Market Commentary: SP500 Couldn’t Hold New Highs, Nasdaq Up +0.4%, DOW Down -0.2%; Earnings Poor

Written by Gary

Closing Market Commentary For 02-19-2015

Markets sea-sawed sideways mostly in the red while the small caps remained in the green.

By 4 pm the averages were mixed and ranging from flat to +0.5% up all on moderate volume on poor earnings. Session headliner on Friday may include more averages flat-lining.

Tomorrow’s forecast may include wet and slippery stocks and a cold shoulder from Mr. Market as some investors prepare for a wintery blast of continuing poor earnings pointing the averages downwards like ice sickles.

S&P 500, Russell 2000 Make Record Highs in Sideways Grind

The S&P 500 and the Russell 2000 notched new all-time highs today despite disappointing earnings and economic data.

Initial jobless claims for last week came in at 283,000, slightly better than the 290,000 consensus forecast. The prior week’s claims were also revised lower to 290,000 from 304,000. However, continuing claims were above expectations.

January Leading Economic Indicators and the February Philadelphia Fed Index were also below expectations.

Crude oil initially fell sharply overnight on a report from the American Petroleum Institute showing an enormous build in crude stocks. Inventory data from the Energy Information Administration was released at 11:00 a.m. ET today, and crude oil took back some losses as the build was not nearly as big as the API data intimated.

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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 23 % 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 up, but remains above zero at 16.19.

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 63 % Bearish.

CNN’s Fear & Greed Index is 78. Above 50 = greed, below 50 = fear. (At ‘Extreme 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.

Investors Intelligence sets the breath at 59.6 % bullish with the status at Bull Confirmed. (Chart Here )

StockChart.com Overbought / Oversold Index ($NYMO) is at +18.01. (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 58.72 %. (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.

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 63.71. (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 73.00. (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 21.13. (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).

StockChart.com Consumer Discretionary ETF (XLY) is at 74.96. (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 11,038. (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 17986 down 44 or -0.24%. (Historical High 18,103.45)

The SP500 is at 2097 down 2 or -0.11%. (Historical High 2,102.13)

SPY is at 210.07 down 0.15 or -0.07%.

The $RUT is at 1228 down 0.04 or 0.00%.

Don’t Invest In The Russell 2000

NASDAQ is at 4925 up 18 or 0.37%. (Historical High 5132.52)

NASDAQ 100 is at 4412 up 21 or 0.48%.

How the Popular ‘VIX’ Gauge Works

$VIX ‘Fear Index’ is at 15.29 down 0.16 or -1.04%. Neutral Movement

(Follow Real Time Market Averages at end of this article)

The longer trend is up, the past months trend is positive, the past 5 sessions have been net positive and the current bias is mixed and sideways.

WTI oil is trading between 52.68 (resistance) and 49.82 (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 trending up and is currently trading down at 51.95. (Chart Here)

Brent Crude is trading between 60.96 (resistance) and 57.81 (support) today. The support currently is ~50.40 and the next resistance is ~62.00. The session bias is trending up and is currently trading down at 60.05. (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 fell from 1223.00 earlier to 1207.20 and is currently trading down at 1205.29. The current intra-session trend is negative to sideways. (Chart Here)

Dr. Copper in Need of Some Medicine?

Dr. Copper is at 2.615 rose from 2.584 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 94.52 and 93.90 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading down at 94.47, the bias is currently trending down. (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 ~93 is the current support and is substantial. The ~95 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 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