Market Commentary: Risks Ahead: SP500 Closes Below 1848, Major Averages Down 1+%

Written by Gary

Close Market Commentary For 04-07-2014

The $VIX melted up to 16.00 earlier and then the HFT algo computers kicked in and started melting the numbers upward. The SP500 entered the all-sacred support zone at 1848 and 1839 and reversing course at 1841. Closing below 1848 would be bearish and by 3 pm the 500 eased back up through that zone to 1852 and then slipped down to close below 1848; not a good sign of things to come. The NASDAQ closed below its 100 DMA yesterday and confirmed it today on moderate volume. The bears are growling!

The short term indicators are still leaning towards the hold side at the close, although close to sell. 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 (large caps), 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. The MACD (large caps) has turned down slightly, but remains above zero. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 8 % buy. (Remember this has been negative for weeks.)

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.

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 4:00 is at 16246 down 167 or -1.02%.

The SP500 is at 1845 down 20 or -1.08%.

SPY is at 184.34 down 2 or -1.11%.

The $RUT is at 1136 down 18 or -1.53%.

NASDAQ is at 4080 down 48 or -1.16%.

NASDAQ 100 is at 3508 down 32 or -0.89%.

$VIX ‘Fear Index’ is at 15.57 up 1.61 or 11.53%. Bearish Movement

(Follow Real Time Market Averages at end of this article)

The longer trend is up, the past months trend is sideways, the past 5 sessions have been sideways, but mixed and the current bias is negative.

How Oil Really Gets Priced

WTI oil is trading between 99.94 and 101.32 today. The session bias is positive and is currently trading up at 100.68.

Brent Crude is trading between 105.12 and 106.66 today. The session bias is positive and is currently trading up at 106.03.

Gold fell from 1304.32 earlier to 1295.86 and is currently trading up at 1297.40. The current intra-session trend is sideways.

Analysts forecast a corrosive year for copper prices

Dr. Copper is at 3.041 rising from 2.977 earlier.

The US dollar is trading between 80.60 and 80.31 and is currently trading up at 80.34, the bias is currently sideways.

I have, along with numerous others, complained, bitched and otherwise damned High Frequency Trading (HFT) by these low-life algo computers (and the humans that operate them) for the last five years. The article below is required reading for Monday.

5 Things To Ponder: ”The Market Is Rigged” Edition

Is HFT really good for the markets? Does it really provide a necessary function of increasing liquidity? Considering that the financial markets have operated successfully for over 100 years, was an increase in liquidity really needed? Or, was HFT transformed from a benign concept into an intentionally malevolent “profit generation” scheme by the financial elite?

# 2. Not only is HFT legalized front-running. It is also a socially worthless activity that amplifies market movements, increases market fragility, inflates asset price bubbles, and naturally worsens market crashes. And as we saw with the ‘Flash Crash‘ of May 2010, it can also fuel market mayhem.

Real Time Market Numbers

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Written by Gary