Written by Gary
Midday Market Commentary For 12-23-2013
Interesting session in that the averages, except the DOW, have continued to melt upwards on falling volume indicating this melt up is completely being generated by the HFT algo computers. Caution is the key word here.
By noon trading in the Blue Chips has been in a narrow trading zone while the small caps continue to melt upwards.
The short term indicators are still leaning towards the buy side at the midday and is expected to change to sell - eventually, 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 action, or let profits ride a bit longer? My non-technical 'gut feeling' says the little guy, that's us, had better take some additional caution through the remaining days of the year and try not to get caught in a faux bull or bear trap.
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. My advise is to invest in tennis balls as they have a higher rate of return!
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 16306 up 85 or 0.53%.
The SP500 is at 1828 up 10 or 0.4561%.
SPY is at 182.50 up 0.94 or 0.52%.
The $RUT is at 1155 up 8 or 0.71%.
NASDAQ is at 4141 up 37 or 0.89%.
NASDAQ 100 is at 3565 up 33 or 0.95%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been positive and the current bias is sideways.
WTI oil is trading between 98.70 and 99.28 today. The session bias is negative and is currently trading up at 98.98.
Brent Crude is trading between 111.27 and 111.87 today. The session bias is positive and is currently trading down at 111.66.
Gold rose from 1192.18 earlier to 1203.42 and is currently trading up at 1200.20.
Dr. Copper is at 3.306 falling from 3.312 earlier.
The US dollar is trading between 80.70 and 80.46 and is currently trading down at 80.52, the bias is currently positive.
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Written by Gary