Written by Gary
Opening Market Commentary For 12-10-2013
This morning the futures took a big dip falling -0.30% after 3000 gold futures were traded unexpectedly. It is not the 'big fall' many pundit have been predicting, but unusual because it happened in the premarket with no significant financial news. At the opening bell the futures had recovered +0.05% and the averages sea-sawing up to -0.10% by 10 am. The morning trend looks positive.
Also worth noting is that the SP500 did not have a notable gap down at the opening which is a bullish sign to many analysts and the NASDAQ covered its morning opening gap.
The premarket worries carried over from yesterday's taper comment from Fisher and concern of the precious metal melting even lower, along with the Saudis cutting oil production were too much for some investors.
Gold (>$1260) and silver (>$20) are extending yesterday's gains as US markets awake this morning. The crack higher at around 8:07ET caused the futures market to be halted after 3,000 Gold Futures contracts traded in one second at 08:07:45 on December 10, 2013 sending the price up $10 and tripping circuit breakers for 10 seconds.
Silver is now +4% on the week and gold +2.5% as Treasuries are also bid. Stocks are stumbling overnight, driven by the "fundamentals" of a drop in EURJPY after it tagged 142 overnight and fell back.
The RRR** has been very narrow at the opening bell for months and this trend of low volume and narrow trading sessions makes any predictions of session movements nearly impossible, thus making trading futile and mostly unprofitable.
Only 'guessing' before the close yesterday that there would be a significant movement this morning would have made an overnight trade profitable, then only to be negated by the BTFDers jumping in at today's opening. Yes, I guessed that would happen, but it was a guess, not a profound and intimate knowledge of black magic and reading tea leaves. My thinking was really, 'What would the Wall Street crooks do now'" Sure enough the SOB's turned the market around this morning. What happens next is anyone's guess.
The problem facing traders is that the trading range, which has been so narrow during the trading day lately, that way too much money has to be put on the table just to get back meager gains. This morning sea-sawing would be difficult at best to 'guess' how much the swing would be setting traders up for major losses - or at least severe heartburn.
The short term indicators are leaning heavily towards the sell side at the opening, 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 (17th. -18th. meeting) 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 some believe it will, the markets are going to price that in by declining sooner. However, 74% of Bloomberg surveyed economists believe tapering will believe either in December or January as of 12-09-2013, but Fisher says it will take place in the first quarter. I am expecting weak to negative markets for the foreseeable future.
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 10:30 is at 16010 down 15 or -0.09%.
The SP500 is at 1807 down 1 or -0.06%.
SPY is at 181.22 down 0.17 or -0.10%.
The $RUT is at 1130 up 0.68 or 0.06%.
NASDAQ is at 4070 up 1 or 0.06%.
NASDAQ 100 is at 3517 up 1 or 0.03%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been positive to mixed and the current bias is positive.
WTI oil is trading between 97.40 and 98.73 today. The session bias is negative and is currently trading down at 98.18.
Brent Crude is trading between 110.44 and 108.92 today. The session bias is negative and is currently trading down at 109.08.
Gold rose from 1240.20 earlier to 1266.88 and is currently trading up at 1265.10.
Dr. Copper is at 3.277 rising from 3.250 earlier.
The US dollar is trading between 80.13 and 79.83 and is currently trading down at 79.91, the bias is currently negative.
** RRR = Risk Reward Ratio
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Written by Gary