November 2nd, 2012
in Gary's blogging
Opening Market Commentary For 11-02-2012
The premarket was up but very choppy making the opening bit unsure of maintaining yesterday's gains. The SP500 gaped up in an uncharacteristically move up which can only mean a move back down in the near future to cover the gap.
The markets did open up as expected and started to melt down on very low volume during the first 10 minutes. By 9:45 the markets were down from the opening and flat. By 10 the financial report for September Factory Orders was 4.8% while analysts were expecting 4.6%. The previous report was -5.1% (revised up from -5.2%) and the markets reacted in a 'slightly' bearish manner. By 10:15 the SP500 futures gap had been filled and the averages appear to be melting further down on low volume.
A recap of yesterday's action.
“After arresting the decline yesterday, the market showed continued strength all morning on the back of increasing new orders from the ISM's manufacturing index. In the morning, the ADP private payrolls figure rose to 158,000 from last month's revised-lower estimate of 114,000. Despite the negative economic data, stocks continued to rally, but not in a healthy fashion. The economically sensitive Russell 2000 index notably underperformed the broader S&P 500 index. Last month's consumer confidence data showed a sharp rise to 72.2, but the prior month's figures were revised lower to 68.4 from 70.3, so the overall gain was muted.
As for this morning the employment numbers are not very exciting. US Unemployment Rate (OCT) came in as expected at 7.9%, the previous rate was 7.8%. The Non Farm Payroll came in at 171K, while analysts were expecting 125K a bullish number. The previous report was revised up to 148K as it usually is.
As expected, a whopping beat of expectations of 125,000 with 171,000 jobs added In October, and the Unemployment Rate rising modestly to 7.9%, but below the magical 8.0%. And while the U-3 rose, the U-6, or underemployment, declined from 14.7% to 14.6%. Go figure. And finally, the Birth Death adjustment came just 10K off our forecast, printing at 90K.
More on Nonfarm Payrolls: The +171K October print is accompanied by big revisions higher to September (+34K to 148K) and August (+50K to 192K). Average workweek didn't budge, remaining at 34.4 hours for the 4th straight month. Average hourly earnings down $0.01 to $23.58, +1.6% Y/Y. Thus far in 2012, employment growth has averaged 157K/month, up a hair from 153K in 2011.
The RRR** was very narrow at the opening bell, just as it has been for the past month. We had a nice jump upwards if you were inclined to 'guess' the market was going to be up this morning. However, 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 13222 down 12.63 or -0.09%.
The 500 is at 1429 up 1.44 or 0.10%.
The $RUT is at 824.16 down 3.69 or -0.45%.
SPY is at 143.00 up 0.16 or 0.11%.
The longer trend is up, the past week's trend is bearish and the current bias is down.
WTI oil was down earlier today and has since moved back up and is down again at 85.82 trading between 87.05 and 85.75 and the bias is negative.
Brent crude is up today and is at 107.85 trading between 107.65 and 108.80 and the bias is negative.
Gold gaped down this morning in an unusual bearish move. Currently trading down at 1695.30, trading range is between 1716.76 and 1792.50 with a negative bias.
Dr. Copper is at 3.51 down from 3.56 earlier.
The US dollar rose from 79.92 earlier to 80.62 and is currently trading at 80.59. It did gap up from 80.40 to 80.47 and I expect that gap to be closed probably today sometime.
** RRR = Risk Reward Ratio
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Written by Gary