December 13th, 2012
in Gary's blogging
Opening Market Commentary For 12-13-2012
Premarket numbers were where we left them yesterday. Except for a serious 4 point spike in the SP500 futures after the 8:30 am US financial's were announced it fell back to reality. Advanced Retail (Nov) fell short of the expected 0.5% to 0.3%, US Initial Claims fell 26,000 from what was expected, however the US Producer Price Index fell even further to 1.5% from the last report of 2.3%. These mixed US financial numbers created a minor 'sell the news' scenario as the markets opened.
The BTFD dippers tried to bolster the market weakness by reversing the opening losses with very low green volume in the first 10 minutes. Then the sellers took over easing the averages back to the opening numbers. By 10 am the tug-of-war had been NOT been decided, for the morning session anyway, as the averages battled for position on low volume. I expect the markets to take a breather today although some weakness will be posted, but not enough to trade. Watch for any sudden reversals.
The RRR** has been narrow at the opening bell for the past several months and continued the trend again this morning. 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. 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 10 am is at 13249 up 4.44 or 0.03%.
The SP500 is at 1428 up 0.34 or 0.02%.
SPY is at 143.57 up 0.05 or 0.03%.
The $RUT is at 829.96 up 0.59 or 0.07%.
NASDAQ is at 3013 up 0.12 or 0.00%.
The longer trend is up, the past months trend is bullish and the current bias is neutral.
WTI oil was choppy this morning and is currently trading down at 86.33 trading between 83.75 and 86.10 and the bias is negative.
Brent crude was also very choppy this morning and is currently trading down at 108.75 trading between 109.50 and 108.80 and the bias is negative.
Gold was down this morning. Currently trading up at 1693.48, trading range is between 1710.63 and 1689.50 with a negative bias.
Dr. Copper is at 3.67 down from 3.71 earlier.
The US dollar slipped from 80.10 earlier to 79.92 and is currently trading sideways at 79.96.
Old Rick doesn't mince words on his opinion of yesterdays FED actions.
The institutional crazies, village idiots and knee-jerk opportunists who bought shares yesterday following a Fed announcement of yet more monetization seem not to have been paying attention, at least initially, to the nasty sell-off in T-Bonds.
Well before yesterday, any sentient being would have surmised that easing’s impact on the economy had reached the point of diminishing returns.
With administered rates pegged at zero and mortgage loans near historical lows, how much more boost are we to expect from yet another gaseous effusion of bank-system credit? Most of it is going unused anyway, other than by banks for the purpose of “buying” – you got it! – Treasury paper.
Contemplating this stupid shell game probably gets a faux Keynesian like Krugman hard, but sage T-Bond traders evidently were having none of it.
As a backdrop, the Fed has been buying $45 billion of T-bonds each month, but offsetting it by selling a like amount of short-term Treasurys.
With yesterday’s announcement, the central bank ditched the offset, clearing the way for an increase in the Fed’s portfolio of “assets” above the current level of $2.861 trillion.
This latest twist in the soon-to-expire, dumber-than-dumb Operation Twist got a big thumbs-down from the bond traders, who drove futures prices sharply lower.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary