October 19th, 2012
in Gary's blogging
Opening Market Commentary For 10-19-2012
Nothing new here, premarket was down about the same percentage it usually does when it is down. When it is up the same percentage marks its rise. Truly a fixed game it seems. IBM, GOOG and ABT have taken a nose dive and the rest of the market yawns and does nothing. Oil and copper are down while the USD and gold are up. Try and figure out what is going on and then place your bets.
The averages took a minor nose dive at the opening but on low volume, so I wasn't especially worried. Then by the 10 minute mark the red volume picked a bit and some more points were shaved off the averages, but still not enough or fast enough. Just some profit taking it seems as the markets by 10 am Existing Home Sales reported FELL to 4.75M as expected and the markets reacted with hardly a whisper going neither up or down with volume quickly drying up.
Like Leavitt we are watching the low caps as they have been lagging and were not the ones that took the big hits recently.
Right now Microsoft (MSFT), GE (GE), McDonalds (MCD) and Baker Hughes (BHI) are down a couple % in premarket trading…Chipotle (CMG) and Marvell Tech (MRVL) are down 12%.
It’s not uncommon for stocks to take big hits during earnings season, but it’s usually small caps, not well-established large caps.
The RRR** was very narrow at the opening bell, just as it has been for the past month. There was a nice jump, but that occurred in the premarket before the opening. 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 10:15 is at 13448 down 100 or -0.74%.
The 500 is at 1448 down 8.53 or -0.59%.
The $RUT is at 830.29 down 6.80 or -0.81%.
SPY is at 145.00 down 0.83 or -0.57%.
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 92.79 trading between 93.01 and 91.91 and the bias is negative.
Gold is down this morning. Currently trading down at 1734.58, trading range is between 1742.91 and 1731.70 with a positive bias.
Dr. Copper is at 3.69 down from 3.74 earlier.
The US dollar rose from 79.14 earlier to 79.59 and is currently trading at 79.56.
As I have pointed many times recently, I do not believe the previous highs of the major averages are going to be challenged successfully IF, and that is a big 'if', the marketplace can even move that high. Every sign of a weak market is manifesting itself every day and the signs are increasing more difficult to ignore. For those of us with a big bag of money it seems foolish to even consider investing. The prospects of getting your fingers burned is very high and having both feet poised out the exit door is not a bad idea.
Big Blue got schmeissed again yesterday along with Google, but the body blows that sent two corporate giants to the mat evidently weren’t enough to unsettle investors.
It’s tempting to think DaBoyz are trying to fool widows and pensioners into believing things are hunky-dory while they distribute shares to the unwary by the trainload.
As we know, however, individual investors deserted the stock market years ago, leaving only sharks to feed on chum limitlessly supplied by the Federal Reserve.
Now, with the Dow Average acting as calm as a serial killer strapped to a polygraph, it beggars belief to think the sharks have not yet caught a whiff of blood from the likes of AAPL, IBM and GOOG.
When the contagion of these bellwether stocks spreads to the broad averages, which could happen any day, don’t think you’ll have time to plot your escape.
We’ve now got both feet out the fire-escape window, no longer persuaded by our own, purely technical and still-valid rally target at Dow 14969 that there’s a reason to stick around.
** RRR = Risk Reward Ratio
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Written by Gary