The Alternative Investor
  • Home
  • TRADING BLOG
  • Current Positions
  • Alternative Investor Strategy
  • ETFs
  • About Alternative Investor
  • Contact

Trading Blog          Thursday,  July 31,  2014

7/31/2014

 
MARKETS  UPDATE  (6:30 pm EST)

The Federal Reserve's Federal Open Market Committee (FOMC) concluded its monthly meeting yesterday (Wednesday) and released its policy statement, this time without an accompanying press conference by Fed Chairwoman Janet Yellen.  
The statement had no surprises and basically reiterated the Fed's policy of "staying the course" with the now familiar strategy of continued asset purchase reductions (QE tapering - another 10 billion) and maintaining near-zero short-term interest rates.  What seems to be making equity markets uncomfortable now is uncertainty about when interest rates will start to rise and confusion about what economic variables will trigger a rate rise by the Fed.  If the Fed continues its QE tapering of 10 billion/month, bond purchasing should end in October. The Fed's statement says that,
 "... it likely will be appropriate to maintain the current target range [i.e. near zero] for the federal funds rate for a considerable time [boldface mine] after the asset purchase program ends..." 
It also states that,
 "... The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time [boldface mine] warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run..."

I guess keeping interest rates low for  "a considerable time" and "for some time" is not specific enough to keep investors from getting the jitters. (Understandable since low interest rates are probably the main thing propping up the stock market now).  The DOW dropped 32 points yesterday but today plunged a whopping 317 points.  
In my last blog I stated,  "...if it [the DOW] continues to fall this week it may be headed towards the current cycle bottom, but that bottom may not get below the 16,400 area..."   It looks like this is happening.  Instead of a high in the first week of August (which I would have preferred), we are now headed for a low into that reversal zone.  There is strong support for the DOW in the 16,200 - 16,400 range so we may see a cycle bottom there shortly which could be a good place to buy.  Directional momentum in the DOW and S&P 500 has switched from 100% bullish to mixed bullish and bearish today, but, curiously, the NASDAQ, even though it took a bigger percentage loss, is maintaining its 100% bullish momentum.  This might be telling us that this correction is not going to be serious.  If the DOW starts breaking below 16,400, however, it could mean a more serious correction is underway.  For now, though, we will look for support near that level and a good spot to go long in the broad stock market, ideally next week.  Still on the sidelines.

Unlike the broad stock market, gold and silver seem to be following my "preferred" scenario of moving towards a significant low in the first week of August.  Gold dropped to $1282 today and silver to $20.39.  Short-term indicators still look bearish in both metals so we are on track for new lows.  There is support for gold in the $1270 - $1280 area. Silver has support just above $20, but there is another strong support level at $19.50.  These may be good price levels to buy next week.  On the sidelines and waiting to buy.

Not surprisingly, crude oil prices, which often follow the broad stock market, took a dive today and dropped to $97.72.  Because prices did not edge higher we did not get an opportunity to sell short.  As with the broad stock market, it appears that crude prices will be making a low instead of a high into the first week of August. 

Based on the cycle structure in crude charts it looks like this market is turning bearish.  This will be especially true if prices break clearly below $96.  Because we are in the middle of a timing zone for a likely reversal in crude, we may see a bottom to buy by the end of next week for a short-term rally.  However, if this market is turning bearish as I suspect, my longer term strategy will be bearish and I would be looking to cover long positions and sell short at the top of that rally.  Still out of this market.





Comments are closed.

    RSS Feed

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012

The Alternative Investor takes no advertising or incentives from any company, institution or investment that is discussed on the website.  Any trading and investing information presented is based on Alternative Investor's independent and unbiased research and analysis of current financial markets.

                                                                                                                                                            LEGAL and DISCLAIMER

All statements and trading/investment information on this website represent solely the personal opinion of The Alternative Investor based on information available at the time of writing and are intended for educational purposes only and are not a recommendation to buy or sell securities, commodities or currencies.  The Alternative Investor is not a licensed broker or financial advisor.  The Alternative Investor presents the trading and investing information on this site in good faith based on his own research into current financial markets but cannot and does not guarantee profit and does not guarantee against any financial losses that result from using this information.  All users of this website and the information presented within it assume full responsibility for their own personal trading/investing decisions and any losses that may result from them.

Trading and investing in any financial market may involve serious risk of loss.  For this reason all traders and investors should never place more money than they can afford to lose in any individual market.  The Alternative Investor monitors several markets and encourages a balanced distribution of funds among them (and others).  The Alternative Investor recommends consulting with a professional financial advisor before making any transactions with financial ramifications.  All trading, investing and financial transactions should always be made in accordance with the appropriate laws and legal regulations in your area of jurisdiction.

The Alternative Investor is an independent researcher and analyst and receives no compensation of any kind from any individuals, groups, companies or institutions discussed on this website.