Opening Market Commentary For 08-28-2014
Premarkets were down -0.30% on mixed news that US GDP was up to 4.2% from 4.0%%, but US Continuing Claims was higher at 2527K up from 2502K. Markets opened lower at -0.40% and immediately recovered fractionally to -0.20%. Volume was and still is, low to anemic which is concerning for any bullish thoughts for the long haul.
By 10 am the averages were all in the red,returning to opening lows, but showing the usual morning weakness that the bulls hope will turn positive by the afternoon.
Many analysts believe this weakness is just part of a consolidation phase that is just the beginning of another aggressive bull run. Then there are those like me that are waving caution flags, saying, ‘Just a moment here, let’s not get ahead of ourselves’.
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, but now I am very concerned. The SP500 MACD has turned up, but remains above zero at 11.96. 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 ($TNX) is at 23.31. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($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 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 game plan, Russia’s annexing game playing and of course the World’s newest player Iraq, ISIS 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 DOW at 10:15 is at 17043 down 78 or -0.46%.
The SP500 is at 1993 down 7 or -0.33%.
SPY is at 199.71 down 0.49 or -0.24%.
The $RUT is at 1166 down 7 or -0.56%.
NASDAQ is at 4554 down 16 or -0.35%.
NASDAQ 100 is at 4061 down 13 or -0.31%.
$VIX ‘Fear Index’ is at 12.40 up 0.62 or 5.26%. Bearish Movement
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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 negative and sea-sawing.
WTI oil is trading between 94.63 (resistance) and 93.45 (support) today. The session bias is positive and is currently trading up at 94.49. (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 102.44 (support) today. The session bias is neutral, descending trend and is currently trading down at 102.81. (Chart Here)
Gold rose from 1286.28 earlier to 1297.39 and is currently trading up at 1293.00. The current intra-session trend is positive. (Chart Here)
Dr. Copper is at 3.155 falling from 3.204 earlier. (Chart Here)
The US dollar is trading between 82.62 and 82.34 and is currently trading down at 82.58, the bias is currently positive. (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