Written by Gary
Closing Market Commentary For 11-26-2013
The averages slowly melted up on very low volume until 2:30 where the volume picked up and the markets started to move up (slightly) into new highs. The DOW and the SP500 sneaked up to new historic highs and then waterfalled off and down to nearly the opening number on high red volume. Off on vacation, see you in a week (provided we don't end up on this boat).
Yes, we had an interesting sell-off, but with the small caps still pushing higher, as compared to the large caps, I would expect a rebound soon, maybe tomorrow.
The short term indicators are leaning towards the sell side at the closing, but I would advise caution in taking a position because of the Fed's cryptic utterances in hinting when the taper will begin and by how much. I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does WHEN it actually does something.
The longer 6 month outlook remains 40-60 sell until we can see what the Fed is actually going to do, simple as that. If we get some Fed tapering in December the markets will certainly react in a negative fashion, how much of course depends on much bond buying takes place. 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 however, some are saying that stock prices will keep rising for another year or so simply because once a market pattern is established it has a tendency to continue in the same direction. Adding to that, it is of general belief that Ms. Janet Yellen will continue to do whatever is necessary to keep stock prices rising.
Many pundits and analysis alike believe as early as 2015 we will experience a stock market crash as bad as or worse than the crash of 2008. It will be at that point 'sheeples' will come to the realization that the current stock market is a fool's paradise propped up by life support from the Fed and will once again start the mass exit.
Members of the FOMC believe the US economy has shown signs of improvement, but they have assured short-term interest rates would remain low for quite some time to come. Alpari Market Analyst, Craig Erlam, said: "Many members of the Fed now appear eager to start winding down its asset purchases and are looking for ways to do it that will create the least disruption in the financial markets, such as setting simple thresholds for reductions, or even more simply, providing a timetable for tapering that is not data dependent."
ADVFN reported, "The rally in question has been built on the back of the Fed's promise of a stimulatory environment. If any catalyst points to the Fed giving up its accommodative stance, there is a danger of a pullback and near term support for the index lies around the 15,965, 15,890 and 15,804 levels."
Personally, I think it could go a lot lower.
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 (shooting star) to verify a top along with heavy volume.
The DOW at 4:00 is at 16073 up 0.26 or 0.00%.
The SP500 is at 1803 up 0.27 or 0.01%.
SPY is at 180.71 up 0.05 or 0.03%.
The $RUT is at 1135 up 9.80 or 0.87%.
NASDAQ is at 4018 up 23 or 0.58%.
NASDAQ 100 is at 3446 up 18 or 0.53%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been positive and the current bias is negative.
WTI oil is trading between 94.68 and 93.55 today. The session bias is negative and is currently trading down at 93.83.
Brent Crude is trading between 110.41 and 111.46 today. The session bias is mixed and is currently trading down at 110.89.
Gold fell from 1254.95 earlier to 1239.44 and is currently trading up at 1242.25.
Dr. Copper is at 3.211 falling from 3.239 earlier.
The US dollar is trading between 80.94 and 80.62 and is currently trading down at 80.63, the bias is currently negative.
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Written by Gary