Written by Gary
Closing Market Commentary For 02-03-2015
The markets started to climb right after the noon hour report and continued to the closing bell with a strong statement the bulls are not yet ready to roll over and die. The equities strong showing is due mostly to the oil’s 7% rise today
By 4 pm the averages were trading in moderate to high volume levels pushing the large caps above critical DMA’s. Here are some thoughts.
The oils did bounce back from their resistance levels this afternoon and I now expect the markets to open lower – but maybe not stay there – a traders delight.
U.S. markets spike from major technical support
CINCINNATI (MarketWatch) – The U.S. markets’ price action remains distinctly technical, and on balance, bullish.
Consider that the Dow Jones Industrial Average has rallied sharply from its 200-day moving average, while the S&P 500 Index has maintained major support at the January low.
Oil is being the primary mover of the markets, but I can’t help to believe it is being manipulated. The theory that supplies will shrink and prices will rise doesn’t sit well with me and the ‘known’ facts.
Here’s One Theory for Why Oil Is Going Nuts
Brent oil surged to $58 a barrel on Tuesday. It is now 24 percent higher than it was just a few weeks ago, meeting the technical definition of a bull market. (Some perspective: Prices are still down 50 percent since June.)
One possible reason for the recent surge: an industry in despair. U.S. drillers idled 94 rigs last week, the most in data going back to 1987, according to Baker Hughes. In the past eight weeks, 352 rigs were idled. BP on Tuesday said it will reduce spending to $20 billion this year, compared with previous guidance of as much as $26 billion. The cuts bring renewed focus to rig counts and raise questions about how low prices can go and still sustain the U.S. oil boom.
Our medium term indicators are leaning towards sell portfolio of non-performers at the close and the session market direction meter (for day traders) is 100+ % bullish. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned up, but remains below zero at -4.29. I would advise caution in taking any position during this period and I hope you have returned your ‘dogs’ to the pound.
Having some cash on hand now is not a bad strategy as market changes are happening everyday. As of now, I do see some leading indicators that are warning of a ‘long-term’ reversal within six months. I believe one is most likely to occur later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market.
Investing.com members’ sentiments are 43 % Bearish.
CNN’s Fear & Greed Index is 43. Above 50 = greed, below 50 = fear. (At ‘Fear, but near the Greed side‘) (Chart Here)
Investors Intelligence sets the breath at 50.0 % bullish with the status at Bear Confirmed. (Chart Here ) I expect a market reversal at or before ~25.0 should the markets start to descend.
StockChart.com Overbought / Oversold Index ($NYMO) is at +11.07. (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 50.29 %. (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.
For example on XLY and $NYA, there are higher lows and lower highs forming a triangle that at some point breaks out to the top or the bottom. Which way will it goes and that is where you the investor have to follow World events and get your ‘gut feeling’ in check.
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 57.45. (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 ($BPSPX) is at 64.60. (Chart Here) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 17.80. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 (11-2012) and we are trending there.
StockChart.com Consumer Discretionary ETF (XLY) is at 72.12. (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 10,847. (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 support down is 10600, 9750, then 9250, and 8500.
The DOW at 4:00 is at 17666 up 305 or 1.76%. (Historical High 18,103.45)
The SP500 is at 2050 up 29 or 1.44%. (Historical High 2,093.55)
SPY is at 204.57 up 3 or 1.45%.
The $RUT is at 1197 up 21 or 1.83%.
Don’t Invest In The Russell 2000
NASDAQ is at 4728 up 51 or 1.09%. (Historical High 5132.52)
NASDAQ 100 is at 4229 up 41 or 0.97%.
How the Popular ‘VIX’ Gauge Works
$VIX ‘Fear Index’ is at 17.33 down 2.10 or -10.81%. Bullish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is sideways, the past 5 sessions have been net positive and the current bias is positive and trending up.
WTI oil is trading between 54.16 (resistance) and 49.79 (support) today. The support currently is ~46.70 and the next resistance is ~53.20. 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, meaning even lower prices to come. The session bias is down after failing to go beyond the resistance and is currently trading down at 52.28. (Chart Here)
Brent Crude is trading between 58.99 (resistance) and 55.01 (support) today. The support currently is ~50.40 and the next resistance is ~59.33. The session bias is down after failing to go above the resistance and is currently trading down at 57.38. (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 fell from 1285.85 earlier to 1255.92 and is currently trading down at 1261.70. The current intra-session trend is down and sideways. (Chart Here)
Dr. Copper in Need of Some Medicine?
Dr. Copper is at 2.578 rising from 2.520 earlier. (Chart Here)
The Consequences Of A Strengthening U.S. Dollar
Will 2015 be the Year of the Greenback?
The US dollar is trading between 94.92 (highest since 2003 and ~92 is a very substantial support with 92.53 representing a triple top that has been broken) and 93.38. U.S. dollar is currently trading down at 93.72, the bias is currently 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 level of ~92 is the current support and is 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
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Real Time Market Numbers
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Written by Gary
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