Written by Gary
Opening Market Commentary For 03-25-2014
Premarkets were up +0.45% and were not effected when the House Price Index Came in lower at 0.5% from the last report of 0.7%. Markets opened in the green and shot up to +0.65% on low green volume and there was not a bear to be found as the $VIX fell to 14.08 from 15.10. The SP500 reached 1871.16, 2 points shy of yesterday’s high and started trading sideways.
By the 15 minute mark the averages were repeating previous sessions by making an initial high, thanks to the HFT computers, and then proceed to melt downwards. By 10 am the averages were near their morning highs and trading was elevated as the bulls partied on.
The short term indicators are leaning towards the hold side at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The 50DMA, MACD, volume and a host of other studies have not turned, only a 6% correction (and recovery) and that is not enough for me to start shorting. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 40 % sell.
In looking at the 50 DMA the current SP500 is above that line, but way above the 200 DMA and on 02-06-14 crossed above the 100. I can not see, as of right now where the MA’s are rolling over to indicate any permanent bear run in fact quiet the opposite.
Chris Puplava writes, “As shown below, the long-term outlook for the S&P 1500 is clearly bullish as 77.0% of the 1500 stocks in the index have bullish long-term trends.”
I still believe that Mr. Market is STILL not through playing with us and even newer historical highs are a distinct possibility beyond what we have seen, mainly because the amount of bond buying the Fed still does on a monthly basis. For those who are hell-bent bears, this article, 5 Reasons Your Simple Bear Market Plans Could Backfire, should be required reading.
It is its ending of QE that worries me the most as many financial institution and emerging markets can not continue to push forward or upwards without the Fed’s ‘Market Viagra’. Even if the Fed reduces its purchases by $10 billion every month for the rest of 2014, the Fed will have acquired $320 billion more for its portfolio. Note, that in 2013, the Fed added more than $1.0 trillion in securities to its portfolio. The debt stands at 4 trillion and will be at 5 trillion by the time the taper is completed and that is one hell of a debt that ‘someone’ has to pay.
The longer 6 month outlook is now 35-65 sell and will remain bearish until we can see what the effects are in the Fed’s ‘Tapering’ game plan. Again, I would also take chart and other technical indicators with a lessor degree of reliability for the time being and watch what the Janet Yellen’s Fed does over the next couple of months. Read at DailyFX, “wouldn’t it be easier if the Fed would just announce the proper level for the S&P and spare us all the policy announcements and market gyrations?”
Several notes of negativity are that the daily volume is very low matching which could set the stage for addition weakness and market decline and the margin debt for stock purchases are at an all time high. Investors are also worried about issues directly related to the Fed’s tapering and are considering this factor along with the Argentine Peso, South African Rand and the Yen. And of course, China’s defaulting businesses are dropping like flies.
If the Russian President Putin stops at annexing Crimea, the markets may alleviate current weakness and the bull run will continue as some bullish pundits seem to indicate. It is also possible that this is simply a pause where Putin will take the slack time to consider his next global conquest. One of the many issues investors face is that a Reuters article suggests that tensions in Eastern Europe/Central Asia aren’t going away as Russian posturing persists in spite of Russian Propaganda.
The real story behind the current weakness is the US weak housing, layoffs and poor employment data, inventory reductions and soft economic outlook including a mediocre sales outlook.
Many pundits have stated that we may have seen the top – but I wouldn’t count it as long as the Fed continues to hand out ‘Market Viagra’, even if it is being reduced somewhat! I would like to see a blowout candle (shooting star) to verify a top along with heavy volume to signify a market top.
The Best Stock Market Indicator Update says the market is tradable. The OEXA200R ended the week at 84%, up from 80% last weekend.
Of the three secondary indicators:
RSI is POSITIVE (above 50).
MACD is POSITIVE (black line above red).
Slow STO is POSITIVE (black line above red).
My feeling is that we’re entering the final euphoria phase of the five-year stock market bull, and I’ll be watching warily for major resistance points in the coming months.
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.
The DOW at 10:15 is at 16380 up 104 or 0.64%.
The SP500 is at 1869 up 12 or 0.65%.
SPY is at 186.66 up 1 or 0.67%.
The $RUT is at 1190 up 12 or 0.98%.
NASDAQ is at 4270 up 43 or 1.02%.
NASDAQ 100 is at 3655 up 38 or 1.04%.
$VIX ‘Fear Index’ is at 14.17 down 0.90 or -5.96%. Bullish Bearish Movement
The longer trend is up, the past months trend is positive, the past 5 sessions have been sideways and the current bias is positive.
WTI oil is trading between 100.21 and 99.14 today. The session bias is negative and is currently trading down at 99.24.
Brent Crude is trading between 107.29 and 106.45 today. The session bias is negative and is currently trading down at 107.03.
Gold rose from 1306.70 earlier to 1316.47 and is currently trading down at 1314.30. The current intra-session trend is positive.
Dr. Copper is at 2.998 rising from 2.940 earlier.
The US dollar is trading between 79.90 and 80.32 and is currently trading down at 80.26, the bias is currently positive.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary