Market Commentary: Averages About to Break Down Through Up Trend Line

October 30th, 2013
in Gary's blogging, midday post

Written by

Midday Market Commentary For 10-30-2013

Markets sold off a bit by noon, down -0.25% which in itself is not overly unusual, but the up trend line was broken by $COMPX and usually the small caps lead the way. The SP500 has almost touched that line (1766) and backed away for now. Other proprietary charts we look at have broken down through that line and expect to see the other major averages follow.

By noon the $VIX has climbed to 14.35 and the averages are in the red on moderate volume and testing of the up trend line is underway.

Follow up:

This morning the short term indicators were screaming sell, sell, but I just could not bring myself to believe it, especially with the Fed believed to be continue the QE and NOT to taper. I know, as you know, the QE is experiencing diminishing returns, but I doubt that will stop the markets rise in the near future. My guess for the day is that the markets will have started a correction by March 2014 and it could be a dozy.

BNP: "The Bigger The Rally, The Worse The Sell-Off Will Be" And "When The Fed Tightens, Bad Stuff Happens"

  • History tells us that when the Fed tightens, bad stuff happens. The bond sell-off this summer on the mere announcement of QE 'tapering' is a case in point.

  • Bonds will suffer when actual 'tapering' is announced. When it starts, we are likely to trade through the previous high for yields.

  • Equities may look fairly immune at first, but as QE buying fades and eventually stops, take care. Any equity sell-off will have a knock-on effect on bonds and the economy.

  • How large the effect on the markets will be will depend on how much the markets rally while QE is 'on'. The bigger the rally, the worse the sell-off will be.

The DOW at 12:00 is at 15653 down 29 or -0.17%.

The SP500 is at 1767 down 5 or -0.26%.

SPY is at 176.72 down 0.47 or -0.26%.

The $RUT is at 1111 down 10 or -0.92%.

NASDAQ is at 3939 down 13 or -0.33%.

NASDAQ 100 is at 3390 down 2 or 0.06%.

The longer trend is up, the past months trend is bullish, the past 5 sessions have been positive and the current bias is negative.

How Oil Really Gets Priced

WTI oil is trading between 98.20 and 96.93 today. The session bias is negative and is currently trading down at 97.35.

Brent Crude is trading between 108.60 and 109.63 today. The session bias is positive and is currently trading up at 109.45.

Gold rose from 1338.69 earlier to 1359.47 and is currently trading down at 1353.70.

Here's why copper has lost its indicator role

Dr. Copper is at 3.323 rising from 3.273 earlier.

The US dollar is trading between 79.75 and 79.52 and is currently trading down at 79.58, the bias is currently sideways.

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:


Written by Gary


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