Written by Gary
Midday Market Commentary For 10-08-2014
Large caps reached a minor support made on last Thursday’s plunge (10-2) and backed off on low volume. Trading was fractionally trending down, but has remained in a relatively narrow range and was mostly sea-sawing around the unchanged line during the morning session.
By noon the averages had started to melt higher and mixed. The %RUT is down solidly at -0.5% and the DOW is just in the green, but overall, it is looking bullish.
At the noon-time hour, a candlestick is being formed that looks like another spinning top which indicates a reversal in the making and is temporally bullish. These candles have been accurate lately and is worth noting if you are a BTFDer. Also possible is that a double bottom has formed and we will have a recovery from here instead of analysts’ negative views of further downside.
However, the 50 DMA is about to cross the 100 DMA on the SP500 and the DOW. Historically this is another bearish signal to add to the already ‘not-so-good’ outlook. There is a lot going on without any concrete answers to what Mr. Market is going to do.
The medium term indicators are leaning towards the hold to lighten portfolio of non-performers at the midday and the short-term market direction meter is Very bearish. We remain mostly, at best, slightly negative and conservatively bullish. The important DMA’s, volume and a host of other studies have are now turning and that is still not enough for me to start shorting, but now I am getting very concerned the current downtrend will get more aggressive. The SP500 MACD has turned down, but remains below zero at -10.94. I would advise caution in taking any position during this uncertain period except to return your ‘dogs’ to the pound. Having some cash on hand now is not a bad strategy.
Investing.com members’ sentiments are 50 % Bearish (falling from 70%) and it seems to be a good sign for being bearish. The ‘Sheeples’ always seem to get it wrong.
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 50.51. (Chart Here) Below support zone and apparently going further down. Next stop was ~57 and now it is ~44, below that is where we will most likely see the markets crash.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.50. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -44.60. (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 (and staying there) should be of a great concern to bullish investors.
This $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
Today it represents the lowest levels seen since the beginning of the October, 2011 rally. Eric Parnell says, ‘ If nothing else, given that relatively fewer stocks are trading above their 200-day moving average at a time when the market is just off of its all-time highs suggests that an increasingly narrowing group of stocks is driving the rally at this stage, which does not bode well for the future sustainability of the uptrend.” It also strongly suggests there has been a ‘stealth bear market’ underway in recent months.
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) is at 40.30 %. (Chart Here) Unless this downward trend reverses itself soon, we are going to see further downside. The next support is ~37.00 and ~25.00 below that.
The longer 6 month outlook is now 30–70 sell (probably should be 20-80 sell) and will remain bearish until we can see what the effects are in the Fed’s game plan.
The DOW at 12:00 is at 16742 up 22 or 0.13%.
The SP500 is at 1935 up 1 or 0.07%.
SPY is at 193.54 up 0.25 or 0.12%.
The $RUT is at 1071 down 6 or -0.53%.
NASDAQ is at 4356 up 0.75 or 0.01%.
NASDAQ 100 is at 3970 up 12 or 0.30%.
$VIX ‘Fear Index’ is at 17.07 down 0.13 or -0.76%. Neutral Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net negative, the past 5 sessions have been negative and the current bias is mixed and flat.
WTI oil is trading between 88.63 (resistance) and 86.93 (support) today. The session bias is negative and is currently trading up at 87.59. (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 1221.03 earlier to 1206.39 and is currently trading up at 1208.00. The current intra-session trend is negative and volatile. (Chart Here)
Dr. Copper is at 3.001 falling from 3.048 earlier. (Chart Here)
The US dollar is trading between 86.02 and 85.66 and is currently trading down at 85.78, the bias is currently slightly negative and VERY volatile. (Chart Here) Resistance made in Aug., 2013 (85.00) 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