October 15th, 2012
in Gary's blogging
Opening Market Commentary For 10-15-2012
Premarket SP500 was up to 1430 (closed at 1428) this morning and by 9 started to show weakness. The Advance Retail Sales came in at 1.1% while expecting 0.8% after the better than expected financial numbers being reported (chart below) the averages started to melt down slightly after Empire Index misses coming in at -6.16 while expecting -4.00. That slightly bearish tone continued to the opening bell where the 'BTFD dippers' jumped in and we saw some light green volume for the first 5 minutes. The volume increased a bit and turned red by the 10 minute mark.
The market remained slight above Friday's closing numbers but was continuing to melting down at a slow rate in what is looking like another lackluster market. As the policeman said, “Nothing to see here, keep moving along”.
Volume started to dry up by 9:45 but remained red. By 10 am the bears and bulls were battling it out with the bears clawing their way further down. The first half hour volume is heavier than the past week but still considered low.
The first column is what was reported. The second is what financial analysts expected and the third is the last report.
The economic data twofer this morning was a beat and a miss. Some of the main drivers in the September retail sales pick up were in electronics and appliance stores, which rose 4.5% from August (thank you iPhone 5), Gasoline Stations +2.5%, and Motor vehicle and parts dealers 1.3%, which continue to be a notable driver of retail strength for the second month in a row.
As for the miss, it came from the Empire Fed, which increased from September's -10.41, to -6.16, but missed expectations of a -4 print. New Orders improved modestly from -14.03 to -8.97, and ironically was the only subindex in the entire report that staged an increase.
Shipments declined to a negative print, from 2.75 to -6.40. Declines were also recorded in Delivery Times, Unfilled Orders, Inventories, Prices Paid, Prices Received, the average Employee Workweek, and most importantly, Number of Employees which declined from 4.26 to -1.08. Not even the forward looking indicators, so critical to consumer "confidence" managed to rise, dropping from 27.22 to 19.42.
Citigroup posted adjusted third-quarter earnings of $1.06 a share on $19.4 billion in revenues, topping Wall Street’s forecast of 96 cents on $18.72 billion. Shares rose more than 1% in pre-market trading.
The RRR** was very narrow at the opening bell 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 meager gains.
Like today, the market started up and within 15 minutes all of the gains of the opening were lost. 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, is a foolish endeavor.
The DOW at 10:00 is at 13338 up 14 or 0.11%.
The 500 is at 1430 up 2.73 or 0.19%.
The $RUT is at 822.35 down 0.52 or -0.06%.
SPY is at 143.22 up 0.32 or 0.22%.
The longer trend is up, the past week's trend is bearish and the current bias is down.
WTI oil was up today and is at 90.31 trading between 90.25 and 92.20 and the bias is negative.
Brent crude was up today and is at 114.43 trading between 113.80 and 115.36 and the bias is negative.
Gold is down this morning. Currently trading down at 1735.65, trading range is between 1753.20 and 1741.16 with a negative bias.
Dr. Copper is at 3.69 down from 3.71 earlier.
The US dollar fell from 80.04 earlier to 79.67 and is currently trading at 79.85.
Leavitt continues to show his bullish side, but his comment about the market being ready to fall apart is right on. What happened in the past is not enough to convince me that this time around is going to be based on what transpired 3.5 years ago. I am not sure that the current resistances zones that lie just above today's averages are going to be penetrated.
The S&P is down 5 of 6 days and 3 of the last 4 weeks. But the damage done isn’t extreme, so for now I consider the action since the September high to be a pullback within an uptrend, not the beginning of a downtrend.
Trading has been iffy for a few weeks. With the near term being unclear, we’ve gotten good set ups in both direction, but it’s obvious neither the bulls nor bears are in total control. Stocks move up and quickly pullback; stocks move down and quickly reverse.
There are reasons to expect the market to fall apart, but we must give the benefit of the doubt to the bulls because they’ve been in control for most of the last 3-1/2 years. Many times since the March 2009 lows the bears took over for a period of time only to see the bulls grab control back and push the market to new highs soon after. Despite everything going on in the world, you have to admit the bulls have been resilient, so don’t bet against them.
Strong US Data is not really helping risk appetite - Barron's bullish front cover is also a good reason to be cautions http://t.co/ynZf3blQ
** RRR = Risk Reward Ratio
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Written by Gary