August 21st, 2012
in Gary's blogging
Opening Market Commentary For 08-21-2012
The SP500 premarket melted up from the 1414 area around 8 am to the 1419 level by 9 am and then backed off by the opening. 1422 represents the high made back in April 2nd this year and I have said all along this high water mark will probably be seen again thus making a double top. The issue I have with this upward market movement of late is the paper thin volume which doesn't bode well for bulls and the continuing melting up. This market has been acting strangely with the HFT and DaBoyz creating most of the market movement and thus not a real metric of where the markets true level is.
The market opened and the 500 went to 1422.98 completing the double top scenario on low green volume. Then the 500 backed off a few cents by the 10 minute mark leaving more than a few investors, sitting on the sidelines, wondering what was going to happen next. The trading at the 15 minute mark was non existent and yet there was little selling and appeared to be more bullish pressure to climb higher.
The euro ticked up to a two-week high against the dollar and Spanish short-term debt costs dropped sharply at an auction of bills amid renewed hopes that the European Central Bank will intervene in debt markets.
The RRR** continues to be very narrow at the opening bell and any trades initiated this morning can not be safely assured being profitable. Swing trading is again at your own risk being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly. This double top scenario has to be put to bed before venturing out to play.
By 10 am the SP500 eased up to 1424 creating a nail biter of suspense even though the volume was very low. This was indicating the HFT crowd was generating the rise in the markets and therefore could not be trusted as a legitimate bullish signal. Until I see some 'real' volume, I'll continue to sit on my hands.
The DOW at 10:15 is at 13309 up 38 or 0.29%.
The 500 is at 1424 up 6 or 0.41%.
The $RUT is at 823.50 up 7 or 0.86%.
SPY is at 142.83 up 0.63 or 0.44%.
The trend is neutral and the current bias is up.
WTI oil is at 97.54 trading between 95.88 and 97.60 and the bias is positive.
Brent crude is at 115.32 trading between 114.40 and 115.45 and the bias is positive.
Gold is up today at 1639.46 trading between 1619.70 and 1640.90 with a positive bias.
Dr. Copper is at 3.45 up from 3.37 earlier.
Earlier the USD tumbled from 82.46 to 81.87 and is currently at 81.91.
Best Buy revealed fiscal second-quarter adjusted earnings of 20 cents a share on sales of $10.55 billion. Analysts expected the struggling tech retailer to earn 31 cents on $10.63 billion in revenue. The company also said it is suspending its share repurchases for fiscal 2013. Shares are down 8% in pre-market trading.
The bad news just keeps coming for Greece. Now, it appears that the country will have to make even deeper cuts than anticipated to satisfy its international creditors. German commentators wonder when the downward spiral will come to an end. more...
** RRR = Risk Reward Ratio
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Written by Gary