Written by Gary
Midday Market Commentary For 10-30-2014
The morning trend has been a fractional melting up to the noon hour, but ultimate market direction is not cast in stone.
By the noon hour the DOW was up nearly 150 points while the other averages were flat and mixed. This is a sit on your hands session and wait for a signal.
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the short-term market direction meter is bearish. We remain mostly, at best, negative and conservatively bullish, neutral in other words. 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 any downtrend could get more aggressive in the short-term and volatility may also promote sudden reversals. The SP500 MACD has turned up, but remains above zero at 4.31. 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 as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a ‘long-term’ reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members’ sentiments are 49 % 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.
StockChart.com Overbought / Oversold Index ($NYMO) is at 62.65. (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 are high enough 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 51.70 %. (Chart Here) The downside decent has reversed, but will it continue to rise above 50%? The next support is ~37.00, ~25.00 and ~15.00 below that. December, 2011 was the last time we saw numbers in the 20’s.
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 48.50. (Chart Here) Below support zone but rising. Next stop was ~57, then ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25 and taking the markets with it.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 23.00. (Chart Here) Treasury Yield Curve Approaches Flattest Since 2009.
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 10,672. (Chart Here) We are above the resistance (10,301) but is this a test of the next resistance at ~10600/700, stay tuned. Next stop down is 9750, then 9250, and 8500.
The following article has some interesting arguments for why the market have and have not topped.
The DOW at 12:15 is at 17120 up 145 or 0.85%.
The SP500 is at 1987 up 4 or 0.23%.
SPY is at 198.64 up 0.55 or 0.28%.
The $RUT is at 1146 down 0.56 or -0.05%.
NASDAQ is at 1544 down 5 or -0.11%.
NASDAQ 100 is at 4083 down 7 or -0.18%.
$VIX ‘Fear Index’ is at 14.77 down 0.38 or -2.51%. 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 neutral, the past 5 sessions have been positive and the current bias is mixed.
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.
“We believe that OPEC will no longer act as the first-mover swing producer and that U.S. shale oil output will be called upon to fill this role,” says Goldman, cutting its 2015 Q1 oil price forecasts by $15 per barrel – WTI to $75, Brent to $85. “Our forecast also reflects the realization of a loss of pricing power by core-OPEC.”
The Goldman team believes OPEC’s largest members – rather than responding to price declines by cutting production – are attempting to defend market share by reducing prices.
WTI oil is trading between 82.09 (resistance) and 80.81 (support) today. The session bias is negative and is currently trading down at 81.07. (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.”
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 fell from 1215.59 earlier to 1195.80 and is currently trading up at 1199.70. The current intra-session trend is negative and trending down. (Chart Here)
Dr. Copper is at 3.063 falling from 3.087 earlier. (Chart Here)
The US dollar is trading between 86.56 and 85.99 and is currently trading down at 86.14, the bias is currently neutral but trending down. (Chart Here) Resistance made in Aug., 2013 (~85.00) has been broken and now is support. This support has gotten much stronger since August, 2014 and isn’t likely to fall easily.
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