August 31st, 2012
in Gary's blogging
Midday Market Commentary For 08-31-2012
The HFT, DaBoyz and the 'BTFD dippers' have had their fun this morning taking the averages from where many sellers jumped ship back up to new daily highs matching the last two sessions. But clearly not able to penetrate the upper resistance as the trend is bearish. By noon the bears were out in force again melting the markets down close to yesterdays close.
Yesterday we received the 2nd estimate of the 2nd Quarter 2012 GDP. The good news is that the original 1.5% estimate was revised up to 1.7%, which is only slightly lower than the Federal Reserve's estimated 2% growth rate for 2012. The bad news is that the increase in the GDP report puts the final nail into the QE3 coffin for the time being.
The RRR** actually was very good IF you could guess that the markets would reverse after Ben's remarks and then reverse again. Damn, back to guessing again. 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 rather than risk guessing incorrectly.
The DOW at 12:30 is at 13080 up 79.72 or 0.61%.
The 500 is at 1405 up 6 or 0.42%.
The $RUT is at 810.37 up 1.75 or 0.22%.
SPY is at 141.07 up 0.58 or 0.41%.
The trend is neutral and the current bias is down. (For the time being – extremely choppy and massive swings.)
WTI oil is at 96.08 trading between 94.53 and 96.67 and the bias is positive.
Brent crude is at 114.17 trading between 112.40 and 114.48 and the bias is positive.
Gold is at 1679.85 trading between 1652.20 and 1663.40 earlier and then fell to 1646.80 during Dr. Ben's speech and shortly after rose dramatically 1670.05 and climbing higher to 1682.40.
Dr. Copper is at 3.45 down from 3.46 earlier.
Earlier the USD tumbled from 81.73 to 80.97 and is currently at 81.30.
Bernanke takes the wind out of the market's euphoric sails: "Substantial further expansions of the balance sheet could reduce public confidence in the Fed's ability to exit smoothly from its accommodative policies at the appropriate time. Even if unjustified, such a reduction in confidence might increase the risk of a costly unanchoring of inflation expectations, leading in turn to financial and economic instability."
More Bernanke: The first two rounds of QE have lowered Treasury yields by 80-120 basis points, raised GDP by 3%, and increased payrolls by 2M. This remains a man who clearly believes in the positive effects of QE and still sees credit/financial markets as needing it. He didn't make any explicit promise for another round, but the speech comes close.
** RRR = Risk Reward Ratio
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