Written by Gary
Opening Market Commentary For 01-06-2015
Premarkets were up +0.2% while WTI oil was sea-sawing in the $48 range which is a full point where we left it yesterday. European and Greece woes have not improved and the US ISM Non-Manufacturing fell to 56.2 down from 59.3. The markets opened up fractionally after the biggest sell-off in 3 months, however most analysts do not expect this last as long as oil continues to fall.
By 10 am the ‘not-so-good’ US financial reports turned the averages down to mixed status as the averages appear to now be trending up fractionally. I do not trust Mr. Market today, be very careful in any trades you might care to execute.
Volatility is much greater today, as some trades relish, than it has been as the averages swing back and forth the unchanged line. The latest move upwards by the averages is primarily due to the falling dollar and oil rising to eventually test the 50 dollar resistance. I told you yesterday that was going to happen.
Our medium term indicators are leaning towards sell portfolio of non-performers at the opening and the session market direction meter is 35 % bearish. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals. The SP500 MACD has turned down, but remains above zero at +3.08. I would advise caution in taking any position during this uncertain period and I hope you have returned your ‘dogs’ to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do not see any leading indicators that are warnings of a ‘long-term’ reversal in the near-term. There may be one later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members’ sentiments are 49 % Bearish.
StockChart.com Overbought / Oversold Index ($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 19.68. (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 10,614. (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.
It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility. Historically, accordingly to Eric Parnell, “major bull markets have almost never reached their final peak in a sideways grinding pattern. Instead, they have almost always peaked with flourish including one final crescendo toward a new all-time high before finally rolling over and succumbing to the forces of the new bear market”.
Just when you thought the U.S. economy was roaring back to health, Former Federal Reserve Chairman Alan Greenspan is here to tell you otherwise.
“The United States is doing better than anybody else, but we’re still not doing all that well,” Greenspan, 88, said today (12-30-2014) in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “We still have a very sluggish economy.”
Greenspan said the economy won’t fully recover until American companies invest more in productive assets and the housing market bounces back.
“Almost all of the weakness in the last four, five, six years has been in long-lived investments” in capital goods and real estate, Greenspan said. “Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”
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.
Looking out a year ahead, there is no recession foreseen for the next 12 months.
And the Leading Index for the United States also shows no recession for the next 12 months.
The DOW at 10:15 is at 17574 up 73 or 0.42%. (Historical High 18,103.45)
The SP500 is at 2030 up 9 or 0.45%. (Historical High 2,093.55)
SPY is at 202.68 up 1 or 0.46%.
The $RUT is at 1179 down 3 or -0.22%.
NASDAQ is at 4660 up 8 or 0.17%. (Historical High 5132.52)
NASDAQ 100 is at 4174 up 13 or 0.31%.
$VIX ‘Fear Index’ is at 19.60 down .036 or -1.81%. 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 negative and the current bias is up fractionally and trending up.
WTI oil is trading between 50.36 (resistance) and 48.50 (support) today. The session bias is down and trending sideways and is currently trading up at 49.05. (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 1214.38 and is currently trading up at 1210.80. The current intra-session trend is elevated and trending sideways. (Chart Here)
Dr. Copper is at 2.765 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 down at 91.75, the bias is currently elevated and trending sideways. (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
If you would like to get advanced buy/sell tweets, sign-up in the column to the right of this post by clicking on the ‘Follow‘ button. Write me with suggestions and I promise not to bite.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary