Market Commentary: Averages Continue The Mornings Decent With No Let Up In Sight

Written by Gary

Midday Market Commentary For 12-11-2013

By noon the decent has slowed and the volume has also decreased leaving investors wondering just how far down the markets are going to go today.

Past history suggests the averages have descended all they are going to do today and very well might start a small recovery before the end of today’s session.

The latest market movements are trending sideways and it remains to be seen if the BTFDers are going to save the day once again. The $RUT being down 1.28% is not indicative of any rally today however.

This ratio of bull Vs. bears could change drastically if we have a small correction and then watch the markets continue their rise. I have not seen anything yet that suggests a cataclysmic decline coming to a market near you, but doesn’t preclude a ‘Black Swan’ event that may be lurking just off stage. I have said for months that this house of cards the Fed has built could be toppled with ease. Santa Claus rally you say? Don’t count on it!

Peak “Greater Fools”?

The ratio of bulls to bears has never (that is ever) been higher according to (the perhaps ironically names) Investor’s Intelligence.

There are now more than 4x more bulls than bears and even more concerning, the only time “bears” have been lower than the current 14.3% was in the spring of 1987…

The short term indicators are still leaning heavily towards the sell side at the midday, but I would advise caution in taking a position because of the Fed’s cryptic utterances in hinting when the taper will begin and by how much. I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does WHEN it actually does something.

The longer 6 month outlook remains 40-60 sell until we can see what the Fed is actually going to do, simple as that. If we get some Fed tapering in December (17th. -18th. meeting) the markets will certainly react in a negative fashion, how much of course depends on much bond buying takes place. If the tapering begins in March 2014, like some believe it will, the markets are going to price that in by declining sooner. However, 74% of Bloomberg surveyed economists believe tapering will believe either in December or January as of 12-09-2013, but Fisher says it will take place in the first quarter. I am expecting weak to negative markets for the foreseeable future.

Members of the FOMC believe the US economy has shown signs of improvement, but they have assured short-term interest rates would remain low for quite some time to come. Alpari Market Analyst, Craig Erlam, said: “Many members of the Fed now appear eager to start winding down its asset purchases and are looking for ways to do it that will create the least disruption in the financial markets, such as setting simple thresholds for reductions, or even more simply, providing a timetable for tapering that is not data dependent.”

ADVFN reported, “The rally in question has been built on the back of the Fed’s promise of a stimulatory environment. If any catalyst points to the Fed giving up its accommodative stance, there is a danger of a pullback and near term support for the index lies around the 15,965, 15,890 and 15,804 levels.”

Personally, I think it could go a lot lower.

Also, many pundits have stated that we may have seen the top – but I wouldn’t count it as long as the Fed continues to hand out ‘Market Viagra’! I would like to see a blowout candle (shooting star) to verify a top along with heavy volume.

The DOW at 12:00 is at 15891 down 83 or -0.52%.

The SP500 is at 1790 down 13 or -0.71%.

SPY is at 179.42 down 1.34 or -0.75%.

The $RUT is at 1105 down 14 or -1.29%.

NASDAQ is at 4028 down 32 or -0.79%.

NASDAQ 100 is at 3491 down 23 or -0.66%.

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

How Oil Really Gets Priced

WTI oil is trading between 98.62 and 97.64 today. The session bias is negative and is currently trading up at 97.78.

Brent Crude is trading between 109.74 and 108.63 today. The session bias is negative and is currently trading up at 109.08.

Gold rose from 1253.39 earlier to 1262.67 and is currently trading up at 1259.80.

Here’s why copper has lost its indicator role

Dr. Copper is at 3.288 rising from 3.256 earlier.

The US dollar is trading between 80.05 and 79.82 and is currently trading down at 79.83, the bias is currently negative.

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

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Written by Gary