Written by Gary
Opening Market Commentary For 07-22-2014
Premarkets were up +0.30% and opened at the same level with investor concerns still around the Ukraine and Gaza and the fact June Consumer Prices rose 2.1% in June from the year before.
By 10 am the averages were up +0.30% to $RUT up at +0.90% low volume. Investor confidence appears this morning to have risen due to conceived reduced tensions in the Ukraine. The problems in Gaza remain problematic and caution is advised as the DOW and SP500 close in on previous highs.
The medium term indicators are leaning towards the hold side at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500 MACD has turned down, but remains above zero at 9.75. I would advise caution in taking any position during this uncertain period.
Barchart.com shows a 88 % buy. (Been at 88% for the last 8 sessions, I think their meter is broken) Investing.com members’ sentiments are 60 % bearish and Investors Intelligence sets the breath at 66.6 % bullish with the status at Bear Correction. (Chart Here )
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 71.35. (Chart Here)
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 82.80. (Chart Here)
StockChart.com Consumer Discretionary ETF (XLY) is at 67.41. (Chart Here)
Chris Ciovacco says, “As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above 67.06, all things being equal, it is a good sign for stocks and the U.S. economy.” (Actually the support looks to be in the 66.88 range)
Why You Should Not Be Comfortable With The Level Of The Stock Markets
The Dow Jones has set a new record above 17,000.
The NFP came out with a stronger than expected number of 288,000 new jobs for June.
Wage growth remains low, well below the level the Fed would like to see.
The U.S. economic recovery is not on sure footing yet. There are foundation issues, especially in the housing market and with wages. The Fed should take into account these problems before raising rates. The Fed is in the middle of tapering its massive bond buying program, hoping to end it by end of October 2014. They have continued to keep short term rates near zero, amid speculation they will raise them soon. The Fed is correct in keeping them as is. It is still too early to raise rates. While 200K new jobs a month is a good thing, a print of 300K would point to a stronger economic recovery.
There are reasons to be concerned. While there is a feeling of euphoria over the Dow Jones hitting 17,000 and closing above it, do not expect it to stay at this level. There is no real economic growth supporting it.
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.
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”.
Charts and other technical tea reading exercises are, for the most part, not worth the effort to discern directions now that the Fed has refilled the sand box with gravel, rocks and old beer cans. That is just my view, but they have completely thrown a monkey wrench into the works and no one knows anything anymore with certainty.
Also, the margin debt has been very high and as of Monday, 2-7-2014, it stood at $466 billion. (Read More at Securities Market Credit) (It has since gone down slightly, but remains higher than previous years. (See current chart here.)
The markets are still susceptible to climbing on ‘Bernankellen’ vapor, use caution!
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The DOW at 10:15 is at 17122 up 72 or 0.42%.
The SP500 is at 1984 up 10 or 0.52%.
SPY is at 198.27 up 0.92 or 0.47%.
The $RUT is at 1158 up 11 or 0.99%.
NASDAQ is at 4460 up 35 or 0.80%.
NASDAQ 100 is at 3963 up 29 or 0.73%.
$VIX ‘Fear Index’ is at 11.89 down 0.92 or -7.18%. 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 sideways and the current bias is positive.
WTI oil is trading between 10.3.37 (resistance) and 102.42 (support) today. The session bias is negative and is currently trading down at 102.45. (and falling)
Brent Crude is trading between 108.40 (resistance) and 107.59 (support) today. The session bias is negative and is currently trading down at 107.81.
Gold prices sink as worries over Europe that drove prices up last week dissipate
Gold rose from 1302.56 earlier to 1315.77, reversed direction and is currently trading down at 1304.20. The current intra-session trend is negative and very volatile.
Dr. Copper is at 3.223 rising from 3.196 earlier.
The US dollar is trading between 80.92 and 80.61 and is currently trading up at 80.86, the bias is currently positive and volatile.
Real Time Market Numbers
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Written by Gary
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