Written by Gary
Closing Market Commentary For 06-18-2014
The Fed has spoken and passed out the kool-aid as the markets rose from mediocre and flat to solid green and interesting.
By 4 pm the SP500 made a new historical high at 1957.74 and the $VIX dropped to 10.56. The other averages also performed well making new high or matching the old ones but be aware this is more of an illusion and Fed trickery.
I mentioned interesting because Ms. Yellen downplays data showing rising inflation as 'noisy' and suggesting that this inflation is just temporary. I guess she hasn't bought grocery's or visited the gas station lately probably because they are too 'noisy'. That is O.K., because the Fed knows what it is doing and we have absolutely nothing to worry about as you can see by the rising markets.
The 'complacency' ($VIX) meter is down to levels last seen in February, 2007 and that has me worried that we are watching a magic act knowing full well this is just a trick. When the table cloth is pulled I can guarantee the place settings and the tea pot are NOT going to stay in place. This is one magic show that looks slick now but once the smoke clears there is going to be some disappointment.
The short-end of the Treasury curve is unch but the longer-end is flattening notably with 10Y -4bps from pre-FOMC. S&P futures are surging (because why not) on the news that there's more taper, less growth, and higher rates than expected.
Perhaps the most critical aspect is the collapse in VIX, which is now 1 vol lower than when Dudley warned of "complacency" at almost a 10-handle. Gold is up modestly higher and the USD Index is down.
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 down, but remains above zero at 15.77. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 56 % buy. (up from a 40% sell this morning) Investing.com members' sentiments are 65 % bearish and Investors Intelligence sets the breath at 67.2 % bullish with the status at Bear Correction.
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The DOW at 4:00 is at 16907 up 98 or 0.58%.
The SP500 is at 1957 up 15 or 0.77%.
SPY is at 196.31 up 1.43 or 0.73%.
The $RUT is at 1183 up 6.51 or 0.55%.
NASDAQ is at 4363 up 26 or 0.59%.
NASDAQ 100 is at 3805 up 23 or 0.62%.
$VIX 'Fear Index' is at 10.61 down 1.45 or -12.02%. 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 net even and the current bias is positive.
WTI oil is trading between 106.45 (resistance) and 105.37 (support) today. The session bias is sideways and is currently trading up at 105.78.
Brent Crude is trading between 114.50 (resistance) and 113.06 (support) today. The session bias is positive and volatile and is currently trading up at 114.31.
Maybe I'm Wrong - Justifying $2,000+ Gold by Jeffrey Dow Jones
Gold rose from 1266.61 earlier to 1274.39 and recently up to 1275.35. Now it is currently trading up at 1274.90. The current intra-session trend is positive and volatile.
Dr. Copper is at 3.064 falling from 3.075 earlier.
The US dollar is trading between 80.76 and 80.47 and is currently trading down at 80.50, the bias is currently negative and volatile.
Real Time Market Numbers
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Written by Gary