September 20th, 2012
in Gary's blogging
Closing Market Commentary For 09-20-2012
Some averages melted their way back up to yesterday's closing numbers by 2:30 while others like the Russell 2000 remained in the red. Generally the volume remained low with some very small spurts of green when the “BTFD dippers' decided to move in.
By the last half hour there was a distinct move down from the highs of the day and during the last minute there was a spurt of green volume but left the averages mixed, flat and mostly in the red.
Market recap: Stocks recovered from early losses to finish flat in thin trading, as Chinese manufacturing output fell to a 10-month low but Philly Fed data improved and three regional Fed leaders expressed support for continued QE. Transport stocks were weighed by Norfolk Southern's downside guidance. NYSE declining issues topped advancers three to two.
The RRR** had narrowed by the opening bell and continued to be non-tradable at the close and any trades will probably end up on the unprofitable side as long as this market has low volume and remains flat. A overnight trade would have produced a nice profit this morning, but then again who knew. Swing trading continues to be at your own risk as the market is STILL at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly. (I was asked if I had to guess what would my choice be for the next month? Ans. Bearish)
The DOW at 4:00 is at 13597 up 19.20 or 0.14%.
The 500 is at 1460 down 0.78 or -0.05%.
The $RUT is at 851.51 down 4.57 or -0.53%.
SPY is at 146.69 down 0.01 or -0.01%.
The trend is neutral and the current bias is up.
WTI oil is at 92.08 trading between 92.30 and 90.65 then rose back to 92.33. The bias is positive.
Gold is up today at 1768.35, trading between 1771.65 and 1756.00 with a positive bias.
Dr. Copper is at 3.78 down from 3.80 earlier.
The US dollar rose from 79.07 earlier to 79.74 and is currently trading at 79.48.
The 500 at the close.
The DOW at the close.
Once again, the unintended consequences (or fundamental flaw as we noted previously) remain front-and-center, just as with prior episodes of QE, we have seen the market surge into the very assets that the Fed has promised to buy (in this case into Eternity).
30Y current coupon mortgages spread to 10Y Treasuries has fallen - rather stunningly - below 20bps. An all-time record low by a mile.
Homebuilders and broad equity markets are not so excited as in his failed attempts to drive people into risky assets (stocks), those 'smart' people have simply front-run the Fed's MBS buying deluge - more than willing to sell the market back to the Fed while reaping some additional yield.
** RRR = Risk Reward Ratio
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Written by Gary