July 17th, 2012
in Gary's blogging
Mid Morning Market Commentary For 07-17-2012
Heavy profit taking occurred right after the market opened as investors regarded the financials this morning didn't provide enough support to believe in a robust recovery. Then Bernanke's prepared remarks were published and the markets went south in a hurry showing very heavy red volume. Bernanke is speaking this morning and is currently hammering home the point that US fiscal policy is misaligned and that's contributing to shaky economic picture.
In yesterday's article, I See A Bear, And It Is Coming To A Market near You , has now become required reading for my followers. Pay heed to what is written there as the elevator door to market hell may have just opened. Follow up:
Follow up:Stocks turned south Dr. Ben put the onus for additional QE and more on Congress to clean up the fiscal mess. Markets fell further because additional candy from the Fed is now further out of reach and has disappointed those bulls that were expecting more. I think I have been saying for the past 3 months that the FED WILL NOT provide more stimulus until next June at the earliest.
The RRR** is improving as I type, but use caution as it is still very narrow and not that conducive to profitable trading. Swing traders may want to dip their toes into some small positions but volatility could change your position into a sour one quickly as this morning opening changed.
The World finances are in a REAL mess and yet the US markets continue to rise. This Keynesian fiscal policy politicians around the World are using is really stupid, incoherent and unsustainable. As of this morning I am beginning to think we could really see a waterfall drop in the market numbers as I look at where we really are, where we are really going and what will really happen in the not so far distant future.
I was of the persuasion that because the 'cash crowd' was mostly absent in the markets there wouldn't be the panic movements seen several years ago, but small <2% moves at the most. Now, seriously, I am not so sure about a slow methodical melting down anymore.
The DOW at 11:00 is at 12661 down 67.43 or -0.54%.
The 500 is at 1347 down 6.32 or -0.47%.
The $RUT is at 791.47 down 5.40 or -0.68%.
SPY is at 134.80 down 0.64 or -0.47%.
The trend is neutral and the current bias is down.
WTI oil is at 97.76 trading between 89.25 and 87.40 and the bias is negative.
Gold is down today at 1572, trading between 1599 and 1571 with a negative bias.
Dr. Copper is at 3.43 down from 3.51 earlier.
As reported earlier the USD rose from 83.06 to 83.67 and currently is at 83.64.
The Federal Reserve remains in close communication with our European counterparts. Although the politics are complex, we believe that the European authorities have both strong incentives and sufficient resources to resolve the crisis.
At the same time, we have been focusing on improving the resilience of our financial system to severe shocks, including those that might emanate from Europe. The capital and liquidity positions of U.S. banking institutions have improved substantially in recent years, and we have been working with U.S. financial firms to ensure they are taking steps to manage the risks associated with their exposures to Europe.
That said, European developments that resulted in a significant disruption in global financial markets would inevitably pose significant challenges for our financial system and our economy.
** RRR = Risk Reward Ratio
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Written by Gary