October 25th, 2012
in Gary's blogging
Opening Market Commentary For 10-25-2012
Weekly Jobless Claims Fall, Durable Goods Orders Jump in September and the premarket action was muted. By 9:30 the markets opened up with unknown expectations, but hoping the good financial's (chart below) would kick start the market into rally mode. The averages melted up (slightly) at the opening on low green volume, but slowly petered out and ending right back where the market opened. So much for a rally early on, but wait, we still have the rest of the day – just kidding.
By the 10 minute mark the volume turned red and we saw what might be the true nature starting to come out with the bears showing some teeth keeping the bull at bay.
When the 10 am Pending Home Sales fell reporting +0.3% vs +2.5% expected and the markets immediately started to fall, well sorta melt down actually. There isn't anyone trading on this pathetic low volume, so any movements we see it is probably the HFT computers.
It is never too late to go short, but the possibility of the market recovering to some degree after such a sharp decline makes this type of trading risky. It is all about how well you are at 'guessing' I am afraid.
. . . we have not gotten a downside washout, so it’s a little risky to go long. Also, in many cases, it’s too late to go short. The market after all has suffered its worst 5-day drop in since last spring.
The first column is what was reported today. The second is what economists were hoping for and the third is what was reported the last time.
The RRR** was very narrow at the opening 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.
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 13150 up 70 or 0.55%.
The 500 is at 1417 up 8.84 or 0.63%.
The $RUT is at 817.11 up 3.46 or 0.43%.
SPY is at 141.82 up 0.81 or 0.57%.
The longer trend is up, the past week's trend is bearish and the current bias is slightly bearish in sideways trading.
WTI oil was up today and is at 86.11 trading between 85.65 and 86.76 and the bias is negative.
Brent crude was up today and is at 108.67 trading between 107.61 and 109.25 and the bias is negative.
Gold is up this morning. Currently trading down at 1715.20, trading range is between 1700.00 and 1717.25 with a neutral bias.
Dr. Copper is at 3.57 down from 3.59 earlier.
The US dollar fell from 80.16 earlier to 79.78 and is currently trading at 79.98.
** RRR = Risk Reward Ratio
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Written by Gary