Written by Gary
Opening Market Commentary For 09-29-2014
Premarkets were off 0.9% this morning setting up the opening of the markets. Within minutes the DOW was off 173 points and the SP500 had fallen below it 50 DMA.
By 10 am the markets were still down but recovering to -0.70% on falling volume. The trend is melting up while firmly entrenched in the negative zone.
One good sign is that the DOW dropped down to its 50 DMA but never went below it. The NASDAQ was already below the 50 DMA but has fractionally moved above it, so there may be some sunshine left for the bullish crowd.
The medium term indicators are leaning towards the hold side at the opening and the short-term market direction meter is bearish. 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 +0.10. 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 74 % Bearish and it seems to be a good sign for being bullish. The ‘Sheeples’ always seem to get it wrong.
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 59.40. (Chart Here) Below support zone and apparently going further down. Next stop ~57 and then ~44, below that is where we see the markets crash.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 24.81. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -43.46. (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.
The recent market decline is accelerating through midday trading Thursday. This is something I have been cautioning investors against throughout September.
There are myriad warning signs that are foreshadowing further declines that should be watch items for equity investors as I believe they will drive market direction over the coming months.
What I am watching in the market right now and how I am positioning my own portfolio during this recent uptick in volatility is detailed below.
I hate to say “I told you so” but it looks like my frequent calls for caution in September are turning out to be warranted. The 2,000 level on the S&P 500 has proven to be a significantly stubborn resistance level, something I also predicted.
I am not taking a victory lap as it is hard to make money in a falling market, I am just re-emphasizing investors should not be ignoring myriad warning signs in the market right now.
All in all, the fundamentals and sentiment of the market are currently negative. That is not to say that fund managers who are significantly behind their benchmarks will not come in and buy any dip in an effort to pull even by year end.
However, mainstream investors should keep some powder dry as it appears there is a high likelihood that lower entry points could be ahead.
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.
The DOW at 10:30 is at 17010 down 103 or -0.60%. (the Dow is only up 2.2% in 2014)
The SP500 is at 1973 down 10 or -0.51%.
SPY is at 197.01 down 1 or -0.46%.
The $RUT is at 1114 down 5 or -0.45%. (the Russell is now down -5.5% on the month and -4.5% on the year)
NASDAQ is at 4497 down 15 or -0.32%.
NASDAQ 100 is at 4040 down 14 or -0.34%.
$VIX ‘Fear Index’ is at 16.06 up 1.21 or 8.15%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net neutral, the past 5 sessions have been negative and the current bias is negative.
WTI oil is trading between 93.59 (resistance) and 92.74 (support) today. The session bias is mildly positive and is currently trading up at 93.59. (Chart Here)
– and –
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 1223.88 earlier to 1217.40 and is currently trading down at 1217.90. The current intra-session trend is negative. (Chart Here)
Currency Corruption Weighs on Copper negative
Dr. Copper is at 3.045 rising from 3.013 earlier. (Chart Here)
The US dollar is trading between 85.92 and 85.59 and is currently trading up at 85.70, the bias is currently negative. (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
If you would like to get advanced buy/sell tweets, sign-up in the column to the right of this post by clicking on the ‘Follow‘ button. Write me with suggestions and I promise not to bite.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary