Written by Gary
Closing Market Commentary For 06-20-2014
Volume was non-existent many times during the afternoon session averaging out to plain old anemic and yet the averages were able to climb off their daily lows and melt upwards. Thanks to the HFT algo computers!
By 4 pm most of the Wall Streeter's had had already left the building and were well on their way back to the burbs. The DOW and the SP500 posted new closing highs which Jim Cramer will explain in boring detail just what this means.
Actually It doesn't mean a thing, but Jim Bob has a lot of air time and will make up something. Maybe I am jealous. If I was paid as much as he is, I probably would do the same thing.
Now onto something really important and the next big thing for the Fed - inflation! Inflation is something we haven't talked about here very much, even though the Fed's members don't believe it exists right now. The markets will react the same way it did yesterday and today by rising and setting new highs. Ms. Yellen did NOT say ANYTHING that was unexpected and basically patted the newsy's on their butt telling them everything was OK and go away and that is all it took.
When inflation is 'officially' recognized by the Fed increasing interest rates, look for that news to send the market plummeting. Scott Page, portfolio manager at Eaton Vance Floating Rate Advantage EAFAX said that when the Federal Reserve starts raising interest rates, "they will do it pretty quickly and often," hoping to get rates up to a level "when where we have another recession, they can drop them."
In an interview with Chuck Jaffe, MarketWatch senior columnist, at the Morningstar Investor Conference, Page said that interest rates are largely a tool and that the Fed is going to "want to recover that monetary tool."
Chris Wallis, chief investment officer at manager at Vaughan Nelson Investment Management and co-manager of Natixis Vaughan Nelson Value Opportunities VNVAX , said he expects inflation to move up over 3 percent, which "will call into question whether the Fed can wait to raise rates." He said the situation sets up the market for a "nice little pullback" in the near future.
In an interview with Chuck Jaffe, MarketWatch senior columnist, at the Morningstar Investor Conference, Wallis said he expects an interest-rate hike sooner than many of his peers. However, Wallis said "rates can only go so high - we don't think they can sustainably move the 10-year 10_YEAR +0.15% over 3 percent." That creates a condition where stockpickers, rather than indexers, will have the best chance at success.
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 16.86. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 40 % buy. (down from 56% buy this morning) Investing.com members' sentiments are 63 % bearish and Investors Intelligence sets the breath at 67.9 % bullish with the status at Bear Correction.
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The DOW at 4:00 is at 16947 up 26 or 0.15%.
The SP500 is at 1962.87 up 3.39 or 0.17%.
SPY is at 195.80 up 0.40 or 0.20%.
The $RUT is at 1188 up 4.39 or 0.37%.
NASDAQ is at 4368 up 9 or 0.20%.
NASDAQ 100 is at 3803 up 2 or 0.05%.
$VIX 'Fear Index' is at 10.85 up 0.23 or 2.17%. Bearish 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, but trending sideways.
WTI oil is trading between 106.91 (resistance) and 105.81 (support) today. The session bias is elevated and sideways and is currently trading up at 106.66.
Brent Crude is trading between 115.68 (resistance) and 114.48 (support) today. The session bias is depressed, trending down and is currently trading up at 114.72.
Maybe I'm Wrong - Justifying $2,000+ Gold by Jeffrey Dow Jones
Gold fell from 1322.50 earlier to 1307.10 and is currently trading up at 1315.60. The current intra-session trend is trending sideways.
Dr. Copper is at 3.117 rising from 3.071 earlier.
The US dollar is trading between 80.57 and 80.27 and is currently trading down at 80.41, the bias is currently elevated and trending downwards.
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Written by Gary