Market Commentary: Markets Open Higher, SP500 Makes New Highs As Volume Falls

Written by Gary

Opening Market Commentary For 06-20-2014

Premarkets were up +0.20% this morning suggesting that the markets will open higher, but will they stay up and close up?

Markets open higher with the SP500 making another high mark of 1963.63 and the $VIX dropped to 10.35. By the 15 minute mark the averages, sans SP500, were trending down with the $RUT being the first to dip into the red. By 10 am the markets have paused and volume is falling off rapidly.

Market complacency seems to be saying that everyone is asleep behind the wheel, staring at the markets like a deer looking into the headlights. Nothing good can come of that false feeling of euphoria.

I am deeply concerned wondering what the SP500 is going to do to top its recent tap dance to the top.

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 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 up, but remains above zero at 16.86. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 56 % buy. Investing.com members’ sentiments are 63 % bearish and Investors Intelligence sets the breath at 67.9 % bullish with the status at Bear Correction.

Here is the John Carlucci weekly update on his best stock market indicator.

Best Stock Market Indicator Ever: Weekly Update

The $OEXA200R Monthly (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the “sweet spot” time period in the market when you have the best chance of making money.

According to this system, the market is now Tradable. The OEXA200R ended the week at 88%, down from 94% last week.

All three secondary indicators are positive.

More…

Bottom line here is that I have not seen any serious bears jumping out of the woods just yet, although I am VERY concerned that ANY minor correction could turn nasty in a heart beat. One significant signal would be daily losses in any of the major averages that go over the ‘magic’ 3 % and then you need to pay close attention to risk-off tactics. There hasn’t been a 10% correction in several years and some investors are becoming increasingly concerned an imminent correction is on the way.

In Lance Roberts article he asks, Is The Market Consolidating Or Topping?

There are two ways to look at stagnation in the markets. It is either a consolidation process that works off an overbought condition which leads to further advances, OR it is a topping process that leads to a market decline. Discerning which process is currently “in play” is critical for investor decision making.

Let me be clear. I am not stating that the current consolidation process will absolutely collapse into a sharp correction in the months ahead. However, I am stating that the current environment is more similar to past markets which did correct, than not.

While it is certainly possible that the markets could ratchet higher from here due to the “psychological momentum” that currently exists, the likelihood of a runaway bull market from here is remote.

It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility. Historically, accordingly to Eric Parnell, “major bull markets have almost never reached their final peak in a sideways grinding pattern. Instead, they have almost always peaked with flourish including one final crescendo toward a new all-time high before finally rolling over and succumbing to the forces of the new bear market”.

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, Russia’s annexing game playing and of course the World’s newest player Iraq. 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. Also, the margin debt has been very high and as of Monday, 4-7-2014, it stood at $466 billion. (Read More at NYSE Statistics Archive) (It has since gone down slightly, but remains high.)

The markets are still susceptible to climbing on ‘Bernankellen’ vapor, use caution!

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 16967 up 44 or 0.26%.

The SP500 is at 1963.54 up 4.06 or 0.21%.

SPY is at 196.00 up 0.46 or 0.23%.

The $RUT is at 1184 down 0.15 or -0.01%.

NASDAQ is at 4365 up 6 or 0.13%.

NASDAQ 100 is at 3805 up 4 or 0.12%.

$VIX ‘Fear Index’ is at 10.37 down 0.25 or -2.35%. Bullish 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 positive.

How Oil Really Gets Priced

WTI oil is trading between 106.58 (resistance) and 105.81 (support) today. The session bias is positive and is currently trading down at 106.38.

Brent Crude is trading between 115.68 (resistance) and 114.60 (support) today. The session bias is depressed and sideways and is currently trading down at 114.69.

Maybe I’m Wrong – Justifying $2,000+ Gold by Jeffrey Dow Jones

Gold fell from 1322.50 earlier to 1307.10 and is currently trading down at 1313.30. The current intra-session trend is sideways.

Analysts forecast a corrosive year for copper prices

Dr. Copper is at 3.109 rising from 3.071 earlier.

The US dollar is trading between 80.57 and 80.27 and is currently trading down at 80.49, the bias is currently positive.

Real Time Market Numbers

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

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Written by Gary