May 1st, 2012
in Gary's blogging
After Market Close Commentary:
The DOW and the 500 closed in the green, however the Russell 2000 turned red. The DOW closed at the highest level since the late 2007. (And we all know what happened shortly after that.) The aftermarket action had a heavy green volume spike that turned red about as fast as it was green. Hard to tell what caused the after market reaction as there were no big winner's nor big loser’s in the Q1 Financial reporting.
The sell-off was a big on volume wise and may carry over to tomorrow opening. The SP500 futures spiked up to 1412 and then fell to 1400. WTI oil moved from it 104 level to 106, supposedly because of the better than expected manufacturing data. Brent on the other hand stayed in its comfort zone of 119 where it has resided for the past several sessions. Gold inched it way down to 1661 and copper fell from 3.85+ to 3.84. (At 4:46 the heavy sell-off continues but indexes trade within a very tight range.)
The 500 at the close. The next resistance is within reach, but can it go there?
The $RUT at the close. The candle which I am reluctant to call does not bode well for further gains. But as with all candles they have to be confirmed on the next day. Really a crazy market with many conflicting signals.
The DOW at the close. As mentioned above this is the highest closing since the late 2007.
The Indexes at the close.
After moving sharply higher in morning trading on Tuesday, stocks gave back some ground over the course of the afternoon but still saw some strength on the day.
The markets benefited from a positive reaction to an upbeat report on national manufacturing activity. The major averages pulled back well off their highs for the session but managed to end the day in positive territory.
The Dow rose 65.69 points or 0.5 percent to 13,279.32, the Nasdaq edged up 4.08 points or 0.1 percent to 3,050.44 and the S&P 500 climbed 7.91 points or 0.6 percent to 1,405.82.
Despite the pullback seen in the latter part of the trading day, the Dow still finished the session at its best closing level in over four years.
The rally seen in morning trading came on the heels of the release of a report from the Institute for Supply Management showing that activity in the U.S. manufacturing sector unexpectedly expanded at a faster rate in the month of April.
The 10 am leap in green volume was almost matched by red volume around 10:45. The green to red is about 2 to 1, but the bears obviously took some profits off the table. The market highs are still where they were at 10:30 and volume has once again trickled to anemic levels. The pause is keeping many of wondering what is going to happen next as we move into the top of the 500's right shoulder.
Just when I though the day's session was rounding out DaBoyz melted it up further keeping everyone guessing. I thought for sure the brief profit taking this morning was a sure sign of a contraction starting, but no, Mr. Market sure likes to keep everyone off guard.
Here is my read for noon.
The market volume has fallen off giving DaBoyz the green light to melt the markets up as they usually do, only to succumb to profit taking towards the session end. The 500 reached 1415 just below its resistance at ~1418. The $RUT climbed to 830.10 and just below its first resistance of 832. The top line resistance for $RUT, that would compare with the DOW and 500, is around 848 and only 19 points to go.
The small caps are lagging behind the large caps and that is a sign of market weakness in my view. This should be viewed as a cautionary flag regarding additional market advances. The MACD is starting to reverse and my (one of the many) bellwether indicators SSO hit its resistance at 58.94, backed off and is reversing as I type.
For a hedge I bought some FAZ at 20.26 earlier when I though the market was reversing. It dropped as low as 20.04 surprising me a bit as it is starting to show its 3X potential. My thinking is that this market has all the right karma to show us a correction soon, very soon in my book. If I am wrong I'll cut my losses. If I am right, I'll make a small profit.
I still don't trust this market and am playing my cards VERY close to my vest dipping my toes just enough to feel the temperature. The volume has been picking up over the past week and that is encouraging as it is impossible to trade this casino without volume.
The game plan for the moment is to cover my FAZ by the close as there is every indication the market lagging Indexes could melt up to their resistances tomorrow and THEN back off. Again this makes some leap of faith assumptions the market is more on the bearish side than the bulls.
Mid Morning Commentary:
The 10 am reports moved the markets up slightly when the ISM Survey rose to 54.8% from 53.4% in April, 53.0% was expected. The Construction Spending MoM rose sightly to -0.1% from -1.4% in April, although +0.5% was expected. The ISM Prices Paid (April) were the same as the last report at 61.0% although a lower reading was expected ay 59.0%. I didn't see this as extraordinary news, but Mr. Market did moving markets up slightly.
The green volume was very heavy during the initial rise but obviously market movement was offset by profit taking as the markets did not move up in proportion to the heavy volume. Not a good sign for an upwards continuation.
The DOW moved up to 13292 which is just above its resistance at 13264, the 500 moved up to 1410 and the Russell 2000 moved up to 826.39 slightly edging out its highs for the past 2 sessions.
By 10:30 the markets were still inching up but at a much lower rate with green volume falling off dramatically. I suspect that before the day is over we will see a pull back of sorts. It is going to take some really decent reports during the rest of the week to pull off an upset and foul the bears at large.
Market Open Commentary:
Markets opened lower to flat and much like Friday and yesterday, not much is happening, at least in the first few minutes. At the opening bell the markets languished without direction and the bias was negative a bit, just like yesterday. The single largest difference is that the opening volume is lower than it was yesterday.
At the opening the DOW is flat at 13198 having closed at 13198, the 500 is flat at 1396 closing on yesterday at 1396, the $RUT is down slightly at 817.53 closing on yesterday at 818.43.
Within 5 minutes the 'Dippers' were out picking up what they can in VERY small numbers causing the markets to turn green on low volume and up several points.
The first 10 minute volume was green and extremely low, actually anemic. Most likely waiting for the 10 o'clock financial reporting of the ISM Index and the Construction Spending. The 'Dippers” tried to keep the markets afloat, but it is obvious the cash crowd is in the wings waiting for the 10 am news.
The trading between the bears and the bulls was in a very tight range for the first 15 minutes measured in single digit points.
By 8:45 the markets were mixed and very light volume. The DOW was off -12.75, the 500 was up +0.12 and the Russell 2000 was up +0.52.
The futures are set to open flat with the DOW at +10.00, the NASDAQ at +1.75 and the SP500 at + 0.50
Most markets in Asia and Europe are closed for May Day (today). The London's FTSE 100 opened with moderate gains as some well-received results from Lloyds and Imperial Tobacco provided a boost according to ADVFN Newsdesk.
Oil futures fell on reports that China is considering supporting Iranian oil production by providing sovereign guarantees. Treasuries rose as slower growth in the US and the growing threat of a possible eurozone-wide recession spooked investors into the safe haven of government bonds. Yield on the 10-year fell 0.02% to 1.91%.
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Written by Gary