Market Commentary: Averages Traded Sideways During Morning Session On Low Volume

Written by Gary

Midday Market Commentary For 02-12-2015

The averages sea-sawed sideways all morning on low volume, sometime anemic. Investors are still digesting the Ukraine cease fire agreement and remain nervous regarding the approaching deadline for a deal between the EU and Greece.

By noon the markets were relatively quiet and trading sideways in a narrow trading zone. The oils are very volatile trending up and the U.S. Dollar was headed south looking to test the support.

Our medium term indicators are leaning towards Hold portfolio of non-performers at the midday 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 +8.07.

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 63 and climbing. Above 50 = greed, below 50 = fear. (At 'Greed') 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 56.7 % bullish with the status at BearCorrection. I expect a market reversal at or before ~25.0 should the markets start to descend.

StockChart.com Overbought / Oversold Index ($NYMO) is at +1.01. 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 %. 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 NYSE Bullish Percent Index ($BPNYA) is at 61.07. 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 68.80. 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 19.71. The all time low is 13.94 (11-2012).

StockChart.com Consumer Discretionary ETF (XLY) is at 74.23. 

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 10,967.  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 12:15 is at 17934 up 73 or 0.41%. (Historical High 18,103.45)

The SP500 is at 2083 up 14 or 0.69%. (Historical High 2,093.55)

SPY is at 208.40 up 1.47 or 0.71%.

The $RUT is at 1211 up 10 or 0.81%.

NASDAQ is at 4841 up 40 or 0.83%. (Historical High 5132.52)

NASDAQ 100 is at 4335 up 38 or 0.87%.

$VIX 'Fear Index' is at 15.72 down 1.24 or -7.31%. Bullish Movement

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.

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 51.38 (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 mixed, neutral, volatile and is currently trading down at 50.50. 

Brent Crude is trading between 58.89 (resistance) and 56.35 (support) today. The support currently is ~50.40 and the next resistance is ~60.00. The session bias is positive and is currently trading up at 58.55. 

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 1223.00. The current intra-session trend is neutral and volatile. 

Dr. Copper is at 2.609 rising from 2.535 earlier. 

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 94.21, the bias is currently negative and volatile. 

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.