September 20th, 2012
in Gary's blogging
Opening Market Commentary For 09-20-2012
The aftermarket went down in a hurry last night Overnight Sentiment: Tumbling Into Global Recession. Premarket action today had the futures down but stabilized and expecting the markets to open significantly lower.
At the 8:30 US data reporting we saw the US. INITIAL JOBLESS CLAIMS rose to 382 K while expecting 375K. The US CONTINUING CLAIMS (September 8th) declined to 3272 K while expecting 3300 K. The markets reacted negatively dropping the SP500 4 point further down to 1446.
At 10 am the Medium rated US Leading Indicators (Aug) stayed even at -0.1% while expecting -0.1%. The Medium rated importance US Philadelphia Fed. (Sep) rose to 1.9 while expecting -3.3. The markets reacted in a neutral manner rising slightly. The averages are still down in what may be called a long overdue 'correction' or perhaps a 'bear trap'.
ETF's following certain averages were all over the place in premarket action. SSO fell from 63.30 to 62.88 in yesterday's aftermarket and fell again to 62.21 this morning only to rise significantly to 62.63 before 8:15. By 8:30 SSO started to melt down again to its morning lows. This is actually good, as traders we need price change volatility. What the rest of the morning has is something we have to watch.
Today's initial claims print was the 5th week out of 6 in which expectations missed: instead of coming in at the consensus number of 375K, down from last week's 382K, the BLS reported a miss to expectations of 7K, resulting in a seasonally adjusted number of 382K, or what is now once again secular shift higher.
But, wait big miss was actually good news: why? Because the ever data-massaging BLS was kind enough to revise last week's print upward (for the 86th week in a row) from 382K to 385K (just as we predicted last week) which in turn led to such farcical headlines as " U.S. weekly jobless claims drop slightly to 382,000" from the WSJ.
And so bad news is now great headlines: Orwell would be proud. Here is an alternative and realistic headline: "Initial Claims Rise Post Next Week's Upward Revision."
S&P 500 futures add to losses, now -0.4%, following the weaker-than-expected jobless claims print. Last week's claims were again revised higher (to 385K from 382K). The 4-week moving average rises 2K to 378K, the highest level since late June. Mornings like this were always good for a QE rumor, but with QE∞ in force, what's left for the Fed to leak?
The RRR** had narrowed by the opening bell 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 10:15 is at 13529 down 48 or -0.36%.
The 500 is at 1452 down 7.78 or -0.52%.
The $RUT is at 848.52 down 7.54 or -0.88%.
SPY is at 146.05 down 0.64 or -0.44%.
The trend is neutral and the current bias is down.
WTI oil is at 92.02 trading between 92.15 and 90.65 then rose to 91.95. The bias is positive.
Gold is down today at 1758.29, trading between 1771.65 and 1756.00 with a negative bias.
Dr. Copper is at 3.75 down from 3.80 earlier.
The US dollar rose from 79.07 earlier to 79.73 and is currently trading at 79.65.
Eurozone PMI points to recession. Eurozone manufacturing PMI increased to a preliminary 46 in September from 45.1 in August, although composite output fell to a 39-month low of 45.9. The flash PMI is consistent with GDP of -0.6% in Q3, "sending the region back into a technical recession," says Markit. German manufacturing PMI improved but still contracted, while France's manufacturing output slumped to 39.8 vs 45.3, suggesting that the country is also heading for recession.
** RRR = Risk Reward Ratio
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Written by Gary