November 1st, 2012
in Gary's blogging
Opening Market Commentary For 11-01-2012
Markets opened about the same as yesterday's session and began to melt back down at the 9:45 mark similar to past sessions. For the opening stats, the range remains the same with the DOW up 0.60 while the $RUT trails at +0.30 all under low volume. This mornings financial numbers were upbeat at bit but evidently not enough to get the bulls to pull out their wallets at firts.
By 10 am the markets rose further, but appeared to be difficult for the bulls to keep pushing the averages much higher as the bears haven't given up just yet. The US Consumer Confidence for October reported 72.2 higher than the 70.3 expected. The volume has been green for the whole morning and the bulls are adding coal to the boiler as the averages continue to melt up.
While I agree that a Santa Claus rally is likely, I believe it will be subdued compared to previous Holiday seasons.
The uptrend off the June bottom was broken two weeks ago; now a little flag pattern is forming. The trendline break won’t automatically result in the market trending down (the uptrend can continue at a shallower slope), but it does make us pause. The market now needs to show its cards.
The flag pattern can resolve down and officially begin a downtrend. We could get a false move down followed by a snap back rally. Or the index can move to the upside and trade range bound between 1400 and 1460. Some mental flexibility is required here. Don’t be too opinionated.
If the market can hold on for a few more weeks, we’ll enter the feel-good holiday season. You never know. Sentiment has dropped lately, but if it can hold on, time will improve things.
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 13232 up 137 or 1.05%.
The 500 is at 1423 up 11.31 or 0.80%.
The $RUT is at 825.87 up 7.16 or 0.87%.
SPY is at 142.49 up 1.16 or 0.82%.
The longer trend is up, the past week's trend is bearish and the current bias is up.
WTI oil was up today and is now down at 86.39 trading between 85.50 and 86.65 and the bias is negative.
Brent crude was down today and is at 108.39 trading between 109.00 and 107.75 and the bias is negative.
Gold was up earlier and is now down this morning. Currently trading down at 1718.97, trading range is between 1717.65 and 1726.88 with a negative bias.
Dr. Copper is at 3.55 up from 3.52 earlier.
The US dollar fell from 80.18 earlier to 79.94 and is currently trading at 79.97.
The first column is what was reported this morning. The second is what was expected by analysts and the third is the past report.
CNN reported the “Private sector hiring jumped in October, according to a report released today by payroll processor ADP. Private employers added 158,000 jobs in the month, ADP said, beating economists' forecasts of 143,000.
The ADP report came out a day before the government's official monthly jobs report, but it's not always been a great predictor of what the government report will say.
Meanwhile, the number of people filing for initial jobless claims fell 9,000 to 363,000 in the latest week, the U.S. government said.”
Last week, when we reported last week's lucky Initial Claims expectations beat of 369K, we explicitly said the following: "today's Initial Claims number which magically "beat" expectations by 1K, printing at 369K, on expectations of 370K, will be revised to a miss of 372K next week."
And guess what last week's number was just revised to? That's right: 372K, which means that last week's beat was actually a miss. But who cares.
Oh, and this week's just as manipulated print of 363K, which was a beat of expectations of 370K, will be spun as a 9K drop in initial claims of course.
Next week this number will be revised to 365K-366K as usual, because the BLS has now upward revised its weekly claims number for something like 80 weeks in a row.
Consumer confidence is lower as is construction spending.
ISM Manufacturing: 51.7, Exp. 51.0, Last 51.5
Consumer Confidence: 72.2, Exp. 73.0, Last 68.4
Construction Spending: 0.6%, Exp. 0.7%, Last -0.1%
** RRR = Risk Reward Ratio
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Written by Gary