November 16th, 2012
in Gary's blogging
Opening Market Commentary For 11-16-2012
The premarket was up a tad but quickly started to melt down when the opening bell sounded on anemic volume. This morning financial's were all in the red (see chart below) and undoubtedly turned the markets down at the opening.
The markets were decidedly moving in a directionless manner and in a narrow range. Yesterday I mentioned that we are in a good position for a correction of sorts so be on your toes.
By 10 am it appears the 'investors' have picked up their marbles and called it a day. The markets slipped down to the supports and eased back up. The averages are mixed and somewhat flat as I suppose the HFT computers will step in and melt the markets back up.
I would expect the averages to have a sideways day as most are sitting on a significant support and will be difficult to penetrate. Even in light of poor financial's reported this morning there isn't enough participation to drive the markets further down today. It is clear the bulls are not willing to dip their toes in the chilly waters this morning – so far, that is.
The first column is what was reported this morning. The second is what analysts had predicted and the third is the last report.
US fiscal policy will continue to be an important short-term focus with key negotiations between Congress and the House of Representatives over the next few weeks and there will inevitably be the threat of brinkmanship which will tend to unsettle markets and undermine risk appetite. There will also be continuing unease surrounding the Euro-zone and doubts over the sustainability of any Chinese improvement which will continue to fuel the cautious tone.
The Federal Reserve Minutes suggested that additional bond purchases might be considered once Operation Twist is completed at the end of December. Some members expressed concerns surrounding the potential inflation outlook. There was a detailed discussion surrounding potential communication for exit strategies and whether to set numerical targets such a specific unemployment rate which could trigger a lifting of the Federal Funds rate. There is a strong probability that the Fed will eventually move towards guidance on economic conditions.
The RRR** was narrow at the opening bell, just as it has been for the past month. It is getting wider, but some guessing still remains and of course that is the tricky part of the equation. 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 as the markets are currently untradable. Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 10:00 is at 12504 down 38 or -0.31%.
The 500 is at 1348 down 4.71 or -0.35%.
The $RUT is at 765.15 down 4.34 or -0.56%. (Leading the pack down)
SPY is at 135.05 down 0.68 or -0.51%.
The longer trend is up, the past months trend is bearish and the current bias is down.
WTI oil is up today and is at 86.34 trading between 85.01 and 86.70 and the bias is positive.
Brent crude last reported at 110.98.
Gold is down this morning. Currently trading up at 1715.71, trading range is between 1717.17 and 1705.00 with a positive bias.
Dr. Copper is at 3.44 down from 3.47 earlier.
The US dollar rose from 81.07 earlier to 81.31 and is currently trading up at 81.26.
** RRR = Risk Reward Ratio
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Written by Gary