Written by Gary
Opening Market Commentary For 09-24-2014
Premarkets were flat and quiet and except for US MBA Mortgage Applications falling like a rock down to -4.1% from +7.9%, not much happened to the futures.
Markets opened flat, mixed and melted up to green status, but then retreated in a sea-saw fashion downward fractionally. By 10 am the averages were mostly in the red, but flat on low volume. The current trend is down, but that could change as investors weigh their ‘options’.
The bull run still has a green light, but the prevalence of negatives from pundits has investors very concerned and not sure if they should buy or sell.
The medium term indicators are leaning towards the hold side at the opening and the short-term market direction meter is fractionally bullish. We remain mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned significantly and that is not enough for me to start shorting, but now I am getting very concerned. The SP500 MACD has turned down, but remains above zero at +4.10. 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 72 % 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 ($TNX) is at 25.38. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -71.65. (Chart Here) But anything 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.
Bottom line here is that I have not seen any serious bears jumping out of the woods just yet, although I am VERY concerned that ANY minor correction could turn nasty in a heart beat. One significant signal would be daily losses in any of the major averages that go over the ‘magic’ 3 % and then you need to pay close attention to risk-off tactics. There hasn’t been a 10% correction in several years and some investors are becoming increasingly concerned an imminent correction is on the way.
Sometime in the future, there will be another three percent drop, only it will go to four, recover somewhat and the BTFDers will cry halleluiah and buy again. Only this time it doesn’t recover fully like in the past and drops again, increasing the net drop to seven percent and so on.
Investors are currently unhappy, unenthusiastic, skittish and ready to jump ship every time it nudges against a small financial iceberg. They remain long for now unable to afford to sell and live off cash savings that have negative real rates thanks to the Feds. They feel in their guts, correctly, that a real ‘correction’ is coming and can’t do anything about it until it is too late. Greed rules the day and investors should be very cautious.
It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility. Historically, accordingly to Eric Parnell, “major bull markets have almost never reached their final peak in a sideways grinding pattern. Instead, they have almost always peaked with flourish including one final crescendo toward a new all-time high before finally rolling over and succumbing to the forces of the new bear market”.
The DOW at 10:15 is at 17050 down 5 or -0.03%.
The SP500 is at 1981 down 2 or -0.11%.
SPY is at 197.74 down 0.27 or -0.14%.
The $RUT is at 1117 down 1 or -0.12%.
NASDAQ is at 4509 down 0.05 or -0.00%.
NASDAQ 100 is at 4051 down 0.00 or -0.00%.
$VIX ‘Fear Index’ is at 14.72 down 0.21 or -1.54%. 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 flat and trending down.
WTI oil is trading between 91.91 (resistance) and 91.14 (support) today. The session bias is negative and is currently trading up at 91.26. (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 fell from 1226.69 earlier to 1217.29 and is currently trading down at 1219.70. The current intra-session trend is negative and volatile. (Chart Here)
Dr. Copper is at 3.038 falling from 3.062 earlier. (Chart Here)
The US dollar is trading between 85.18 and 84.70 and is currently trading up at 85.17, the bias is currently positive. (Chart Here) Resistance made in Aug., 2013 has been broken.
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