Market Commentary: Averages Turn Tail And Melt Down On Increasing Volume

Written by Gary

Closing Market Commentary For 01-31-2014

The afternoon markets melted up on falling volume and the on rising volume stared to melt down. Not a very comforting signal in ‘hoping’ the averages will continue to climb higher in 2014.

So ends January, 2014 and according to Wall Street folklore, January puts in place how the rest of the year will behave – not very encouraging is it?

By 4 pm the closing bell left the averages well into the red with the EU having all sorts of problems and the emerging markets becoming more intense. I would say that is a recipe for disaster and it could be just weeks away.

What will Monday bring us I wonder? Being like other pundits, I like to make predictions and mine is that for the next several weeks we will see another channel form. More sideways action and more wondering what the hell is going to happen next in this casino market. Monday should be up I would think.

Theft Is Deflationary – Especially The Crony-Capitalist/State Kind

There is a causal connection between systemic theft and deflation. To all those terrified of deflation (for example, central bankers and their cronies holding trillions of dollars in phantom assets and illusory collateral), the solution is obvious: get rid of systemic theft.

But since those terrified of deflation are at the top of the monopoly-power thievery pyramid, that is asking the impossible: for the thieves to relinquish their power to steal.

The short term indicators are leaning towards the sell hold at the close, but I would advise caution in taking any position during this volatile transition period. As it stands right now I do not have a clue what Mr. Market has up his sleeve as the bulls and the bears both have convincing arguments why the markets should go this way or that way.

There will be pressure to climb higher if only to test the previous Blue Chip highs, therefore I do not foresee the markets descending below the new sideways channel between 1809 and 1773 for the SP500. (However, I said the same thing about the support at 1809 – and that is long gone – take my guesses for what they are worth.) The latest question investors have is, will it go below the next support at (SP500) 1773 and most importantly, close there? Below that and we could be in a serious correction mode and all bets are off on how deep it can go. More likely this is the start another sideways channel that may drag on for a month baring any Black Swans.

Also, have to watch out for these overnight negative World news announcements which many are rumors and make sure you have stops in place if you are not in a position to monitor the markets.

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.

Again, I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does over the next 4 months. Removing 10 billion from the bond buying program each month isn’t going to do much in reducing the QE program in the beginning, but halving it by March 2014 certainly will – IF – the Fed’s continues the taper program – so far, they are moving ahead in spite of the emerging market worries.

My instincts tell me that the Keynesian’s are going to be reluctant to stop their grand financial experiment and will want to taper the taper within the next several months – especially if the employment rate increases. Also, watch for QE5 when Obamacare starts drags the economy down into trouble in 2015.

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.

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The DOW at 4:00 is at 15699 down 150 or -0.94%.

The SP500 is at 1783 down 12 or -0.65%.

SPY is at 178.38 down 1.05 or -0.59%.

The $RUT is at 1131 down 8 or -0.74%.

NASDAQ is at 4104 down 19 or -0.47%.

NASDAQ 100 is at 3522 down 10 or -0.30%.

$VIX ‘Fear Index’ is at 18.36 up 1.07 or 6.25%. Bearish

The longer trend is up, the past months trend is sideways, the past 5 sessions have been negative and the current bias is negative.

How Oil Really Gets Priced

WTI oil is trading between 98.36 and 97.13 today. The session bias is negative and is currently trading up at 97.47.

Brent Crude is trading between 108.02 and 106.33 today. The session bias is negative and is currently trading up at 106.39.

Gold rose fell 1254.63 earlier to 1239.73 and is currently trading down at 1244.10.

Analysts forecast a corrosive year for copper prices

Dr. Copper is at 3.193 falling from 3.230 earlier.

The US dollar is trading between 81.08 and 81.42 and is currently trading down at 81.36, the bias is currently sideways and mixed.

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Written by Gary