February 5th, 2013
in Gary's blogging
Midday Market Commentary For 02-05-2013
Both the DOW and the SP500 challenged their 14,000 and 1,500 magic lines in the sand as they rose off the morning lows to project new highs for the day. BUT they stayed very close to the witching numbers either winding up for another attack upwards or pausing before another plunge.
By noon the averages looked as if they have run out of steam as they melted along in a slightly negative parabolic fashion. This doesn't mean they couldn't make a fake run for the gold ring during the afternoon session and clean the clocks of the bears out there. The volume has fallen off and unless the HFT computers start melting the numbers upwards, I suspect we will see the closing averages back down where they started this morning.
I have written before, that the absence of the ma and pop investors will limit any market action to 1 to 2 percent moves on low volume so expect any future changes to be small baby steps. That is because the investors left in this market casino have little reason to sell; where are they going to go?
When the market does go down, and it will, who will make up the selling group?
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. It is too late to catch the highs and may be too early to start shorting, be careful.
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 12:00 is at 13991 up 111 or 0.80%.
The SP500 is at 1509 up 13 or 0.91%.
SPY is at 150.89 up 1.35 or 0.90%.
The $RUT is at 906.603 up 7 or 0.81%.
NASDAQ is at 3162 up 31 or 1.00%.
The longer trend is up, the past months trend is bullish and the current bias is up to sideways.
WTI oil was up this morning and is currently trading up at 96.82 trading between 95.95 and 97.08 and the bias is positive to neutral.
Brent crude was up earlier and is currently trading up at 116.91 trading between 114.90 and 116.98 and the bias is positive to neutral.
Gold was up and then descended this morning. Currently trading down at 1670.503, trading range is between 1667.06 and 1684.90 with a negative bias.
Dr. Copper is at 3.77 down from 3.79 earlier.
The US dollar fell from 79.80 earlier to 79.50 and then rose back up to 79.81 before falling again to 79.48 and is currently trading up at 79.64.
** RRR = Risk Reward Ratio
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Written by Gary