Written by Gary
Midday Market Commentary For 12-31-2013
New highs are being posted but our proprietary bear indicator doesn't believe it as the needle was in the red most of the morning. Volume has been light and inconclusive as investors try to decide which way to go.
By noon the trend was melting down, but remaining elevated, all the averages were in the green and the $VIX was moving up to 13.95.
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? This trend will become more apparent in January.
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 1:00 is at 16522 up 48 or 0.29%.
The SP500 is at 1846 up 5 or 0.28%.
SPY is at 184.35 up 0.52 or 0.29%.
The $RUT is at 1165 up 4 or 0.36%.
NASDAQ is at 4172 up 18 or 0.44%.
NASDAQ 100 is at 3587 up 16 or 0.46%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is trending down.
WTI oil is trading between 99.39 and 98.20 today. The session bias is sideways and is currently trading up at 98.62.
Brent Crude is trading between 111.52 and 110.47 today. The session bias is sideways and is currently trading down at 110.72.
Gold rose from 1182.02 earlier to 1212.80 and is currently trading down at 1204.10.
Dr. Copper is at 3.397 rising from 3.366 earlier.
The US dollar is trading between 80.09 and 80.28 and is currently trading up at 80.20, the bias is currently sideways.
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Written by Gary