideways. (Chart Here)
Dr. Copper is at 2.690 rising from 2.636 earlier. (Chart Here)
The US dollar is trading between 95.37 and 94.07 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading up at 95.36, 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 ~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