Written by Gary
Closing Market Commentary For 05-15-2014
The good news is that the $RUT closed above the 1090 support encouraging the bulls among us with hope of melting back up. The bad news is that the DOW closed down triple digits and near 1% off in losses, but pulled back from the 50 DMA.
By 4 pm the averages had melted off the session lows, but remained firmly in the red on moderate volume. We have seen this action before and after what becomes a bear trap the markets consolidate sideways. It is what comes next is my big worry.
The $RUT ended the session with a ‘hammer’ candlestick that usually means a reversal back up the next day like it did on 02-05-2014 and 04-15-2014. Other indicators also point the averages upward tomorrow, but remember this market is full of surprises.
The Russell 2000 on Thursday traded as much as 10.4% below its March 4 closing high, meaning in correction territory. But one portfolio manager has noted that small-cap stocks usually suffer intra-year drops of 10% or more.
World events and issues in the Ukraine could change the face of the markets in a heartbeat should they get sour.
Despite two desperate attempts to juice stocks overnight via JPY, US equities opened red and got redder.
The selling climaxed when Europe closed and stocks rallied handsomely “off the lows” proving Tepper wrong and the rest of CNBC right (right?)
The S&P ramped back up perfectly to VWAP (thank you Michelle) as 330ET BTFD’ers ensured it closed back above the all-important 50-day-moving-average.
The Dow did not bounce like its higher-beta short-squeezing cousins and dropped back into the red for 2014.
Away from stocks, bonds just kept rallying – but everyone said that couldn’t happen – to new multi-month low yields for 10Y and 30Y (-13bps on the week).
Commodities lost ground with gold back under $1300 as the USD ripped and dipped to close unchanged on the day. VIX popped back over 13 with its biggest rise in 5 weeks.
The short term indicators are leaning towards the hold side at the close. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500 MACD has turned flat, but remains above zero at 6.13. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 48 % buy. (Most likely correct for tomorrow.) Investing.com members’ sentiments are 66 % bearish.
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The DOW at 4:00 is at 16447 down 167 or -1.01%.
The SP500 is at 1871 down 18 or -0.94%.
SPY is at 187.36 down 1.66 or -0.88%.
The $RUT is at 1096 down 7 or -0.65%.
NASDAQ is at 4069 down 31 or -0.76%.
NASDAQ 100 is at 3565 down 28 or -0.78%.
$VIX ‘Fear Index’ is at 13.15 up 0.98 or 8.05%. Neutral to slight bullish 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 and the current bias is positive.
WTI oil is trading between 102.24 (resistance) and 101.31 (support) today. The session bias is negative and is currently trading up at 101.50.
Brent Crude is trading between 109.63 (resistance) and 108.83 (support) today. The session bias is negative and is currently trading up at 109.02.
Gold fell from 1306.63 earlier to 1291.32 and is currently trading up at 1296.20. The current intra-session trend is volatile and sideways.
Dr. Copper is at 3.145 falling from 3.170 earlier.
The US dollar is trading between 80.40 and 79.97 and is currently trading up at 80.09, the bias is currently sideways and volatile.
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Written by Gary