Bears Still Control The Markets Bulls Run For Cover

July 12th, 2012
in Gary's blogging

Closing Market Commentary For 07-12-2012

Markets recovered nicely from the early morning session in an unpredictable jerky fashion making trading decisions impossible with mostly low volume. Markets remained by and large in the red with the DOW only off -0.06% at 2:15. RRR** remains in the no-mans land today and it is difficult to forecast swing trades even though my 30 day barometer needle remains in the bearish zone.

As it was mentioned early in the session, the markets were expected to melt up from the the morning lows and they did only to end up under heavy profit taking during the last 30 minutes. Most issues and indexes dropped just below their opening numbers still placing them below yesterday's close. The 'dippers' kept the numbers falling further than they did, but the bears outnumbered the bulls and will probably will continue the trend as the bulls run for cover.

Follow up:


US monthly budget deficit widens to $59.7 bln in June from $43.1 bln a year ago. $60.0 bln deficit expected.

The DOW at 4:00 EST closed at 12573 down 31.26 or -0.25%.

The 500 closed at 1334 down 6.69 or -0.50%.

The $RUT closed at 789.62 down 2.64 or -0.33%.

SPY closed at 133.50 down 0.65 or -0.48%.

The trend is down and the current bias is neutral to bearish.


WTI oil is at 85.79 trading between 86.22 and 84.25 and the bias is positive.

Brent crude is at 100.78 trading between 101.40 and 98.60 and the bias is positive.

Gold is down today at 1572, trading between 1577 and 1555 with a positive bias.

Dr. Copper is at 3.42 up from 3.39 earlier.

4 Little Known Factors Driving The Price Of Copper by CommodityHQ

The 500 at the close.

The DOW at the close.

The SPY at the close. Interesting, but still in the middle of nowhere and could move easily in either direction in the very near-term.


BTFD No More?

In reality, it is little surprise that behaviorally we see risk markets recover from precipitous declines - we are an optimistic bunch of knife-catchers after all. Credit Suisse's Global Risk Appetite index uses a number of factors to track the herd's shift from euphoria to dysphoria, and uses those panic levels to BTFD.

The typical response function is around a 230 day upswing in animal spirits before reality sets in from now-euphoric levels. It seems that from the April 2011 'panic' levels in their index, we are about a month away from it being as good as it is going to get and the BTFD'ers will perhaps notice from the chart below that as time has gone on (from the '82 recovery to the current recovery) that the response function has had diminishing potential - as we are very near to Peak Recovery.

Starting out tomorrow morning we have the Producer Price Index Ex Food & Energy reporting in at 8:30EST and that should set the tone for the opening at least. At any rate not much will probably happen until The U of M at 9:55 pops up. At that time we will most likely see some volatility even if the markets don't move much. The bulls out there VERY MUCH want to move the markets up, but the unfavorable mess the EU is in keeping the markets from rising.

First column is what is expected and second is the last report.

** RRR = Risk Reward Ratio

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Written by Gary

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