Closing Market Commentary For 08-01-2014
Written by Gary
Sell in May worked this year, but you had to wait until the recent downturn to appreciate the DOW forfeiting all profits this year and worst losing market streak since 2011. The only good news is that the by the close DOW didn’t lose triple digits again today.
By 4 pm the $RUT had clearly dipped down through an important support, the SP500 touched the 100 DMA and the DOW backed off the 145 DMA. But there is good news.
The good news is that this dip-e-do is supposed to be temporary and at least one more try for the golden ring is expected, so stay tuned and keep your powder dry. One key indicator we use had a ‘spinning top’ candle which normally indicates a direction reversal if confirmed on the next session. We will be watching Monday carefully.
If you were brave enough, you took out a small position to sell next week. But, I have to admit, I am not all that courageous myself and sat on my hands when I wasn’t typing.
History says don’t count on a big correction anytime soon
The S&P 500 has gone years without a 10%-plus correction. But history shows investors bracing for a big near-term pullback may end up disappointed, says one of Wall Street’s most prominent bulls.
The medium term indicators are leaning towards the hold side at the close. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500 MACD has turned down and is below zero at -0.84. I would advise caution in taking any position during this uncertain period.
Investing.com members’ sentiments are 51 % bearish and Investors Intelligence sets the breath at 62.7 % bullish with the status at Bear Correction. (Chart Here )
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 64.44. (Chart Here) Very close to support.
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 73.80. (Chart Here) Closed below support.
The Market Is Overpriced But The Correction Will Likely Be Shallow
StockChart.com Overbought / Oversold Index ($NYMO) is at -87.35. (Chart Here) (Need to type in $NYMO) Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50, but this time things may be different – where have I heard this before?
StockChart.com Consumer Discretionary ETF (XLY) is at 65.65. (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) We have entered an area that concerns me should the XLY drops any further. This chart clearly shows that dropping below 65.50 should be of a great concern to bullish investors should it remain there. The next green support line is a good guess to where the correction is going to go if we continue melting down. XLY closed with a ‘spinning top’ candle indicating a reversal.
The markets are still susceptible to climbing on ‘Bernankellen’ vapor, use caution!
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The DOW at 4:00 is at 16493 down 70 or -0.42%.
The SP500 is at 1925 down 5.52 or -0.29%.
SPY is at 192.33 down 0.59 or -0.31%.
The $RUT is at 1115 down 5.21 or -0.47%.
NASDAQ is at 4353 down 17 or -0.39%.
NASDAQ 100 is at 3880 down 13 or -0.33%.
$VIX ‘Fear Index’ is at 17.03 up 0.08 or 0.47%. Neutral 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 negative and the current bias is negative.
WTI oil is trading between 98.08 (resistance) and 97.08 (support) today. The session bias is sideways, neutral and is currently trading down at 97.61.
Brent Crude is trading between 106.12 (resistance) and 104.40 (support) today. The session bias is negative and is currently trading down at 104.63.
Gold rose from 1281.54 earlier to 1297.96 and is currently trading up at 1294.60. The current intra-session trend is elevated and sideways.
Dr. Copper is at 3.217 falling from 3.255 earlier.
The US dollar is trading between 81.60 and 81.25 and is currently trading down at 81.39, the bias is currently sideways and volatile.
Real Time Market Numbers
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Written by Gary
