Written by Gary
Midday Market Commentary For 01-06-2015
Markets plunged fractionally after a brief run in the green. The oils tested resistances and the dollar declined fractionally causing the averages to climb mostly on Margin Calls.
By noon the averages drastically reversed direction and were in the minus one percent level. The large caps were only down -0.8%, but were catching up with the small caps as the sell off continues on moderate volume.
SP500 takes a technical tenuous turn down.
Consider that significant support points are under siege – most notably, the S&P 500’s breakout point of 2,019 – and a violation of this area would raise a technical caution flag.
Been doing my research on an inverse ETF; SOXS currently at 14.94 and believe this baby will give extraordinary returns by the end of 2015. You can’t buy too much because SOXS doesn’t trade with any upscale volume, but I dipped my toes in for a 100 shares. I calculate a 100% return in 12 months.
Our medium term indicators are leaning towards sell portfolio of non-performers at the opening and the session market direction meter is 89 % 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 +3.08. 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 49 % Bearish.
StockChart.com Overbought / Oversold Index ($NYMO) is at -23.28. (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 48.48 %. (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 $NYA all show rounding off the tops which in the past has lead to a downturn.
Also, the SP500 10 DMA has crossed over the 20 DMA (12-11-14) always indicating a ‘correction’ underway. The 50,100, 145 and 200 DMA are all going flat which is never a good omen for a continuing bull run. Watch for the 50 DMA to cross over the 100,145 and 200 DMA to indicate how deep the correction will be.
These are not ‘leading’ indicators as such, but depicting ‘trends’ in the making showing data accumulated over the past several months, but needs to be watched.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 19.02. (Chart Here) 10-year Treasury yield drops below 2% for first time in 7 months
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 10,509. (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.
The DOW at 12:15 is at 17333 down 170 or -0.97%. (Historical High 18,103.45)
The SP500 is at 2000 down 22 or -1.00%. (Historical High 2,093.55)
SPY is at 199.76 down 2 or -0.98%.
The $RUT is at 1156 down 25 or -2.15%.
NASDAQ is at 4586 down 66 or -1.42%. (Historical High 5132.52)
NASDAQ 100 is at 4114 down 48 or -1.14%.
$VIX ‘Fear Index’ is at 22.54 up 2.62 or 13.15%. 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 down and trending lower
WTI oil is trading between 50.36 (resistance) and 47.78 (support) today. The session bias is down and trending down and is currently trading down at 47.945. (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 1201.68 earlier to 1222.78 and is currently trading down at 1219.30. The current intra-session trend is positive. (Chart Here)
Dr. Copper is at 2.768 falling from 2.781 earlier. (Chart Here) Very Volatile!
The US dollar is trading between 91.92 (highest since 2005 and ~91 is a very substantial resistance) and 91.41 and is currently trading up at 91.57, the bias is currently neutral and 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 current level (~91 / 92) is the resistance (substantial) and could be a triple top of sorts. Historical chart Here.
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