Written by Gary
Opening Market Commentary For 01-27-2014
Premarkets were up a fraction (+0.16%) and some investors complaining that they didn't have stops in place on Friday and suffered the consequences it seems.
The markets opened up where the Blue chips were up +0.10% moving to +0.20% and the $RUT quickly melted up to +0.30% all on very low volume. Investors are reluctant to test the early morning waters as the NASDAQ 100 became the first average to show red and the others slipping into the flat status.
By 10 am the averages were mixed and sea-sawing as investors were still unsure about negative emerging markets stories. New Home Sales came in at a negative 7% under what analysts were expecting and the markets yawned.
Interesting, are were still in a recession of some sort?
The taper-driven rate-rise scare mid-summer that stalled home-buyer (speculator) confidence has been matched by the [December] 2013 numbers.
New Home sales plunged 7.0% against expectations of only a 1.9% drop as total sales (seasonally adjusted and annualized) dropped to 414k - the biggest miss (against 455k exp.) since July 2013.
Of course the data is dreadfully [sparse] and noisy, as we note a mere 1,000 (non-seasonally-adjusted) homes were sold in the Northeast.
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.
Got to watch out for these overnight negative World news announcements which are usually rumors and make sure you have stops in place if you are not in a position to monitor the markets.
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.
The Best Stock Market Indicator Update says the market is untradable.
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? 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 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 15920 up 40 or 0.25%.
The SP500 is at 1792 up 2 or 0.12%.
SPY is at 179.13 up 0.22 or 0.12%.
The $RUT is at 1142 down 2 or -0.17%.
NASDAQ is at 4122 down 7 or -0.17%.
NASDAQ 100 is at 3533 down 7 or -0.20%.
$VIX 'Fear Index' is at 17.26 down 0.88 or -4.85%. Neutral
The longer trend is up, the past months trend is sideways, the past 5 sessions have been negative and the current bias is sideways and mixed.
WTI oil is trading between 97.16 and 96.61 today. The session bias is sideways and mixed and is currently trading down at 96.89.
Brent Crude is trading between 106.96 and 108.08 today. The session bias is negative and is currently trading down at 107.34.
Gold fell from 1279.20 earlier to 1257.69 and is currently trading up at 1260.60.
Dr. Copper is at 3.268 falling from 3.286 earlier.
The US dollar is trading between 80.64 and 80.39 and is currently trading down at 80.57, the bias is currently up, but sideways.
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Written by Gary