Written by Gary
Closing Market Commentary For 05-13-2014
Afternoon session traded sideways in a narrow band on mostly low to sometimes anemic volume. Both the DOW and SP500 closed at historic highs while the small caps fell behind and closed in the red.
By 4 pm the averages were looking strong - or do they look tired? I guess we will see in the coming week or so. Question investors are asking: Can the markets go higher?
Absolutely they can go higher, but at what cost? Savvy investors are watching their positions very carefully right now. The really nervous ones have begun to lighten their portfolios. Most of us know there is nothing really wrong with having a cash position once in a while as the cost of getting in and out is minimal.
Once again, we have talk why the markets can't collapse. The problem with this one is that it hasn't factored in QE - the main reason why the markets are up. When the QE finally tapers to an end, the yield curve will tumble too.
Jittery investors who are looking to the indices for signs of an approaching bear market might do better by focusing their attention elsewhere: on the yield curve.
So says Jeffrey Kleintop, chief market strategist at LPL Financial, who asserts in a note Tuesday that the yield curve has a perfect track record of predicting the top of the stock market over the past 50 years, and it's not signaling a bear market right now.
The yield curve is another way of describing the difference between short-term Treasury yields and long-term yields. It's a favorite tool among financial and economics wonks because of what it says about the economy.
The widening between the yields of different maturities, known as a steepening curve, often signals a brightening economic outlook. On the contrary, if the curve flattens considerably, the growth outlook tends to be souring.
The short term indicators are leaning towards the hold side at the close. 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 and that is not enough for me to start shorting. The SP500 MACD has turned up, but remains above zero at 7.67. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 72 % buy. (One of these two has to be wrong - roll your dice gentlemen.) Investing.com members' sentiments are 71 % bearish.
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The DOW at 4:00 is at 16715 up 20 or 0.12%.
The SP500 is at 1897 up 0.80 or 0.04%.
SPY is at 189.98 up 0.16 or 0.08%.
The $RUT is at 1121 down 12 or -1.10%.
NASDAQ is at 4130 down 14 or -0.33%.
NASDAQ 100 is at 3611 down 2 or -0.04%.
$VIX 'Fear Index' is at 12.13 down 0.10 or -0.82%. 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 sideways.
WTI oil is trading between 101.90 (resistance) and 100.36 (support) today. The session bias is positive and is currently trading up at 101.86.
Brent Crude is trading between 108.68 (resistance) and 107.45 (support) today. The session bias is positive and is currently trading up at 108.66.
Gold rose from 1289.21 earlier to 1298.82 and is currently trading up at 1293.80. The current intra-session trend is sideways and volatile.
Dr. Copper is at 3.132 falling from 3.152 earlier. (Very volatile)
The US dollar is trading between 80.24 and 79.92 and is currently trading down at 80.19, the bias is currently sideways.
Real Time Market Numbers
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Written by Gary