December 14th, 2012
in Gary's blogging
Closing Market Commentary For 12-14-2012
By the close Markets in general were showing serious signs of weakness as the averages declined all day. No announcement of the end of the 'fiscal crisis' and generally financial news was thin as we head into the weekend. Investors have noted this and have, at least temporarily, taken to the sideline.
Markets continued their 2 day melting with everyone wondering if we have seen the last of the Santa Claus Rally.
This should be required reading.
Once upon a time there lived an independent and industrious people in a land called Ameristan deep in the realm of Middle Income. Their kingdom was unlike any other recorded in the ancient histories, primarily because they had no “king”.
Instead, the Ameristanians had decided long ago that kings were much more trouble than they were worth, and, using cost/benefit ratio analysis, came to the conclusion that it was better to hang such ambitious power mongers by their necks and govern themselves instead.
Unfortunately, many generations had passed, and the revolutionary fire of Ameristan had grown tired and dormant. Eventually, many of the people began to forget where they had come from... Ameristan had become a land of Unicorn-burger flippers, Swamp Banshee back washers, Dwarf tossers, Jabberwocky jugglers, Bugbear shavers, etc.
They were like the peasants of the old days; beggars, thieves, and slaves.
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. 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 pm is at 13135 down 35 or -0.27%.
The SP500 is at 1413 down 5.87 or -0.41%.
SPY is at 142.19 down 0.51 or -0.36%.
The $RUT is at 823.75 down 0.45 or -0.05%.
NASDAQ is at 2971 down 21 or -0.70%.
The longer trend is up, the past months trend is bullish and the current bias is down.
WTI oil was down today and is currently trading up at 86.78 trading between 86.90 and 86.05 and the bias is positive.
Brent crude was up today and is currently trading down at 109.15 trading between 107.90 and 109.57 and the bias is positive.
Gold has been trading sideways this morning. Currently trading down at 1695.20, trading range is between 1693.18 and 1700.20 with a negative bias.
Dr. Copper is at 3.67 down from 3.69 earlier.
The US dollar fell from 80.06 earlier to 79.56 and is currently trading down at 79.65.
The 500 at the close. Notice the 500 closed below the 100 DMA.
The DOW at the close. Notice the DOW closed below the 100 DMA. The 50 DMA crosed over the 1005 sessions ago, very bearish.
REALITY CHECK: The White House and many congressional Republicans are setting their sights on a more modest deal that would extend current tax rates for most Americans, raise rates for top earners and leave vexing issues for the new year.
CLIFF AVOIDANCE: A growing number of Senate Republicans were calling on their House colleagues to yield on their opposition to letting top tax rates increase on income over $250,000 for couples, while extending Bush-era tax cuts for everyone else. That would leave other fiscal issues unsolved until 2013, including an increase in the nation's borrowing limit.
TROUBLE AHEAD: A narrow deal, involving only an increase in top marginal rates for top income earners would guarantee a second round of negotiations and brinkmanship over the debt ceiling.
** RRR = Risk Reward Ratio
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Written by Gary