Market Commentary: New Highs At Opening, Averages Settle In At Flat And Mixed

Written by Gary

Opening Market Commentary For 11-15-2013

Premarkets were up +0.20% this morning and remained that way after the US Empire Manufacturing and the Import Price Index both printed VERY low numbers which should be bullish news for the QEeen Yellen followers. Literally one minute before the opening the futures suddenly dropped to flat status. When the markets opened the DOW and SP500 shot up to new highs signaling increasing volatility which should make traders happy.

By the 15 minute mark the markets were headed south on relatively heavy volume and being bought up by the ever present BTFDers. The markets sea-sawed until the 10:15 financial reports on the Industrial and Manufacturing Production numbers were announced.

The reports were mixed with the industrial dropping sharply and the manufacturing beating expectations. The US Capacity Utilization also dropped below expectations and the markets didn’t react and remained static.

Will the DOW reach the elusive 16,000 mark or or we going to witness the start of the ‘Big Slide’? With ol’ Ben retiring, he can say Yellen messed up and not him when the markets start to fall. Sometime in the future, the chicken is going to come home to roost, as they say, and this market’s house of cards is going to collapse bringing forth a lot of finger pointing.

@ ADVFV: Stocks rose strongly on Thursday after the soon-to-be Fed Chairwoman Janet Yellen said that the US economy is still performing “far short of [its] potential”, sparking hopes that the central bank will continue with its stimulus programme for the time being.

The dovish comments prompted yet another record finish on Wall Street last night with both the Dow Jones Industrial Average and S&P 500 rising to all-time highs.

The [poor] US data comes a day after Janet Yellen attended her Federal Reserve Chair nomination hearing before the Senate Banking Committee when she said the economy needs to improve before the central bank starts scaling back monetary stimulus.

Yellen, who is to replace Ben Bernanke as head of the Fed in January, said that the central bank’s quantitative easing (QE) programme has made a “meaningful contribution to economic growth” but the labour market and wider economy are still performing “far short of their potential”.

Her remarks on maintaining QE provided a boost to global stocks yesterday.

The article below says indicators are screaming danger for the stock market, which is what I have been stating for weeks, but it is good to know I am not alone.

Warning: Stock Market Margin (Borrowing) Reaches All-Time High

I’ve been writing in these pages how more and more time-proven stock market indicators are starting to scream “Danger!” for the stock market.

Investors are getting too bullish on stocks (an omen of lower stock prices ahead), as seen in the American Association of Individual Investors (AAII) Investor Sentiment Survey. It shows 48% of investors were bullish towards key stock indices on November 7. Going back to just June of this year, the number of bullish investors stood at 32.97%.
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As for trading, the RRR** has been very narrow at the opening bell for months and this trend of low volume and narrow trading sessions makes any predictions of session movements nearly impossible, thus making trading futile and mostly unprofitable.

The problem facing traders is that the trading range, which has been so narrow during the trading day lately, that way too much money has to be put on the table just to get back meager gains. Again, guessing where the market is going to be tomorrow or next week, at this time anyway, can be a foolish and costly endeavor.

The short term indicators are now leaning towards the buy side at the morning opening, but I would advise caution in taking a position because of the Fed’s reluctance to give any hints of when the taper will begin and Janet Yellen’s hollow conformation hearing rhetoric. I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does.

The longer 6 month outlook remains 40-60 sell until we can see what the Fed is going to do, simple as that. If we get Fed tapering in December, which is not likely, the markets will certainly react in a negative fashion. If the tapering begins in March 2014 with Yellen at the helm, like many believe it will, the markets are going to price that in by declining sooner. I am expecting weak to negative markets for the foreseeable future. Also, many pundits have stated that we may have seen the top – but I wouldn’t count it, as we have just seen, as long as the Fed continues to hand out ‘Market Viagra’! I would like to see a blowout candle to verify a top along with heavy volume.

The DOW at 10:15 is at 15914 up 38 or 0.24%.

The SP500 is at 1793 up 2 or 0.14%.

SPY is at 179.50 up 0.23 or 0.13%.

The $RUT is at 1110 down 1 or -0.09%.

NASDAQ is at 3975 up 1 or 0.04%.

NASDAQ 100 is at 3415 down 1 or -0.02%.

The longer trend is up, the past 12 months trend is bullish, the past 5 sessions have been positive and the current bias is sideways with a negative slant.

How Oil Really Gets Priced

WTI oil is trading between 93.63 and 94.51 today. The session bias is neutral and is currently trading down at 94.13.

Brent Crude is trading between 108.66 and 107.81 today. The session bias is neutral and is currently trading up at 108.17.

Gold rose from 1279.66 earlier to 1288.90 and is currently trading down at 1287.00.

Here’s why copper has lost its indicator role

Dr. Copper is at 3.159 falling from 3.182 earlier.

The US dollar is trading between 81.21 and 80.83 and is currently trading up at 80.96, the bias is currently positive.

** RRR = Risk Reward Ratio

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

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Written by Gary