December 4th, 2012
in Gary's blogging
Midday Market Commentary For 12-04-2012
Midday market antics continue as the averages sea-saw back and forth first with bear traps and then with bull traps. If the 3 to 4 day lackluster sessions continue we will probably see several days of the bulls running amok and then a serious attack by the bears. I expect the markets to see lower numbers before the week is out.
For today, the weakness shown this morning is probably done and we can all go home now and see what Mr. Market has for us tomorrow. The latest bear fake has leveled off for the time being leaving us with averages in the red, but flat.
As the market sea-saws this morning because of direct influence of the algo computers I can only wonder when the SEC is going to do something about them.
Study shows the extent of advantage for high-speed traders. Outgoing CFTC Chief Economist Andrei Kirilenko has highlighted the profits that high-speed traders make from traditional investors, with average income reaching as high as $5.05 in trades in S&P 500 futures against small investors. The findings come amid increasing concerns about whether high-speed traders have an unfair advantage, and whether they pose a threat to the financial system.
As long as market volume remains light or the trading range is narrow, one can expect successful trading to remain elusive. The RRR** has been wider lately on volatile sessions lately and is expected to become more so as the year ends, but a lot of guessing still remains. Correctly 'guessing', of course, is the tricky part of the successful trading equation. Any trades today will probably end up on the meager side of profitability if you are lucky as most trades have been during this past year.
I also have issues with some pundits writing almost every day that 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. Do not fall into the trap of money burning a hole in your pocket, sit tight better days are coming. Watch for increasing volume to signal improved trading.
Swing trading is also at your own risk for all the reasons mentioned above. Because the market is at a crossroads of sorts, I would prefer to sit on my hands as the markets are currently untradable. Guessing where the market is going to be tomorrow or next week, at this time anyway, can be a foolish and costly endeavor.
The DOW at 12:15 is at 12958 down 7 or -0.05%.
The SP500 is at 1405 down 4 or -0.27%.
The $RUT is at 816.73 down 4.05 or -0.50%.
SPY is at 141.10 down 0.34 or -0.24%.
The longer trend is up, the past months trend is bearish and the current bias is down.
WTI oil is down today and is currently up at 89.49 trading between 89.20 and 87.58 and the bias is positive.
Brent crude is down today and is currently down at 109.45 trading between 110.90 and 109.20 and the bias is positive.
Gold was down this morning. Currently trading down at 1696.20, trading range is between 1720.00 and 1691.28 with a negative bias.
Dr. Copper is at 3.67 up from 3.64 earlier.
The US dollar fell from 79.91 earlier to 79.61 and is currently trading down at 79.67.
** RRR = Risk Reward Ratio
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Written by Gary