Mid-Session Market Comment 03-27-14

 Major U.S. market index fell this morning,  then bounced, and they are now trading mixed. Fourth quarter GDP came in +2.6% better than the last estimate of  2.4 percent  and  the reduction of initial jobless claims both serve to stabilize stock market. Technically, the Nasdaq Composite and Russell 2000 have both dropped below their 50-day moving averages yesterday, their trends have turned down . However, the two indices have fallen five days in a row, and are oversold. After dropping to near their 100-day moving averages this morning ,they are now bouncing off those levels. A short term oversold bounce for the market is likely.  The Nasdaq may go back up to test its 50 day moving average at 4223 before coming back down again. S & P 500 fell below 1850 support this morning and has since recovered above it. This should also helping the rebound. The Dow is up now and have been the strongest among indexes lately. It's trend is still up. Social Media sector (SOCL)should lead the bounce.

Today's Technical Damages For The Stock Market

Today's technical bearish factors for the stock market:

1. Russell 2000 sell on morning rallies for the 4th day.

2. Nasdaq Composite breaking below 50 day moving average.

3. Tail reversal for the S&P 500.

4. Transportation index dropping big today - diverge with the Dow Jones Industrial Average.

Mid-Session Market Comment 03-25-14

Major U.S. market indices soared this morning and have been dropping since. They are now trading mixed with the Nasdaq Composite and  Russel 2000 down and the Dow and S&P 500 slightly up.  European stock markets rose across the board is positive to U.S. stocks. Consumer confidence index better than expected also helped. However rising market attracted selling and has led to rapid retracement. Previous high flying stock sectors such biotech IBB, Internet FDN, social media SOCL and solar energy TAN are all targets for selling. Technically, major market indices fell over the past two trading day and are forming topping patterns. Both the Nasdaq and S & P 500 were able to hold supports in yesterday's trading, these supports are 4220 and 1850 respectively. These levels  are going to be the levels of contention between bulls and bears today. If these two levels are violated to the downside, more serious market down turn will be likely. Based on  recent weak market performance there's a good chance this will happen. S & P 500 support is 1850 and 1832. 

Bullish Percent Index Issued Sell Signal For Nasdaq 100 And The Nasdaq Composite

First a tutorial:

Bullish Percent Index (BPI)   is a  market breadth indicator that is calculated by dividing the number of stocks in a given group (an index ,an exchange, an industry, etc.) that are currently trading with Point and Figure buy signals, by the total number of stocks in that group.  BPI can be used to determine overbought/oversold conditions and can generate buy/sell signals. It moves between 0 and 100, however it rarely goes below 20 or over 80. Followings are the how it can be used in trading :

Bull Alert when BPI is below 30%, oversold
Bear Alert when BPI is above 70%, overbought
Buy signal when  BPI go above  30% from below
Sell signal when BPI go below 70 % from above

The $BPNDX is a Bullish Percent Index for NASDAQ 100 Index ($NDX). It shows the percentage of stocks with current Point and Figure Charts buy signals inside the index . The following is a most recent $BPNDX chart shown with $NDX created by Greg Schnell and published in shortsideoflong.com. The following chart demonstrated the accuracy of BPI sell signal and it is indicating we are having one now in the Nasdaq 100.

BPI for other popular indexes are as follows:

 

Mid-Session Market Comment 03-21-2014

Major U.S. market indexes soared at the open, pulled back and are now trading mixed. S & P 500 rose slightly above the previous high then fell back. The Nasdaq is down due to weakness in biotechnology and technology stocks. There is no significant positive news driving the market up besides the big surge in China's stock market by 2.72 %. However today is a "quadruple witching day," it's the last trading day for stock index futures, stock index options, stock futures and stock options. Today's stock market will be affected by artificial price manipulation and is subject to irregular fluctuations. As there is no particular good news, it is difficult for the Dow to break above 16500 level. On the other hand, we need to beware of  the S & P 500 reversal after briefly making new high this morning. If the S&P 500 closed down today, a bearish intra-day reversal will be formed and the market will likely reverse down in the near term.  Dow support is 16131 and resistance is 16500.

Bearish International

As the Dow Jones Industrial Average is trying to follow the S&P 500 and the Russell 2000 in making all time high in the USA, it needs luck as stock markets around the world are not helping.

The German market formed Double Top pattern since end of February 2014. Although it has been bouncing in the last few days but is facing resistance at its 100 day moving average. It looks like the bounce is over and it will be turning back down.

The UK market has been in a trading range since October last year and has been coming down to near the bottom of range. It may be ready to go under if it follow its European counterpart's performance.

The Japanese market is trading below its 50, 100 and 200 day moving average and is in a down trend. It just renew its downside momentum by dropping 1.65% yesterday. A big bad bearish Head and Shoulder pattern has formed.

The Shanghai stock index has been in a down trend for years. It has been struggling to hold the critical 2000 level recently but failed to do so yesterday. It is looking like it probably will accelerate to the down side from here.

The Hong Kong Hang Seng Index accelerate to the downside after it failed to hold its 50, 100 and 200 day moving averages. It failed to hold its February low yesterday and looks going lower.

Will the US stock market going alone to all time high ignoring the bearishness all over the world? We will have the answer very soon. But situation is not looking good.

Mid-Session Market Comment 03-20-2014

Major U.S. market indices opened with small losses this morning, they have been going back up and are now having  moderate gains. Since tomorrow is the last trading day for March stock index futures, stock index options, stock futures and stock options, the stock market may be affected by artificial manipulation which may cause irregular fluctuations. However, the Fed may raise interest rates sooner than expected and ​​President Obama signed authorization for a  series of new sanctions against Russia this morning should have negative impact on the stock market. Technically, the Dow found support near its 50 day moving average at 16133 and is bouncing but may find resistance at 16370. Since there is no significant good news in sight as trigger to make new high, the odd of the market coming down and correct is still high.

Closing Market Comments 03-19-2014

Major U.S. market indices opened with small gains this morning, they then trended lower and closed with moderate losses. Fed President Janet Yellen believe that interest rates will likely rise  in about six months after the end of quantitative easing. In her first conference with reporters after taking the seat of Fed chair, investors sensed that interest rate may go up sooner than expectation.  Besides selling stocks, investors also dump treasuries and gold as US dollar index rose the sharpest in months.  10-year bond yield soared 0.091% to 2.772%.  Gold dropped 28.20 to 1330.60 per troy ounce. These trends likely will continue in the near term. Technically, the Dow fell sharply today by  114 points after rising for the past two days, and a bearish outside day pattern on its chart is formed. The market will likely continued to come down in the near term. Dow support is 16137 and resistance is 16370.

More ETF Symbols

• Treasury ETFs: TBT, TLT, TMV, SHY, IEF, TBF, PST, EDV, TTT, TMF, ZROZ, SBND, TLH, IEI, DLBS, TYO, DTYS, VGLT, BIL, UST, SHV, UBT, TBX, VGSH, TLO, VGIT, SCHO, GSY, DTYL, SCHR, LBND, ITE, TENZ, TYD, TYBS, DTUL, SST, DTUS, TUZ, FIVZ, DFVL, TBZ, DLBL, DFVS, TYNS
• Gold ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, GLDI, DGZ, AGOL, DGLD, TBAR, UBG, GLDE, GYEN, GEUR, GGBP
• Dollar ETFs: UUP, UDN, DBV, FORX, UDNT, UUPT, USDU
• S&P 500 ETFs: SPY, IVE, SH, SSO, SDS, IVV, VOO, SPXU, UPRO, RSP, RWL, EPS, IVW, SPYG, RPG, RPV, SPYV, BXUB, VOOG, VOOV, TRND, SFLA, BXUC, BXDB, FTA

Mid-Session Market Comment 03-18-2014

Major U.S. market indices opened up this morning, pulled back and are now holding with most of the morning gains. Putin said he does not want to split Ukraine further drives stocks higher. But U.S. Vice President Joe Biden said the Russian move is like land grab and is working with European countries for more sanctions on Russia. Despite the tension in Ukraine is calming down a bit,  it could flare up again at any time. China's economic slowdown worries , major European stock markets forming double top patterns and investor sentiment too bullish are negative factors for the market. Technically, the Dow rises sharply for the second day and is climbing towards resistance 16500 level.  This level is not easy to break without good news. The Dow may turn around as it gets near this level. Dow support is 16141 and resistance is 16500.

Mid-Session Market Comment 03-17-2014

Major U.S. market indices surged at the open, it then  pulled back, and are now maintaining most of the earlier gains.  Crimea is to leave Ukraine and join Russia following yesterday’s referendum. Both the US and EU issued travel ban for officials responsible for helping Crimea to become part of Russia immediately. President Barack Obama stressed that sanctions of clear impact on Russia are to be implemented. US congress is to pass sanction plans when it's members return from vacation. The strong rebound in the U.S. stock market today is overdone. Before the announcement of  further U.S. and EU sanctions, one should still beware of  market reversing back down. Besides, Ukraine situation is not the only negative for the market, China's economic slow down, Double Top patterns in major European stock markets , Investors Intelligent sentiment data in frothy level are all negatives.  Technically, the Dow remains in a bearish double-top pattern, if the Dow fall back below the 16,144 level again, stock market will  continue to correct down. Dow support is 16144 and resistance is 16500.

Mid-Session Market Comment 03-14-2014

After 6 hours of meeting with Russian foreign minister Lavrov, Secretary of State Kerry said:" Russia is not ready for any decision before result of Crimea referendum is in . The United States and the international community will not accept the results of the referendum in Crimea. If Russia does not change direction, there will be costs." Failed compromise means things are setting up for a show down between western nations and Russia next week after the Crimea referendum. It is not likely to be good for the stock market. US stocks are up slightly now but will likely give way to weakness later as investors sell stocks ahead of the weekend. Technically, the Dow has formed Double Top pattern and is below 50 day moving average 16149 and downside will likely continue. Dow's immediate support is 1600 but probably not able to hold and will likely go down to challenge its 200 day moving average at 15620 next week.

Funny Blog Referral

Joshua M Brown of Reform Broker's "Why did the stock market sell off today" is funny. In the piece he distinguishes the characteristics or the standpoints of each of the popular media websites and how they would describe the stock market sell off. His observations are keen. I am sharing it here since I think it is remarkable.

http://www.thereformedbroker.com/2014/03/13/why-did-the-stock-market-sell-off-today/

2014 World Stock Markets Compared 03-13-2014

Global stock markets comparison: All the major European markets have peaked, the German market (DAX) showed the largest decrease of about 3.5 percent this year. Chinese and Japanese markets have been in downtrend for a while, fell by about 4% and 6.5% respectively this year. U.S. stock market is starting to follow with a decrease of 2%.

Mid-Session Market Comment 03-13-2014

Major U.S. market indices opened with small gains this morning , it then started to fall back, and are now down sharply. Although  U.S. retail sales and jobless claim were better than expectations, but data from China show its economy is slowing. This weekend's Crimea referendum for becoming part of Russia will serve to be the obstacle for U.S. stocks. Failed negotiations between Russia and western countries on how to resolve the Ukraine situation means a trade war is imminent. If a trade war starts , it can't be good to Russia, the western countries and the whole world. Technically, the Dow has formed a bearish Double Top chart formation. US stocks will likely  continue to come down in the near term. Dow supports are 16161 and 16000, and resistances are 16500 and 16588.

Mid-Session Market Comment 03-12-2014

Major U.S. market indices opened  down this morning, they then bounced and are now trading mixed. Leaders of the G-7 countries said they would not recognise Crimea weekend referendum result causes tension on the Ukraine situation again and is dragging down global stock markets. Germany, Britain and France stock markets have all formed bearish Double Top patterns while China's Shanghai index fell below its psychological support level of 2000 and is trending toward its five-year low of 1959. Weakness in European and Asian stock market is difficult for the US market to make an exception not to follow. As matter of fact the Dow has also formed Double Top. This weekend's Crimea became part of Russia referendum worry is an obstacle for the US market to move higher. So the odd favors continue weakness for the US stock market. Dow support is 16165, and  resistances are 16500  and 16588.

Mid-Session Market Comment 03-11-2014

Major U.S. market indices opened this morning with small gains, then moving lower, they are now turning negative. Steady foreign stocks provided support to the US stock market. Analysts positive comments on Apple's also helped . However, high investor complacency, German stock market has formed bearish Double Top pattern, weak Chinese Shanghai Composite Index, coupled with unresolved situation in Ukraine are factors that negatively impacting the US market. Technically, two days ago, the Dow rose to only 80 points away from a record high of 16588 but stopped and started pulling back and is forming a bearish Double Top pattern. So there's a good chance that the market will continue to correct down in the near term. Dow support is 16170, and  resistances are 16500 then 16588.

 

It Does Not Look Good

When putting the 3 most important stock market representing 3 different continents together and compare, it does not look good for the US stock market. The 3 markets are US (orange), Shanghai (blue) and Germany (green). In the following 2 charts, the 3 markets are represented by orange, blue and green respectively.

The Shanghai Stock Index has been on a down trend since the latter part of 2007. By closing below 2000 yesterday at 1999, it is in danger of making 5 year low. The German stock market had been racing to new high side by side with the US market since March of 2013, but formed Double Top pattern at the end of February 2014. Even though stock markets of different countries go different ways sometime, but when  important markets are not doing well it tends to impact other markets negatively. In this case, both the Chinese and the German markets are in trouble and the US market is not likely to escape unharmed.


6 month chart:

10 year chart

After making all time high 16588 last December, the Dow Jones Industrial Average dropped 7% in January this year, it then made a quick V-shape reversal and is close to all time high level 16588 again. The Dow has moved too fast and too much and when the market is over bought and near resistance, it is tough to break resistance. For this reason, the chance for the Dow to form bearish Double Top pattern is good.

The Dow Jones Industrial Average:

Fundamentally, weak economic data from the last 2 months have been hurting the Chinese market while concern over European economy and the lingering, unresolved Ukraine situation have capped the German market's advance. Even though the US economic data have been holding up firm lately, but if the world economies are tied, it won't be long when the weakness comes around to the US.

Sentimentally,  newsletter advisors remain stubbornly bullish at extreme levels. Recent Investor Intelligence survey levels came in at 55% bulls and 15% bears. This translate into a bull percentage of 79% (55/(55+15)x100) and is in extreme complacency zone. Stock market usually reverse down at this level historically.

So, watch out!

Investor Intelligent Bull Ratio and S&P 500:

Bearish Indications

The following shortsideoflong.com article presents a whole range of  bearish indications for the stock market and is worthwhile to read.

http://shortsideoflong.com/2014/03/march-sentiment-summary/

Mid-Session Market Comment 03-10-2014

Major U.S. market indexes fell at the open and has been falling, they are down moderately now . Weak foreign stock markets have negative impact on today's U.S. stocks. China's trade went from surplus to deficit  caused the Shanghai index to fall nearly 3 percent and dragged down other Asian stock markets . European stock markets also fell across the board. German stock market fell 0.8 percent today, a follow through action from down nearly 2 percent last Friday. German stock market has formed a bearish Double Top technical pattern and will likely continue to come down near term.   Concerns over weakness in Asian and European economies and Ukraine situation remain unresolved ,it is reasonable for US stock to take a break from rising. Technically,  US stock followed through with last Friday's downward reversal today and looks like down side correction has begun. Dow has also formed a Double Top pattern.  Dow support is 16170, and resistance is 16500. 

EBAY Is Heading Higher

Famous corporate raider Carl Icahn's new target is Ebay Inc.  (EBAY). He complained about Ebay CEO John Donahoe's bad timing on selling Skype and cost investor $4B and is pushing for a PayPal spinoff. Omega Advisors's Leon Cooperman supports this idea. Icahn nominated 2 of his people for Ebay board member but have been rejected by Ebay. Fights between Icahn and Ebay goes on. Icahn is pressuring Ebay to enhance share holder value and will likely pressure Ebay to do something good for share holder eventually.  These kind of actions will likely help pushing up Ebay's stock price near term. In addition Baird analyst  maintain Outperform rating and $65 price target for eBay. Baird believes downside risk from current levels is likely limited by the high value of PayPal and Carl Icahn’s recent activism.

Technically, EBAY chart is extremely bullish as it broke out of a 14 month trading range between 48 and 58.  Monthly chart is showing a bullish Cup and Handle breakout pattern. The stock is set up to make all time high near term. Using trading range break out measurement, the stock's immediate upside target is 68. Using Continuation Up pattern measurement, longer term target is around 90.

Disclaimer: The above write up represents the opinion of the author only. You are responsible for your own risk when taking position in these stocks. Author of this blog may already own position in the mentioned stocks.

Mid-Session Market Comment 03-06-2014

Major U.S. market indexes  rose this morning, they are now posting moderate increases. Crimean parliament voted to join Russia raised tension again on Ukraine situation and raised investors caution. Fed's Beige Book report showed winter snow affected the entire U.S. economy, but the economic expansion continues is a positive for the market. Technically, after S & P 500 making record highs in the past few days, it is likely the Dow may follow and reach new high in the near term. The Dow is only about 150 points from a new high. However, the unsettling situation in Ukraine and Friday's influential employment data release are putting a cap on the market. In addition, the stock market keep racing forward before the employment report is not favorable for the market because it increases the chance of sell off on the news. Investors should remain cautiously optimistic. Dow support is 16167 and resistance is historical high of 16,588.

Mid-Session Market Comment 03-05-2014

Major U.S. stock market indices opened slightly down this morning , they have been trading within a narrow range and are now trading mixed. Markets are steady as situation in Ukraine is calm. Technically,  S & P 500, after yesterday's record high may lead the Dow to challenge its new high level near term. Dow is about  a little more than 200 points to its new high . However, the situation in Ukraine still need to be settled and this Friday's influential employment data may change things quickly, investors should remain cautiously optimistic. Dow support is 16163, 16400 and resistance is historically high 16,588.

Mid-Session Market Comment 03-04-2014

Major U.S. market indexes soared at the open this morning, and then continue to rise, they are now all up more than 1.4%. Russian President Vladimir Putin says there's no intention of annexing Crimea and called back exercise troops to their bases. These actions have reduced military tensions in Ukraine but the situation remain to be resolved. Technically, the S & P 500 hit a record high today and reached to the vicinity of 1872. U.S. stocks react somewhat overly optimistic today. Before the situation in Ukraine is resolved and the influential employment data to be released on Friday , investors need to remain cautious. Now the focus is whether the Dow can also make new high following S&P 500. Based on today's momentum, this may as well happen before stopping.  Dow support is 16159,  and resistances are 16400 then historically high 16,588.

Mid-Session Market Comment 03-03-2014

Major U.S. market indices plunged this morning,  rebounded, and is now falling to low of this morning. Possible full-scale invasion of  Ukraine by Russia and the United States warned this could lead to the economic isolation of Russia caused global stock markets sharply lower. Ukraine incident is the most serious confrontation between western countries and Russia since the 1947-1991 Cold War period . Investors worried if losing trades with Russia, the German economy will be negatively affected, which in turn will dragged down the European economy. In addition, Europe is also very dependent on Russian suppy of natural gas. Technically, S & P 500's falling back below the 1850 level today causes it to form bearish multiple top formation . Although today's economic data released in the United States were better than expected, but the U.S. stock market will remain under pressure before the situation in Ukraine is resolved . S & P 500 support is 1822 and resistance is 1850.

ETF's Categorized For Quick References

• Index ETFs: SPY, QQQ, SH, DIA, SSO, SDS, PSQ, IVV, SPXU, VOO, UPRO, TQQQ, QID, RSP, DOG, SQQQ, QLD, DXD, RWL, EPS, UDOW, SDOW, DDM, BXUB, QQEW, QQQE, TRND, SFLA, BXUC, QQXT, BXDB, TNDQ
• Gold ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, GLDI, DGZ, AGOL, DGLD, TBAR, UBG, GLDE, GYEN, GEUR, GGBP
• Treasury ETFs: TBT, TLT, TMV, TBF, EDV, TTT, TMF, SBND, ZROZ, TLH, DLBS, VGLT, UBT, TLO, LBND, TENZ, TYBS, DLBL
• Oil ETFs: USO, OIL, UCO, SCO, DBO, DTO, BNO, CRUD, USL, UWTI, DNO, DWTI, SZO, OLO, OLEM, TWTI