Premarkets were down -0.10% before the US Trade balance and eased down to -0.30% when it came in shrinking 3.6%. WTI oil futures remained below $100 and other commodities remained relatively unchanged.
The markets opened down with a small gap that, like yesterday, may be closed before today’s session is finished. For the first half hour, averages traded sideways in a sea-saw fashion on moderate volume as the bulls and bears battle it out.
The short term indicators are leaning towards the hold side at the opening. 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, only a past 6% correction (and recovery) and that is not enough for me to start shorting. The SP500 MACD has turned flat, but remains abovezero at 6.76. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 40 % buy. (Remember this has been negative for weeks.) Investing.com members’ sentiments are 60 % bearish.
In looking at the 50 DMA, the current SP500 opened above that line and the small caps remain just above the 100 DMA. I can not see, as of right now where those MA’s are rolling over to indicate any permanent bear run but the failing small caps are a real worry as the 50 DMA now has a trend downward.
We have seen similar action at the beginning of Feb, 2014 when the SP500 went below the 100 DMA and actually touched the 145 DMA and then rebounded to set new historic highs in the beginning of this month.
Bottom line here is that I have not seen any serious bears jumping out of the woods just yet, although I am VERY concerned that ANY correction could turn nasty in a heart beat.
I still believe that Mr. Market is STILL not through playing with us and even newer historical highs are a distinct possibility beyond what we have seen, mainly because the amount of bond buying the Fed still does on a monthly basis. For those who are hell-bent bears, this article, 5 Reasons Your Simple Bear Market Plans Could Backfire, should be required reading.
