Written by Gary
Closing Market Commentary For 02-27-2015
The daily volume looked about the same as it has been for the last 5 sessions dropping down near yesterdays lows, only this time we stayed there. I caution you NOT to read anything into this. The oil rig count dropped an additional 33 reported today and that what was what caused the WTI to drop a whole point grabbing the attention of a lot of traders. It has since recovered.
By 4 pm the averages were off -0.4%, again, not too much can be read into this session closing. I am expecting a 'small' correction to start next week, but is a SWAG as many indicators are still pointing up.
I still believe oil's bottom is going to fall out after Cushing has finally filled up and there is no place to store incoming oil. Watch for it as it will probably not be a waterfall but a slow price erosion as we get closer to to the 'full' mark.
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 27 % 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 down, but remains above zero at 19.16.
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.
Investing.com members' sentiments are 72 % 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 +12.52. (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 60.41 %. (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.
The Old Double Top is being tested now ...
Previous comments: Double tops are considered formidable formations because it is where a security was stopped twice while being unable to breach the resistance level to the upside.
When a third attempt is made, pay attention to it because it is either an important upside breakthrough is close by, or failure is at hand.
And so it is with the NYA Index now ...
Current comments: Yesterday, it closed at 11082.10, just below its 11108.39 resistance level. It had previously had an upside breakout, but now the market's Inflowing Liquidity levels will have a short term support being tested today. Bottom line is the same as last week: Keep a careful eye on the NYA Index now.
I am going to change the way we report the market action by having a 9 am premarket news report followed later with what is happening at irregular times. I am going to rely on tweeting alerts to notify you on important changes in the markets. If you want to be on my front line for 'significant' events that could effect your trading and want to recieve Trader Alert 'Tweets' click here:
The DOW at 4:00 is at 18133 down 82 or -0.45%. (Historical High 18,244.38)
The SP500 is at 2105 down 6 or -0.30%. (Historical High 2,119.59)
SPY is at 211.02 down 0.72 or -0.34%.
The $RUT is at 1233 down 6 or -0.46%.
NASDAQ is at 4964 down 24 or -0.49%. (Historical High 5132.52)
NASDAQ 100 is at 4441 down 22 or -0.48%.
$VIX 'Fear Index' is at 13.34 down 0.57 or -4.10%. Bullish 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 fractionally down.
WTI oil is trading between 49.89 (resistance) and 48.49 (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 neutral, volatile and is currently trading down at 49.26. (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 62.79 (resistance) and 60.76 (support) today. The support currently is ~58.60, next ~58.13 and the next resistance is ~62.00. The session bias is trending up and is currently trading down at 62.02. (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 rose from 1204.18 earlier to 1219.08 and is currently trading up at 1212.70. The current intra-session trend is trending down. (Chart Here)
Dr. Copper is at 2.687 rising from 2.660 earlier. (Chart Here)
The US dollar is trading between 95.44 and 94.86 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading down at 95.30, the bias is currently positive 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 ~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