Written by Gary
Closing Market Commentary For 12-27-2013
Markets sea-sawed from 11 am to the closing bell with short burst of green and then red volume, but not having much effect on market direction as it continued to trade in a narrow zone. WTI oil futures closed above 100 on US inventory decline and the US dollar has been on a bullish trend since the opening gaining +0.68 cents.
By 4 pm the averages were all in the red, but losses were minimal and could quickly reverse itself on Monday. Below is the SP500 chart for the day.
There many descriptions for this stock market and entering 'Crazy Town' is as good as any.
It is time to crank up the Looney Tunes theme song because Wall Street has officially entered crazytown territory.
Stocks just keep going higher and higher, and at this point what is happening in the stock market does not bear any resemblance to what is going on in the overall economy whatsoever.
So how long can this irrational state of affairs possibly continue? Stocks seem to go up no matter what happens.
If there is good news, stocks go up. If there is bad news, stocks go up. If there is no news, stocks go up.
On Thursday, the day after Christmas, the Dow was up another 122 points to another new all-time record high. In fact, the Dow has had an astonishing 50 record high closes this year. This reminds me of the kind of euphoria that we witnessed during the peak of the housing bubble.
At the time, housing prices just kept going higher and higher and everyone rushed to buy before they were "priced out of the market".
But we all know how that ended, and this stock market bubble is headed for a similar ending.
Today's opening gaps were closed early this morning removing that bearish indicator, but several more remain that were made earlier this month AND will EVENTUALLY be closed.
The short term indicators are leaning towards the hold side at the closing, 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.
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 4:00 is at 16488 down 1.47 or -0.01%.
The SP500 is at 1841 down 0.62 or -0.03%.
SPY is at 183.88 down 0.01 or 0.01%.
The $RUT is at 1161 down 1.56 or -0.13%.
NASDAQ is at 4157 down 11 or -0.25%.
NASDAQ 100 is at 3574 down 11 or -0.29%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is sideways.
WTI oil is trading between 99.37 and 100.74 today. The session bias is negative and is currently trading down at 100.14.
Brent Crude is trading between 111.53 and 112.78 today. The session bias is negative and is currently trading down at 112.11.
Gold rose from 1208.60 earlier to 1218.30 and is currently trading down at 1213.80.
Dr. Copper is at 3.385 rising from 3.370 earlier.
The US dollar is trading between 80.67 and 79.83 and is currently trading up at 80.49, the bias is currently positive.
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Written by Gary