Live Market Commentary For 04-17-2012

April 17th, 2012
in Gary's blogging


Market Close And Commentary:

This morning President Obama announced plans which were aimed at increasing oversight of oil markets and cracking down on price manipulation. So what happened? Nothing, just what did anyone think would happen? Brent went from a high of 119 to 118.65 and WTI oil went from 105 to 104.25. Senate Republican leader Mitch McConnell said earlier today: “It probably polls pretty well, but I guarantee it won't do a thing to lower prices at the pump.”

The markets were up all day with a brief sell-off at the close. What this means is beyond my crystal ball. If the trend of closing down and opening up followed by a up day, then tomorrow will be a down day. Whatever, I am sure DaBoyz and the 'Five-Fingered-Financiers' working the midnight shift will have a surprise awaiting us tomorrow morning.

The sell-off red volume was light to moderate and obviously profit taking from DaBoyz. The DOW futures are already off 50 points after closing at 13115. The 500 closed at 1390 and $RUT closed at 810.63. What is important here is what didn't happen.

Follow up:

Looking at the charts, you can see that the resistance of the 500, SPY and the $RUT poked through the resistance, but pulled back and closed below. The DOW did stay above its resistance, but the large caps are not going to lead the market. The small caps are the ones to watch. Although they showed the most advanced, $RUT +1.57% to the DOW's +1.50%, it isn't enough to draw parallels. Look for continued weakness even if the markets move up.

The 500 at the close.

The Russell 2000 at the close.

The DOW at the close.

The SPY at the close.

The indexes at the close.

Lastly, IBM came in with first-quarter earnings per share that beat Wall Street’s expectations, though revenue came in a bit shy. Big Blue earned $2.78 an adjusted share on revenue of $24.7 billion. Analysts were expecting earnings of $2.65 a share on sales of $24.8 billion. The stock is off about 2% in late trading.

Midday Market Comments:

The volume finally turned to green and moderate to heavy as the 'cab drivers' of the financial world jump on the train to nowhere. The Only Fools Bigger Than Those That Are Playing Are Those That Are Watching

The SP500 and the Russell 2000 ran up to a critical resistance and stopped dead in their tracks at 1388 and 813 respectively. The DOW continued its climb to 13089, but it appears the small caps are the canary in the mine signaling trouble ahead.The volume has fallen to anemic levels leaving the HFT algo machines to alter the market. Earlier moderate to high volume have been green, but these buyer appear to be the Johnny-come-lately folks that have been drawn in by the good news being reported by the 'Main Stream Neurosis Broadcasting Company' (MSNBC).


The markets are powering higher as traders react to a round of strong corporate earnings and easing concerns about the debt crisis in Europe. Gains are broad-based, with energy, industrial and financial shares leading the way. The Dow is up 123 points, or 0.95%, and the broader S&P 500 is 0.76% to the upside.”

Dr. Copper did rise to 3.64 this morning, but trend is still down as seen in the chart below. The Chinese GDP has fallen 8.1% and so has their use of copper; a bellwether of thing to come. (Read The Article)

Market opening comments:

The DOW jumped up to 13045, the SP500 up at 1379, $RUT up at 806.94, SSO up at 56.03, SPY up at 138.00. GLD dropped to 160.38 and SLV remained steady at 30.90. The dOW went through a resistance zone, but doesn't mean much as the $RUT and the SP500 are lagging behind. I agree with Leavitt's call below.

The opening green volume was light to medium not giving any credence to the rise and looking weak. The 10 minute volume turned to red and very light indicating the action for the first 45 minutes for the day is over in just 10 minutes.

The 20 minute volume is red and it looks like we are going to sell the news. The 30 minute volume is red and falling.

Premarket Action:


Many breadth indicators had dropped enough to support a bounce but had not dropped to “washout” levels yet.

Yesterday’s put & call open-interest data revealed a need for the market to move up the next couple days if it’s going to cause max pain.

The market seems to be in a topping process, but we’ve seen this enough times the last couple years that we can’t go all-in on the short side. Here’s the 60-min S&P chart. A long support trendline was broken, and now a rising wedge is forming. A measured move takes the index down to 1330, but I’m still eying 1340 as a target per the daily chart I posted yesterday.

My bias is to the downside, but I’m still playing this defensively. Even though there are very few, if any, good long set ups, the bulls deserve the benefit of the doubt because the trend has been up for most of the last three years.”

The SP500 reached 1373 from a low of 1360 this morning.


Disappointing US data this morning with Housing Starts and IP numbers missing forecasts. Not much a reaction in $SPX futures, though.

US Industrial Production down at 0.0% MoM in March vs 0.3% expected. Capacity Utilization up at 78.6% vs 78.5% expected.”

The futures started out with the SP500 up 8.30 or +0.61%, NASDAQ up 14.25 or +0.53% and the DOW up 72.00 or +0.56%.

WTI oil climbed from 102.65 to 105.03 and Brent is trading in a very tight range between 118.20 and 118.64. Gold climbed from the early morning lows of 1650 to 1653.

WTI Surges Over $105 Ahead Of Margin-Hiker-In-Chief Speech


"U.S. housing starts slid 5.8% in March to a 654,000-unit rate, missing expectations of a 705,000-unit rate and marking the lowest level since October 2011. Housing permits rose 4.5% during the month to a 747,000-unit rate, topping estimates of a 710,000-unit rate."


US home starts (work starting on new houses) fell unexpectedly in March, according to the Commerce Department. They slipped 5.8pc to a seasonally-adjusted annual rate of 654,000 units. But, to sugar the pill, new permits for home construction surged by 4.5pc.”


A longer-term chart of housing starts (from Bill McBride) shows they have improved a bit from the depths of the financial crisis, but remain well beneath the levels in the past we would associate with a recession.“


U.S. Housing Starts Fall To 654,000 In March, Below Expectations

New housing construction in the U.S. dipped unexpectedly in March, but an equally unexpected jump in construction permitting offers hope for the future of the beleaguered housing market. According to figures released Tuesday by the Commerce Department, new privately-owned housing starts came in at a seasonally adjusted annual rate of 654,000, a 5.8 percent drop from February levels.

Additionally the February figures were revised down slightly from the 698,000 rate initially reported to 694,000. The March rate of new housing starts comes in well below the expectations of most economists, who had predicted a slight uptick to a rate of 700,000.“


European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.31% while Germany's DAX is up 1.19% and London's FTSE 100 is up 0.90%.”

The Asian markets closed down with Hang Seng down -0.23%

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