October 24th, 2012
in Gary's blogging
Closing Market Commentary For 10-24-2012
The afternoon session was about as boring as it can get. From 1 pm on it was super sideways, low volume and an extremely narrow trading range. By the closing bell the many averages took a peak at yesterdays lows, some remaining there.
Volume did pick up but compare that to spitting in the rain, it wasn't very much. The overlying issue in corporate earnings and the problems in the eurozone remain right were we left them this morning.
The major indexes close down, flat and who know where we will see them tomorrow morning.
We have talked endlessly about recient trends and what to do about them. Kurtis Hemmerling said, “what worked best [for me] was a simple trendline and a couple moving averages as possible pullback zones for a bounce. The rest was fighting my emotions, over-trading, and making stupid moves trying to win back losses. Use what works for you though”.
This trendline chart is interesting and need to be studied. If true we are headed for some more downside. The immediate issue is a technical analysis will only work if there are 'many' people seeing the same thing you are seeing. The problems is with the millions of 'sheeples' falling in line to make this happen is that most have left the marketplace arena as seen in the exceedingly low volume for the past year. Of this volume, 70% is from HFT algo computers that could give a 'rats a$$' regarding trend lines rendering any mass hysteria trading useless.
The RRR** was very narrow at the opening bell and remained this way through the closing bell, 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.
Let me repeat what I have been writing for days, I have issues with some traders in that they are saying there are setups for day trading. This may be 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. Eric Parnell said it correctly “all of the prevailing economic forces today point to a stock market that should be in decline” and “unstable economic and market conditions are becoming increasingly tumultuous”. He goes on to say in his article, 50 Shades Of Stock Market Grey, “How can you best participate in any further upside while keeping things as clean and risk controlled as possible?”.
Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 4 pm is at 13077 down 25.19 or -0.19%.
The 500 is at 1408 down 4.36 or -0.31%.
The $RUT is at 813.65 down 2.55 or -0.31%.
SPY is at 141.05 down 0.54 or -0.38%.
The longer trend is up, the past week's trend is bearish and the current bias is down.
WTI oil started up today and then headed down. Currently it is at 85.71 trading between 87.46 and 85.00 and the bias is negative.
Brent crude was down today and is at 107.78 trading between 109.34 and 107.05 and the bias is neutral to positive.
Gold is down this morning. Currently trading down at 1701.60, trading range is between 1713.95 and 1698.50 with a negative bias.
Dr. Copper is at 3.57 down from 3.59 earlier.
The US dollar fell from 80.24 earlier to 79.24 and is currently trading at 80.05 it closed at 80.04 yesterday.
The 500 at the close.
The DOW at the close.
As we noted earlier, the Fed tweaked the language a little on the latest economic data but [changed] nothing on their plans for our 'great recovery':
*FED SAYS HOUSING SECTOR SHOWS SOME FURTHER SIGNS OF IMPROVEMENT
*FED SAYS U.S. HOUSEHOLD SPENDING ADVANCED `A BIT MORE QUICKLY'
*FED REPEATS `EXCEPTIONALLY LOW' RATES AT LEAST THROUGH MID-2015
*FED REPEATS IT WILL CONTINUE OPERATION TWIST THROUGH YEAR-END
*FED TO KEEP BUYING $40B A MONTH OF MORTGAGE-BACKED SECURITIES
*FED REITERATES `SIGNIFICANT DOWNSIDE RISKS' TO ECONOMY
** RRR = Risk Reward Ratio
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Written by Gary