January 4th, 2013
in Gary's blogging
Midday Market Commentary For 01-04-2013
By noon the markets were still at the crossroads of indecision. Equities have shown a lack of direction in midday trading during this Friday session, as traders are obviously reluctant to make any significant moves. The major averages are lingering near the unchanged line after ending the previous session about even.
McDonalds (MCD) was hovering just below its 200 DMA along with Apple (AAPL) having decided to continue its downward journey. These are just several of the many bearish indicators of overall market health and should be watched closely. The DOW, NASDAQ, Russell 2000 and the 500 seemed to have reached a major resistance and are unable to move any further.
Further bearish signals are coming from the Fed themselves. “While there was a clear majority in favour of further asset purchases (the third round of quantitative easing, or QE3), reports ADVFN, the Federal Open Market Committee (FOMC) members were divided on the timing of these purchases.”
Markus Huber, the head of German HNW trading at ETX Capital explains, “The support for how long the programme should run "isn't as solid as previously thought with some Fed members feeling rather uncomfortable for the Fed buying bonds beyond mid 2013.”
The RRR** has been narrow at the opening bell for the past several months and continued the trend into the midday 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 2012 ends and 2013 begins, but a lot of guessing 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 the past year.
I also have continuing 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 12:30 is at 13412 up 21 or 0.16%.
The SP500 is at 1464 up 5 or 0.33%.
SPY is at 146.21 up 0.48 or 0.33%.
The $RUT is at 878.87 up 6 or 0.72%.
NASDAQ is at 3104 up 4 or 0.13%.
The longer trend is up, the past months trend is bullish and the current bias is up.
WTI oil was down this morning and the reversed itself and is currently trading down at 92.51 trading between 92.96 and 91.55 and the bias is positive.
Brent crude was also down earlier and is currently trading down at 110.89 trading between 112.10 and 110.39 and the bias is positive.
Gold was down this morning and has since reversed its course. Currently trading down at 1644.359, trading range is between 1663.64 and 1626.00 with a positive bias.
Dr. Copper is at 3.69 up from 3.67 earlier.
The US dollar fell from 80.99 earlier to 80.59 and is currently trading up at 80.76.
** RRR = Risk Reward Ratio
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Written by Gary