Written by Gary
Midday Market Commentary For 06-06-2014
Like yesterday the SP500 keeps on setting new highs as the session progresses. The SP500 reached up to 1949.25 and the DOW likewise melted up to 16909.22 and have been at this elevated zone for most of the morning.
By noon the trading was in a narrow band moving sideways on falling volume with the bears taking a nap.
This is a question every savvy investor is asking.
For 5 years the correlation between the expansion of the Federal Reserve's balance sheet and the growth of the S&P 500 has risen dramatically.
Since QE3 was unveiled, the correlation is converging on 1 which of course is just happy coincidence and nothing to do with the free and easy flow of liquidity that month after month of Fed largesse has created.
The problem is we now know that the hurdles to a Fed un-Taper are very high and so we can extrapolate the end-point for the Fed's balance sheet and where stocks would trade at that point.
The S&P 500's recent exuberance has priced in the total expansion of the Fed's balance sheet to the end of the taper, so how much more upside is there?
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 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 16.81. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 16 % sell. (was 56% buy this morning) Investing.com members' sentiments are 66 % bearish.
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The DOW at 12:15 is at 16901 up 65 or 0.39%.
The SP500 is at 1948 up 8 or 0.39%.
SPY is at 195.27 up 0.79 or 0.40%.
The $RUT is at 1164 up 11 or 0.91%.
NASDAQ is at 4315 up 19 or 0.44%.
NASDAQ 100 is at 3789 up 12 or 0.32%.
$VIX 'Fear Index' is at 11.22 down 0.46 or -3.94%. Bullish Movement
(Follow Real Time Market Averages at end of this article)
The longer trend is up, the past months trend is positive, the past 5 sessions have been positive and the current bias is elevated and sideways.
WTI oil is trading between 103.07 (resistance) and 102.32 (support) today. The session bias is positive and is currently trading up at 102.44.
Brent Crude is trading between 109.30 (resistance) and 108.48 (support) today. The session bias is negative and is currently trading up at 108.58.
Maybe I'm Wrong - Justifying $2,000+ Gold by Jeffrey Dow Jones
Gold fell from 1257.47 earlier to 1246.12 and has sense reversed. It is currently trading down at 1252.20. The current intra-session trend is positive and volatile.
Dr. Copper is at 3.046 falling from 3.092 earlier.
The US dollar is trading between 80.55 and 80.26 and is currently trading up at 80.47, the bias is currently sideways.
Real Time Market Numbers
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Written by Gary