Midday Market Commentary For 08-20-2012
Leavitt said this morning, “Last week was a good one.”. I sure would like to know what market he was referring to, because the ones I was watching were just as bad as it is today. The 500 moved 4 points on Friday, the best in many sessions and so far today a whopping 5 points.
The total swing for the 500 over the past 9 sessions has been 23 points averaging 2.5 points a day and he calls that 'good'! He is absolutely correct in saying, “Be conservative out there. This is not a time to take big chances.” I would go on to say, I hope you have a lot cash handy as we will probably see some excellent values coming up soon.
The RRR** still is very narrow at the midday mark and any trades may end up on the unprofitable side as this market is known to make unannounced swings. Swing trading is at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands.
The DOW at 1:00 is at 13261 down 14 or -0.11%.
The 500 is at 1415 down 3 or -0.21%.
The $RUT is at 814.72 down 5.16 or -0.63%.
SPY is at 141.93 down 0.24 or -0.17%.
The trend is neutral and the current bias is negative.
WTI oil is at 95.57 trading between 96.55 and 95.40 and the bias is negative.
Gold is up today at 1619.43 trading between 1622.40 and 1609.65 with a positive bias.
Dr. Copper is at 3.37 down from 3.42 earlier.
Earlier the USD tumbled from 82.82 on Friday to 82.43 this morning and is currently at 82.54.
Interesting article (below) in that there are hard to find graphs here that go back to 1997 and gives a meaningful picture of what has been volume wise.
His perspective is quaint, but shallow, ignoring why Mom and Pop and the cash crowd are no longer trading. That missing piece of reality places a lot of emphasis on the critical nature of today's negative perception of US markets and the true nature of low volume. The cash crowd played an important part in the old markets along with 401 savings and other long term investments. In 2009 they not only lost a great deal of market value but the Keynesian members of the Fed reduced interest that further eroded their income. This availed large gains for the banks and other large financial institutions but not for the 401 savers or the 'little guy'.
What did the cash crowd finally do after been beaten severely by the very same institutions that were in place to help them? They left in groves; despondent and in many cases broke nowhere to go except back to work. They left what was once a safe haven for saving and cashed out stuffing their money that was left under the mattress. Exacerbating this problem many millions became unemployed and lost their savings and then their homes.
The 401 accounts were hit as hard during this last rescission and retirees of that same 2008 -2009 period, that were depending on those 'savings', were really screwed as the markets descended and left them with a fraction of what they had hoped to retire on.
All of the above and the many crooked financial deals, bank corruption, stupid politicians and other outright criminal activities that have been an all-out assault on this investment palace which is still on the rise I might add. These numerous adulterous assaults and activities have reduced the market place trading members to investors that are either professional or those that still think they can beat the market. I call this group the 2 percenters as that, in my estimation, is about how many are actively trading.
His statement below '. . . while composite volume is indeed down, it is not the epic collapse that NYSE-only volume suggests' does not take in account the many other factors governing this casino and its movements.
The 'secular bear' is going to continue thanks partly to the HFT crowd and 'Dark Pools', moving not as fast as it would if Ma and Pa were still doing their panic buying and selling moving the markets around in the old fashion way. The market movements of today's markets are going to be muted, except for some unknown Black Swan moment, moving in swings not exceeding 2% as that is how many are trading.
There is a lot more going on beneath the hood of this market 'car' and many financial savants are either unaware of the deep fast moving currents or purposely ignore the obvious. Most financial pundits are taking a slice of information and claiming 'that is the reason for . . . '. They will only be partially correct. Therefor, I would maintain their prognosis of the current state of affairs is lacking insight and additional future cognitive content are also in doubt.
Until the workers of the World become employed, can save and then buy a home this financial mess we are witnessing will only get worse, much worse.
Understanding Stock Market Volume By James Bianco
** RRR = Risk Reward Ratio
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Written by Gary