December 4th, 2012
in Gary's blogging
Closing Market Commentary For 12-04-2012
Markets closed on time and that is about the only thing of interest. Several good fake outs as the algo computers jerked everyone brave enough to dip their toes in the market waters today. Generally the averages melted down on low volume, but steady and remaining flat all day. I do expect volatility in the next several sessions, so be on the outlook of generally higher averages followed by several days of steep declining numbers.
Interesting read from Zerohedge.
With the foundation of our economy now one of gluttony and excess (at all costs), the significance of the slowdown in consumer spending in the latest GDP data cannot be underestimated.
As Bloomberg Briefs notes, real consumer spending fell 0.3% in October, and is only 1.3% above year-ago levels - the US economy has a propensity to slip into recession any time the 12-month pace of real consumer spending falls below 2.0%.
Their so-called ‘Fab Five’ indicators of discretionary spending took a notable turn for the worse in October. Dining out fell 0.4% MoM in October and is only +1.5% YoY – its slowest pace since April 2010. Spending on cosmetics and perfumes fell 0.04% in October, continuing the negative trend from its peak registered in the summer of 2011.
Spending on women’s and girls’ clothing slumped 1.8% in October, following a 0.1% decline in September. Casino gambling fell 1.6% in October, while spending on jewelry and watches fell 0.1% in the same month.
All-in-all, the consumer's balance-sheet-recession continues...
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 4:00 is at 12951 down 13.82 or -0.11%.
The SP500 is at 1407 down 2.41 or -0.17%.
The $RUT is at 822.12 up 1.32 or 0.16%.
SPY is at 141.18 down 0.27 or -0.19%.
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 down at 88.35 trading between 89.20 and 87.58 and the bias is negative.
Brent crude is down today and is currently down at 109.71 trading between 110.90 and 109.20 and the bias is negative.
Gold was down this morning. Currently trading up at 1697.20, trading range is between 1720.00 and 1691.28 with a negative bias.
Dr. Copper is at 3.66 up from 3.64 earlier.
The US dollar fell from 79.91 earlier to 79.59 and is currently trading down at 79.65.
The 500 at the close.
The DOW at the close.
** RRR = Risk Reward Ratio
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Written by Gary