Written by Gary
Midday Market Commentary For 08-29-2014
After the morning market did the ‘usual’ dippy-do, rising from the doldrums to post green numbers is leaving investors scratching their heads. Falling volume and rising numbers is not very comforting to investors worried about the Russian/Ukraine issues and how it effects the EU and ultimately the US markets.
By noon the SP500 had climbed above it historic closing high and was leveling off. The small caps were reporting the largest gains as volume became anemic.
What are investors going to do. Everyday, I ask this question, but fail to find the right answer.
NEW YORK (AP) – Is it time to cash out of stocks?
The market has nearly tripled in a little over five years, and with each record close, the temptation grows to take your winnings and flee. If only you had done that in the crashes that began in 2000 and 2008, you might be a lot richer. Plenty of experts think stocks are about to drop.
But many others offer compelling arguments for the rally to continue for years. The bulls point to a strengthening U.S. economy that will help companies generate big profits. They also like that companies have plenty of money to keep buying back their own stock, a big force pushing up prices.
The bears argue that, with the Standard and Poor’s 500 index closing above 2,000 on Wednesday, stocks already reflect years of future profit gains. And that forecast is suspect anyway given that so many economies around the world are stumbling.
They also worry that U.S. interest rates could rise fast soon, one of the surest ways to kill a rally.
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, but now I am very concerned. The SP500 MACD has turned flat, but remains above zero at 12.82. 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 57 % 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 ($TNX) is at 23.41. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at 26.82. (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 12:00 is at 17096 up 17 or 0.10%.
The SP500 is at 2002.52 up 5.82 or 0.29%.
SPY is at 200.65 up 0.52 or 0.25%.
The $RUT is at 1172 up 6 or 0.55%.
NASDAQ is at 4579 up 21 or 0.46%.
NASDAQ 100 is at 4081 up 15 or 0.38%.
$VIX ‘Fear Index’ is at 12.04 down 0.01 or -0.08%. 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 negative and the current bias is negative.
WTI oil is trading between 95.47 (resistance) and 94.47 (support) today. The session bias is positive, sideways and is currently trading up at 95.31. (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 103.14 (resistance) and 102.63 (support) today. The session bias is neutral and is currently trading up at 102.84. (Chart Here)
Gold fell from 1292.05 earlier to 1284.36 and is currently trading up at 1288.80. The current intra-session trend is neutral. (Chart Here)
Dr. Copper is at 3.174 rising from 3.151 earlier. (Chart Here)
The US dollar is trading between 82.71 and 82.46 and is currently trading down at 82.66, the bias is currently positive and volatile. (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