Written by Gary
Opening Market Commentary For 05-09-2014
Premarkets were down -0.10% and some longer term technical indicators are flat going in on today's Friday session.
Markets opened down and flat and quickly melting further down to -0.35% on moderate volume and continued Ukraine fears. US JOLT's Job Openings fell to 4014 down from 4125 and the markets just yawned at the announcement continuing trading sideways.
By 10 am the large caps were in the red sustaining small losses in what appears to be the start of a volatile session.
The short term indicators are leaning towards the hold side at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA's, volume and a host of other studies have not turned, only a past 6% correction (and recovery) and that is not enough for me to start shorting. The SP500 MACD has turned down, but remains above zero at 4.69. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 40 % buy. (Could be right, I have seen some weird markets before.) Investing.com members' sentiments are 69 % bearish.
In looking at the 50 DMA, the current SP500 opened above that line and the small caps remain below the 145 DMA and half way to the 200 DMA. I can not see, as of right now where those large cap MA's are rolling over to indicate any permanent bear run but the falling small caps are a real worry as both the 50 and 100 DMA's have turned down.
Bottom line here is that I have not seen any serious bears jumping out of the woods just yet, although I am VERY concerned that ANY correction could turn nasty in a heart beat.
It is still possible that Mr. Market is not through playing with the averages 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. For those who are hell-bent bears, this article, 5 Reasons Your Simple Bear Market Plans Could Backfire, should be required reading.
The longer 6 month outlook is now 35-65 sell and will remain bearish until we can see what the effects are in the Fed's 'Tapering' game plan and Russia's annexing game playing. Again, I would also take chart and other technical indicators with a lessor degree of reliability for the time being and watch what the Janet Yellen's Fed does over the next couple of months. Also, the margin debt is very high and has been setting historic highs and as of Monday, 4-7-2014, it stands at $466 billion. (Read More at NYSE Statistics Archive)
It is its ending of QE that worries me the most as many financial institution and emerging markets can not continue to push forward or 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.
Several additional notes of negativity where investors are worried about issues directly related to the Fed's tapering and Putin's annexing. They are considering these factors along with the Argentine Peso, South African Rand and Japan. And of course, China's defaulting businesses are dropping like flies. And now the Second Chinese Bond Company Defaults, First High Yield Bond Issuer. And now Another Chinese High Yield Bond Issuer Declares Bankruptcy. Germany's exports fell 1.8% on month in March after dropping 1.3% in February and missed forecasts, with the crisis in Ukraine and China's slowdown weighing on the figure.
The real story behind the current weakness is the US weak housing, layoffs and poor employment data, inventory reductions and soft economic outlook including a mediocre sales outlook. I just can not buy the continual optimism of the bullish pundits when it comes to politicians and our economy. They lie and misrepresent the financial status just about every day, but of course, that is the definition of a politician, is it not? We may never know how 'dark' our shadow banking is, 'Dark Pool' activity and there are too many lurking 'Black Swans' on the horizon to be as confident as some bulls are.
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The DOW at 10:15 is at 16534 down 15 or -0.09%.
The SP500 is at 1872 down 4 or -0.20%.
SPY is at 187.39 down 0.33 or -0.17%.
The $RUT is at 1098 up 0.43 or 0.04%.
NASDAQ is at 4054 up 4 or 0.09%.
NASDAQ 100 is at 3544 up 5 or 0.15%.
$VIX 'Fear Index' is at 13.55 up 0.12 or 0.89%. Neutral 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 and the current bias is negative.
WTI oil is trading between 101.15 (resistance) and 100.26 (support) today. The session bias is sideways and volatile and is currently trading down at 100.60.
Brent Crude is trading between 109.02 (resistance) and 107.96 (support) today. The session bias is negative and is currently trading down at 108.17.
Gold fell from 1294.50 earlier to 1289.78 and is currently trading up at 1291.80. The current intra-session trend is sideways and volatile.
Dr. Copper is at 3.075 rising from 3.053 earlier.
The US dollar is trading between 79.37 and 79.84 and is currently trading up at 79.80, the bias is currently positive.
Real Time Market Numbers
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Written by Gary