Written by Gary
Opening Market Commentary For 08-12-2014
Premarkets were up +0.15% and the dropped to the minus side prior to the opening. The markets did open at -0.18% and by the 15 minute mark had erased all of the red ink where the large caps were at least flat and the small caps were singing along at +0.30%. The $RUT was slowly trying to climb up from its opening numbers, but remained at -0.13%.
By 9:50 am the large caps were struggling to stay in the green and the small caps were melting down to flat status too. By 10 am the averages were melting downwards and were in the red once again as volume levels remained elevated.
The averages were sea-sawing back and forth across the ‘zero line’ as investors were trying to decide if yesterday’s positive close was for real. The reality here is that we are still in the intersection of the crossroad and just about anything could push the markets off to the shoulder and experience a prolonged sideways trading. It would also be possible for a geopolitical 18-wheeler to pop up out of nowhere and push the market cadaver into a swampy ditch.
I suspect were will see some choppy trading with some moderate volatility in today’s session as investors try to guess where the markets are headed..
The medium term indicators are leaning towards the hold side at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500 MACD has turned flat, but remains below zero at -9.38. I would advise caution in taking any position during this uncertain period although some technical indicators are starting to turn bearish.
Investing.com members’ sentiments are 44 % bearish and when it switches over to bullish, as it did on Tuesday 8-5, watch for the market bottom to fall out some are saying as the markets usually go against ‘Sheeple’ buying high and selling low.
Investors Intelligence sets the breath at 58.1 % bullish with the status at Bear Confirmed. (Chart Here )
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 62.39. (Chart Here) Below support.
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 70.80. (Chart Here) Closed below support, nearing new support @ 69.
The Market Is Overpriced But The Correction Will Likely Be Shallow
StockChart.com Overbought / Oversold Index ($NYMO) is at +6.06. (Chart Here) (Need to type in $NYMO) Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and it did today.
StockChart.com Consumer Discretionary ETF (XLY) is at 66.62. (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.
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.
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
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.
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 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.
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.
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 inequities, they should try to be fearful when others are greedy and greedy only when others are fearful.” – Warren Buffett
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 16565 down 3 or -0.02%.
The SP500 is at 1936 down 0.42 or -0.02%.
SPY is at 193.81 down 0.00 or -0.00%.
The $RUT is at 1139 down 3 or -0.22%.
NASDAQ is at 4399 down 3 or -0.06%.
NASDAQ 100 is at 3907 down 3 or -0.08%.
$VIX ‘Fear Index’ is at 14.11 down 0.08 or -0.56%. Neutral Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net neutral, the past 5 sessions have been net neutral and the current bias is negative, but sea-sawing.
WTI oil is trading between 97.94 (resistance) and 97.05 (support) today. The session bias is down and sideways and is currently trading down at 97.40.
Brent Crude is trading between 105.34 (resistance) and 104.23 (support) today. The session bias is negative and is currently trading down at 104.52.
Gold rose from 1306.89 earlier to 1317.76 and is currently trading down at 1317.00. The current intra-session trend is positive.
Dr. Copper is at 3.165 falling from 3.189 earlier.
The US dollar is trading between 81.73 and 81.58 and is currently trading up at 81.64, the bias is currently neutral.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary
Leave a Reply