Written by Gary
The midday trend is melting lower as I type. The U.S. Budget Deficit report this morning fell to its lowest since 2008 and zero difference to averages as they continue to fall.
By noon the averages were down over 1.5% and melting down fractionally. It would appear we have further to go, but be ready for sudden reversals.
As it stands now equities are due for a reflex bounce and yesterday I thought today was going to be the day. The Doji candlestick indicated indecision and a possible trend reversal which we could still have in a possible scenario below with Doji 'A' representing yesterdays session.
There will be a corrective move upward shortly, but is that going to mark the bottom of this correction or just a pause before another decline to Doji 'B'? As for the Ebola factor, I am having a really tough time believing this phenomena has anything to do with this current correction. This correction has been in the making for years and Ebola is simply coincidental.
Looking at the weekly charts it appears we have another 5% to 7% more to go before we hit the up-trend line from 2009. The DOW is currently at 16100 and the intersecting up-trend is at 15685 (and rising), the SP500 still has a way to go at 160 points, NASDAQ at 624 points and the $RUT has 36 points to go. Just a couple of serious down session would mark a good point for a reversal.
Our medium term indicators are leaning towards sell non-performers at the midday and the short-term market direction meter is very bearish. We remain mostly negative and conservatively bullish. The important DMA's, volume and a host of other studies have now turned and that may be enough to start shorting. But now I am getting very concerned the current downtrend will get more aggressive. The SP500 MACD has turned down, but remains below zero at -27.04. I would advise caution in taking any position during this uncertain period and I hope you have returned your 'dogs' to the pound. Having some cash on hand now is not a bad strategy.
Investing.com members' sentiments are 34 % Bearish (falling from 70%) and it seems to be a good sign for being bearish. The 'Sheeples' always seem to get it wrong.
Investors Intelligence sets the breath at 40.4 % bullish with the status at BearConfirmed. (Chart Here )
StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 40.05. (Chart Here) Below support zone and apparently going further down. Next stop was ~57 and now it is ~44, below that is where we will most likely see the markets crash. We are seriously below 44 and need a reversal pronto as it looks like there is nothing to stop the fall until 25.
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) is at 42.60. (Chart Here) In support zone and falling - doesn't look good. ~62, ~57, ~45 at which the markets are in a full-blown correction. The next stop is ~37.00.
StockChart.com 10 Year Treasury Note Yield Index ($TNX) is at 20.25. (Chart Here)
StockChart.com Overbought / Oversold Index ($NYMO) is at -44.34. (Chart Here)But anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold.
StockChart.com Consumer Discretionary ETF (XLY) is at 62.66. (Chart Here)
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) is at 30.48 %. (Chart Here) Unless this downward trend reverses itself soon, we are going to see further downside. The next support is ~37.00 and ~25.00 below that.
StockChart.com NYSE Composite (Liquidity) Index ($NYA) is at 100006. (Chart Here) Next stop is 9750, then 9250, and 8500.
The DOW at 12:15 is at 16036 down 282 or -1.73%.
The SP500 is at 1845 down 33 or -1.77%.
SPY is at 184.29 down 4 or -1.89%.
The $RUT is at 1053 down 8 or -0.80%.
NASDAQ is at 4162 down 64 or -1.50%.
NASDAQ 100 is at 3750 down 60 or -1.57%.
$VIX 'Fear Index' is at 27.56 up 4.92 or 21.59%. Bearish Movement
The longer trend is up, the past months trend is negative, the past 5 sessions have been negative and the current bias is negative.
WTI oil is trading between 82.40 (resistance) and 79.99 (support) today. The session bias is positive and is currently trading up at 82.29. (Chart Here)
Brent Crude is trading between 85.98 (resistance) and 83.73 (support) today. The session bias is neutral and is currently trading down at 85.17 (Chart Here)
Gold rose from 1222.24 earlier to 1249.94 and is currently trading down at 1246.10. The current intra-session trend is positive and volatile. (Chart Here)
Dr. Copper is at 3.009 falling from 3.084 earlier. (Chart Here)
The US dollar is trading between 86.12 and 84.52 and is currently trading up at 85.18, the bias is currently negative and trending sideways. (Chart Here) Resistance made in Aug., 2013 (~85.00) has been broken and now is support. Support was tested this morning and has rebounded.
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