Written by Gary
Midday Market Commentary For 01-09-2014
Except fro a brief pause this morning, the averages have continued to melt downward and are all in the red. The volume at noon-time is dipping into the anemic levels and the $VIX remains in the low 13's.
By noon the averages had slipped considerably from the morning highs closing the opening gaps and looking for further losses. The bear is in the room and is looking like he isn't going to take any prisoners.
The short term indicators are leaning now towards the hold 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.
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 12:00 is at 16413 down 49 or -0.30%.
The SP500 is at 1834 down 0.35 or -0.19%.
SPY is at 183.17 down 0.35 or -0.19%.
The $RUT is at 1155 down 3 or -0.23%.
NASDAQ is at 4151 down 15 or -0.35%.
NASDAQ 100 is at 3550 down 18 or -0.49%.
The longer trend is up, the past months trend is bullish, the past 12 sessions have been sideways and the current bias is negative.
WTI oil is trading between 91.83 and 92.92 today. The session bias is negative and is currently trading down at 91.84.
Brent Crude is trading between 106.99 and 108.15 today. The session bias is negative and is currently trading up at 107.03.
Gold fell from 1230.50 earlier to 1223.20 and is currently trading down at 1223.60.
Dr. Copper is at 3.294 falling from 3.356 earlier.
The US dollar is trading between 80.98 and 81.32 and is currently trading up at 81.14, the bias is currently negative.
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Written by Gary