Written by Gary
Closing Market Commentary For 04 Mar, 2015
Nasdaq and the $RUT end lower by -0.3%, while the DOW is off 106 points. The SP500 was off -0.4% on low to moderate volume at the close. Investors are generally looking to see the markets do its correction thing after reaching new highs.
By 4pm the session ended with trading all afternoon in a very narrow zone and remaining in the red. There was a heavy burst of buying right at the end, but it isn’t a harbinger of things to come, more likely a down session tomorrow.
Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) is 35 % Bearish. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned DOWN, but remains above zero at 16.79. When this happens, we usually see 5 down sessions before turning up again and making another new high.
Having some cash on hand now is not a bad strategy as negative market changes are happening everyday. Many investors are starting to take in some profits from ‘high-fliers’ as a precaution and to build a better cash base for the ‘dips’.
As of now, I do see some leading indicators that are warning of a ‘long-term’ reversal within six months. I believe one is most likely to occur later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market. If you are not worried, then at least be cautious.
Investing.com members’ sentiments are 72 % Bearish.
CNN’s Fear & Greed Index is 63 and falling. Above 50 = greed, below 50 = fear. (At ‘Greed‘) (Chart Here) The number of stocks hitting 52-week highs exceeds the number hitting lows and is at the upper end of its range, indicating extreme greed.
StockChart.com Overbought / Oversold Index ($NYMO) is at +0.32. (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 59.83 %. (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.
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 11,005. (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 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.
I am going to change the way we report the market action by having a 9 am premarket news report followed later with what is happening at irregular times. I am going to rely on tweeting alerts to notify you on important changes in the markets. If you want to be on my front line for ‘significant’ events that could effect your trading and want to recieve Trader Alert ‘Tweets’ click here:
The DOW at 4:00 is at 18097 down 106 or -0.58%. (Historical High 18,288.63)
The SP500 is at 2099 down 9 or -0.44%. (Historical High 2,119.59)
SPY is at 210.15 down 0.89 or -0.42%.
The $RUT is at 1231 down 4 or -0.33%.
NASDAQ is at 4967 down 13 or -0.26%. (Historical High 5132.52)
NASDAQ 100 is at 4445 down 13 or -0.30%.
$VIX ‘Fear Index’ is at 14.23 up 0.37 or 2.67%. Bullish to 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 negative and sideways.
WTI oil is trading between 51.98 (resistance) and 49.67 (support) today. The support currently is ~49.00, then ~45.06 and the next resistance is ~54.40+. 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 and is currently trading up at 51.77. (Chart Here)
Some believe Saudi Arabia is ready to call ‘uncle’ and cut oil production which would raise prices. But that would be in the face of NOT achieving their goals of financially hurting Iran or Russia. Kevin Kerr, president of Kerr Trading International is positive that “the Saudi’s [will] announce a production cut” is a bit premature.
I am betting that the emergency meeting was more about what can they do to make oil fall further and faster, but that is just my opinion of course.
Markets Open Fractionally
Brent Crude is trading between 60.93 (resistance) and 59.49 (support) today. The support currently is ~58.60, next ~58.13 and the next resistance is ~62.00. The session bias is neutral and is currently trading up at 60.40. (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. 2014 to Aug. 2015). Goldman Sachs estimates that gold will fall to $1,050 an ounce, a drop of nearly 19%.
Gold fell from 1208.50 earlier to 1297.80 and is currently trading down at 1198.80. The current intra-session trend is negative. (Chart Here)
Dr. Copper is at 2.661 falling from 2.676 earlier. (Chart Here)
The US dollar is trading between 96.07 and 95.40 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading up at 95.98, the bias is currently elevated 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 ~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
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