Closing Market Commentary For 12-17-2013
Today's session was interesting in that heavy losses were not seen when it was all but sure we were going to see the markets tank. The Blue Chips stayed mostly around the flat line, but some losses were in the -0.60% range.
The afternoon averages traded in a more or less narrow trading zone while the small caps actually showed a positive trend upwards from the morning lows.
By 4 pm the averages were falling, er, melting downward somewhat, but nothing to get your knickers in a knot over and the $VIX hovered at 16.00 leaving the major averages in the red.
Aftermarket action showed further declining to -0.70%. The question is this going to reflect in tomorrow's opening?
Tomorrow is the big day and I expect some volatility as the bulls and bears start guessing which way Mr. Market is going to go after the FOMC minutes are released. It will be interesting to see who gets the inside information first as you and I both know there is some 'cheating' going on.
Treasuries rallied from the pre-open release of inflation data this morning and never looked back (with 30Y unch on the week and 5Y -4bps).
Stocks tumbled notably through the US open but recovered as Europe closed hovering quietly around VWAP all afternoon. The rally back in stocks coincided with a drop in VIX which smacked of hedges being lifted and exposure being reduced into the momentum-ignoted strength.
Gold and silver saw weakness (though the latter is still +1% on the week). The USD weakened notably as Europe closed with some significant CHF buying.
Stocks closed ugly...as VIX was significantly bid (up for the 5th day in a row).
The short term indicators are leaning heavily 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.
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 15875 down 9 or -0.06%.
The SP500 is at 1781 down 6 or -0.31%.
SPY is at 178.46 down 0.57 or -0.32%.
The $RUT is at 1119 down 1 or -0.09%.
NASDAQ is at 4024 down 6 or -0.14%.
NASDAQ 100 is at 3469 down 6 or -0.19%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been negative and the current bias is negative.
WTI oil is trading between 97.27 and 98.14 today. The session bias is negative and is currently trading down at 97.35.
Brent Crude is trading between 109.41 and 108.20 today. The session bias is negative and is currently trading down at 108.24.
Gold fell from 1247.53 earlier to 1227.83 and is currently trading up at 1231.50.
Dr. Copper is at 3.313 falling from 3.333 earlier.
The US dollar is trading between 80.13 and 80.43 and is currently trading down at 80.20, the bias is currently negative.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary