Written by Gary
Midday Market Commentary For 03-14-2014
At 10:30 the University of Michigan Consumer Confidence reported 79.9 sliding down from 81.6 as averages test supports. The SP500 was seriously flirting with the support zone at 1848 and 1839 but remained above for most of the morning. Moving below 1839 would be a serious blow to the bulls and by 11 am it was headed that way but at the last minute reversed course and headed upward.
By noon the averages were back into the green reaching the morning highs and pausing trading sideways on moderate volume. It is at this point I wonder just what Mr. Market has in store.
The short term indicators are leaning towards the hold side at the midday. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The 50DMA, MACD, volume and a host of other studies have not turned, only a 6% correction (and recovery) and that is not enough for me to start shorting. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 100% sell.
Several notes of negativity are that the daily volume is very low matching the period of historical highs in the past which could set the stage for addition weakness and market decline. The longer MACD view is starting uphill, but not convincingly signaling a continued up trend as it is very weak. Lastly, the margin debt for stock purchases are at an all time high.
I still believe that Mr. Market is STILL not through playing with us and even newer historical highs are a distinct possibility beyond what we have seen, mainly because the amount of bond buying the Fed still does on a monthly basis. Past bullish sessions is a very important reminder of what QE has done in the past and remains a continuing and very powerful stimulus to the financial markets.
It is its ending that worries me the most as the financial institution can not continue to push upwards without the Fed's 'Market Viagra'. Even if the Fed reduces its purchases by $10 billion every month for the rest of 2014, the Fed will have acquired $320 billion more for its portfolio. Note, that in 2013, the Fed added more than $1.0 trillion in securities to its portfolio. The debt stands at 4 trillion and will be at 5 trillion by the time the taper is completed and that is one hell of a debt that 'someone' has to pay.
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The DOW at 12:00 is at 16123 up 17 or 0.11%.
The SP500 is at 1848 up 1 or 0.07%.
SPY is at 185.26 up 0.08 or 0.05%.
The $RUT is at 1182 up 5 or 0.41%.
NASDAQ is at 4261 up 0.37 or 0.01%.
NASDAQ 100 is at 3646 down 5 or -0.14%.
$VIX 'Fear Index' is at 16.56 up 0.33 or 2.03%. Bearish Movement
The longer trend is up, the past months trend is positive, the past 5 sessions have been negative and the current bias is flat with a positive slant.
WTI oil is trading between 98.06 and 99.20 today. The session bias is negative and is currently trading down at 98.51.
Brent Crude is trading between 108.24 and 107.38 today. The session bias is negative and is currently trading up at 107.78.
Gold fell from 1388.44 earlier to 1374.00 and is currently trading down at 1375.80. The current intra-session trend is negative.
Dr. Copper is at 2.946 rising from 2.912 earlier.
The US dollar is trading between 79.82 and 79.44 and is currently trading up at 79.51, the bias is currently sideways.
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Written by Gary