Pre-market – Monday 2-10-2014
"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
"Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other."
~ Ludwig von Mises ~
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Resistance at the 50-day moving averages loom large
Support at last Wednesday's neck-line low of (SPX) 1739 is crucial
MARKET
Last week stocks, as best seen by the S&P 500 (SPX) advanced off their Monday's low on above average and increasing volume- albeit slightly increasing volume. Friday's move of 1.7% in the Nasdaq was the first time since mid-January that the index advanced on rising volume. Generally speaking it was a positive week coming off an oversold McClellan Oscillator where 'price' reached depths not seen since last October of minus 200. The McClellan closed on Friday at a neutral minus 41.
While major indexes, sans Nasdaq, have that broken chart look, the important channel off the November 2012 low remains intact. Major technical damage has been done. The 50-day moving average resistance is now in decline at 1809. However, so far anyway, 'it' all could be a healthy 'buy 'em cheap at the Channel low kind of scenario.
All eyes will be at Wednesday's neck-line low of (SPX) 1739.9. If that goes the long party with that solid trend goes blewie and the outlook, from a technical perspective, really gets dicey.
Graph of the week:
The value of an education is now more important than ever.
S&P 500
The S&P 500 (SPX) closed Friday at 1797.02 - off from the prior Friday's 1782.59 – 4-weeks ago it was 1838.70.
Watch (SPX) 1772…
Key 'price' support is at (SPX) 1738
Channel and trend line support off the November 2012 lows is 1760.
The 200-day moving average support is at 1711.
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 1643.
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 in decline at 1809.
Significant price resistance is at the top tick of 1850.84 was registered on Wednesday 1/15/2013.
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PIGS bond yield update
EuroLand Heals: Portuguese, Italian, Greek and Spanish and short- and long-term bond yields are hugely lower from where they were in 2012.
·Portugal 10-year bond yield 4.90% down from high of 18.29%
·Italy 10-year (gross) bond yield – 3.68% off cycle highs of 7.29%
·Greek 10-year yields are at 7.59% down from a high of 24.41%
·Spanish 10-year (generic) bond yield – 3.58%. cycle highs of 7.41%
This Week's Investor Sentiment
The Bullishness / Bearishness complex overview is now well-off its recent extreme highs of Bullishness. The 'sky high' bullish sentiment had numerous models posting near decade highs that gave us ample warning to prepare for a stock market pullback.
(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 0.49% from the prior weeks plus 0.55.5-weeks ago it reached decade new highs of 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 slid to 27.9% from the 32.2%. 7-weeks ago it ticked a 55.1% the highest posting in the prior11-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 36.4% from 32.8% the prior week. 4-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 59% that's down from last week's 68% and from the cycle and multi-year highs of 78% established 10-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 couple of ticks to 59% from the prior last week's posting of 61%. In October 2007 it topped at 70% bullish.
The Investor's Intelligence Index six 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 six 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 plus 45
·(The prior Monday the McClellan was an oversold minus 200)
·3-month $USD LIBOR – 0.2385 link here
·CBOE Put / Call Volume Ratio – 0.82
·VIX – 15.29
·Natural Gas (Globex) – 4.775 - last Wednesday it posted 5-year highs of 5.73
·Swiss Franc – 1.1144
·US Dollar Index – 80.76
·Euro – 1.3628
·Japanese Yen – 0.9777
·Canadian Dollar – 0.9056-The prior week it ticked 4½ year lows at 0.8899
·Aussie Dollar –0.8938
·Crude oil (NYMEX) 99.88
·Brent crude 109.57
·Copper (Globex) – 3.2360
·Gold (Globex) – 1262.9
·The Treasury 5-year yield – 1.47%
·The Treasury 10-year yield – 2.69 - cycle highs were 3-weeks ago at 3.01%
·The 30-year Treasury – 3.68% - the cycle highs of 3.93% were 3-weeks ago
·Silver (COMEX) – 19.936
·Platinum 1379.2
·Palladium (Globex) 708.80
·Lumber (CME) – 354.20
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