Written by Gary
Closing Market Commentary For 11-07-2013
The averages didn't crash as some headlines state. What did happen is the major markets slipped below a support made on October 31, 2013 on relatively low volume. An attempt was made to climb back above but failed and that is not to say with good reporting tomorrow morning that it couldn't climb back up with abandon. It does represent a large 'slip' in comparison to recent down days.
By 3:00 pm the averages had stopped falling and settled into a sideways trend and could be the jumping off point for a nice recovery tomorrow - do you want to gamble?
I wrote recently that a 'correction' this week should not be discounted, because all of the current investor worries over the economy, the Fed's taper and the worsening economy in the Eurozone.
Clearly, the averages retreated from this morning highs today as investors interpreted this mornings financial reports as improved growth in the US economy as it expanded at an annual rate of 2.8%, up from 2.5%. Meaning that the US Fed might start the taper sooner than March, 2013. That made investors think the Fed could start cutting back its stimulus next month, much earlier than many anticipated.
There has been speculation that the taper could start as soon as December this year and certainly that is foremost in the minds of speculators. It is almost certain the Federal Reserve will test the waters, so to speak, possibly next month by purchasing something less than the current 85 billion which in opinion, has kept the stock market afloat for the past several years.
The short term indicators are leaning heavily towards the sell side this afternoon, but because of the Fed's reluctance to give any hints of when the taper will begin, I would take just about any indicator with a grain of salt. The longer outlook remains 40-60 sell however.
If we get Fed tapering in December the markets will certainly react in a negative fashion. If the tapering begins in March 2014, like many believe it will, the markets are going to price that in by declining sooner. I am expecting weak to negative markets for the foreseeable future. Perhaps we have seen the top - but I wouldn't count it as long as the Fed continues to hand out 'Market Viagra'!
The DOW at 4:00 is at 15594 down 153 or -0.97%.
The SP500 is at 1747 down 23 or -1.32%.
SPY is at 175.05 down 2.24 or -1.26%.
The $RUT is at 1079 down 20 or -1.78%.
NASDAQ is at 3857 down 75 or -1.90%.
NASDAQ 100 is at 3321 down 64 or -1.89%.
The longer trend is up, the past 6 months trend is bullish, the past 8 sessions have been sideways and the current bias is negative.
WTI oil is trading between 95.30 and 93.81 today. The session bias is negative and is currently trading down at 94.27.
Brent Crude is trading between 105.23 and 103.23 today. The session bias is negative and is currently trading up at 103.41.
Gold fell from 1325.28 earlier to 1297.77 and is currently trading up at 1307.20.
Dr. Copper is at 3.241 falling from 3.257 earlier.
The US dollar is trading between 80.51 and 81.54 and is currently trading up at 80.92, the bias is currently positive.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary