Opening Market Commentary For 12-17-2013
Premarkets were up +0.15% and took a nose dive at the opening bell. The DOW was off -0.08% while the other averages were off -0.30% in the first 10 minutes with a heavy green spike of BTFDers jumping in that did not slow the decent. Apparently investors got news that the Feds are going to start tapering and why didn't I get the memo? The $VIX shot up to 16.45 during the opening minutes, but volume really didn't reach the 'heavy' level
By 10 am the averages had stabilized down around ~-0.30% and volume remained low to moderate. The HFT algo computers appear to be active pushing the numbers upwards or at least keeping the markets from going lower.
The Blue Chips were the only major averages to sneak back into the green (+0.06) while the small caps slumped in the -0.15% to -0.20% range.
The markets descending the way it did at today's opening was a bit surprising as it had to be just a rumor floating around. The 'BIG' news comes tomorrow when the FOMC minutes are released, THEN the proposed fireworks will happen.
I have repeatedly cautioned about speculating on overnight trades and today is a good example. Everyone is guessing which way the markets are going to swing and I too, thought today would be slightly on the green side at least.
The article below is a bit on the melodramatic side but reflects real issues that face investors. For one, it is the 'House of Cards' the Fed has built and the impossible task of disassembling it without it crashing.
The fraud that has been the US government and its effects on the Potemkin economy should be obvious by now. Yet our politicians continue to pretend the economy is growing and recovering.
It is not. It is in a death spiral that their interventions caused and continue to feed.
For years short-run corrections were avoided or mitigated by this falsifying of economic signals. The intent was to send false signals to economic actors, to encourage them to behave in ways that helped short-term results but were harmful long-term.
The cost was to make the economy weaker and less efficient. The economy has been wasted. These short-term highs have place it in grave danger.
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 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 10:15 is at 15901 up 14 or 0.09%.
The SP500 is at 1784 down 3 or -0.16%.
SPY is at 178.94 down 0.31 or -0.17%.
The $RUT is at 1117 down 3 or -0.25%.
NASDAQ is at 4023 down 6 or -0.16%.
NASDAQ 100 is at 3471 down 13 or -0.11%.
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 positive and is currently trading down at 98.02.
Brent Crude is trading between 109.41 and 108.44 today. The session bias is negative and is currently trading down at 108.62.
Gold fell from 1247.53 earlier to 1229.59 and is currently trading down at 1231.70.
Dr. Copper is at 3.329 rising from 3.316 earlier.
The US dollar is trading between 80.13 and 80.39 and is currently trading down at 80.34, the bias is currently positive.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
<p><strong><span style="font-family: arial,helvetica,sans-serif;"><span style="font-size: medium;">Written by <a rel=""author"" href="/files/gary.htm">Gary</a></span></span></strong></p>