December 21st, 2012
in Gary's blogging
Opening Market Commentary For 12-21-2012
The end of the World has begun as the premarket was down this morning, waaaayyy down. The SP500 futures was down 12 points (-1.25%) after the GOP announced that 'Plan B' was going to be scrapped. The futures kept falling as the early morning action progressed. At 8:30 a.m., attention turned to the Commerce Department’s report on personal income and consumer spending where the reports were better than expected.
However, at the opening market opened much lower but leveling out by the 15 minute mark. The 'dippers' jumped in with abandon and leveled the markets decline with heavy green volume that is the heaviest seen in many months.
By 10 am the volume had fallen off to very low levels as traders take in a deep breath deciding what to do next.
The US financial reports were so-so with the U of Michigan confidence (Dec) fell 72.9 vs 75.0 expected and 74.5 prior and that is not so good. Maybe the 'dippers' who jumped in this morning are right and maybe they are not. My advise is NOT to guess. Look for the HFT computers to jack up the numbers today.
= Orders for long-lasting goods climbed 0.7% in November from October, a bigger gain than the 0.2% economists expected.
= Personal income climbed 0.6%, its biggest increase since February, and also higher than the 0.3% expected.
Good advise in that there are a lot of variables in play right now. Don't forget the Euro Zone issues either as nothing has changed over there.
“If nothing else today’s open will serve as a big reminder not to get lazy with positions. You can’t sit back and relax and assume things will work out in a timely manner.
When the S&P is 100 points off its low and a few warnings pop up, you gotta take partial profits, manage remaining shares wisely and be a little more cautious with new trades.
A deal in Washington will get done, but it’s unknown when.”
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. I personally would not have guessed what transpired last night and continued this morning.
The DOW at 10:15 is at 13188 down 123 or -0.93%.
The SP500 is at 1428 down 16 or -1.09%.
SPY is at 142.51 down 1.61 or -1.12%.
The $RUT is at 843.27 down 9.25 or -1.09%.
NASDAQ is at 3007 down 43 or -1.41%.
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 down at 88.25 trading between 90.00 and 88.00 and the bias is negative.
Gold was up this morning. Currently trading up at 1651.70, trading range is between 1634.42 and 1653.80 with a positive bias.
Dr. Copper is at 3.55 down from 3.56 earlier.
The US dollar rose from 79.07 earlier to 79.65 and is currently trading down at 79.59.
** RRR = Risk Reward Ratio
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Written by Gary