Written by Gary
Closing Market Commentary For 01-09-2014
The averages recovered some early losses to end the session flat and leaving investors wondering what they are going to do next.
By 4 pm the big bad bear fell asleep and the bulls were trying to keep this leaky boat afloat. This isn't the market I like - how much more sideways can we take?
Tomorrow may be very volatile, watch your step.
Another day or 'spot the difference' between AUDJPY and the S&P 500 saw an odd overnight spike in stocks fade soon after the US open, bounce higher (again) at the European close then oscillate around VWAP (with the ever-ready-to-please 330 RAMP).
Stocks remain red for the year and still the worst start since 2008. "Most Shorted" names continue to outperform. Copper and WTI crude were notable under-performers (both ending an oddly similar -1.75% on the week so far) with oil rebounding modestly off 8-month lows into the close.
VIX and credit markets were quiet - ending practically unch ahead of tomorrow's NFP. CAD weakness continues (-2% on the week) but the USD leaked lower to unch on the week.
Treasuries rallied 2-3bps (and the curve flattened very modestly) with 2Y unch and 10Y -3bps.
The short term indicators are leaning now towards the hold side at the closing, 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.
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 4:00 is at 16446 down 17 or -0.10%.
The SP500 is at 1838 up 0.62 or 0.03%.
SPY is at 183.65 up 0.12 or 0.07%.
The $RUT is at 1158 up 0.89 or 0.08%.
NASDAQ is at 4156 down 9 or -0.23%.
NASDAQ 100 is at 3553 down 15 or -0.42%.
The longer trend is up, the past months trend is bullish, the past 12 sessions have been sideways and the current bias is sideways.
WTI oil is trading between 91.27 and 92.92 today. The session bias was negative and is currently trading up at 92.41.
Brent Crude is trading between 106.11 and 108.15 today. The session bias is negative and is currently trading up at 106.52.
Gold fell from 1230.50 earlier to 1223.20 and is currently trading down at 1227.70.
Dr. Copper is at 3.298 falling from 3.356 earlier.
The US dollar is trading between 80.98 and 81.32 and is currently trading up at 81.07, the bias is currently negative.
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Written by Gary