Written by Gary
Midday Market Commentary For 01-03-2014
Around 11 am the markets started to melt down after Philadelphia Fed President Charles Plosser warned Friday that the central bank may have to be "aggressive" in lifting interest rates. The decent gathered speed 15 minutes later resulting in a -0.25% fall on the average with the small caps suffering the most losses.
By noon the averages were still declining where the DOW was up +0.05% and the small caps were down -0.70% on relatively light volume. The oils also showed the most action going down whereas the US dollar is up slightly along with gold, both are traveling mostly sideways. I can hardly wait to hear what Bernanke has to say later today.
As Europe closes, the 'recovery' in US equities has faded to red for the majors (though Trannies and all the high-beta momos are still in the green thanks to JPY just not wanting the party to stop - for now) seeimngly led by AAPL's plunge to its 50DMA.
This morning's jerk higher appears as much about BTFD catch up for Trannies than anything else.
Bonds sold off modestly but the USD continues to surge (led by EUR weakness after ugly loan creation data). WTI crude (and Brent) is tumbling further - back at $94.50 - but gold is surging back to yesterday's highs at around $1236.
VIX is stable for now around 14% as stocks rotate back to play catch-down.
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.
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.
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 DOW at 12:15 is at 16450 up 9 or 0..05%.
The SP500 is at 1830 down 2 or -0.09%.
SPY is at 182.77 down 0.12 or -0.07%.
The $RUT is at 1152 up 1 or 0.09%.
NASDAQ is at 4128 down 15 or -0.37%.
NASDAQ 100 is at 3540 down 23 or -0.65%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been positive and the current bias is negative.
WTI oil is trading between 94.365 and 95.74 today. The session bias is negative and is currently trading down at 94.45.
Brent Crude is trading between 108.64 and 106.82 today. The session bias is negative and is currently trading up at 106.97.
Gold is currently trading positively from 1221.40 and 1238.10 and is currently trading up at 1236.50.
Dr. Copper is at 3.348 falling from 3.387 earlier.
The US dollar is trading between 80.64 and 80.95 and is currently trading up at 80.94, the bias is currently positive.
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Written by Gary