Another Low Volume And Narrow Trading Range Day

September 10th, 2012
in Gary's blogging

Opening Market Commentary For 09-10-2012

Premarket futures were down a couple of points and looking for more of the same today as we have seen for the past several weeks. The real action, if there is any, may come tomorrow if the German High Court can render a decision on the EU's €500bn ESM rescue fund. Then On Thursday Uncle Ben May or may not disappoint the markets. As Leavitt reported this morning, “I’m hearing lots of chatter the Fed will announce QE3. From an outsider’s perspective, this is nuts. Why would the Fed do QE3 when market is doing so well?”

Market opened flat and down slightly, a few points, on low volume. I can't see why DaBoyz won't push the averages up a few points today keeping in tradition their manipulation during low volume days. I expect another narrow range of trading again today with little action. Might as well play on the links today.

Follow up:

The low volume did turn to green for several of the averages, but the majors remained ever-so-slightly in the red as SPY was down 0.08 and the DOW was down 20 after the opening bell. At the 15 minute mark I thought we might see a sell-off of sorts, but that was sort lived and didn't go anywhere. By 10 am I think the market fell asleep as DaBoys were not doing anything but melting numbers up and down fractionally.

In the news this morning I see where the GHC may kick the can down the road while deciding on a new challenge to the constitutionally of the ESM rescue fund. I have said all along the German people would say 'Nien' to allowing Brussels having the final say over their sovereign finances. This drama is far from over and no 'fat lady' in sight.


Germany's Constitutional Court said it will examine whether to postpone its long-awaited verdict on the eurozone's €500bn ESM rescue fund and the EU fiscal pact given a new legal challenge by a leading eurosceptic politician.

A spokeswoman told AFP the court would hold an emergency session on the latest challenge by Peter Gauweiler - a eurosceptic lawmaker from the CSU Bavarian sister party to Chancellor Angela Merkel's conservatives - on Monday afternoon and make public its decision on Tuesday morning.

The court verdict is the last legal hurdle for the ESM before it can come into effect. Until now, the court had been scheduled to deliver its ruling on Wednesday.

But it could now be held up following Gauweiler's latest complaint on Sunday, in which he challenged last week's decision by the European Central Bank to launch a bond-buying programme.

He argues that the ECB move alters the situation and the court must now first decide whether the central bank's bond purchase programme is legal before it can rule on the constitutionality of the ESM rescue fund.

The RRR**, as it has been for weeks, was very narrow at the opening bell and any trades will probably end up on the unprofitable side as long as this market remains flat and continued low volume. 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 10:00 am is at 13294 down 11.85 or -0.09%.

The 500 is at 1437 down 1.15 or -0.08%.

The $RUT is at 841.79 down 0.47 or -0.06%.

SPY is at 144.21 down 0.13 or -0.09%.

The trend is up and the current bias is down.


WTI oil is at 95.86 trading between 95.38 and 96.60 and the bias is negative.

Brent crude is at 114.25 trading between 113.98 and 115.05 and the bias is negative.

Gold is down today at 1730.06, trading between 1740.00 and 1727.50 with a negative bias.

Dr. Copper is at 3.69 up from 3.64 earlier.

The US dollar rose from 80.14 earlier to 80.55 and is currently trading at 80.50.


Government to cut AIG stake. The Treasury confirmed it's putting another $18B worth of AIG (AIG) stock on the block, as observers recently anticipated. AIG plans to buy up to $5B worth of the shares at the IPO price. Premarket: AIG -1.85% (6:30 ET).

Japan GDP slower than estimated. Japanese Q2 GDP rose 0.7% Q/Q, half the initial estimate of +1.4% and below consensus of +1%. GDP fell a nominal 1% in annualized terms vs. +5.5% in Q1. The current account surplus declined 41% to ¥625.4B ($8B) in July. With the economy losing momentum, economists increasingly expect Japan to slip into contraction this quarter.

I too, have been in the camp wondering when the 'Mother of all bear markets” is going to claw into reality.


A Robust Rally Lies Just Ahead

our cynical expectation is for higher stock prices, at least over the near term. We’ve been using a 1470.00 rally target for the E-Mini S&Ps, which settled on Friday at 1438.25.  If our forecast is correct, it would imply a corresponding rally in the Dow Industrials of about 250 points.  What happens after that is more speculative, although an easy move through the target would suggest that DaBoyz are planning to go for broke by running stocks higher into November.  Of course, there is also a chance the S&Ps could hit our 1470.00 Hidden Pivot target and conk out, setting in motion the Mother of All Bear Markets that so many of us have expected for oh-so-long.”

If you are following the problems in China I can tell you they haven't gone away. In fact between Japan, China and the EU any hope of a solid financial market rally in November is just a pipe dream.


A weak open on Wall Street as China stumbles

Stocks are opening slightly lower on Wall Street as troubling economic news from China overshadows hopes of more stimulus from the Federal Reserve.

The Dow Jones industrial average fell 25 points to 13,281 shortly after the opening bell Monday. The Standard & Poor's 500 slipped two points to 1,436 and the Nasdaq composite fell seven points to 3,129.

China's auto sales growth slowed to 3.7 percent in August, more evidence of a pronounced economic cooling. China's imports also shrank unexpectedly. The Chinese president warned growth could slow further. Fed officials meet Wednesday and Thursday after a surprisingly weak report on U.S. jobs last Friday.

Many anticipate a third round of bond purchases or other support for the U.S. financial system.

** RRR = Risk Reward Ratio

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Written by Gary

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