Fiscal Cliff Or Market Cliff, Both Set For A Dive

December 14th, 2012
in Gary's blogging

Opening Market Commentary For 12-14-2012

Premarket was up early and fell off after the US financial reporting at 8:30 this morning. (See charts below.) The 'not so good' news is bound to reflect poorly later in the session.

The Friday session large caps opened up a few points but generally markets remained flat, mixed and directionless. The large caps are sitting on the 100 DMA and small caps remain below the 100 DMA. The early green volume was low as was the red as investors await any word of a political compromise to avoid the so-called 'fiscal cliff'.

However, it won't take much for the markets themselves to fall off a cliff and take a nose dive; one that has been expected for months.

Follow up:

I suspect that the not so good financial's and the lack of resolving the fiscal cliff issue will play negatively later in the day. Read: 'What Is The Fiscal Cliff?'


Inflation at the consumer level fell 0.3% in November from October, a slightly steeper drop than the 0.2% expected and the first decline since May. Excluding the food and energy components, prices were up 0.1%, slightly less than the 0.2% expected.

The financial's as reported this morning. The first column is what was reported. The second is what analyst were expecting and the third is the last report.

(Click on chart for larger view.)

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 10:15 is at 13180 up 9.40 or 0.07%.

The SP500 is at 1417 down 2.38 or -0.17%.

SPY is at 142.35 down 0.29 or -0.20%.

The $RUT is at 823.68 down 0.54 or -0.07%.

NASDAQ is at 2977 down 15 or -0.49%.

The longer trend is up, the past months trend is bullish and the current bias is down.

How Oil Really Gets Priced

WTI oil was down today and is currently trading down at 86.29 trading between 86.90 and 86.05 and the bias is negative.

Brent crude was up today and is currently trading up at 109.08 trading between 107.90 and 109.27 and the bias is positive.

Gold has been trading sideways this morning. Currently trading up at 1697.37, trading range is between 1693.18 and 1700.20 with a negative bias.

Dr. Copper is at 3.68 down from 3.69 earlier.

The US dollar fell from 80.06 earlier to 79.82 and is currently trading up at 79.94.

** 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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