Market Commentary: DOW, SP500 Make New Highs On Heavy Volume

Written by Gary

Premarkets were up +0.8% this morning with noticeable volume which translated into a gap up at the opening. Markets opened in the +0.8% range on high volume setting new historic highs for the DOW and the SP500.

By 10 am the Nasdaq was within 10% of its historic highs set in 2000 and above its historical closing high.

Our medium term indicators are leaning towards sell portfolio of non-performersat the opening and the short-term market direction meter is very bullish. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and volatility may also promote sudden reversals. The SP500 MACD has turned flat, but remains above zero at 25.63. 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 as market changes are happening everyday. As of now, I do not see any leading indicators that are warning of a 'long-term' reversal in the near-term. There may be one 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 65 % Bearish (falling from 70% and now rising from 33%).

Investors Intelligence sets the breath at 53.7 % 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 +10.92. 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 57.15 %. 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.

Many indicators are showing markets leveling off or rounding indicating market softness that could lead to lower values and investor's should watch carefully. The SP500 MACD, $BPNYA, $BPSPX, $TNX and the $NYA all show rounding off the tops which in the past has lead to a downturn.

StockChart.com NYSE Bullish Percent Index ($BPNYA) is at 59.89. 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. 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 23.28

StockChart.com Consumer Discretionary ETF (XLY) is at 70.40

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 11,054. We are above the resistance (10,301) but is this a test of the next resistance at ~10600/900, watch to see if these numbers decline back down. If they don't then there an excellent possibility for the markets going higher now that we have topped 10900. Next stop down is 10600, 9750, then 9250, and 8500.

It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility. Historically, accordingly to Eric Parnell, "major bull markets have almost never reached their final peak in a sideways grinding pattern. Instead, they have almost always peaked with flourish including one final crescendo toward a new all-time high before finally rolling over and succumbing to the forces of the new bear market".

The longer 6 month outlook is now 50-50 sell and will remain neutral until we can see what the effects are in the Fed's game plan. Investors should employ the first thing one learns while in a foxhole; keep their head down.

The DOW at 10:00 is at 17864 up 147 or 0.83%. (Historical High 17,894.83)

The SP500 is at 2070 up 17 or 0.82%. (Historical High 2,071.46)

SPY is at 207.27 up 1.70 or 0.83%.

The $RUT is at 1182 up 12 or 1.00%.

NASDAQ is at 4735 up 33 or 0.70%.

NASDAQ 100 is at 4269 up 27 or 0.63%.

$VIX 'Fear Index' is at 13.16 down 0.42 or -3.09%Bullish to Neutral Movement

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

WTI oil is trading between 77.78 (resistance) and 75.62 (support) today. The session bias is negative and is currently trading up at 76.66

Brent Crude is trading between 81.58 (resistance) and 79.07 (support) today. The session bias is negative and is currently trading up at 80.42

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 1186.36 earlier to 1207.12 and is currently trading down at 1203.60. The current intra-session trend is positive

Dr. Copper is at 3.059 rising from 3.006 earlier. 

The US dollar is trading between 88.28 (highest since 2009) and 87.50 and is currently trading down at 88.18, the bias is currently elevated and sidewaysResistance 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.

"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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