Written by Gary
Midday Market Commentary For 12-27-2013
About 10:30 the averages took a nose dive placing the markets in the red, but on low volume numbers. There was a faux recovery from the morning lows and then another recovery with a small correction.
By noon the averages were mixed, flat but melting back up nicely. Whether or not we will see new highs or falling again to test the morning lows is not clear as we appear to be in the 'volatile' sea-saw transition of experiencing new daily highs which is better than an outright nasty correction.
The short term indicators are leaning towards the hold 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.
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 16488 up 7 or 0.05%.
The SP500 is at 1842 up 0.03 or 0.00%.
SPY is at 183.89 up 0.04 or 0.02%.
The $RUT is at 1159 down 3 or -0.27%.
NASDAQ is at 4161 down 6 or -0.15%.
NASDAQ 100 is at 3580 down 4 or -0.12%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is positive.
WTI oil is trading between 99.37 and 100.64 today. The session bias is positive and is currently trading down at 100.35.
Brent Crude is trading between 111.53 and 112.78 today. The session bias is negative and is currently trading down at 111.94.
Gold rose from 1208.60 earlier to 1218.30 and is currently trading down at 1212.20.
Dr. Copper is at 3.387 rising from 3.370 earlier.
The US dollar is trading between 80.67 and 79.83 and is currently trading up at 80.35, the bias is currently positive.
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Written by Gary