Opening Market Commentary For 01-21-2014
Premarkets were up nicely+0.45% amid the totally expected revelation from Fed Whisperer Jon Hilsenrath of the FOMC's intention to boost the taper at its next meeting, says SA.
Markets gaped up at the opening with the SP500 flirting with its previous high, missing by a point. By 10 am the markets were still in the red and the 500 made another attempt, missing again. Volume was moderate at the opening but has fallen to low as investors sit back and decide what to do next.
This blurb below may have been part of the reason investors were so positive on the this mornings opening. Further, U.S. stocks look overvalued, B. of A. survey finds and this should play against any further rise in the blue chips.
NEW YORK (AP) - U.S. stock futures rose Tuesday as investors assessed the latest round of company earnings. Delta Air Lines climbed in premarket trading after its earnings beat analysts' forecasts.
KEEPING SCORE: Dow Jones industrial average futures were up 78 points to 16,475 about 30 minutes before the opening bell. Standard & Poor's 500 index futures were up eight points to 1,842, and the Nasdaq futures gained 20 points to 3,605. MILE HIGH: Delta gained 3.2 percent before the opening bell after reporting a better-than-expected fourth-quarter profit as fares and traffic rose.
The airline's president said that demand was strong and forecast that profit margins would increase in the current quarter. TELECOMMUNICATIONS : Verizon climbed 0.5 percent after it reported fourth-quarter earnings of $5.1 billion, more than analysts forecast.
The company lost $4.2 billion in the same period a year earlier.
The short term indicators are leaning towards the hold side at the opening, 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.
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, 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.
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The DOW at 10:15 is at 16455 down 4 or -0.02%.
The SP500 is at 1845 up 6 or 0.33%.
SPY is at 184.36 up 0.70 or 0.38%.
The $RUT is at 1176 up 7.51 or 0.64%.
NASDAQ is at 4221 up 23 or 0.56%.
NASDAQ 100 is not reporting this morning.
$VIX 'Fear Index' is at 12.58 up 0.41 or 3.30%. Bearish
The longer trend is up, the past months trend is bullish, the past 5 sessions have been mixed in a sideways channel and the current bias is negative.
WTI oil is trading between 93.93 and 95.44 today. The session bias is positive and is currently trading up at 95.27.
Brent Crude is trading between 106.23 and 108.00 today. The session bias is positive and is currently trading up at 107.92.
Gold fell from 1255.50 earlier to 1235.60 and is currently trading down at 1238.80.
Dr. Copper is at 3.338 rising from 3.315 earlier.
The US dollar is trading between 81.26 and 81.53 and is currently trading up at 81.37, the bias is currently negative.
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
<p><strong><span style="font-family: arial,helvetica,sans-serif;"><span style="font-size: medium;">Written by <a rel=""author"" href="/files/gary.htm">Gary</a></span></span></strong></p>