Written by Gary
Midday Market Commentary For 09-15-2014
Morning large caps sea-sawed in flatland while the small caps remained mostly below -0.9% while the NASDAQ and $RUT were into the minus one percent range.
By noon investors didn’t quite know what to do as volume remains low to anemic awaiting this weeks FMOC meeting. There are some well founded fears that uber-dovish Fed Chair Ms. Yellen is going to reverse previously stated Fed direction and create unwanted volatility.
There is a lot of speculation of what the Fed is going to do on Wednesday and some of the ‘guesses’ are scary.
The Fed has been holding down the federal funds rate near zero since the financial crisis, but a strengthening economy has lead to speculation that it will raise rates sooner than later. Most analysts predict the first rate hike will occur next summer.
In a worst case scenario, the Fed would raise rates too quickly, and the move would derail the stock market rally and the U.S. economy.
Keep an eye on the Fed’s policy statement Wednesday. The precise wording matters. In previous statements, the Fed has said it intends to keep rates low for a “considerable time” until the job market improves and as long as inflation remains in check.
If the Fed removes those two words, analysts say the markets could sell off as investors brace for a jump in rates.
The medium term indicators are leaning towards the hold side at the midday and the short-term market direction meter is fractionally bearish. 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 getting very concerned. The SP500 MACD has turned flat, but remains above zero at 6.87. 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 70 % Bearish and it seems to be a good sign for being bullish. The ‘Sheeples’ always seem to get it wrong.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 25.92. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at –51.40. (Chart Here) (Need to type in $NYMO) It is now around the area where it turns and starts to rise, but any thing below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold.
Chris Ciovacco says, “As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy.” This chart clearly shows that dropping below 65.50 should be of a great concern to bullish investors. Wednesday, 9-3-2014, XLY edged up to 69.25 and was a signal that we might have another reversal as were are witnessing.
According to StockTiming, Last week (09-8-2014) they reported that the $NYA Index was within just a few tenth’s of 1% from its all time high. Last Friday the $NYA Index was at 10911.39 which was 162.01 points lower than where it was on September 5th.
Last week, they commented that the Fed couldn’t afford to let the market die, so they were pumping in a lot of Liquidity to keep things up. By Friday, they had not pumped in enough so the Inflowing Liquidity levels were dropping.
While the level of Inflowing Liquidity was lower and down trending, it was still in positive territory so the Fed could still turn things back up. The liquidity expansion / contraction line is at ~10600.
The DOW at 12:15 is at 16999 up 11 or 0.06%.
The SP500 is at 1980 down 5 or -0.27%.
SPY is at 198.60 down 0.53 or -0.27%.
The $RUT is at 1146 down 15 or -1.28%.
NASDAQ is at 4515 down 52 or -1.15%.
NASDAQ 100 is at 4026 down 43 or -1.05%.
$VIX ‘Fear Index’ is at 14.13 up 0.82 or 6.16%. Bearish to 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 negative and the current bias is down and trading sideways.
WTI oil is trading between 92.29 (resistance) and 89.88 (support) today. The session bias is trading up and is currently trading up at 91.56. (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)
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The general consensus is that gold prices will actually fall in the next twelve months (Sept to Aug. 2015). Goldman Sachs estimates that gold will fall to $1,050 an ounce, a drop of nearly 19%.
Gold rose from 1228.64 earlier to 1239.03 and is currently trading up at 1234.00. The current intra-session trend is neutral, quiet and sideways. (Chart Here)
Dr. Copper is at 3.089 falling from 3.105 earlier. (Chart Here)
The US dollar is trading between 84.54 and 84.29 and is currently trading up at 84.33, the bias is currently negative and very volatile. (Chart Here) >>>> There is a gap below between 83.92 and 83.79, watch out below as any rise is expected to be temporary.<<<<<<
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