Written by Gary
Market Commentary For 12-15-2014
Morning markets lost their positive momentum early and started to head south almost after opening up +0.4%.
By noon the averages were all in the red with the small caps down one percent with no letup in sight. Crude oil (WTI) has fallen to Sunday lows and will probably fall lower as the session progresses.
Our medium term indicators are leaning towards sell portfolio of non-performers at the midday and the short-term market direction meter is very bearish moving from fractionally bullish this morning. 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 +0.83. 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 warnings 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 -63.25. (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 45.44 %. (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 20.94. (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 10,421. (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 longer 6 month outlook is now 40-60 sell and will remain bearish until we can see what the effects are from the oil slide, ECB and the U.S. Fed possibly triggering a deflationary slide. Investors should employ the first thing one learns while in a foxhole; keep their head down.
The DOW at 12:00 is at 12123 down 158 or-0.91%. (Historical High 17,991.19)
The SP500 is at 1984 down 19 or -0.93%. (Historical High 2,079.47)
SPY is at 199.05 down 1.83 or -0.92%.
The $RUT is at 1138 down 14 or -1.24%.
NASDAQ is at 4596 down 58 or -1.25%. (Historical High 5132.52)
NASDAQ 100 is at 4150 down 49 or -1.17%.
$VIX ‘Fear Index’ is at 22.28 up 1.20 or 5.69%. Bearish 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 negative and the current bias is negative.
WTI oil is trading between 58.98 (resistance) and 56.48 (support) today. The session bias is negative and is currently trading down at 56.77. (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 1224.73 earlier to 1206.97 and is currently trading up at 1215.90. The current intra-session trend is neutral. (Chart Here)
Dr. Copper is at 2.884 falling from 2.947 earlier. (Chart Here)
The US dollar is trading between 88.87 (highest since 2009) and 88.42 and is currently trading down at 88.49, the bias is currently neutral. (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