Choppy Markets Expected Ahead Of Plan B vote

December 20th, 2012
in Gary's blogging

Opening Market Commentary For 12-20-2012

Equity Markets opened up a few point higher than yesterday's close on miniscule green volume and then started to melt down. It is apparent the the vote on Boehner's “Plan B' tonight is having a sobering effect on traders as the market moves in a directionless manner.

Volume moved up a notch with the sellers and 'dippers' trying to decide who will win the tug of war. By 10:00 the green volume shot up after the profit takers seemingly left the building. Suspect the day's session is going to be choppy in a light volume atmosphere. The HFT computer will also push the numbers around.

Follow up:

I wouldn't expect much in today's trading session – tomorrow is another matter completely.

Today's Fiscal Cliff Timeline

The "worst case" in the sequence of events forecasted two days ago in "The Most Critical 48 Hours In The Fiscal Cliff Melodrama Have Begun" is  taking shape, with Obama and Boehner not even remotely close to a compromise despite what the media and fly by night sellside analysts will have you believe.

Instead what looks almost certain to happen is a House vote on the GOP-proposed Plan B where it will pass, only to be voted down in the Senate, especially with the pre-veto treatment by Obama.

The House vote will be preceded by a Boehner press conference in which he will prepare the general public for this one final PR gambit before the House essentially shuts down for the year, as any hope of further Cliff discussion in the Christmas week can be abandoned. So from a timing standpoint:

  • House republicans meet at 12:00 pm to discuss the final act of the 2012 season of the Fiscal Cliff miniseries.

  • Boehner holds press briefing at 1:15 pm Eastern

  • House scheduled to vote on "Plan B" between 7:30 pm and 9:30 pm

Shortly thereafter Senate votes Plan B down and chaos ensues.

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. This morning it was as narrow as I have seen it in 6 months.

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 13258 up 7 or 0.05%.

The SP500 is at 1438 up 2.42 or 0.17%.

SPY is at 144.62 up 0.34 or 0.24%.

The $RUT is at 849.25 up 1.40 or 0.17%.

NASDAQ is at 3046 up 2 or 0.07%.

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

How Oil Really Gets Priced

WTI oil was down today and is currently trading down at 89.72 trading between 90.20 and 89.28 and the bias is negative.

Gold was down this morning. Currently trading down at 1649.50, trading range is between 1671.56 and 1646.90 with a negative bias.

Dr. Copper is at 3.53 down from 3.61 earlier.

The US dollar fell from 79.43 earlier to 79.06 and is currently trading up at 79.25.

** 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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