Written by Gary
Midday Market Commentary For 04-07-2014
The averages have slid downward since a brief stint in the green this morning and moderate volume suggests this will continue until the HFT computers decide to take advantage of the situation and melt the averages back up some.
By noon the SP500 was off -0.80% but had not descended like the NASDAQ at -1.15%. The $VIX has risen steadily from the low 14's to the high 15's with spikes of red and green volume with the bears winning.
We are in a minor correction phase so far and not a major problem, but I would fasten your seat belts as this could turn ugly in a heartbeat.
UPDATE: V-shaped recovery in stocks as 103 USDJPY marks line in the sand...
BTFD failed and momentum has broken. Growth stocks and Biotech dreams are lying shattered in a pool of margin calls once again this morning.
Nasdaq being dragged by another more-than-1% drop in Biotechs (now negative year-to-date) and nearing the 20% high-to-low drop of a bear market. Bonds are bid as JPY carry unwinds drag broad US equity markets lower...
The USD is weaker (led by EUR strength) and precious metals are down modestly (gold at $1300)
The short term indicators are leaning towards the hold side at the midday, although close to sell. 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, 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. The MACD has turned down slightly, but remains above zero. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 0 % hold. (Remember this has been negative for weeks.)
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 is being 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. Write me with suggestions and I promise not to bite.
The DOW at 12:15 is at 16277 down 137 or -0.83%.
The SP500 is at 1847 down 18 or -0.95%.
SPY is at 184.55 down 2 or -1.03%.
The $RUT is at 1134 down 20 or -1.72%.
NASDAQ is at 4072 down 56 or -1.35%.
NASDAQ 100 is at 3501 down 39 or -1.09%.
$VIX 'Fear Index' is at 15.71 up 1.75 or 12.54%. Bearish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is sideways, the past 5 sessions have been sideways, but mixed and the current bias is negative.
WTI oil is trading between 100.23 and 101.32 today. The session bias is negative and is currently trading down at 100.38.
Brent Crude is trading between 105.25 and 106.66 today. The session bias is negative and is currently trading down at 105.59.
Gold fell from 1304.32 earlier to 1295.86 and is currently trading down at 1297.10. The current intra-session trend is negative.
Dr. Copper is at 3.039 rising from 2.977 earlier.
The US dollar is trading between 80.60 and 80.31 and is currently trading up at 80.33, the bias is currently negative.
I have, along with numerous others, complained, bitched and otherwise damned High Frequency Trading (HFT) by these low-life algo computers (and the humans that operate them) for the last five years. The article below is required reading for Monday.
Is HFT really good for the markets? Does it really provide a necessary function of increasing liquidity? Considering that the financial markets have operated successfully for over 100 years, was an increase in liquidity really needed? Or, was HFT transformed from a benign concept into an intentionally malevolent "profit generation" scheme by the financial elite?
# 2. Not only is HFT legalized front-running. It is also a socially worthless activity that amplifies market movements, increases market fragility, inflates asset price bubbles, and naturally worsens market crashes. And as we saw with the 'Flash Crash' of May 2010, it can also fuel market mayhem.
Real Time Market Numbers
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary