Written by Gary
Closing Market Commentary For 01-15-2014
Another day at the 'brown bag factory' and nothing to show for it I am afraid. The averages squeaked up to the new high resistance level earlier and still couldn't get the job done of penetrating and closing at new highs, maybe tomorrow. Then again, maybe not, I wouldn't want to place a bet either way as we are due a correction and this could be the time it will happen.
By 4 pm the averages had completed the session by trading mostly sideways leaving little room for traders and investors alike. The SP500 made several attempts to best its earlier high mark for the day but in the end it closed below that lofty mark.
The short term indicators are leaning towards the hold side at the closing, but I would advise caution in taking any position during this volatile transition period. There will be pressure to climb higher if only to test the previous Blue Chip highs, therefore I do not foresee the markets descending below the sideways channel they are currently in until AFTER those highs are tested. Today was not the test I want to see.
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.
What I am afraid of is that if a serious 'Black Swan' pops 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 3 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, watch for QE5 when Obamacare starts drags the economy down into trouble in 2015.
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.
If you would like to get advanced buy/sell tweets, sign-up in the column to the right of this post by clicking on the 'Follow' button.
The DOW at 4:00 is at 16482 up 108 or 0.66%.
The SP500 is at 1848 up 10 or 0.52%.
SPY is at 184.59 up 1 or 0.54%.
The $RUT is at 1171 up 8 or 0.68%.
NASDAQ is at 4215 up 32 or 0.76%.
NASDAQ 100 is at 3610 up 29 or 0.82%.
$VIX 'Fear Index' is at 12.28 even 0.00 or 0.00%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been sideways and mixed and the current bias is sideways.
WTI oil is trading between 92.63 and 94.81 today. The session bias is positive and is currently trading up at 94.61.
Brent Crude is trading between 105.06 and 106.72 today. The session bias is positive and is currently trading down at 106.24.
Gold rose from 1233.90 earlier to 1241.90 and is currently trading down at 1239.50.
Dr. Copper is at 3.354 rising from 3.307 earlier.
The US dollar is trading between 80.69 and 81.25 and is currently trading down at 81.13, the bias is currently positive.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary