Written by Gary
Opening Market Commentary For 01-07-2014
Premarkets were up +0.38% amid some manipulative news that didn't mean much in my book because some financial egg-heads says the SP500 skid should stop. But in light of this mornings rising markets, be careful of a faux bull run and a quick reversal.
The markets gaped up +0.35%, like yesterday's opening, melting the averages slowly upwards. By the 15 minute mark the averages were up +0.50% on low to moderate volume. By 10 am the averages were surging upwards were the DOW was showing +115 points, the SP500 +11 points and the NASDAQ +30 points just above yesterday's highs and falling volume. Testing, testing, 1,2,3. . .
A bit surprised that the markets opened up this morning, but at the same time, considering the manipulation going on, not unexpected either. This morning the November trade data reported that the U.S. trade gap declined more than expected to $34.3 billion and that is not exactly a 'Taper' stopper, therefore market bearishness.
WASHINGTON (MarketWatch) - Exports rose in November and the nation's trade deficit fell to the lowest level in more than four years, suggesting the economy expanded faster than expected in the fourth quarter and perhaps signaling faster U.S. growth ahead.
The short term indicators are leaning slightly towards the buy side at the opening, then at 10 am back to the sell side of things. I would advise caution in taking any position during this volatile transition period as the sudden reversals can make any trades worthless.
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.
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 of profits over the next few months, so what should they do? Start reducing positions now, my choice, or let profits ride a bit longer? I would be afraid that if a serious 'Black Swan' popped up, the market decent would wipe out a lot of profits. This 'house of cards' the Fed has built is fragile and would not take a lot to tear it down.
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.
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 to signify a market top.
The DOW at 10:15 is at 16533 up 108 or 0.66%.
The SP500 is at 1837 up 11 or 0.60%.
SPY is at 183.52 up 1 or 0.64%.
The $RUT is at 1157 up 10 or 0.86%.
NASDAQ is at 4147 up 34 or 0.82%.
NASDAQ 100 is at 3555 up 28 or 0.78%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been negative and the current bias is positive.
WTI oil is trading between 94.16 and 93.37 today. The session bias is negative and is currently trading down at 93.62.
Brent Crude is trading between 107.52 and 106.88 today. The session bias is negative and is currently trading down at 107.03.
Gold fell from 1244.60 earlier to 1226.23 and is currently trading up at 1227.90.
Dr. Copper is at 3.349 falling from 3.362 earlier.
The US dollar is trading between 80.75 and 81.10 and is currently trading down at 81.06, the bias is currently positive.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary