Written by Gary
Midday Market Commentary For 01-06-2014
More good news on the labor side of things and the markets react negatively pushing the averages down where the Blue Chips were down -0.35% and the small caps down -0.70%. The decline paused around 11:30 while investors considered the alternatives and watching WTI oil dropping well into the 93’s. An positive day for the markets has turned sour and a negative correction is looking more likely the event for this week as the averages mark the low point of the year.
By noon there was some improvement but isn’t expected to remain that way as the bears have pushed the bull out of the way.
It appears to investors this morning that the ‘Taper’ is still on for January and are jumping ship.
WASHINGTON (AP) – U.S. service companies expanded at a steady but slightly slower pace in December as sales dipped and new orders plunged to a four-year low.
The report suggests economic growth may remain modest in the coming months. The Institute for Supply Management said Monday that its service-sector index fell to 53 last month, down from 53.9 in November. Any reading above 50 indicates expansion.
A measure of new orders plummeted 7 points to 49.4, the first time it has dropped below 50 since July 2009. A gauge of business stockpiles also fell sharply. But a gauge of hiring increased 3.3 points to 55.8, evidence that services firms are adding more jobs.
That’s a good sign for December’s jobs report, which will be released Friday.
The short term indicators are leaning towards the hold side at the midday, but I would advise caution in taking any position during this volatile transition period.
The longer 6 month outlook still remains 40-60 sell until we can see what the effects are in this almost nothing start of the Fed’s ‘Taper’. By March investors should know how the taper is going to work out in relationship to the stability of the US financial markets and their ability to not to slide downward. For now, I am continuing to expect weak to negative markets for the foreseeable future.
Here is the quandary some investors have now. They have bet on the QE program to bolster their profits and knowing full well they may see some eroding of profits over the next few months, so what should they do? Start reducing positions now, my choice, or let profits ride a bit longer? I would be afraid that if a serious ‘Black Swan’ popped up, the market decent would wipe out a lot of profits. This ‘house of cards’ the Fed has built is fragile and would not take a lot to tear it down.
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 if it has been reduced somewhat! I would like to see a blowout candle (shooting star) to verify a top along with heavy volume to signify a market top.
The DOW at 12:15 is at 16433 down 38 or -0.24%.
The SP500 is at 1826 down 5 or -0.29%.
SPY is at 182.36 down 0.53 or -0.29%.
The $RUT is at 1150 down 6 or 0.52%.
NASDAQ is at 4113 down 19 or -0.46%.
NASDAQ 100 is at 3522 down 17 or -0.48%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been sideways and the current bias is negative.
WTI oil is trading between 94.59 and 93.57 today. The session bias is negative and is currently trading up at 93.67.
Brent Crude is trading between 106.74 and 107.96 today. The session bias is negative and is currently trading down at 106.84.
Gold fell early this morning from 1247.62 earlier to 1217.27 and is currently trading back up at 1241.40.
Dr. Copper is at 3.361 rising from 3.330 earlier.
The US dollar is trading between 81.08 and 80.75 and is currently trading down at 80.82, the bias is currently negative.
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Written by Gary