Market Commentary: Markets Open Cautiously Higher, Trending Sideways On Low Volume

Written by Gary

Opening Market Commentary For 08-04-2014

Premarkets were trending fractionally higher as might be expected after last weeks moderate falloff. Markets opened up +025% and trended sideways on low to anemic volume as investors are unsure what to do. Is the market going to selloff, is the ‘correction’ over with or what. The big gamble awaits.

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 below zero at -3.36. I would advise caution in taking any position during this uncertain period.

Investing.com members’ sentiments are 43 % bearish and Investors Intelligence sets the breath at 60.6 % bullish with the status at Bear Confirmed. (Chart Here )

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 64.20. (Chart Here) Very close to support.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 73.40. (Chart Here) Closed below support.

The Market Is Overpriced But The Correction Will Likely Be Shallow

StockChart.com Overbought / Oversold Index ($NYMO) is at -89.39. (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? The new support is ay ~-100.

StockChart.com Consumer Discretionary ETF (XLY) is at 66.05. (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. The next green support line is a good guess to where the correction is going to go. XLY closed with a ‘spinning top’ candle on Friday 08-01-2014 indicating a reversal.

Do You Trust The Fed?

By Bret Jensen

My own opinion is that the Federal Reserve should have taken off the “training wheels” some time ago. The economy would have taken a short-term hit, but I think we would be much further along in our recovery by taking our lumps earlier in the cycle before the Federal Reserve expanded their balance sheet to such a massive level.

So, going forward; Do you trust the Fed? There are myriad reasons I do not and I believe rough times are ahead in the market.

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 for now.

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 10:30 is at 16507 up 11 or 0.07%.

The SP500 is at 1929 up 3 or 0.18%.

SPY is at 192.86 up 0.37 or 0.19%.

The $RUT is at 1116 up 1 or 0.11%.

NASDAQ is at 4366 up 14 or 0.31%.

NASDAQ 100 is at 3895 up 16 or 0.41%.

$VIX ‘Fear Index’ is at 16.15 down 0.88 or -5.17%. Neutral 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 negative and the current bias is elevated and trending down.

How Oil Really Gets Priced

WTI oil is trading between 98.33 (resistance) and 97.43 (support) today. The session bias is positive and is currently trading down at 98.20.

Brent Crude is trading between 105.66 (resistance) and 104.52 (support) today. The session bias is positive and is currently trading down at 102.36.

Gold fell from 1296.44 earlier to 1280.46 and is currently trading down at 1291.50. The current intra-session trend is trending down and volatile.

Dr. Copper is at 3.251 rising from 3.199 earlier.

The US dollar is trading between 81.45 and 81.36 and is currently trading down at 81.41, the bias is currently sideways.

Real Time Market Numbers

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Written by Gary