Written by Gary
Midday Market Commentary For 01-10-2014
As we approached the noon hour the averages have remained depressed in the -0.10% to -0.35% range with a possible reprieve rolling in this afternoon. However, I do not forecast a resounding and booming bull run at the last minute. What could happen is that the markets will move to a flat and mixed scenario by the close.
By noon the averages were still in the red and trading sideways on low, but falling volume.
The labor data from this morning is still being discussed.
Once again, in its sheer panic to tout the quantity, or lack thereof, in the case of the December jobs number, the frenzied media and pundits completely ignored the quality of the jobs gained in the last month of December.
Or lack thereof.
Because as the simple breakdown below shows, of the 74K jobs gained in December, 55%, or 40K were the worst of the lot when it comes to wages or benefits: temporary jobs.
The short term indicators are leaning towards the buy side at the midday (but I don't believe it), 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.
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The DOW at 12:15 is at 16391 down 53 or -0.32%.
The SP500 is at 1834 down 4 or -0.20%.
SPY is at 183.26 down 0.38 or -0.21%.
The $RUT is at 1157 down 1 or -0.07%.
NASDAQ is at 4151 down 5 or -0.13%.
NASDAQ 100 is at 3544 down 8 or -0.23%.
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 91.99 today. The session bias is mixed and is currently trading up at 92.66.
Brent Crude is trading between 107.25 and 106.08 today. The session bias is mixed and is currently trading up at 106.78.
Gold rose from 1226.90 earlier to 1246.87 and is currently trading down at 1243.60.
Dr. Copper is at 3.339 rising from 3.289 earlier.
The US dollar is trading between 81.26 and 80.62 and is currently trading down at 80.77, the bias is currently negative.
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Written by Gary