August 17th, 2012
in Gary's blogging
Opening Market Commentary For 08-17-2012
Premarket numbers started fractionally lower and then moved up about even with yesterday's closing. Today is options expiration day and in the past several months has been an up day squeezing out the shorts. Some pundits do not believe that there will be a big effect on today's market as “most positions that needed to be unwound have already been exited”, says Leavitt. In their opinion, “The media will make this out to be a big day, but that’s just because they need something to talk about. It’s just another day during a slow month.”
Markets opened with a giant surge upward followed immediately by descending numbers. Although this mornings surge barely inched above yesterday's highs it still indicated a quick changing market atmosphere one has to be careful of. This erratic movement is clearly reminiscent of HFT and other low volume market manipulators. Understandably a morning to sit on ones hands as we watch this idiotic market go through it gyrations. Choppy and directionless markets could be a signal to cover ones bets.
By the 10 am financial reporting of the U. of Michigan Confidence coming in higher at 73.6 against the expected 72.2. and the Leading Indicators for July coming in higher at 0.4% VS. the 0.2% expected. The better than expected numbers effect on the markets by moving them fractionally down. The green volume was indeed heaver than usual rated moderately high, but the selling kept the market numbers flat just where they were when the market opened. By 10:15 the markets moved fractionally lower and mixed effectively reducing the blood flow to my hands under my butt.
Leavitt is still biased toward market upside movement and I remain cautious and sceptically wary as we are within fractions of a percent of the previous tops. The reading of charts as I have repeatedly pointed out may be a lost cause because of the manipulations going on.
The Dow broke out from its flag pattern and can now eye its summer high. The Nas followed through on the breakout that took place two days ago. The S&P has invalidated the small rising wedge that was forming. The Russell busted out and closed at its highest level since early July. Solid, across-the-board movement.
The RRR** this morning is narrow and not conducive for profitable trading. Swing trading is also in doubt as we are near market tops and need to wait out the possibility of markets swinging either way.
The DOW at 10:15 is at 13267 up 16.40 or 0.12%.
The 500 is at 1417 up 1.28 or 0.09%.
The $RUT is at 813.59 up 0.48 or 0.06%.
SPY is at 142.01 up 0.04 or 0.03%.
The trend is up and the current bias is neutral with a bearish slant.
WTI oil is at 95.47 trading between 94.95 and 95.78 and the bias is negative.
Gold is up today at 1614.66 trading between 1612.14 and 1619.20 with a negative bias.
Dr. Copper is at 3.42 up from 3.38 earlier.
Earlier the USD tumbled from 82.55 to 82.37 then skyrocketed up to 82.73 and is currently at 82.71.
“. . . optimism regarding the Eurozone increased with Angela Merkel backing Mario Draghi's bond-buying proposal.
Merkel, the German Chancellor, has thrown her weight behind the European Central Bank (ECB) President's idea of buying sovereign debt in order to bring down bond yields in peripheral Eurozone nations. She said that Draghi's pledge to do "whatever it takes to preserve the euro" was "completely in line" with the euro-area officials.
However, analyst Craig Erlam from Alpari said that it is worth showing some caution: "She may back the ECB's position, but then want to impose strict austerity measures on any country that requests it. This would make it a very unattractive option to the Spanish and Italian governments. The markets are always very quick to react to comments made by Merkel and it's regularly followed quickly by a reversal once the details of her comments emerge."
Nevertheless, the Eurozone is set to enter a recession in the third quarter and not return to growth until next year, according to a monthly poll conducted by Reuters. The survey results come just after recent data showing that the region registered a 0.2% contraction in the second quarter. A recession is defined as two consecutive quarters of negative growth.”
** RRR = Risk Reward Ratio
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Written by Gary