Written by Gary
Midday Market Commentary For 11-15-2013
Midday averages started to slip after reaching new highs around 11:30 and of course the BTFDers responded after the averages fell to opening numbers. Totally ignoring the poor financial news this morning by 12:15 only the $NDX was showing red numbers while the DOW was pushing past +46.00. And the party goes on!
For the bulls, the lousy financial numbers of late seem to confirm the Fed is NOT going to taper and to some rumors, the FED is going to increase it. Oh how I pity our children that have to pay for this foolishness while the fat cats rake in profits.
The headline Empire manufacturing data missed expectations by the most since January (the 4th month in a row) and plunged to its lowest since January.
Across the board sub-indices collapsed (every one of them) into contraction with shipments down from over 13 to -0.5, and New Orders down from 7.75 to -5.5. "Hope" didn't save it this time either as the outlook dropped to 3 month lows.
Labor market conditions were subdued. The index for number of employees drifted downward for a third consecutive month, coming in at 0.0 in November in a sign that employment levels were flat (falling at fastest rate in 2013).
The average workweek index fell nine points to -5.3, pointing to a decline in hours worked. This can only be great news for the bulls and guarantees that the S&P 500 will hit 1800 today... (actually 1794.46, close, but no banana)
First it was the Empire Mfg Index.
Now it is the turn of Industrial Production which as the Fed just reported declined by -0.1% in October, a drop from the upward revised 0.7% increase in September driven by a -1.6% collapse in mining and a -1.1% drop in Utilities, while pure manufacturing rose a modest 0.3% in October, just above the 0.1% from September.
And confirming the increasing slack, Capacity Utilization dipped once again, from the 78.3 in September, to 78.1 once again driven by a notable drop in Mining Capacity down from 90.5 to 88.7.
In short: the news today so far has been bad enough to validate the "BTFATH mentality" which means Kevin Henry's 1800 price target on the S&P remains unchanged.
The short term indicators were leaning towards the buy side at the morning opening and by the midday mark they eased to sell. I would advise caution in taking a position because of the Fed's reluctance to give any hints of when the taper will begin and Janet Yellen's hollow conformation hearing rhetoric. I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does.
The swings this morning were not enough to get many traders interested in gambling money in a highly precarious market. The recent highs have been purely speculative based solely on remarks from Janet Yellen which are viewed as Fed current policy and not necessarily her own. That is a problem for me as these dovish financiers like to say one thing and then turn around and do something else.
The longer 6 month outlook remains 40-60 sell until we can see what the Fed is going to do, simple as that. If we get Fed tapering in December, which is not likely, the markets will certainly react in a negative fashion. If the tapering begins in March 2014 with Yellen at the helm, 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 we have just seen, as long as the Fed continues to hand out 'Market Viagra'! I would like to see a blowout candle to verify a top along with heavy volume.
The DOW at 12:30 is at 15920 up 44 or 0.28%.
The SP500 is at 1793 up 2 or 0.11%.
SPY is at 179.51 up 0.24 or 0.13%.
The $RUT is at 1113 up 1 or 0.12%.
NASDAQ is at 3977 up 5 or 0.12%.
NASDAQ 100 is at 3414 down 1 or -0.03%.
The longer trend is up, the past 12 months trend is bullish, the past 5 sessions have been positive and the current bias is sideways with a negative slant.
WTI oil is trading between 93.62 and 94.51 today. The session bias is negative and is currently trading up at 94.84.
Brent Crude is trading between 108.66 and 107.68 today. The session bias is negative and is currently trading up at 107.86.
Gold rose from 1279.66 earlier to 1289.59 and is currently trading up at 1289.50.
Dr. Copper is at 3.172 rising from 3.143 earlier.
The US dollar is trading between 81.21 and 80.83 and is currently trading up at 80.96, the bias is currently neutral to negative.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary