Written by Gary
Midday Market Commentary For 08-20-2014
Markets have continued to melt upwards ahead of the Fed’s Jackson Hole meeting and the DOW has melted back above its 50 DMA.
By noon the averages were still trending upwards, albeit slowly and may rounding off for the session. Volume is falling and we might see some serious volatility after the Fed minutes are released this afternoon.
Our short term market direction meter shows a positive trend, but reduced from this morning. It may not mean much in a couple of hours with the Fed’s release of their minutes – anything could happen.
The medium term indicators are leaning towards the hold side at the midday. 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 up, but remains above zero at +2.97. I would advise caution in taking any position during this uncertain period although some technical indicators have starting to turn bearish.
Investing.com members’ sentiments are 48 % 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.
StockChart.com Overbought / Oversold Index ($NYMO) is at 58.24. (Chart Here) (Need to type in $NYMO) It is now around the area where it turns and start to descend, but any thing below -30 / -40 is a concern. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. Today, 8-20-2014, $NYMO 58.24 also might mean a reversal in our near future.
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. Tuesday, 8-19-2014, XLY gaped up to 66.04 and that is another notch in the gun signaling that we might have another reversal very soon – at least to cover the gap. Protect thyself!
Just in time for the Jackson Hole Fed meeting later today.
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.
The DOW at 12:00 is at 16951 up 31 or 0.19%.
The SP500 is at 1984 up 2 or 0.12%.
SPY is at 198.66 up 0.26 or 0.13%.
The $RUT is at 1158 down 5 or -0.43%.
NASDAQ is at 4529 up 2 or 0.04%.
NASDAQ 100 is at 4044 up 3 or 0.09%.
$VIX ‘Fear Index’ is at 12.04 down 0.17 or -1.39%. Neutral Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net positive, the past 5 sessions have been positive and the current bias is positive.
WTI oil is trading between 93.47 (resistance) and 92.73 (support) today. The session bias is positive and is currently trading down at 93.36. (Chart Here) There is a very large gap at 97.06 and these types of gaps are usually filled sooner rather than later. It would not surprise me to see the oils move back up in the very near future. (Chart Here) (Look at the 60 minute time scale.)
Brent Crude is trading between 102.36 (resistance) and 101.45 (support) today. The session bias is positive and is currently trading down at 102.19. (Chart Here)
Gold is trading from 1298.87 to 1292.72 and is currently trading down at 1295.00. The current intra-session trend is neutral and very volatile. (Chart Here)
Dr. Copper is at 3.157 rising from 3.083 earlier. (Chart Here)
The US dollar is trading between 82.16 and 81.92 and is currently trading up at 82.09, the bias is positive and now trending sideways. (Chart Here)
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
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Written by Gary