Market Commentary: Markets Melt Up, Fail To Penetrate Resistance As Volume Falls

Written by Gary

Midday Market Commentary For 10-24-2014

Markets continued to melt up from this mornings shaky opening, but have, so far, been unable to penetrate the major resistance above. The SP500 has stalled just below its100 DMA, the DOW at the 145 DMA and the NASDAQ at the 50 DMA.

By noon volume has seen spurts of red and green volume, but has remained mostly at the low to anemic levels with future market direction in doubt.

Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the short-term market direction meter is neutral. We remain mostly, at best, negative and conservatively bullish. The important DMA’s, volume and a host of other studies have now turned and may be enough for some to start shorting. Right now now I am getting very concerned the current downtrend will get more aggressive in the short-term and volatility may promote sudden reversals. The SP500 MACD has turned up, but remains below zero at -11.01. 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 46 % Bearish (falling from 70% and now rising from 33%) and it seems to be a good sign for being bearish. The ‘Sheeples’ always seem to get it wrong.

Investors Intelligence sets the breath at 41.9 % bullish with the status at Bear Confirmed. (Chart Here )

StockChart.com Overbought / Oversold Index ($NYMO) is at 52.88. (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. (Now were in good shape to descend again – watch out!)

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 46.86 %. (Chart Here) The downside decent has reversed, but will it continue to rise? The next support is ~37.00, ~25.00 and ~15.00 below that. December, 2012 was the last time we saw numbers this low.

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 44.00. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 49.00. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. The next stop now is ~37.00.

StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.68. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.

StockChart.com Consumer Discretionary ETF (XLY) is at 66.28. (Chart Here)

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.

StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 10,571. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600, stay tuned. Next stop down is 9750, then 9250, and 8500.

The DOW at 12:00 is at 16764 up 86 or 0.52%.

The SP500 is at 1960 up 9 or 0.46%.

SPY is at 195.93 up 1 or 0.51%.

The $RUT is at 1115 down 1 or -0.13%.

NASDAQ is at 4470 up 18 or 0.45%.

NASDAQ 100 is at 4031 up 19 or 0.47%.

How the Popular ‘VIX’ Gauge Works

$VIX ‘Fear Index’ is at 16.25 down 0.28 or -1.693%. Bullish to 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 positive and the current bias is trending upwards.

Gundlach: Rates not going anywhere; oil headed lower

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.

WTI oil is trading between 81.83 (resistance) and 80.36 (support) today. The session bias is neutral, volatile and is currently trading down at 81.13. (Chart Here)

According to Rob Kurzatkowski, Senior Commodity Analyst at OptionsExpress.com, “. . . we see the December Crude Oil contract holding above the $80 level. To this point, the contract has held up at this technical support level. More stout support can be found around the $75 mark, should Oil fail to hold $80. The result of recent price weakness has been oversold technical levels. The 14-day RSI is in the mid-teens, which could be supportive of prices in the near term. In order to gain some traction, Crude Oil prices may need to post several closes north of the $85 mark.”

Brent Crude is trading between 86.73 (resistance) and 85.40 (support) today. The session bias is neutral, volatile and is currently trading down at 86.28. (Chart Here)

Not so “Golden” Anymore”

Monday, October 20, 2014 For those traders who really take a long view of market trends, looking at the monthly continuation chart for Gold futures, we notice that the bull market that began back in 2001 when Gold prices were… Read More…

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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 rose from 1229.17 earlier to 1234.39 and is currently trading down at 1233.40. The current intra-session trend is trending down. (Chart Here)

Currency Corruption Weighs on Copper

Dr. Copper is at 3.042 rising from 3.029 earlier. (Chart Here)

The US dollar is trading between 86.00 and 85.62 and is currently trading up at 85.79, the bias is currently negative. (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

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Written by Gary