February 7th, 2013
in Gary's blogging
Opening Market Commentary For 07-07-2013
Premarket numbers were generally flat coming into the opening bell and not giving us much in the direction markets were headed for the day.
The markets opened down then a fake rise and once again melted back down where the direction now seems to be headed. Moderate red volume spikes indicates more profit taking as investors become skittish over increased fears of the EZ heading towards more financial fears throughout the region.
By 10 am the markets tracks looked like the past several sessions where the averages melt down at the opening and then with the help of the HFT computers, melt back up for the rest of the session.
Some interesting views and advice from Leavitt this morning.
“So far this week we’ve gotten a big down day, a big up day and a pause day. The S&P’s net change since last Friday is down one point, so we’re basically flat on the week. This isn’t a surprise because coming into the week the near term was not clear.
Yesterday’s [SP500] range was small relative to the last three days. A breakout doesn’t automatically mean it’s party time. A higher high followed by a sell-off would create a megaphone pattern – a common pattern that often forms at tops and right before volatility expands. I’m not predicting this. I’m just bringing it to your attention. Don’t go all in with your trades until you know a new high isn’t going to be faded.
. . . but most [charts today] fall in the category of “high and tight.” Those are small patterns that form after big rallies. They easily break out, but getting follow through can be difficult given the already-booked gains. It will take a multi-day market rally to push these stocks out of their patterns and get them enough follow through for me to believe we won’t get a round of false moves.”
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 10:15 is at 13930 down 57 or -0.41%.
The SP500 is at 1509 down 3 or -0.22%.
SPY is at 150.90 down 0.27 or -0.18%.
The $RUT is at 908.61 down 2.68 or -0.29%.
NASDAQ is at 3161 down 7 or -0.22%.
The longer trend is up, the past months trend is bullish and the current bias is down.
WTI oil was up this morning and is currently trading sideways at 96.75 trading between 95.10 and 97.21 and the bias is neutral.
Brent crude was up earlier and is currently trading down at 117.37 trading between 115.10 and 117.82 and the bias is neutral.
Gold was down this morning. Currently trading down at 1667.62, trading range is between 1684.55 and 1663.35 with a negative bias.
Dr. Copper is at 3.74 down from 3.79 earlier.
The US dollar fell from 79.86 earlier to 79.58 and is currently trading at a new high at 80.21.
This following article is a must read on where we are today and where we are going. An in-depth critique of the market place with a ten step how to approach the current market.
by Lance Roberts
There have been several articles as of late discussing that the next great secular bull market has arrived. Historically, secular bear markets have averaged about 14 years, and considering that we began writing about the current secular bear market cycle in early 2000, that would put the current cycle about 2 years away from it historic average.
However, the reality is that this cycle is currently unlike anything that we have witnessed in the past. ...[W]e are likely closer to the end than the beginning, and the next major stock market correction will likely be the last for this cycle.
** RRR = Risk Reward Ratio
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Written by Gary