Market Commentary: Large Caps Bust Through Resistance, Not So With The Small Caps

November 8th, 2013
in Gary's blogging, market close

Written by

Closing Market Commentary For 11-08-2013

The large caps climbed through the resistance like it wasn't there. No new highs were made and the small caps never made first base. In fact the $RUT is using 'middle finger diplomacy' with Mr. Market by not even coming close to recovering from its end of October high.

By 4 pm all of the averages were in the green and most over the one percent line and from a 'sheeples' stand point looking good. But between you and me, if the small caps do not improve quickly, we are going to see that correction.

16 SP500 Sessions

Follow up:

This article below may explain why the averages continued to climb this afternoon. Here we are all thinking that the Fed is going to have to start tapering someday - well, because - it is the right thing to do? Hold on to your seat, because the taper theory is about to be thrown out with the bath water.

Deutsche Bank: "Yellen May Actually Have To Increase QE" - Here's Why

With what few vacuum tube-based trading algos are left and reacting with rabid kneejerkiness to every flashing red headline, one would get the impression that what matters to the Fed's decision on how to adjust its balance sheet flow depends on the US economy.

But if Deutsche Bank is correct, the next source of global economic contraction, which it will be up to the Fed to offset (just like China was the marginal growth dynamo in the months after Lehman filed), and result in an increase in QE .

Never mind taper, is not in the US at all, but in China where things are about to go bump in the night.

Which means that just like that we have moved into the "New Normal Paradigm" where the worse the news out of China, the better for stocks.

The short term indicators are leaning heavily towards the sell side by this session close, but because of the Fed's reluctance to give any hints of when the taper will begin, Having said that, I would take chart and other technical indicators with a grain of salt. "Technically' speaking, today should have been a recovery day with maybe a +0.25% gain and not the almost 2% rise the $RUT displayed.

The longer 6 month outlook remains 40-60 sell while the Barchart is once again 100% sell. I can't be that bearish in light of what the Fed may or may not do.

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. Also, many pundits have stated that we may have seen the top - but I wouldn't count it as long as the Fed continues to hand out 'Market Viagra'! I would like to see a blowout candle to verify a top.

The DOW at 4:00 is at 15762 up 168 or 1.08%.

The SP500 is at 1771 up 23 or 1.34%.

SPY is at 177.22 up 2.36 or 1.35%.

The $RUT is at 1100 up 21 or 1.94%.

NASDAQ is at 3919 up 62 or 1.60%.

NASDAQ 100 is at 3367 up 45 or 1.37%.

The longer trend is up, the past 6 months trend is bullish, the past 9 sessions have been sideways and the current bias is positive.

How Oil Really Gets Priced

WTI oil is trading between 93.90 and 94.69 today. The session bias is sideways and is currently trading up at 94.36. (There was a spike to 94.86 this afternoon at 2:15 but 'normal' trading resumed.)

Brent Crude is trading between 102.99 and 105.29 today. The session bias is positive and is currently trading down at 102.02.

Gold fell from 1313.36 earlier to 1281.07 and is currently trading up at 1287.80.

Here's why copper has lost its indicator role

Dr. Copper is at 3.261 rising from 3.225 earlier.

The US dollar is trading between 80.72 and 81.57 and is currently trading sideways at 81.33, 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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