Written by Gary
Closing Market Commentary For 01-09-2015
The trading zone was narrow and sideways, but the bulls and bears battled it out all afternoon without a clear winner. The volume remained low to sometimes moderate levels as we head into the weekend where anything could happen.
By 4 pm it was obvious that the BTFDers are still around and believe the upside rally is just a session away while the naysayers decided to jump ship while there is still time. The DOW closed 171 points down and small caps followed closely.
I think the naysayers have it right for the short term as oil is predicted to edge lower.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close 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 flat, but remains above zero at +0.50. 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 51 % Bearish.
StockChart.com Overbought / Oversold Index ($NYMO) is at +17.67. (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 50.93 %. (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 19.71. (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 10,712. (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 4:00 is at 17737 down 171 or -0.95%. (Historical High 18,103.45)
The SP500 is at 2045 down 17 or -0.84%. (Historical High 2,093.55)
SPY is at 203.97 down 1.65 or -0.80%.
The $RUT is at 1186 down 10 or -0.87%.
NASDAQ is at 4704 down 32 or -0.68%. (Historical High 5132.52)
NASDAQ 100 is at 4213 down 27 or -0.64%.
$VIX ‘Fear Index’ is at 17.55 up 0.54 or 3.17%. 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 net positive and the current bias is down, but trending up.
WTI oil is trading between 49.42 (resistance) and 47.18 (support) today. The session bias is trending down and is currently trading down at 48.21. (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 1208.42 earlier to 1223.78 and is currently trading down at 1223.30. The current intra-session trend is elevated, trending up and volatile. (Chart Here)
Dr. Copper is at 2.758 falling from 2.775 earlier. (Chart Here)
The US dollar is trading between 92.74 (highest since 2005 and ~92 is a very substantial resistance with 92.53 representing a triple top) and 92.10 and is currently trading up at 92.19, the bias is currently neutral, volatile 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
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Written by Gary