October 16th, 2012
in Gary's blogging
Midday Market Commentary For 10-16-2012
The morning was for the bulls as they dominated the activity. After a brief pause the march upwards continued on falling volume. This midday rise probably can be contributed to HFT computers activity as volume at noon has fallen to anemic.
Little news to move the markets one way or the other, but suspect the averages will lose a little of their gains later in the session.
The RRR** was very narrow at the opening bell and continuing to the midday mark, just as it has been for the past month. Any trades today will probably end up on the unprofitable side as long as this market remains flat or continues to have low volume.
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 just to get back meager gains.
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 12:00 is at 13544 up 120 or 0.89%.
The 500 is at 1453 up 13.55 or 0.95%.
The $RUT is at 834.35 up 6.07 or 0.73%.
SPY is at 145.46 up 1.38 or 0.96%.
The longer trend is up, the past week's trend is bearish to neutral and the current bias is up.
WTI oil has been up and down today and is at 91.64 trading between 91.30 and 92.30 and the bias is neutral.
Brent crude was down today and is at 114.59 trading between 116.15 and 114.50 and the bias is negative.
Gold is up this morning. Currently trading down at 1744.32, trading range is between 1734.48 and 1748.48 with a negative bias.
Dr. Copper is at 3.70 down from 3.72 earlier.
The US dollar fell from 79.90 earlier to 79.36 and is currently trading at 79.50.
An interesting analysis complementing my Opening Morning Commentary. It has been pointed out that multiple tops are forming, articles of the markets dropping 40% and signs of distribution.
1. The price movement is showing an ascending triangle that has a bullish bias.
2. BUT ... the strength as seen by the green line of our C-RSI readings show's the opposite ... a descending triangle with a bearish bias.
There is one more pattern to consider here, and that is the possibility of a double-top with a negative divergence coming from the Strength reading ... and that would have negative connotations.
The signs of a coming bear market are out there. It is time to turn cautious and get ready to execute your exit plans.
We noted yesterday that NYSE short-interest dropped to a five-month low removing much of the kindling for a centrally-planned world of goal-seek'd equity wealth creation.
So when we hear that sentiment is so bad, and everyone's bearish - the simple fact is: they are not. To wit, the S&P 500 e-mini futures contract - the most liquid equity trading vehicle in the world - has pushed to its most net-long position since December 2008.
The last time equity traders were this net-long, the S&P fell 22% in the next 11 days.
The psychology may be different - from "surely it can't drop any more" then to the current "it can't drop much because Bernanke/Draghi has our back" - but the positioning is just as complacent this time.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary