Market Commentary: Midday Markets Showing Signs Of Further Weakness

December 17th, 2013
in Gary's blogging, midday post

Midday Market Commentary For 12-17-2013

During the mid-morning trading the markets slide further down (-0.50%) but have since recovered a bit where the Blue Chips are down -0.15% and the small caps average -0.35%.

By noon investors were looking at the markets in a negative fashion completely convinced the Fed is going to start tapering tomorrow. If you are up to gambling, please pace your bets before the close.

Follow up:

Interesting thoughts in the following article.

Previewing Tomorrow's Fed Announcement From A Game Theory Perspective

There's a lot of chatter out there that the Fed will hold off on a taper announcement, but will put some sort of limit on the overall size of this latest round of QE launched in September 2012.

In other words, monthly purchases will continue at the current rate, but this will no longer be a QE-forever program. From a CK game perspective, placing a limit on the QE program is a more market-negative statement than a taper.

This is what I'm going to be watching for tomorrow, along with whatever dovish (market-positive) language is inserted around forward guidance on rates. And then the battle for meaning and interpretation will be joined ...

The short term indicators are leaning heavily towards the sell side at the midday, 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 12:30 is at 15861 down 23 or -0.14%.

The SP500 is at 1780 down 7 or -0.38%.

SPY is at 178.54 down 0.67 or -0.37%.

The $RUT is at 1116 down 4 or -0.38%.

NASDAQ is at 4020 down 9 or -0.23%.

NASDAQ 100 is at 3469 down 6 or -0.18%.

The longer trend is up, the past months trend is bullish, the past 5 sessions have been negative and the current bias is down, but sliding sideways.

How Oil Really Gets Priced

WTI oil is trading between 97.27 and 98.14 today. The session bias is neutral and is currently trading up at 97.81.

Brent Crude is trading between 109.41 and 108.35 today. The session bias is negative and is currently trading down at 108.44.

Gold fell from 1247.53 earlier to 1227.83 and is currently trading down at 1231.40.

Here's why copper has lost its indicator role

Dr. Copper is at 3.326 rising from 3.316 earlier.

The US dollar is trading between 80.13 and 80.43 and is currently trading down at 80.25, the bias is currently negative.

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:


Written by Gary


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