Written by Gary
Midday Market Commentary For 12-19-2013
Markets at noon are nearly at the same place when I last posted this morning. There seems to be some bullish movement as the BTFDers are making some headway albeit slowly. Personally, I think some investors have their head in the wrong place and should wait out this turmoil.
There is a lot going on in the financial world that many do not understand or do not care.
The reality is, however, is that the Federal Reserve simply cannot verbally state what they really see during each highly publicized meeting as it would roil the markets. Instead, they use their communications to guide the markets expectations toward reality in the hopes of reducing the risks of market dislocations.
The most recent release of the Fed's economic projections on the economy, inflation and unemployment continue to follow the same previous trends of weaker growth, lower inflation and a complete misunderstanding of the real labor market.
Reminiscent of the choices of Goldilocks - the reality is that the Fed's estimates for economic growth in 2013 was too hot, employment was too cold and inflation estimates were just about right.
The real unspoken concern should be the continued threat of deflation and what actions will be available when the next recession eventually comes.
The short term indicators are leaning towards the sell side at the midday, but I would advise caution in taking any position during this volatile transition period. Here is the quandary some investors have now. They have bet on the QE program to bolster their profits and knowing full well they may see some eroding over the next few months, so what should they do? Start reducing positions now, most probable, or let profits ride a bit longer?
I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does over the next 4 months. Removing 10 billion from the bond buying program each month isn't going to do much in reducing the QE program in the beginning, but halving it in 4 months certainly will - IF - the Fed's continues the taper program.
My instincts tell me that the Keynesian's are going to be reluctant to stop their grand financial experiment and will want to taper the taper within the next several months - especially if the employment rate increases.
The longer 6 month outlook still remains 40-60 sell until we can see what the effects are in this almost nothing start of the Fed's 'Taper'. By March investors should know how the taper is going to work out in relationship to the stability of the US financial markets and their ability to not to slide downward.
For now, I am continuing to expect weak to negative markets for the foreseeable future.
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', even if it has been reduced somewhat! I would like to see a blowout candle (shooting star) to verify a top along with heavy volume.
The DOW at 12:15 is at 16162 down 6 or -0.04%.
The SP500 is at 1807 down 3 or -0.19%.
SPY is at 181.30 down 0.39 or -0.21%.
The $RUT is at 1127 down 6 or -0.55%.
NASDAQ is at 4056 down 14 or -0.35%.
NASDAQ 100 is at 3495 down 14 or -0.40%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been mixed and the current bias is down, but sideways.
WTI oil is trading between 97.87 and 99.01 today. The session bias is positive and is currently trading up at 98.95.
Brent Crude is trading between 109.13 and 110.49 today. The session bias is mixed and is currently trading down at 110.42.
Gold fell from 1224.00 earlier to 1193.50 and is currently trading down at 1197.80.
Dr. Copper is at 3.286 falling from 3.322 earlier.
The US dollar is trading between 80.61 and 80.83 and is currently trading down at 80.73, the bias is currently sideways.
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Written by Gary