Market Commentary: Markets Remain Near Session Highs; Averages Mostly Flat On Anemic Volume

Written by Gary

Midday Market Commentary For 02-17-2015

The morning trend was up as the SP500 made a halfhearted attempt to touch its previous high on anemic volume suggesting the HFT algo computer antics at work again.

By noon the averages were trading in a narrow zone near their highs for the day. Basically nothing has really happened since the opening and investors are patiently waiting for Mr. Market to do something.

I am not saying you should go home and chill out because of a slow market, but I am saying you are going to get bruises on your forehead from falling asleep if you don't go home.

Our medium term indicators are leaning towards Hold portfolio of non-performersat the midday and the session market direction meter (for day traders) is 36 % 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 13.29.

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 74. 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 58.6 % 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 +31.98. 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 58.03 %. 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 62.69. 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 71.20. 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 21.12. The all time low is 13.94 (11-2012).

StockChart.com Consumer Discretionary ETF (XLY) is at 74.64.

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 11,033. 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 12:30 is at 18021 up 2 or 0.01%. (Historical High 18,103.45)

The SP500 is at 2097 up 0.21 or 0.01%. (Historical High 2,097.03)

SPY is at 209.89 up 0.10 or 0.04%.

The $RUT is at 1225 up 2 or 0.16%.

NASDAQ is at 4895 up 0.66 or 0.01%. (Historical High 5132.52)

NASDAQ 100 is at 4380 down 3 or -0.07%.

$VIX 'Fear Index' is at 15.76 up 1.07 or 7.28%. Bullish to Neutral Movement

The longer trend is up, the past months trend is positive, the past 5 sessions have been positive and the current bias is 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 t30 Asia. The market is oversupplied, and storage tanks are topping out. Read More >>

WTI oil is trading between 54.31 (resistance) and 52.00 (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 down and sideways and is currently trading up at 52.47.

Brent Crude is trading between 62.33 (resistance) and 60.28 (support) today. The support currently is ~50.40 and the next resistance is ~62.00. The session bias is depressed and sideways and is currently trading up at 60.98.

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 1229.40 earlier to 1203.38 and is currently trading up at 1205.30. The current intra-session trend is negative. 

Dr. Copper is at 2.566 falling from 2.619 earlier. 

The US dollar is trading between 94.53 and 93.84 (highest levels since 2003 and ~93.69 is a very substantial support). U.S. dollar is currently trading down at 94.11, the bias is currently neutral with a negative slant. 

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 ~95.00 area appears to be a minor resistance for those interested.