Closing Market Commentary For 08-28-2014
Markets closed down after a quiet low volume afternoon. The BTFDers jumped in during the last 3 minutes to melt the averages up fractionally, but not enough to make any difference.
By 4 pm investors are seriously interested in where Mr. Market is going to take them after the expected negative EU Inflation Data comes out tomorrow morning.
There are continual reports about the EU’s problems coming ashore in the US and sinking the US’s already water logged ship.
. . . the indications don’t look great. Spain’s economy sank deeper into deflation in August with consumer prices falling 0.5% on the year. In Belgium, inflation dropped to the lowest level in five years. And in powerhouse Germany, consumer-price growth stabilized at a worryingly low rate this month.
Those national figures – all released on Thursday – don’t bode well for Friday’s region-wide data. Economists expect euro-zone consumer prices to only have grown 0.3% in August. That’s even weaker than the 4 1/2-year low of 0.4% recorded in July and far from the ECB’s target of below, but close to 2%.
Why should you care about this exact number? First, low inflation has already hampered the currency bloc’s recovery, and downright deflation would make it even harder for the region to return to solid growth rates.
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, but now I am very concerned. The SP500 MACD has turned up, but remains above zero at 12.15. 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 56 % 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 10 Year Treasury Note Yield Index ($TNX) is at 23.34. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at 42.71. (Chart Here) (Need to type in $NYMO) It is now around the area where it turns and starts 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. Wednesday, 8-20-2014, $NYMO climbed to 58.24 is signaling a market 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. Wednesday, 8-27-2014, XLY edged up to 69.03 and that is another notch in the gun signaling that we might have another reversal very soon – at least to cover the gap below. Protect thyself!
The DOW at 4:00 is at 17080 down 44 or -0.25%.
The SP500 is at 1997 down 3.38 or -0.17%.
SPY is at 200.27 down 0.11 or -0.05%.
The $RUT is at 1166 down 7 or -0.58%.
NASDAQ is at 4558 down 12 or -0.26%.
NASDAQ 100 is at 4066 down 7 or -0.17%.
$VIX ‘Fear Index’ is at 12.05 up 0.27 or 2.29%. 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 net positive and the current bias is down and trending sideways.
WTI oil is trading between 94.69 (resistance) and 93.45 (support) today. The session bias is positive and is currently trading up at 94.64. (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 103.19 (resistance) and 102.28 (support) today. The session bias is neutral, descending trend and is currently trading up at 102.52. (Chart Here)
Gold rose from 1286.28 earlier to 1297.39 and is currently trading up at 1290.20. The current intra-session trend is neutral. (Chart Here)
Dr. Copper is at 3.153 falling from 3.204 earlier. (Chart Here)
The US dollar is trading between 82.62 and 82.34 and is currently trading down at 82.50, the bias is currently neutral and 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