Written by Gary
Closing Market Commentary For 12-18-2013
When the FMOC announced its tapering plans starting January 2014, at 2 pm, the markets went bananas at first dropping -0.50% and then climbing over 1% for the Blue Chips on moderately heavy volume.
By 4 pm the averages were surging with the Blue Chips up 1.85% new highs for the SP500 and the DOW. Volume did not seem to match the investor euphoria and it remains to be seen if these new highs are going to hold.
As so it goes. We have some winners and some losers today, but my first thought was this a great shorting moment, but then I am not a gambling sort of guy. It remains to be seen if we test the previous highs again tomorrow, probable, or start sliding! There are many indicators that we have seen the last big push, but knowing Mr. Market, I do not believe we have heard the last of the bulls.
WASHINGTON (AP) – The Federal Reserve says it will reduce its $85 billion a month in bond purchases by $10 billion starting in January, citing a stronger U.S. job market. And it says it will take further steps to reduce the pace of the purchases next year if that improvement continues.
The reduction is a signal that Fed policymakers are ready to ease their massive support for the economy provided since the Great Recession. The bond purchases have helped keep long-term interest rates low to encourage more borrowing and spending.
To cushion to impact on financial markets, the Fed strengthened its commitment to record-low short-term rates. It says it plans to hold its key short-term rate near zero “well past” the time when unemployment falls below 6.5 percent.
The short term indicators are leaning slightly towards the hold side at the close, but I would advise caution in taking a position as the market euphoria is an unknown factor at this point. 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. Well the Fed did something and now we wait until the dust settles. The markets shooting upwards caught some us by surprise, but not unexpected and that is why we sit on our hands.
The longer 6 month outlook still remains 40-60 sell for the time being.
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’, even at a reduced rate! As for top, I would like to see a blowout candle (shooting star) to verify it along with heavy volume.
The DOW at 4:00 is at 16168 up 293 or 1.84%.
The SP500 is at 1784 up 30 or 1.66%.
SPY is at 181.62 up 5 or 1.71%.
The $RUT is at 1134 up 15 or 1.33%.
NASDAQ is at 4070 up 46 or 1.15%.
NASDAQ 100 is at 3510 up 40 or 1.16%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been negative and the current bias is positive.
WTI oil is trading between 97.30 and 98.25 today. The session bias is now sideways and is currently trading up at 97.89.
Brent Crude is trading between 107.81 and 109.67 today. The session bias is now sideways and is currently trading up at 108.33.
Gold rose from 1227.16 earlier, after the FMOC meeting, to 1243.43 and then fell to 1215.69 and now is currently trading up at 1218.16. The bias is negative.
Dr. Copper is at 3.317 rising from 3.298 earlier.
The US dollar was trading between 80.34 and 80.15 before the FOMC meeting. After the minutes were released gold fell to 79.68 and then promptly skyrocketed to 80.70 and is currently trading up at 80.58, the bias is currently positive. (Very bearish for the stock market.)
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Written by Gary