January 7th, 2013
in Gary's blogging
Closing Market Commentary For 01-07-2013
Markets closed in a lackluster sort of way, but expect the potential volatile situation to pick up as the week progresses. A quick bit of minor sell off towards the end of today's session indicating there is still some weakness out there in spite of what many bullish pundits are clamoring. Not with standing, no upper resistances were approached or broken and without some glorified news, I suspect we will see more market decline tomorrow.
Mr. Cam Hui is saying basically what I have been preaching in his following article with charts to back up his case.
“Technically, there are a lot of reasons for stocks to at least pause at these [current] levels. . .
comforting for the bulls is that broader NYSE Composite has managed to stage an upside breakout through resistance . . .
I don't expect that the SPX will break through to new highs in the short run . . .
this bull is getting tired and this latest up-move is facing too many headwinds . . .
the VIX Index has retreated to a major support zone where it has bounced off in the past. The CBOE noted that the VIX saw its largest percentage move since inception . . .
which is another sign of an oversold condition for the VIX and overbought condition for equities. In order for the stock market to advance, volatility would have to fall through a major support level.
In short, the bull case is facing too many technical and fundamental headwinds to see the market advance too much further in the short-term.
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 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 and the $VIX going above 20 to signal improved trading.
Swing trading is also at your own risk for all the reasons mentioned above although guessing overnight trades would have been most profitable. Again, 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 4:00 is at 13384 down 51 or -0.38%.
The SP500 is at 1461 down 4.58 or -0.31%.
SPY is at 145.99 down 0.38 or -0.26%.
The $RUT is at 875.80 down 3.35 or -0.38%.
NASDAQ is at 3098 down 2.85 or -0.09%.
The longer trend is up, the past months trend is bullish and the current bias is up.
WTI oil was down this morning and is currently trading up at 91.32 trading between 93.24 and 92.40 and the bias is positive.
Brent crude was down earlier and is currently trading up at 111.59 trading between 111.70 and 110.54 and the bias is positive.
Gold was down this morning. Currently trading sideways at 1646.78, trading range is between 1662.55 and 1644.00 with a neutral bias.
Dr. Copper is at 3.68 down from 3.71 earlier.
The US dollar down from 80.80 earlier to 80.38 and is currently trading down at 80.34.
The 500 at the close.
The DOW at the close.
The NASDAQ at the close. Mr. Hui, in the article above, didn't include several important indicators one of which are 'gaps' in the averages. The one shown here is big and is of the alpha sort. I expect it to be closed shortly with a declining market.
** RRR = Risk Reward Ratio
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Written by Gary