February 1st, 2013
in Gary's blogging
Opening Market Commentary For 02-01-2013
Premarket numbers were higher this morning but the NFP figures were not what was expected and the employment rate eased up to 7.9 from 7.8. Also, there was a big gap to be covered in the USD FX market of 6 cents at 79.20 which happened by the 20 minute mark. SP500 futures jumped up to 1505 before the opening and started melting back down as investors began to realize that the mornings financial numbers were not all that positive.
Markets opened up as expected near the highs of several sessions past and quickly started to retreat. After several false starts the averages continued to challenge previous highs. By 10 am most averages were solidly in the green.
The MSM (Main Stream Media) was going gaga over the 'no so good' financial numbers this morning pushing the premarket to new highs. The migraine is about to set in, watch for it. The bottom line here is to expect the markets to make a small contraction soon. The pivot point for today was when the USD went to 79.26. It actually went to 79.31 before retracing a bit; now we wait to see which direction the markets will eventually take. If you were quick this morning, several inverse ETF's would have been a good scalp.
The goldilocks economy continues as January nonfarm payrolls number comes in right as expected, or 157,000, a tiny miss to expectations of 165,000, down from the upwardly revised 196,000 (was 155,000 previously), leading to an unemployment rate of 7.9%, higher than the 7.8% expected.
The seasonal adjustment for January was in line with expectations, or 2.120 million, as the actual decline in jobs December to January was a whopping 2.84 million. The NSA Birth/Death adjustment subtracted some 314K jobs in January.
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. It is too late to catch the highs and may be too early to start shorting.
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 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 several years.
I also have continuing issues with some pundits, writing almost every day, that there are setups for day trading. Best Stock Market Indicator Ever: Unchanged at 87% and Secondaries Confirm "Tradable" 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. I keep hoping for increasing volumes 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 10:00 is at 13994 up 133 or 0.96%.
The SP500 is at 1510 up 12 or 0.84%.
SPY is at 151.01 up 1.31 or 0.87%.
The $RUT is at 908.63 up 6.54 or 0.72%.
NASDAQ is at 3166 up 24 or 0.78%.
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 97.07 trading between 98.20 and 96.55 and the bias is negative.
Brent crude was up earlier and is currently trading up at 116.38 trading between 116.72 and 115.25 and the bias is neutral.
Gold was up this morning. Currently trading down at 1667.18, trading range is between 1656.75 and 1681.35 with a negative bias.
Dr. Copper is at 3.73 down from 3.77 earlier.
The US dollar fell from 79.27 earlier to 78.94 and is currently trading down at 79.22. (Gap was covered at 79.26 moving up to 79.32 before retracting.)
** RRR = Risk Reward Ratio
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Written by Gary