Midday Market Commentary For 07-14-2014
The DOW made a failed second attempt to best its morning high and then wiggled its way up to 17088 although remaining in a narrow trading zone. The small caps continued to melt upwards as the $NDX made a new high as volume fell to anemic levels..
By noon the markets were showing sighs of weakness and trading sideways, but this may be simply part of the consolidation phase before moving higher.
I know a lot of analysts are calling for a major correction at any time now, but I feel we will only see a minor one – MAYBE 10%, assuming one happens. Never the less, I would use caution and not throw caution to the wind as the $VIX has and mind your stops. The markets are not strong as some believe and are going to get a lot more ‘ify’ as we approach 2015.
Polls like the one below are compiled from the most uninformed and can shed a lot of light of where the markets are headed by going in the opposite direction of retail investors exuberance.
Bull market has longer to run: MarketWatch readers
MarketWatch readers appear to be optimistic the bull market in stocks has longer to run.
An informal poll asking what phase of the bull market readers felt we are in drew more than 3,000 responses Friday.
The poll gave readers a choice from among the four stages of a bull market identified by Sir John Templeton and Laszlo Birinyi. A plurality of readers, 35%, indicated we are still only in the third phase “optimism / acceptance.”
The next largest group picked the second phase, “skepticism / digestion.” Only 22% picked the final phase “euphoria / exuberance,” while 14% picked the first phase “pessimism / reluctance,” or “Other.”
Bull market has longer to run: MarketWatch readers
The medium term indicators are leaning towards the hold side at the midday. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned and that is not enough for me to start shorting. The SP500MACD has turned down, but remains above zero at 12.28. I would advise caution in taking any position during this volatile period.
