Bears Take Back Gains From HFT's Melt Up

August 30th, 2012
in Gary's blogging

Closing Market Commentary For 08-30-2012

The afternoon was again low volume and the HFT crowd melted the averages up as they always do. Fifteen minutes before the close volume both red and green picked up with the bears wining the tug of war. The entire swing for the 500 has been 13 points, so when I say the market went down halfway to its lows, it doesn't really mean much.

Today was another lackluster, do-nothing session waiting, I guess, for tomorrow's am speech from Dr. Ben. The pent-up anxiousness in investors may unleash a fury of disappointment if 'ol Ben doesn't have a QE for them. If I wasn't so conservative, I would dip my toes into the world of short ETF's as I am sure there is going to be a sell-off tomorrow.

Follow up:

When I say sell-off, I am not referring to a waterfall as that won't happen. Something like 2% will jump ship and that will be all the action you will see. Then the 'BTFD dippers' will jump in and melt the averages back up some. This see-saw will continue until the week of September 12th.


Sellers Not Waiting for Friday

Investors have already given up on Ben Bernanke for Friday's Jackson Hole speech, said Stephen Guilfoyle of Meridian Equity Partners.

The RRR** finally turned in a positive number if you were quick to jump in around 10:30 am and do a short. The RRR still isn't something I would write home about, but sufficient enough this morning to have made a profitable trade. I hope you didn't get greedy and stay in. If you watched the volume drop that was a signal to jump out as the HFT crowd likes to melt the markets up when the volume becomes anemic.

Swing trading is still at your own risk and being the market is at a crossroads of sorts. I would prefer to sit on my hands rather than risk guessing incorrectly as to what Ben is going to say tomorrow or more accurately, how the market is going to react.

The DOW at the close is at 1300.78 down 106.70 or -0.81%.

The 500 is at 1399.50 down 10.99 or -0.78%.

The $RUT is at 808.66 down 9.19 or -1.12%.

SPY is at 140.41 is down 1.10 or -0.78%.

The trend is neutral and the current bias is down.

The 500 at the close.

The DOW at the close.

Oil futures extend loss ahead of Bernanke speech

WTI oil is at 94.73 trading between 94.90 and 95.60 and the bias is negative.

Brent crude is at 112.77 trading between 112.30 and 113.45 and the bias is neutral.

Gold Option Traders Most Bullish Since Bottom In October 2008

Gold back to losses ahead of Bernanke speech

Gold is at 1655.89 trading between 1650.90 and 1663.98 with a neutral bias.

Dr. Copper is at 3.44 down from 3.48 earlier.

Earlier the USD tumbled from 81.58 to 81.41 then rose to 81.78 when the equities fell and is currently at 81.71.


On the markets, the FTSE 100 has ended the day down 0.42pc at 5719 while Germany's DAX is off 1.64pc at 6895 and Spain's IBEX is 1.52pc lower at 7195.

Investors decided to take their money off the table ahead of tomorrow's global gathering of bankers in Jackson Hole, Wyoming. Craig Erlam, market analyst at Alpari, commented:

Investors are going to be clinging to every word from [U.S. Federal Reserve chairman] Ben Bernanke ... If Bernanke side-steps the issue, we're likely to see a huge disappointment in the markets.

Meanwhile, Spain's 10-year yields have ticked up 13.3 basis points to 6.5pc, with investors rattled by another increase in the bill for bailing out Spain's regions - Valencia said today it will ask for a rescue of more than €4.5bn from the central government.

** RRR = Risk Reward Ratio

To contact me with suggestions or deserved praise:

Written by Gary

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