Written by Gary
Midday Market Commentary For 12-10-2014
Noon time averages are depressed and trading sideways as WTI oil drops to 60 worrying investors about further market deterioration in the coming sessions.
By noon the averages were trending down slowly and volume remaining moderate. I don’t see an afternoon rally in the making or least one that will save the day. In fact, the market looks like it is on the verge of falling further.
We pretty well know that Iran does not have a nuclear weapon as they would have used it on Saudi Arabia by now. Media pundits were so sure this was an attack on the US, when the Saudis are more concerned with Iran and Russia supporting Syria than the US’s oil production.
TEHRAN, Iran (AP) – Iran’s President Hassan Rouhani said Wednesday that the sharp fall in global oil prices is the result of “treachery,” in an apparent reference to regional rival Saudi Arabia, which opposed production cuts. Oil prices have plunged by more than 40 percent since June to around $65 a barrel, placing severe strain on Iran’s economy, which is already hobbled by international sanctions imposed over its nuclear program.
An OPEC meeting last month failed to reach agreement on production curbs, mainly because of Saudi opposition. Rouhani told a Cabinet meeting Wednesday that the fall in prices is at least partly “politically motivated,” the result of a “conspiracy against the interests of the region, the Muslim people and the Muslim world.”
His comments reflect concerns among Saudi Arabia’s rivals that the kingdom is capable of withstanding the revenue losses and is forcing lower oil prices to damage their economies.
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the short-term market direction meter is very, very bearish. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals. The SP500 MACD has turned down, but remains above zero at 15.17. I would advise caution in taking any position during this uncertain period and I hope you have returned your ‘dogs’ to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a ‘long-term’ reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members’ sentiments are 64 % Bearish.
StockChart.com Overbought / Oversold Index ($NYMO) is at -17.92. (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.
This $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) is at 52.62 %. (Chart Here) 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.
Many indicators are showing markets leveling off or rounding indicating market softness that could lead to lower values and investor’s should watch carefully. The SP500 MACD, $BPNYA, $BPSPX, $TNX and the $NYA all show rounding off the tops which in the past has lead to a downturn.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.01. (Chart Here) Flattening Yield Curve Signaling Slowing Economic Growth?
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 10,752. (Chart Here) Markets move inverse to institutional selling. We are above the resistance (10,301) but is this a test of the next resistance (triple top) at ~11,109, watch to see if these numbers decline back down. Next stop down is 10600, 9750, then 9250, and 8500.
The DOW at 12:30 is at 17648 down 154 or -0.86%. (Historical High 17,991.19)
The SP500 is at 2044 down 16 or -0.80%. (Historical High 2,079.47)
SPY is at 204.87 down 2 or -0.77%.
The $RUT is at 1177 down 11 or -0.92%.
NASDAQ is at 4736 down 30 or -0.63%. (Historical High 5132.52)
NASDAQ 100 is at 4268 down 27 or -0.63%.
$VIX ‘Fear Index’ is at 16.38 up 1.49 or 10.01%. Neutral to Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is net positive, the past 5 sessions have been sideways and the current bias is negative.
WTI oil is trading between 63.24 (resistance) and 60.46 (support) today. The session bias is negative and is currently trading down at 60.84. (Chart Here)
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 1238.86 earlier to 1225.66 and is currently trading up at 1229.00. The current intra-session trend is neutral and volatile. (Chart Here)
Dr. Copper is at 2.896 falling from 2.926 earlier. (Chart Here)
The US dollar is trading between 88.81 (highest since 2009) and 88.31 and is currently trading down at 88.37, the bias is currently 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 next resistance/support ??? is at ~88.72 set in June, 2010.
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