Written by Gary
Closing Market Commentary For 10-14-2014
Interesting session in that today’s session appears to have been a relief rally and Mr. Market promises some more damaging declining to come if the spinning top candlestick formations are NOT confirmed tomorrow. If the market does reverse tomorrow, we may have seen a mid-term bottom.
By 4 pm there was heavier than normal volume during the last 15 minutes of trading. Whatever happens, be careful as volatility is much greater and large swings are possible that will catch any ‘Sheeples’ sleeping at the switch.
I sold my reverse ETF having made a substantial profit and went long on another ETF as it is quiet possible we have seen a midterm bottom. The reverse trend represented by spinning top candle formation have been 100% correct over the past month and that is how I made my last minute decision.
‘Don’t panic, it’s only a correction’ says, Cam Hui. This article below is a must read as Cam says, ‘short-term technical conditions are screaming “bounce”!’ EXACTLTY what I have been saying.
. . . we are entering a deeper corrective period based on signs of broad market weakness and anxiety. Too much damage has been done to the equity outlook for stocks to carry on and grind higher as they have in the last couple of years.
To my mind, the greatest damage to the global equity outlook has nothing to do with any technical indicator. Rather, it was signaled by the single sentence warning by Microchip Technology ((NASDAQ:MCHP)) about a likely semi-conductor inventory correction, which exemplified the picture of slowing global growth.
This time, there appears to be no broad based consensus of a fundamental reason for the market weakness. That leads me to believe that we are seeing a correction in risk appetite, which is generally not the pre-condition for a bear market or even a major correction. Most likely, the magnitude of this pullback will be of the 5-10% variety.
Our medium term indicators are leaning towards the sell 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 -22.98. I would advise caution in taking any position during this uncertain period and I hope you have returned your ‘dogs’ to the pound. Having some cash on hand now is not a bad strategy.
Investing.com members’ sentiments are 39 % 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 ($BPNYA) is at 43.31. (Chart Here) Below support zone and apparently going further down. Next stop was ~57 and now it is ~44, below that is where we will most likely see the markets crash. We are there and need a reversal pronto.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.06. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
StockChart.com Overbought / Oversold Index ($NYMO) is at -67.70. (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 65.00 / 62.75 (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 29.34 %. (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 arrows in the chart below show levels that have acted as support and resistance since 2006. The two blue lines intersect near 10,301. As long as 10,301 holds, the odds of a rally taking place will be higher. If 10,301 fails to attract support from buyers, then the bullish push higher in early 2014 could be classified as a “failed breakout”, which would increase the odds of bad things happening in the weeks ahead.
The DOW at 4:00 is at 16315 down 5.75 or -0.04%.
The SP500 is at 1878 up 3 or 0.16%.
SPY is at 188.13 up 0.29 or 0.15%.
The $RUT is at 1062 up 12 or 1.17%.
NASDAQ is at 4227 up 14 or 0.32%.
NASDAQ 100 is at 3810 up 2 or 0.06%.
$VIX ‘Fear Index’ is at 23.24 down 1.37 or -5.56%. Bearish 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 trending sideways.
Saudi Arabia has reportedly been telling oil-market investors and analysts that it is ready to accept oil prices below $90 per barrel, and even as low as $80, for up to a year or two. If true, it would represent a major change in policy for Riyadh, which may be looking to slow the expansion of rivals such as the U.S. Oil was -1.45% at $84.57 at the time of writing.
WTI oil is trading between 85.59 (resistance) and 81.43 (support) today. The session bias is negative and is currently trading down at 81.96. (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 rose from 1231.99 earlier to 1231.30 and is currently trading down at 1231.79. The current intra-session trend is trending down. (Chart Here)
Dr. Copper is at 3.078 rising from 3.031 earlier. (Chart Here)
The US dollar is trading between 85.99 and 85.20 and is currently trading down at 85.92, the bias is currently elevated and sideways. (Chart Here) Resistance made in Aug., 2013 (85.00) has been broken and now is support.
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