Written by Gary
Opening Market Commentary For 12-30-2013
Premarkets were up +0.02% and remained that way until the opening where the DOW was up +0.09% and the small caps were in the red.
By 10 am the markets were generally mixed with the small caps falling further and faster. Volume was anemic as many investors have decided to sit out the morning action this Monday morning. The overall trend appears to be melting further down before the session is over.
Pending Home Sales came in at -4.0% falling from the last report of -2.7%.
For the 5th month in a row, pending home sales missed expectations (though a silver lining is a positive print MoM - breaking a 5-month streak).
Year-over-year, home sales collapsed at 4% - its worst drop since April 2011, and that even after prior data was revised lower. Still, despite this ongoing plunge, there is always hope - as engendered by NAR's chief economist who states (somewhat unconfidently), "we may have reached a cyclical low." Cyclical low indeed - just don't look at the chart.
The short term indicators are leaning towards the sell side at the opening, 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. Especially today after the Santa Claus Rally pushed the markets up to reach new highs. A correction is expected, how much is the question?
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 10:30 is at 16481 up 2 or 0.01%.
The SP500 is at 1839 down 3 or -0.14%.
SPY is at 183.64 down 0.20 or -0.10%.
The $RUT is at 1159 down 2 or -0.17%.
NASDAQ is at 4145 down 12 or -0.28%.
NASDAQ 100 is at 3562 down 12 or -0.33%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is negative.
WTI oil is trading between 100.43 and 99.62 today. The session bias is negative and is currently trading down at 99.76.
Brent Crude is trading between 112.63 and 110.94 today. The session bias is negative and is currently trading down at 111.28.
Gold fell from 1215.80 earlier to 1200.30 and is currently trading up at 1206.40.
Dr. Copper is at 3.385 falling from 3.392 earlier.
The US dollar is trading between 80.58 and 80.13 and is currently trading up at 80.18, the bias is currently negative.
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Written by Gary