News Driven Market Delivers K.O. To Market

July 19th, 2012
in Gary's blogging

Opening Market Commentary For 07-19-2012

Premarket was up 65 points on the DOW (12924) and 7.40 on the SP500 (1375) and when the Initial Jobless Claims: came in at 8:30 higher at 386,000 from 365,000 reported earlier sent the premarket SP500 tumbling 5 points down to 1370 below the 1372 at yesterday's closing.

At the opening, the markets were generally at yesterdays closing numbers with some moderately heavy green volume. By 10 am when the Existing Home Sales announced a much lower 4.37 million while expecting 4.6 million the markets started falling as the poor news reached investors and decided to bail with red volume reach moderate levels clearly matching the earlier green mark.

Follow up:

Foxnews reported, “a Labor Department spokesperson says claims are more volatile than usual due to differences in the timing of auto layoffs that normally occur this time of year.” Yeah, whatever, we know these figures are a bunch of bunk and nearly meaningless. Just wait, they will be revised upwards in a couple of days. Seriously, you are only fooling yourself in believing the employment situation is getting any better if you think that millions out of work.

(click on chart for larger view)

Also helping the market slide is the July Philly Fed Business Outlook: came in at a double digit fourth miss in a row -12.9 while economist were expecting at least a -8.0 improvement over June's reporting of a -16.6.

The June Leading Indicators: Leading Index declined to -0.3% to 95.6 while economists were expecting -0.1% over the +0.3% prior reporting.

Way too much red in the first column indicating what was reported this morning against what was expected in the second column and the last report in the third column.

I agree with Leavitt that one must be flexible in thinking, but the RRR** remains very narrow and not conducive to profitable trading. Swing trading is very iffy but becoming more bearish as each session end up. As I have mentioned before, next week should show more weakness.


A couple days ago the bears were out in full force. Today the S&P will open at its highest level since early May. It pays to be open minded.

Warnings persist (the small caps are lagging, tech is lagging, money is flowing into safe havens), and there are still lots of headwinds (earnings season, Europe, economic numbers). But the character of the market the last two months has been that of one directional moves ending in sudden reversals. If you used a trailing stop, you most likely gave back a good chunk of your gains. Here’s what the market has done…

up 5 of 6 days
down 3 days
up 4 of 5 days
up 5 of 6 days
down 3 of 4 days
up 5 of 6 days
down 6 days
up 3 of 4 days

Literally up, down, up, down, etc. Rallies get sold, dips get bought. If you get overly bearish or bullish, the market goes right in your face soon after. It pays to be open-minded. It pays to not have a super strong opinion. It pays to not have a combative attitude. The market is what it is. Accept it and be flexible.”

The DOW at 10:30 is at 12930 up 21.27 or 0.16%.

The 500 is at 1374 up 1.40 or 0.10%.

The $RUT is at 803.91 down 1.21 or -0.15%.

SPY is at 137.50 up 0.12 or 0.09%.

The trend is moderately positive and the current bias is down.


WTI oil is at 91.52 trading between 89.80 and 91.74 and the bias is positive.

Gold is up today at 1585 trading between 1572 and 1591 with a positive bias.

Dr. Copper is at 3.53 up from 3.47 earlier.

As reported earlier the USD rose from 82.80 to 83.24 settling at 83.14.

** RRR = Risk Reward Ratio

To contact me with suggestions or deserved praise:

Written by Gary

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