Written by Gary
Opening Market Commentary For 01-10-2014
Whoa, what a 'Flash Crash' in the premarket dropping some -0.75% in one minute (8:30 am) and immediately recovering most of the decline. It happened so fast that the most astute trader couldn't have caught that falling knife. It appears the HFT computers did not like the labor reported news (see more below) and did what uncontrollable computers do. Danger Will Robinson, danger!
The Markets did open up +0.15% but the trend is down to where by the 15 minute mark the volume was low to moderate and the the averages had slipped to +0.08%. By 10 am the DOW and SPY had just dipped into the red with others to follow.
The big news this morning is the labor stats where the unemployment rate falls because literally no one care anymore. You would have thought that would be bullish and watch the BTFDers jump in. What it does represents is a growing concern that whatever economic 'recovery' has been going on really isn't and that could open a few more holes in this leaking ship.
WASHINGTON (AP) - U.S. employers added a scant 74,000 jobs in December, the fewest in three years. The disappointing gain ends 2013 on a weak note after recent economic reports had raised hopes for a strong finish.
The Labor Department says the unemployment rate fell from 7 percent in November to 6.7 percent, the lowest level since October 2008. But the drop occurred partly because more Americans stopped looking for jobs.
The government counts people as unemployed only if they are actively searching for work. Cold weather may have slowed hiring. Construction firms cut 16,000 jobs, the biggest drop in 20 months. December's hiring is far below the average gain of 214,000 jobs a month in the preceding four months.
But monthly gains averaged 182,000 last year, nearly matching the previous two years.
As we have said over past several years, the BLS statistics are garbage, manipulation at their best.
As was reported to mass jubilation on Wednesday, the ADP private payrolls number soared to the highest monthly change since November 2012, a 238,000 increase driven by what the report said was a 48,000 increase in construction jobs.
ADP's Mark Zandi went on the record to say that "The job market ended 2013 on a high note. Job gains are broad-based across industries, most notably in construction and manufacturing.
It appears that businesses are growing more confident and increasing their hiring." It appears not. According to today's BLS report in December, on a seasonally adjusted basis, the construction industry lost 16K jobs.
And where it gets really funny is when one looks at construction on a non-seasonally adjusted basis, construction jobs plummeted by a whopping 216,000! However you cut it someone is obviously lying.
If we cared we would ask who. However, since both data series are completely fabricated, who even cares?
Other headlines this morning.
The short term indicators are leaning heavily towards the hold side at the opening, 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 10:15 is at 16395 down 49 or -0.30%.
The SP500 is at 1834 down 4 or -0.21%.
SPY is at 183.18 down 0.46 or -0.25%.
The $RUT is at 1155 down 3 or -0.25%.
NASDAQ is at 4148 down 8 or -0.19%.
NASDAQ 100 is at 3546 down 6 or -0.17%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been sideways and the current bias is negative.
WTI oil is trading between 93.31 and 92.21 today. The session bias is neutral and is currently trading down at 92.90.
Brent Crude is trading between 107.25 and 106.42 today. The session bias is neutral and is currently trading up at 106.83.
Gold rose from 1226.90 earlier to 1244.33 and is currently trading up at 1242.80.
Dr. Copper is at 3.340 rising from 3.289 earlier.
The US dollar is trading between 81.26 and 80.65 and is currently trading down at 80.65, the bias is currently negative.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary