Bank of America technician Stephen Suttmeier explains why weak seasonals and tactical complacency could mean trouble for stocks heading into next month. » Read More
It's the market's most important question. And this expert says that traders are getting the answer all wrong.
Now that the Federal Reserve has shocked the market by maintaining the pace of its asset purchases, the market desperately wants to know when the Fed will, in fact, begin to taper its quantitative easing program.
Some speculate that the Fed will announce tapering in its December statement, while others contend that tapering could come as soon as October. But David Robin, co-head of financial futures and options at Newedge, makes a strong case that a tapering announcement is still further away than many think.
"I don't think they start tapering until the early part of 2014," Robin told CNBC on Tuesday's "Futures Now."
For Robin, October is out of the question. First of all, if economic conditions don't yet support a reduction of quantitative easing, then they still won't support tapering in a few weeks.
"Even if you get a strong payroll number in the early part of October, you're still going to have an above-7-percent [unemployment] rate, you're still going to have smoothed-out nonfarm payrolls growth below 200,000," Robin said. "That is not the recipe for removing tapering."
Plus, there is a logistical problem with tapering in October. As Robin points out, there is no press conference scheduled to follow the Fed's Oct. 30 statement. That means that Fed Chairman Ben Bernanke wouldn't be given a chance to ease the market's concerns following any tapering announcement.
Equity markets have been trading heavy for several days, despite the taper delay and some decent economic data. This means the market is probably due for a corrective pause.
Yes, the good headlines outnumber the bad. The Federal Reserve is still behind this market in a big way, with Chairman Ben Bernanke refusing to slow the pace of asset purchases. And it appears very likely that Janet Yellen will be the next Fed chair, which will mean more easy policies going forward.
(Read more: The million-dollar bet that markets will get rocky)
Now that gold's Fed pop has subsided, look for market to retest recent lows.
Everyone will remember last week as the one in which the Federal Reserve failed to taper asset purchases. Gold shot up as a result. So you might be surprised to learn that from the electronic open on Sept. 15 to the electronic close on Friday, gold actually traded lower on the week.
(Read more: Gold bulls undeterred as stimulus-led rally fades)
In a way, this is exactly as it should be. Because on first blush, the Fed's decision not begin its exit from quantitative easing appears bullish for gold. But the reality is that this does not change the scope nine, 12, or 18 months out, when the chances of hawkish Fed action still appear highly likely. And that's what you see reflected in the gold market now.
(Read more: Why Bernanke may have ended gold's bear market)
Gold initially rallied after the Fed announcement on Wednesday, and extended its highs into Thursday, when it reached $1,375.40 in the December futures. With major resistance above at $1,379 and $1,383 to $1,384.10, gold never even had the strength to reach major resistance levels. And once gold moved below the key $1,352 level on Friday, the party was over. We believe that much of the initial reaction to the Fed was short-covering and stops getting hit at the $1,325 level, rather than fresh buying.
Gold has had great week. So is this the start of a sustained move higher, or just simple short-covering? You'll have to watch Friday's close to find out.
Gold traded to a low of $1,352.10 on Thursday night after stalling out and failing to make new session highs against $1,375.40 in Thursday's session. The level just below there, $1,374.30, has served as resistance a few times over, and now there is a major trend line meeting the market at that level.
This adds to the headwinds, and helps explain why the market kept stalling out around $1,375 on Thursday.
But it wasn't for lack of trying—gold twice made a run at the highs. Gold reached $1,375.30 the first time, and the second attempt was right ahead of the floor close. When the market caught resistance at the same level, it began to show signs of failure, sending gold into the mid-$1,360s.
(Read more: Gold recovery? Here's one way to play it)
Gold was able to hold support at $1,362.80 on Thursday and Thursday night. But on Friday morning, it chewed through that level, and ran stops below Thursday's low of $1,358.50.
Gina Martin Adams is sticking to her guns.
The Wells Fargo strategist has been bearish on stocks all year, even as she watched the S&P 500 add 21 percent. And on Thursday's "Futures Now," Adams reiterated her call that the index would close out the year at 1,440.
"Our target is based on fundamentals," Adams insisted. "We're basing our target on typical valuation measures, given the level of interest rates and also on earnings forecasts. And that's why our target is relatively low."
In fact, "low" is somewhat of an understatement. Adams' target implies that the market will drop 16 percent in little more than three months, erasing everything that stocks gained after the year's first day of trading. This makes her one of the lone bears on the Street.
So what could produce such a dismal fourth quarter for stocks?
First of all, Adams is highly skeptical about the rally that the market has enjoyed thus far.
"It's all about emotion at this point. The entirety of the S&P 500's increase this year has come via the multiple," Adams said. "It's been simply through the amount that investors are willing to bid up the value of the future earnings stream."
Indeed, the S&P 500's price-earnings multiple has risen from 17 on Jan. 1 to nearly 20. That means the market has largely been rising due to investors' willingness to pay more for those earnings.
(Read more: Robert Shiller to bulls: 'Don't expect miracles')
When Ben Bernanke announced that the Federal Reserve would not reduce the pace of its $85 billion-per-month quantitative easing program, gold greeted the news with open arms. The yellow metal promptly added more than $50 after Wednesday's news to hit the highest level in a week.
But Peter Boockvar says we've only seen the beginning of gold's response to the news.
"The two-year bear market for gold is over, and the uptrend is going to resume," said Boockvar, chief market analyst at the Lindsey Group.
(Read more: Will gold make a run for $1,500?)
"Gold is your defense against your policies of the Fed, and in my eyes, the Fed lost a lot of credibility today," Boockvar told CNBC.com. "Just when you thought the Fed was very dovish, they pull an even more dovish act, and many in the markets were blindsided."
For Boockvar, gold's post-announcement move was "predicated on the idea that the Fed is going to repeat the mistakes of the mid-2000s, and way-overstay its welcome with QE." He owns gold, because he thinks that thesis will end up playing out.
CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.
Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.