Written by Gary
Closing Market Commentary For 10-02-2014
Markets closed mixed and flat after a real battle between the bulls and bears and it looks like the bulls may be wining. The DOW, SP500 and the NASDAQ ended the session with a Spinning Top candle formation which can be interpreted as bullish.
By 4 pm the averages had recovered, mostly, from the sell-off from this morning closing mixed, flat and quiet. The real danger here is that this may be, or not be, the bottom. I feel it is, but I need confirmation before I place my bet.
The chance of the markets being up tomorrow are good if you believe in the Spinning Top Candlestick pattern typically defining a bullish reversal.
. . . if this formation is found in an defined downtrend, it suggests that the sellers are losing conviction and that a bottom may be forming.
The medium term indicators are leaning towards the hold side at the close 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 below zero at -6.14. 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 65 % 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 ($BPNYA) is at 52.93. (Chart Here) Below support zone and apparently going further down. Next stop was ~57 and now it is ~44, below that is where we will most likely see the markets crash.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 24.38. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -67.57. (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.
This $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
Today it represents the lowest levels seen since the beginning of the October, 2011 rally. Eric Parnell says, ‘ If nothing else, given that relatively fewer stocks are trading above their 200-day moving average at a time when the market is just off of its all-time highs suggests that an increasingly narrowing group of stocks is driving the rally at this stage, which does not bode well for the future sustainability of the uptrend.” It also strongly suggests there has been a ‘stealth bear market’ underway in recent months.
The DOW at 4:00 is at 16801 down 3.66 or -0.02%.
The SP500 is at 1946 up 0.01 or 0.00%.
SPY is at 194.35 up 0.03 or 0.02%.
The $RUT is at 1096 up 11 or 1.01%.
NASDAQ is at 4430 up 8 or 0.18%.
NASDAQ 100 is at 3986 up 1 or 0.03%.
$VIX ‘Fear Index’ is at 16.16 down 0.55 or -3.29%. Bullish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is negative, the past 5 sessions have been negative and the current bias is net neutral.
WTI oil is trading between 91.52 (resistance) and 88.22 (support) today. The session bias is positive and is currently trading up at 91.35. (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 1222.82 earlier to 1209.21 and is currently trading up at 1214.70. The current intra-session trend is net neutral. (Chart Here)
Dr. Copper is at 3.004 falling from 3.038 earlier. (Chart Here)
The US dollar is trading between 86.01 and 85.54 and is currently trading down at 85.74, the bias is currently neutral. (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