October 5th, 2012
in Gary's blogging
Closing Market Commentary For 10-05-2012
I have quit guessing what this screwy market is going to do next, but is perhaps I do not understand the algorithms the HFT folks use. One day the drive the market up and like today, they drive them down.
Good NFP news, although a bit tainted with political conspiratorial rumors of it being 'fixed'. The markets closed flat, mixed and with low volume. Are we ever going to see the market make a move other than the lackluster molasses moves of late?
I suggested several weeks ago we could see the averages move a bit higher to at least make double tops. In one case, the SP500, a triple top at or around 1548. For the DOW to fall 2,500 points (after reaching its double top at 13935) it would end up at 11,435, which is not that unrealistic. I would have thought that the 9730 area would be the conservative level to watch for.
. . . It called for a 1400-point rally to exactly 14969, and although we no longer believe the Dow can get there by election day, the target remains theoretically viable nonetheless.
As a practical matter, though, we have set all of our chart-based tripwires on “hair-trigger” lest we miss the onslaught of a 2500-point plunge. That’s how much we think the market will fall, at a minimum, when the cliff dive so many of us have been expecting for so long finally comes.
The technical logic behind our bullish Dow forecast is that the blue chip average exceeded a “midpoint Hidden Pivot resistance” at 13502 on September 13.
Moreover, it did so with considerable force and then appeared to consolidate above the pivot for nearly a week. Taken together, these signs were unmistakably bullish, and going by-the-book, the 14969 rally target will stand until such time as the Dow breaches a key low at 12035 from a year ago.
The RRR** surprisingly was very narrow for the entire session. I feel any trades will probably end up on the unprofitable side as long as this market has low volume and remains flat. 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. If I had to guess, I would 'guess' that Monday will open down.
The DOW at 4:00 is at 13610 up 34.79 or 0.26%.
The 500 is at 1461 down 0.47 or -0.03%.
The $RUT is at 842.86 down 1.79 or -0.21%.
SPY is at 146.06 down 0.07 or -0.05%.
The longer trend is up, the past week's trend is neutral to bullish and the current bias is down.
WTI oil is down today and is at 89.89 trading between 91.65 and 89.02 and the bias is positive.
Brent crude is down today and is at 111.82 trading between 113.00 and 110.51 and the bias is positive.
Gold is down today at 1781.62, trading between 1795.84 and 1772.50 with a positive bias.
Dr. Copper is at 3.76 down from 3.81 earlier.
The US dollar fell from 79.53 earlier to 79.17 and is currently trading at 79.42.
The 500 at the close.
The DOW at the close.
** RRR = Risk Reward Ratio
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Written by Gary