Markets Close Below Sessions High

December 11th, 2012
in Gary's blogging

Closing Market Commentary For 12-11-2012

Very interesting market today. For the past 5 sessions there has been a direct line of advancement despite the daily ups and downs. Today high rise and consequent decline is right in line with this rise. I can see the averages, especially the DOW and the SP500, continue to rise somewhat for the next several days. The low caps have to catch up and climb to their resistance levels discussed earlier. I think that is a possible goal if the large caps slow down a bit. At that point the Santa Claus rally will be over and we can see some market decline.

Markets closed down from the days highs but above the sessions opening. Tomorrows FOMC meeting will probably not be a 'Earth Shaking' meeting but it should provide a bit more support to the bulls. I would expect the markets to start out low tomorrow, rise and decline somewhat – all on low volume. The after market action brought the futures back up to nearly the sessions highs, but we will have to see how this translates in the morning.

Follow up:

The RRR** has been narrow at the opening bell for the past several months and continued the trend into the closing session. This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable.

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 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 less than optimal 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. The gap up this morning would have been considered tradeable, but you would have had to 'guess' at yesterday's closing that today would be up and hold overnight. Today might be another good guessing game if the market gaps up again tomorrow.

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 13248 up 78 or 0.60%.

The SP500 is at 1427 up 9 or 0.65%.

SPY is at 143.66 up 1.19 or 0.83%.

The $RUT is at 834.99 up 8.73 or 1.06%.

NASDAQ is at 3022 up 35 or 1.18%.

The longer trend is up, the past months trend is bearish to neutral and the current bias is up.

How Oil Really Gets Priced

WTI oil was up earlier but turned sour and is currently trading up at 85.89 trading between 85.30 and 86.38 and the bias is positive.

Brent crude was up today then turned down and again up. Currently trading up at 108.32 trading between 107.10 and 108.35 and the bias is positive.

Gold was up this morning and then turned south in a big way and then reversed itself once again. Currently trading up at 1709.80, trading range is between 1704.78 and 1714.40 with a positive bias.

Dr. Copper is at 3.69 down from 3.72 earlier.

The US dollar fell from 80.50 earlier to 80.12 and is currently trading up at 80.18.

The 500 at the close. Is the next resistance going to be penetrated? The 'zone' starts at 1434 to approximately 1442 therefore any movement up to but NOT including 1442 would be considered rubbing the bottom. Above 1442 is VERY bullish.

The DOW at the close. The same thought apply here except the low number of the zone is 13284 and top is around 13401. Going above 13400 is very bullish.

The $RUT at the close. Notice all the gaps and in particular the one at October 19th. The Russell has to rise to 837.12 in order to close that gap and that is what I expect to happen – eventually. Notice all of the open gaps the $RUT made during this current rise since November 16th. These gap are VERY bearish AND will be filled – eventually. Because everyone is expecting the US 'fiscal cliff' to be avoided, investors will most likely rally around just about ANYTHING that is said between the two opposing parties that makes it appear a compromise has been reached. That will in turn move the $RUT up to 837.12 signaling the end of the so-called Santa Claus Rally.

Click on chart to see larger version.

** RRR = Risk Reward Ratio

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

Written by Gary

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