Written by Gary
Opening Market Commentary For 08-08-2014
Premarkets were up +0.30% on ‘noticeable’ volume, but the averages opened slightly down from that high mark and proceeded to sea-saw trading sideways.
By 10 am volume was falling off, key indicators were signaling positive and the SP500 was attempting to move back across yesterdays failed 100 DMA.
The DOW was still near the 200 DMA and had not crossed it like it did yesterday. The $RUT remaining way below its 200 DMA is showing some improvement, but has a long way to go. The $NDX and Nasdaq are both below their 50 DMA’s and charting a down trend.
Proprietary indicators show the markets to be slightly in a positive trend, but could change at any time.
The medium term indicators are leaning towards the hold side (barely) at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500 MACD has turned down, but remains below zero at -11.63. I would advise caution in taking any position during this uncertain period although some technical indicators are starting to turn bearish.
Investing.com members’ sentiments are 43 % bearish and when it switches over to bullish, as it did on Tuesday 8-5, watch for the market bottom to fall out some are saying as the markets usually go against ‘Sheeple’ buying high and selling low.
Investors Intelligence sets the breath at 57.8 % bullish with the status at Bear Confirmed. (Chart Here )
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 62.03. (Chart Here) Below support.
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 70.40. (Chart Here) Below support.
The Market Is Overpriced But The Correction Will Likely Be Shallow
StockChart.com Overbought / Oversold Index ($NYMO) is at -53.57. (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? Tuesday’s (8-5) numbers are definitely not a good sign, but today’s numbers show improvement.
StockChart.com Consumer Discretionary ETF (XLY) is at 65.76. (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. Today’s numbers are bullish in that the support 65.35 is holding.
Investors are currently unhappy, unenthusiastic, skittish and ready to jump ship every time it nudges against a small financial iceberg. They remain long for now unable to afford to sell and live off cash savings that have negative real rates thanks to the Feds. They feel in their guts, correctly, that a real ‘correction’ is coming and can’t do anything about it until it is too late. Greed rules the day and investors should be very cautious.
One thing to keep in mind is that stocks may not be setting up for a fearsome bear market. History shows that there are two types of corrections — sharp, brutal downturns that clear the air fairly quickly and prolonged periods of backing-and-filling that gradually remedy built-up imbalances. Time will tell which one lies ahead.
Eric Parnell, in his timely article below points out the obvious and we may very well see the starting of it right now.
The Slow And Perilous Death Of Bull Markets
Summary
A primary worry among many stock investors today is that the long running bull market may soon come to an end.
At the heart of their concern is the worry that the subsequent decline into the next bear market could quickly become swift and severe.
History has shown that the transition from a bull market to a bear market is a process filled with rallies and correction that plays out over an extended period of time.
Bull markets die long slow deaths, and it is this prolonged dying process that causes so many investors to find themselves unwittingly trapped in the next bear market.
A primary worry among many stock investors today is that the long running bull market may soon come to an end. At the heart of their concern is exactly what lies beyond the bull market peak, as many worry that the subsequent decline into the next bear market could quickly become swift and severe.
But history has shown that the transition from a bull market to a bear market is often a gradual and drawn out process filled with rallies and correction that plays out over an extended period of time. In short, bull markets die long slow deaths, and it is this prolonged dying process that causes so many investors to find themselves unwittingly trapped in the next bear market long before they even realize it.
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 and Israel. 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.
The markets are still susceptible to climbing on ‘Bernankellen’ vapor, use caution!
“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in
equities, they should try to be fearful when others are greedy and greedy only when others are fearful.” – Warren Buffett
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The DOW at 10:15 is at 16388 up 20 or 0.12%.
The SP500 is at 1912 up 2.53 or 0.13%.
SPY is at 191.31 up 0.27 or 0.14%.
The $RUT is at 1122 up 3 or 0.24%.
NASDAQ is at 4335 up 0.30 or 0.01%.
NASDAQ 100 is at 3855 down 3 or -0.07%.
$VIX ‘Fear Index’ is at 16.90 up 0.24 or 1.44%. 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 positive.
Crude Rebound Off of 3-month Lows
WTI oil is trading between 98.42 (resistance) and 97.33 (support) today. The session bias is neutral and is currently trading down at 97.63.
Brent Crude is trading between 106.85 (resistance) and 105.51 (support) today. The session bias is negative and is currently trading down at 105.55.
Gold fell from 1324.10 earlier to 1307.64 and is currently trading up at 1312.30. The current intra-session trend is negative.
Dr. Copper is at 3.170 falling from 3.178 earlier.
The US dollar is trading between 81.67 and 81.35 and is currently trading down at 81.45, the bias is currently down and volatile.
Real Time Market Numbers
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Written by Gary
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