September 12th, 2012
in Gary's blogging
Closing Market Commentary For 09-12-2012
And so another lackluster day goes by. Will we ever see a real market?
Oh, wait, the FOMC is tomorrow and that should have some lively effect although there is the looming fiscal cliff December 31st. I know why don't we just continue kicking the can down the road and pass laws to ignore the debt.
Seriously, the blessing of the German High Court was to have solved the EU's financial problems and the DOW would be on its way to 15,000 by this afternoon. What do you want to bet that whatever the FED's decide the markets won't move much in either direction?
Some very curious thoughts ahead of tomorrow's FOMC announcement from none other than Citigroup: "There is a strong view in markets that 1) the Fed have to do a big QE, given the expectations that have been built up, and 2) the added liquidity will have a marginal effect.
Taken together this raises the risk that the assets that will benefit are those sensitive to liquidity, such as money substitutes and Treasuries, rather than assets that are sensitive to real business cycle expansion." Money substitutes = gold.
The DOW at 4:00 is at 13333 up 9.99 or 0.0.07%.
The 500 is at 1436 up 3.00 or 0.21%.
The $RUT is at 845.10 up 3.19 or 0.38%.
SPY is at 144.49 up 0. 60 or 0.42%.
The trend is neutral and the current bias is neutral.
WTI oil is at 96.85 trading between 96.65 and 98.15 and the bias is neutral.
Brent crude is at 115.69 trading between 114.95 and 116.70 and the bias is neutral.
Gold is down today at 1731.34, trading between 1732.25 and 1746.90 with a neutral bias.
Dr. Copper is at 3.70 down from 3.73 earlier.
The US dollar fell from 80.14 earlier to 79.65 and is currently trading at 79.90.
The 500 at the close.
The DOW at the close.
FARRELL’S MARKET RULES TO REMEMBER1. Markets tend to return to the mean over time.2. Excesses in one direction will lead to an opposite excess in the other direction.3. There are no new eras – excesses are never permanent.4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.5. The public buys the most at the top and the least at the bottom.6. Fear and greed are stronger than long-term resolve.7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names.8. Bear markets have three stages – sharp down – reflexive rebound – a drawn-out fundamental downtrend.9. When all the experts and forecasts agree – something else is going to happen.10. Bull markets are more fun than bear markets.
It's entirely likely the market will remain comatose for the next two days until the German constitutional court decision on the 12th and/or the FOMC announcements/press conference on the 13th. IMHO, QE3 is very much baked into current prices; though, we should get at least a nice little pop if the central planners deliver as expected.
If not, expect a sizable sell-off unless Bernanke is able to let us down so easy as keep hopes very high ("we are postponing QE until October 12, at which point we will buy every POS bond in sight.") It's really that simple -- which, of course, renders both fundamental and technical analysis meaningless in the short run and turns any long/short decisions made today into a veritable coin toss.
** RRR = Risk Reward Ratio
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Written by Gary