Written by Gary
Midday Market Commentary For 12-18-2013
The Fed’s bewitching hour approaches and investors are getting cold feet as I watch the averages slowly melt into the market sunset. All the major averages are now in the red except the Blue Chips, but I expect to see them turn red shortly.
By noon the averages were showing weakness on low volume so I am not sure who is doing the selling, but we can blame the HFT computers anyway.
Just to remind anyone that is not paying attention there are some concerns that we might still be in a recession or at least the so-called recovery is slower than ‘crap’.
Despite yesterday’s exuberant spike in optimism from the NAHB sentiment index to 8 year highs, the delusion from reality appears to growing ever wider.
This morning’s “if we build them, they will buy’em” false headline spike in housing starts (seasonally-adjusted) is yet another delusional divergence as the mortgage applications index collapses (down 60% from 2013 highs) to a new 13-year low.
The short term indicators are leaning slightly 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 today 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 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.
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.” (low on 12-12-13 was 15,698) Personally, I think it will eventually go a lot lower. First stop will be in the 15,540 to 15,530 area from there is anyone’s guess.
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 15893 up 18 or 0.11%.
The SP500 is at 1784 down 2 or -0.13%.
SPY is at 178.42 down 0.24 or -0.13%.
The $RUT is at 1117 down 1 or -0.14%.
NASDAQ is at 4004 down 19 or -0.47%.
NASDAQ 100 is at 3449 down 20 or -0.58%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been negative and the current bias is down.
WTI oil is trading between 97.30 and 98.25 today. The session bias is negative and is currently trading down at 97.54.
Brent Crude is trading between 107.81 and 109.67 today. The session bias is positive and is currently trading up at 109.34.
Gold fell from 1236.58 earlier to 1227.19 and is currently trading up at 1230.00.
Dr. Copper is at 3.319 rising from 3.298 earlier.
The US dollar is trading between 80.34 and 80.15 and is currently trading up at 80.22, the bias is currently negative.
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Written by Gary