May 2nd, 2012
in Gary's blogging
Moderate volume on the close as the afternoon melted up. The DOW closed at 13268 just below its resistance. The SP500 closed at 1402 2 points below yesterday's close. The $RUT closed at 818.60 closing yesterday at 815.59
The markets are weak but depending on the news will decide if they go up or down tomorrow. Like a lot of other investors I am trying to read the tea-leaves which are scattered and not making a lot of sense.
Noon Market Commentary:
Markets are mixed and going nowhere on light volume. The DOW still in the red for the day is at 13253, the 500 is in the red at 1401 and the $RUT is in the green at 816. The DOW is just below its resistance, the 500 is just above its support and the Russell 2000 is somewhere in between.
Low volume days are the worst in that any direction is usually up after the European markets close. I won't DaBoyz today, but you know how I really feel.
The European markets closed mixed The CAC 40 gained 0.42%, while the FTSE 100 led the DAX lower. They fell 0.93% and 0.75% respectively.
Article in Seeking Alpha this morning should be a good afternoon read.
Sell In May - Is This Year Different? by Josef Friedman
“Advice to hold this year may well be correct, but I don't see a compelling case to have the additional risk exposure.“
Josef goes on to say in the comments area:
“There have been numerous discussions of whether to "Sell in May" this year. My personal impression is that it is probably better to play the odds, especially if the odds favor reducing risk.
Advice to hold this year may well be correct, but I don't see a compelling case to have the additional risk exposure.
Selling in May does better for small caps than large caps
From 2003 to 2007
Buy and Hold returns 77%
Sell in May returns 149%
From 2003 to 2012
Buy and Hold returns 108%
Sell in May returns 270%
The fact that gains increase from the shorter period to the longer period indicates that the strategy is robust. Similar to the figures I mention above -
22 of the 161 securities did better with Buy and Hold than Sell in May; 50 of the securities showed a loss with Buy and Hold; None of the securities showed a loss with Sell in May.”
zerohedge ITALY NEW CAR SALES FELL 18% IN APRIL VS YR AGO. Bulish for horses.
Mid Morning Commentary:
Rated low, the April ISM New York came in lower at 61.2 versus 67.4 previous and had little effect on the markets.
The 10 am USD Factory Orders (MAR) came in FALL 1.5% Vs. 1.6% decline that was predicted. The previous gain was revised to 1.1% from 1.3%; ex-transport remained unchanged.
The markets declined as one might think, but not much, leaving room for a possible melting up later today. Volume was light and red and more than the opening green volume, the DOW moved below its support, the 500 is resting on its support for the 3rd. Session in a row and the Russell 2000 opened below its support and 50 day MA.Markets appeared to recover some after digesting the news but remained depressed at the opening levels and melting with a negative bias. By 10:30 the markets decline picked up speed confirming its earlier lows for the morning and paused.
This is an obviously news driven market and unless your crystal ball is clear enough to see into the future, stay clear of swing trading. My readers know how I feel about going long – DON'T! The markets are weak and yesterday's sell-off in the after market was at least 5 or 6 times the volume since January is just another signal of late to curb your portfolio buying and start looking at the short ETF's.
Sure wished I had kept my FAZ from yesterday as it is up to 21.41; a nice 1.15 points. The bottom line is that I banked a profit in my toe dipping venture.
Market Open Commentary:
Markets opened lower and much like the past 3 sessions, not much is happening, at least in the first few minutes. At the opening bell the markets fell as expected. The volume was red the turned green as the dippers jumped in. One thing to note is that the aftermarket yesterday had the heaviest red volume in months as I suspect the funds are selling. Not a bad strategy at this point. There is an old saying, "There is nothing wrong with cash. It gives you time to think." Robert Prechter Jr.
At the opening the DOW is down at 13277 having closed at 13279, the 500 is at 1396 closing on yesterday at 1405, the $RUT is down slightly at 809 closing on yesterday at 815.
Like yesterday, within 5 minutes the 'Dippers' were out picking up what they can in VERY small numbers causing the markets to turn green on moderate volume.
The first 20 minute volume was green and extremely low. Most likely waiting for the 10 o'clock financial reporting of the USD Factory Orders (MAR). The 'Dippers” actually bolstered the markets a bit keeping them afloat.
The trading between the bears and the bulls is in a very tight range for the first 15 minutes measured in single digit points for the Russell and SP500.
By 8:45 the markets were mixed and very light volume with a negative bias. The DOW was off -50.10, the 500 was off -6.69 and the Russell 2000 was down -3.68.
At 9 AM
Agree with Leavitt in that trading is still not where it should be. The 3X ETF are still way off their mark resulting in trades that leave the risk/reward ratio leaning in the risk side. Markets are leaning towards a moderate decline matching the afternoon closing level of yesterday. Gold has moved down to the 1653 area while Brent lost a point is now back in the 118 zone.
“Trading has not been easy lately because moves haven’t lasted. Dips get bought, rallies get sold…no move has legs, so we have to be much less aggressive with our entries and ahead of the curve taking profits when they’re available. Until the market can break out of its funk, there’s no sense letting a profit turn into a loss or letting a loss grown.”
The BOE dove Fisher said that QE is still on the table, when are they going to learn. Dailyfx reports that “Italian and Spanish equity markets killed - again - right now. MIB -2.50%, IBEX -3.06%.”
“It is hardly rocket science that Europe will continue to drag on the world. The only question is how long before this nexus of global trade drags everyone else down, because as hard as they try the US and the BRICs simply can not pull away from the tractor beam of the European black hole.”
“Spain's IBEX has now plunged more than 3pc, with banking shares leading the dive. Banco Santander stock dropped 4.22pc, BBVA slumped 4.99pc and Banco Popular slid 5.55pc.
For a while the eurozone crisis died down, giving many hope that a slow and steady recovery could finally begin. But it's back with a bang, writes Jeremy Warner.
The eurozone crisis is back with a bang, with the pain, once again, most visible in Spain. The Spanish IBEX is being hammered on the latest PMI data, which points to an ever deepening recession. But it's not just Spain. The data on the eurozone labour market and manufacturing sector as a whole is appalling, with the recession now manifestly metastasising out from the euro area periphery to the core. Even the German unemployment rate is now rising.”
Premarket Comments And Analysis:
The premarket moved sharply down after the ADP employment report showing that it showed the private sector only added 119,000 jobs in April, significantly fewer than the 177,000 jobs expected. The SP500 went from 1404 to 1392 immediately.
WTI oil was at 105 prior to the announcement and along with Brent (119) didn't move with this employment news. Gold did move up slightly to 1658.72.
The premarket DOW indicates -57.00 and the NASDAQ is -15.50.
“More on ADP report: Private service-providing sector gains 123K jobs. Manufacturing employment loses 5K jobs, the first decline since September and not jibing with positive PMI surveys. Construction employment off 5K jobs, the first decline in 7 months; perhaps payback for gains seen during the mild winter.”
Asian markets all closed up in the green with Hang Seng closing at +1.30%. The European markets are mixed today. The CAC 40 is up 0.67% while the DAX gains 0.12%. The FTSE 100 is off 0.64%.
I sold my FAZ last night for a 0.29 profit, wished now I had kept it overnight but I still don't trust the markets.
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Written by Gary