Market Commentary: DOW And SP500 Set New Highs, HFT Algo Computers In Charge

Written by Gary

Opening Market Commentary For 12-26-2014

Premarkets on this Friday morning after Christmas were up +0.2% as the bulls seem to have the markets under control. The SP500 set a new historic high on the opening but the DOW lagged behind indicating a slow day ahead because of investors extending their Christmas Holiday by staying home today.

By 10 am the HFT computers were pumping out the Holiday cheer with the DOW setting new highs and the SP500 pushing further upwards on sometimes anemic volume.

Hard to tell if today is going to really mean anything as it appears the HFT algo computers are manipulating the numbers somewhat. Trying to sell a large block today will end in futility I believe.

The US dollar is still melting up, the oils are showing weakness again and Dr. Copper just barfed. I wouldn’t bet on the markets remaining up by this afternoon.

Our medium term indicators are leaning towards sell portfolio of non-performers at the opening and the session market direction meter is 10 %bullish and falling. 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 up, but remains above zero at +11.90. 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 65 % Bearish.

Investors Intelligence sets the breath at 54.1 % bullish with the status at Bear Confirmed. (Chart Here ) I expect a market reversal at or before ~25.0 should the markets start to descend.

StockChart.com Overbought / Oversold Index ($NYMO) is at 24.30. (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 52.87 %. (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.

Also, the SP500 10 DMA has crossed over the 20 DMA (12-11-14) always indicating a ‘correction’ underway. The 50,100, 145 and 200 DMA are all going flat which is never a good omen for a continuing bull run. Watch for the 50 DMA to cross over the 100,145 and 200 DMA to indicate how deep the correction will be.

These are not ‘leading’ indicators as such, but depicting ‘trends’ in the making showing data accumulated over the past several months, but needs to be watched.

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 59.11. (Chart Here) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash.

StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 74.80. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction.

StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 22.61. (Chart Here) Flattening Yield Curve Signaling Slowing Economic Growth?

StockChart.com Consumer Discretionary ETF (XLY) is at 72.17. (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 10,993. (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 ~11,900, watch to see if these numbers decline back down. Next stop down is 10600, 9750, then 9250, and 8500.

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The DOW at 10:15 is at 18091 up 61 or 0.34%. (Historical High 18,103.45)

The SP500 is at 2091 up 8.75 or 0.42%. (Historical High 2,091.77)

SPY is at 208.61 up 0.83 or 0.40%.

The $RUT is at 1214 up 7 or 0.57%.

NASDAQ is at 4797 up 24 or 0.50%. (Historical High 5132.52)

NASDAQ 100 is at 4304 up 21 or 0.49%.

How the Popular ‘VIX’ Gauge Works

$VIX ‘Fear Index’ is at 14.40 down 0.02 or -0.14%. Neutral 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 positive and the current bias is elevated and trending down.

Gundlach: Rates not going anywhere; oil headed lower

Everything You Need To Know About The Geopolitics Surrounding Crude Oil

WTI oil is trading between 56.58 (resistance) and 55.67 (support) today. The session bias is trending down and is currently trading down at 55.74. (Chart Here)

Brent Crude is trading between 60.95 (resistance) and 59.97 (support) today. The session bias is trending down and is currently trading down at 60.01. (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 rose from 1176.40 earlier to 1199.11 and is currently trading up at 1194.80. The current intra-session trend is elevated and sideways. (Chart Here)

Can Dr. Copper Heal Thyself

Dr. Copper is at 2.815 crashing from 2.861 earlier. (Chart Here)

The Consequences Of A Strengthening U.S. Dollar

The US dollar is trading between 90.37 (highest since 2006 and 89.85 is a very substantial resistance) and 90.06 and is currently trading down at 90.34, the bias is currently positive. (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 is at ~88.85 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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Real Time Market Numbers

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Written by Gary