Written by Gary
Opening Market Commentary For 01-22-2015
Volatility is here! Premarkets were up +0.4%, markets opened at +0.3%, fell to -0.2% and has since rose back to +0.3%. Gold, U.S. Dollar and oil all took a big jump upward and then fell to previous levels.
By 10 am the averages were trending up on moderate volume and may continue the trend, but be on your toes.
Not much to say this morning except to buckle up – the roller coaster ride might be bumpy.
Our medium term indicators are leaning towards sell portfolio of non-performers at the opening and the session market direction meter (for day traders) is 25 % bearish. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned flat, but remains below zero at -5.54. I would advise caution in taking any position during this 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 see some leading indicators that are warning of a ‘long-term’ reversal within six months. I believe one is most likely to occur 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 36 % Bearish.
CNN’s Fear & Greed Index is 26. Above 50 = greed, below 50 = fear. (At ‘Extreme Fear’) (Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at +0.36. (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 49.44 %. (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 $NYA all show rounding off the tops which in the past has lead to a downturn.
Also, the SP500 10 DMA has crossed over the 20 DMA (12-11-14) always indicating a ‘correction’ underway. The 50,100, 145 and 200 DMA are all going flat which is never a good omen for a continuing bull run. Watch for the 50 DMA to cross over the 100,145 and 200 DMA to indicate how deep the correction will be.
These are not ‘leading’ indicators as such, but depicting ‘trends’ in the making showing data accumulated over the past several months and needs to be watched.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 18.77. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For 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 10,736. (Chart Here) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors. It is a very important index for investors to watch. We are above the support (10,301) but is this a test of the next resistance (triple top) at ~11,000 to 11,108, 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 45-55 sell and will remain somewhat bearish until we can see what the effects are from the oil decline, the Euro collision with Greece and the U.S. Fed possibly triggering a deflationary slide. The markets are at a crossroad of sorts, indecision of which way to go, with a bias to the downside. Investors should employ the first thing one learns while in a foxhole; keep their head down.
Risk Reward Shows Market In The Toilet For 2015
Risk is running very high and the momentum indicators are beginning to wane. Commodity prices are in free fall in some cases, and long-term interest rates continue to trend lower. These negative economic developments are deflationary, which augurs poorly for the stock market. Simultaneously, a plethora of indicators are also flashing warning signs. Our subscribers received a notice on December 15, advising them to add 10% to their short position. We are currently at 50% short.
The DOW at 10:30 is at 17615 up 60 or 0.34%. (Historical High 18,103.45)
The SP500 is at 2042 up 10 or 0.49%. (Historical High 2,093.55)
SPY is at 203.95 up 0.85 or 0.42%.
The $RUT is at 1174 up 8 or 0.67%.
NASDAQ is at 4687 up 20 or 0.43%. (Historical High 5132.52)
NASDAQ 100 is at 4212 up 20 or 0.47%.
$VIX ‘Fear Index’ is at 17.12 down 1.73 or -9.18%. Bullish 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 positive and the current bias is positive.
WTI oil is trading between 49.00 (resistance) and 47.11 (support) today. The support floor currently is ~46.70. The Iranians say they are comfortable with $25 and I’ll bet the Saudi’s will do everything possible to make it painful for them. The session bias is negative and is currently trading down at 47.22. (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 1279.68 earlier to 1304.11 and is currently trading up at 1301.80. The current intra-session trend is positive. (Chart Here)
Dr. Copper is at 2.566 falling from 2.610 earlier. (Chart Here)
The US dollar is trading between 93.82 (highest since 2003 and ~92 is a very substantial resistance with 92.53 representing a triple top) and 82.67 and is currently trading down at 93.72, 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 current level (~91 / 92) is the resistance (substantial). 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