February 8th, 2013
in Gary's blogging
Midday Market Commentary For 02-08-2013
Since 10 am the markets have moved in a sideways motion on falling volume. It seems all of the 'dippers' that wanted to buy in have, so the market drifts sideways as the HFT computers do their thing.
The $VIX is at its lowest point since 2001 at 12.92 having broken down from its support at 13.3. The bulls are in charge and are looking to open a can of 'whoop ass' next week, so the bears had better watch out.
By noon the averages were off their highs and had settled down to another lackluster afternoon.
Here is one reason the bulls like. The bears are shaking their heads collectively and waiting for the hammer to fall.
“The early strength on Wall Street is partly due to a positive reaction to a Commerce Department report showing a much narrower than expected U.S. trade deficit for the month of December, with the data potentially leading to an upward revision to the disappointing fourth quarter GDP data.
The report showed that the U.S. trade deficit narrowed to $38.5 billion in December from a revised $48.6 billion in November. Economists had expected the deficit to shrink to $46.0 billion.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said the much narrower than expected trade deficit "pretty much guarantees that the dip in fourth-quarter GDP will be revised to a small gain in the second estimate."
The initial report on fourth quarter GDP showed a 0.1 percent contraction compared to economist estimates for an increase of about 1.0 percent.”
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.
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 12:15 is at 13995 up 51 or 0.37%.
The SP500 is at 1517 up 7 or 0.51%.
SPY is at 151.75 up 0.79 or 0.52%.
The $RUT is at 914.07 up 5.89 or 0.65%.
NASDAQ is at 3194 up 30 or 0.93%.
The longer trend is up, the past months trend is bullish and the current bias is sideways.
WTI oil was up this morning and is currently trading down at 96.07 trading between 95.10 and 96.57 and the bias is negative.
Brent crude was up earlier and is currently trading up at 118.92 trading between 115.10 and 119.17 and the bias is positive.
Gold was down this morning. Currently trading up at 1667.707, trading range is between 1662.31 and 1682.10 with a neutral to negative bias.
Dr. Copper is at 3.76 up from 3.73 earlier.
The US dollar fell from 80.33 earlier to 80.01 and is currently trading higher at 80.28.
** RRR = Risk Reward Ratio
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Written by Gary