Written by Gary
Closing Market Commentary For 02-12-2015
Interesting session watching the averages climb unabated to new monthly highs that leaves the SP500 within rock throwing distance (5.24 points) of its historic high. At 3:30 the averages rolled over and started to retreat from the session highs then made a second attempt and failed.
By 4 pm the SP500 appeared to be ready to ‘attack’ its resistance tomorrow and investors are wondering what Mr. Market is going to do when that happens? I have some thoughts about this weak market.
The markets are due for a ‘correction’ again, especially if there is any hope of making new highs later in the year. Any kind of pull back could be viewed as bullish providing a consolidation platform to continue this old bull run.
Personally, the markets, the EU, the Ukraine, Greece and most of the BRICS are not in any position to post stable financial papers. Just how long do you think the U.S. is going to be able to carry the ball before we trip and fall? That is an important question when considering if the markets can continue to push upwards. There are a bunch of top-notch analysts that say further significant hights is unlikely.
I am not saying rush out and start shorting, but I am saying to be damn careful and don’t get pulled into an unstable situation that could ‘fail’ at any time. There are way too many classic signs that ‘hint’ of an aging bull and notable analysts that warn of a deteriorating financial situation in the global economy that will have a detriment effect on the U.S. Financial markets.
Our medium term indicators are leaning towards Hold portfolio of non-performers at the close and the session market direction meter (for day traders) is 52 % 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 above zero at +8.51.
Having some cash on hand now is not a bad strategy as negative 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 52 % Bearish.
CNN’s Fear & Greed Index is 62 and climbing. Above 50 = greed, below 50 = fear. (At ‘Greed‘) (Chart Here) The number of stocks hitting 52-week highs exceeds the number hitting lows and is at the upper end of its range, indicating extreme greed.
StockChart.com Overbought / Oversold Index ($NYMO) is at +1.01. (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 53.91 %. (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.
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 ($TNX) is at 19.86. (Chart Here) The Stock Market Is Just Noticing What The Bond Market Has Known For Months The all time low is 13.94 (11-2012).
Chris Ciovacco says, “As long as the consumer discretionary ETF (NYSEARCA:XLY) holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy.” This chart clearly shows that dropping below 65.00 / 62.75 (and staying there) should be of a great concern to bullish investors.
StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 10,994. (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 17972 up 110 or 0.62%. (Historical High 18,103.45)
The SP500 is at 1088 up 20 or 0.96%. (Historical High 2,093.55)
SPY is at 208.80 up 1.99 or 0.96%.
The $RUT is at 1216 up 15 or 1.22%.
NASDAQ is at 4858 up 56 or 1.18%. (Historical High 5132.52)
NASDAQ 100 is at 4348 up 51 or 1.18%.
$VIX ‘Fear Index’ is at 15.37 down 1.60 or -9.43%. 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 elevated and trending sideways.
The recent surge in oil prices is just a “head-fake,” and oil as cheap as $20 a barrel may soon be on the way, Citigroup said in a report . . . Despite global declines in spending that have driven up oil prices in recent weeks, oil production in the U.S. is still rising, wrote Edward Morse, Citigroup’s global head of commodity research. Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia. The market is oversupplied, and storage tanks are topping out. Read More >>
WTI oil is trading between 51.58 (resistance) and 49.22 (support) today. The support currently is ~46.70 and the next resistance is ~54.00. 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 much lower prices to come. The session bias is positive, volatile and is currently trading down at 51.20. (Chart Here)
Brent Crude is trading between 59.92 (resistance) and 56.35 (support) today. The support currently is ~50.40 and the next resistance is ~60.00. The session bias is failed at resistance and is currently trading up at 59.30. (Chart Here)
Citi reduced its annual forecast for Brent crude for the second time in 2015. Prices in the $45-$55 range are unsustainable and will trigger “disinvestment from oil” and a fourth-quarter rebound to $75 a barrel, according to the report.
Prices this year will likely average $54 a barrel.
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 1218.83 earlier to 1232.58 and is currently trading down at 1221.80. The current intra-session trend is trending down and volatile. (Chart Here)
Dr. Copper is at 2.603 rising from 2.535 earlier. (Chart Here)
The US dollar is trading between 95.10 (highest since 2003 and ~92 is a very substantial support at ~93.50) and 94.07. U.S. dollar is currently trading up at 94.25, the bias is currently down and 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. The ~94.25 area appears to be a minor resistance for those interested. Historical chart Here.
The markets are still susceptible to climbing on ‘Bernankellen’ vapor, use caution!
“Investors should Hinge Kir Businessremember 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