October 15th, 2012
in Gary's blogging
Closing Market Commentary For 10-15-2012
The run-up stopped about 2:30 when minor selling began on light volume. Paused at 3 pm only to run up again making new highs for the day and most importantly, closing above the 50 day MA. What looked like a manipulated run up may in fact been legit. Tomorrows session will be a determining factor if we have seen a correction over the past week.
The positive bull run today is not all that convincing however as several short ETF's did not share the same enthusiasm in percentage loss as the averages gain. The ending volume, while green, was low suggesting caution in tomorrows morning action.
You might have time to sell as my thought is that market movements are going to be in small percentages never exceeding 2%. There is an obvious trend down and if it isn't corrected tomorrow by another gain, I would be ready to push the 'sell button' on a moments notice. Be very careful that you are not sucked into a slow moving bear run thinking it is just a little correction. That said, there is sound thought that the averages could ease on up to previous highs made some time ago. Be on the defensive and consider what profit level you want before you to start unloading your last holdout of equities. Make a plan and stick with it!
I have mentioned before the previous highs are going to be next to impossible to penetrate and, in my opinion, foolish to be buying long now in hopes that 'could' happen. Most of you, including myself, are now stuck with a bag full of cash waiting for a decline to buy back in. If I have to wait 6 months that will be fine as I am not going to lose what I have gained.
. . . we will attempt to explain why we believe the two major peaks in the S&P 500 of 1555 in 2000, and 1575 in 2007 will not easily be surpassed, as the severe debt burdens built up in the "financial manias" preceding those peaks still must be deleveraged.
We expect the latest move up in the S&P 500 from the March 2009 low will not exceed those peaks and will technically form a long-term triple top that will lead to the market declining to valuation levels similar to other secular bear market lows over the past 100 years. [More]
The RRR** was very narrow at the opening bell and continued to the closing bell, just as it has been for the past month. Any trades will probably end up on the unprofitable side as long as this market has low volume or remains flat.
I have issues with some traders in that they are saying there are setups for day trading. This is true enough, but the trading range is so narrow that way too money has to be put on the table to get back meager gains.
Like today, the market started up and within 15 minutes all of the gains of the opening were lost. Then it went up again only to fall off later in the session. Sorry if you didn't follow advise and stay far away from this marketplace as today was one of those days that could have sucked you in. This is not my cup of tea.
Swing trading is also 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. Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 4:00 is at 13424 up 95 or 0.72%.
The 500 is at 1440 up 11.54 or 0.81%.
The $RUT is at 828.28 up 5.19 or 0.63%.
SPY is at 144.12 up 1.22 or 0.85%.
The longer trend is up, the past week's trend is bearish and the current bias is up.
WTI oil was up today and is at 91.69 trading between 89.75 and 92.20 and the bias is positive.
Brent crude was up today and is at 115.90 trading between 113.60 and 115.36 and the bias is positive.
Gold is down this morning. Currently trading down at 1737.15, trading range is between 1753.20 and 1728.70 with a positive bias.
Dr. Copper is at 3.70 up from 3.66 earlier.
The US dollar fell from 80.04 earlier to 79.67 and is currently trading at 79.75.
The 500 at the close.
The DOW at the close.
The market is facing severe headwinds in the period ahead and is showing early signs of topping out.
Recently, there have been seven distribution days on the S&P 500 and NYSE and five on Nasdaq, a signal usually indicating a market decline ahead. A distribution day occurs when an index is down for the day on increased volume.
A number of leading stocks have broken important support levels, particularly in the benchmark technology sector.
Nasdaq has broken below its 50-day moving average and stocks have generally been selling off late in the day, a sign of institutional selling.[More]
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary