Pre-market – Monday 2-3-2014
"The just price is the price established by the 'common estimation' [17] of buyers and sellers."
Saint Thomas Aquinas
1225 -1274
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quote of the day
"A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves."
~ Lao Tzu ~
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Today's Food for Thought
"If you can get arrested for hunting or fishing without a license, but not for being in the country illegally... you might live in a country founded by geniuses - but run by idiots."
~ Junius P. Long ~
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MARKET
Last Monday stocks, as best seen by the S&P 500 (SPX), added to their previous weeks retreat, but held that a crucial level of 1772 (see below.) That 1772 support low held up over the rest of the week in a wild up one day - down the next - up again - down again fashion. The Dow Jones industrial average took it on the chin a bit more and of the major indexes looks the weakest technically. The prior Friday a big downstroke broke through the 50-day moving average. Importantly, the 1772 lows have held.
Anyway, the good news is that the trend is still intact with 'price' and key trendline support holding tough, so far anyway. Also notable is that the McClellan Oscillator that dipped into the oversold at a minus 171 last Monday came back up to a minus in neutral 98 on Friday.
I had said over the last few weeks; "Net, net it's looks to me like the market is topping…" And, "I see even more downside." And that still looks to be the case for me. We're coming off extreme and highly bullish sentiment* and a hyperextended chart.
I believe that the retreat has more to go, likely to at least a "corrective" 10% level if the (SPX) 1772 level is breached. If so, say goodbye to the trend. Obviously, this 1772 number is where the buyers will arrive to buy the lower support zone. We will soon find out whether this Fed driven party will stay intact. I favor playing defense - and speaking of defense wasn't that a fantastic defensive exhibition by the Seattle Seahawks in yesterday's 43 to 8 rout to the Denver Broncos in the Super Bowl. Wow!
S&P 500
The S&P 500 (SPX) closed Friday at 1782.59 - off from the prior Friday's 1790.29 - three weeks ago it was 1838.70.
(SPX) Weekly
(SPX) Daily
Watch (SPX) 1772…
Key 'price' support is at (SPX) 1772.
Channel and trend line support off the November 2012 lows is also at 1772.
Fibonacci 38.2% retracement support is likewise at 1772.
Notably - the December low support is similarly at 1772.
The 200-day moving average support is at 1706.
Fibonacci 50% support is at 1749.
Fibonacci 61.8% support is at 1725.
Then deep channel and trend line support of (October 2011) is at 1641.
Then the deepest channel and trend line support of (March 2009) is at 1450.
Price resistance is at the 'previous' breakout point of 1798. Importantly,1798 repelled the market on Thursday.
The 50-day moving average resistance is now flattening at 1812.
Significant price resistance is at the top tick of 1850.84 was registered on Wednesday 1/15/2013.
So – who cares about what?
Note just 6% list income inequality as a top priority. Likewise, the same share say it should be immigration.
Note just 6% list income inequality as a top priority. Likewise, only a 6% share say it should be immigration.
Filed under: What a screwed up country
"In less than 24 hours, the three networks have devoted 17 times more coverage to a traffic scandal involving Chris Christie than they've allowed in the last six months to Barack Obama's Internal Revenue Service controversy." Media Research Center.
This Week's Investor Sentiment
The Bullishness / Bearishness complex overview is off again but not by much. Recently 'sky high' bullish sentiment had multiple models posting near decade highs gave us warning to prepare for a retreat.
(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)
The Citigroup "Panic / Euphoria" Model fell to a plus 0.55from the prior weeks plus 0.63.4- weeks ago it reached decade new highs to a plus 0.66 in the Euphoria Zone.In early 2000 it ticked its all-time high at plus 0.72. At the end of June, 2011 it ticked cycle lows of minus0.31 in the Panic mode.
The American Association of Individual Investors [AAII]Investor Sentiment Survey of BULLISHNESS slipped to 32.2% from the 38.1% the prior week. 6-weeks ago it ticked a 55.1% the highest posting in 11-months. It posted cycle lows of 22.2% on 7/23/2012 the lowest percentile since August 2010. Long-Term Average: Bullish: 39.0%.
The American Association of Individual Investors [AAII] Investor Survey of BEARISHNESS rose to 32.8% from 23.8% the prior week. 3-weeks ago it was 21.5 %. 4- months ago it registered the lowest read since 1/12/2012 at 17.6%. Cycle highs of Bearishness of 54.5% were posted about 5-months ago. Long-Term Average: Bearish: 30.5%.
Consensus Index of BULLISH sentiment is at 68% that's down from last week's 71% and from the cycle and multi-year highs of 78% established 9-weeks ago. The new cycle highs in Bullishness of 78% topped the top of 77% Bullish posted on 10/11/2007.
The Market Vane (Market Letter Survey) fell a tick to 61% from the prior last week's posting of 65%. In October 2007 it topped at 70% bullish.
The Investor's Intelligence Index five weeks ago Monday was at 81%. That's the highest level since January of 1987. The Investor's Intelligence Index is a combination/comparison of that survey's bullish and bearish percentage scores. The bullish percentage is at 59%, which is the highest level since September of 2008. The bearish percentage now stands at 14%, which is the lowest reading since early 1987.
The Hulbert Financial Newsletter Sentiment Index for all stocks five weeks ago Monday was at 82%... the highest reading in at least 15 years.
Friday's key indicators and metrics
Cycle highs or lows are in red
·McClellan Oscillator is in Neutral at minus 98
·3-month $USD LIBOR – 0.23660 link here
·CBOE Put / Call Volume Ratio – 0.86
·VIX – 18.41
·Natural Gas (Globex) – 4.943 – Wednesday it posted 5-year highs of 5.456
·Swiss Franc – 1.1024
·US Dollar Index – 81.40
·Euro – 1.3484
·Japanese Yen – 0.9775
·Canadian Dollar – 0.897 - Interday it ticked new 4½ year lows at 0.8899
·Aussie Dollar –0.8721
·Crude oil (NYMEX) 97.49
·Brent crude 106.40
·Copper – 3.1970
·Gold (COMEX) – 1239.8
·The Treasury 5-year yield – 1.47%
·The Treasury 10-year yield – 2.65 - cycle highs were 3-weeks ago at 3.01%
·The 30-year Treasury – 3.60% - the cycle highs of 3.93% were 3-weeks ago
·Silver (COMEX) – 19.120
·Platinum 1375.7
·Palladium 703.20
·Lumber (CME) – 353.80
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