Written by Gary
Midday Market Commentary For 02-27-2015
The averages are trading sideways but with a trend upwards.
By noon investors like myself are concerned with sudden reversals NOT going in the direction we were betting on. Another session that we can say we are at a crossroad and it is better sit on ones hands and wait for a direction from Mr. Market.
WTI oil is once again testing the ~49 support and if it falls through the market will follow. The saving grace is that the markets may falter at this point and just become quiet and wait until Monday for Mr. Market to make his move.
Our medium term indicators are leaning towards Hold portfolio of non-performers at the midday and the session market direction meter (for day traders) is 23 % 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 19.68.
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 74. 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 +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.
The DOW at 12:15 is at 18185 down 29 or -0.16%. (Historical High 18,244.38)
The SP500 is at 2111 down 0.44 or -0.02%. (Historical High 2,119.59)
SPY is at 211.41 up 0.03 or 0.01%.
The $RUT is at 1238 down 1 or -0.11%.
NASDAQ is at 4981 down 7 or -0.14%. (Historical High 5132.52)
NASDAQ 100 is at 4457 down 5 or -0.11%.
$VIX 'Fear Index' is at 13.57 down 0.34 or -2.44%. 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 and sideways.
WTI oil is trading between 49.52 (resistance) and 48.80 (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 up at 49.11. (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 61.90 (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, volatile and is currently trading down at 61.76. (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 down at 1215.80. The current intra-session trend is positive. (Chart Here)
Dr. Copper is at 2.686 falling from 2.696 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 95.33, the bias is currently positive and volatile. (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