December 18th, 2012
in Gary's blogging
Midday Market Commentary For 12-18-2012
Markets continued to climb after a rocky opening start until 11:30 when the bears made their presents known halting the markets advance. Red and green volume has been moderate compared to previous sessions as the $VIX continues to fall. The 500 was the first market to reach the upper limit of their individual resistance zones and has since leveled off while the NASDAQ and DOW have barely made a move into their zones yet. SPY and the Russell 2000 have gone above the 'zone' and may be signaling more upside to come, investors must be very cautious at this juncture.
By noon volume fell off considerably as investors await news of a fiscal cliff comprise. Positive news could skyrocket the averages but be aware they could fall just as fast if political bull$hit is detected on either side. Right now investors are not in much of a mood to play political games.
Volume continues to stay at elevated levels (compared to previous sessions) and it remains to be seen who is going to win this tug of war. Weakness is apparent and it remains to be seen if the bears can pull the rug out from under the bulls.
The RRR** was surprisingly narrower than usual at the opening bell this morning. By noon it had widened to a 'normal' width which is just too thin to trade. The continuing narrow width trend that we have been seeing for the past several months 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 12:15 is at 13311 up 76 or 0.58%.
The SP500 is at 1441 up 10.62 or 0.74%.
SPY is at 144.80 up 1.03 or 0.72%.
The $RUT is at 842.03 up 7.07 or 0.85%.
NASDAQ is at 3042 up 31.54 or 1.05%.
The longer trend is up, the past months trend is bullish and the current bias is down.
WTI oil was up today and is currently trading up at 87.99 trading between 87.91 and 88.14 and the bias is positive.
Brent crude last report was 109.15.
Gold was down this morning. Currently trading down at 1674.93, trading range is between 1702.50 and 1672.68 with a negative bias.
Dr. Copper is at 3.65 down from 3.68 earlier.
The US dollar fell from 79.64 earlier to 79.78 and is currently trading down at 79.53.
The FTSE 100 opened strongly on Tuesday morning on the back of increasing optimism that US President Barack Obama and House Speaker John Boehner will be able to strike a deal by the end of the year to avert the 'fiscal cliff'.
Without a deal by the January 1st deadline, the $600bn in automatic spending cuts and tax increases which come into effect are expected to pull the US economy back into recession.
Markus Huber, the head of German HNW trading at ETX Capital said this morning that with the end of the year approaching fast and an empty economic data schedule, focus will mostly be on US budget negotiations and "the smallest hint of progress or setback can have a substantial impact on the markets.
"Overall for now, any indication at all that there is some movement as the budget negotiations are concerned and that the two parties are making an effort to find a solution is enough to keep markets moving higher.
Obama has reportedly proposed raising taxes for those that earn over $400,000, a higher threshold than the $250,000 annual salary he had previously targeted. While Boehner's proposal at the weekend offered to raise taxes on those earnings over $1m in exchange for cuts to entitlement spending, it appears that the real negotiations have officially begun.
** RRR = Risk Reward Ratio
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Written by Gary
Written by Gary