February 12th, 2013
in Gary's blogging
Opening Market Commentary For 02-12-2013
The SP500 futures this morning, like yesterday, made a move up and above the 'holy grail' line of resistance that has kept the 500 from advancing. It then fell back to just below that line, just like yesterday. It was looking like we are going to have a repeat session, just like yesterday. The futures want to move higher, but the strength doesn't appear to be there even though the 500 eased above 1519 for a brief moment.
Markets opened flat, mixed and low volume, nothing surprising there, but certainly not a really great investing climate either. The markets are oversold and posed for a 'correction' as many pundits are claiming, but I actually can see a bit more room at the top and caution jumping to any conclusions for a lot of reasons.
The market may be weak and can't move higher OR the market may be consolidating for the next grab for the gold ring. Remember, this market is not like the old days where moves would be signaled by 'massive' jumps in either direction. Now we see small measured moves primarily because the mom and pop investors are not there to do their panic thing. Plus, the big institutions don't have any reason to sell. So we look and the 'crumbs' of information that are given us to help discern which way to go.
At the opening $VIX was melting up and the $TRIN fell from yesterday's 0.80's to 0.35 leaving investors scratching their heads and wondering what is going to happen next. My proprietary movement indicator was at zero for the first 10 minutes then went slightly red and then slipped back up into the green zone.
By 9:55 the 500 melted up to 1518.27 and then backed off, just like yesterday. The DOW and the $RUT are advancing so perhaps the 500 is waiting for the other averages to catch up before advancing? It seems we are back to guessing.
The RRR** has been narrow at the opening bell for the past several months and has continued the trend again this morning. This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable. As of right now, 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 over the past year. 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 13997 up 26 or 0.19%.
The SP500 is at 1518 up 1.45 or 0.11%.
SPY is at 151.94 up 0.16 or 0.10%.
The $RUT is at 915.82 up 2.79 or 0.31%.
NASDAQ is at 3191 down 0.05 or -0.00%.
The longer trend is up, the past months trend is bullish and the current bias is up.
WTI oil was up this morning and is currently trading up at 97.53 trading between 95.07 and 97.80 and the bias is positive.
Brent crude was up earlier and is currently trading down at 118.36 trading between 117.50 and 118.91 and the bias is negative.
Gold was generally down this morning. Currently trading up at 1648.14, trading range is between 1668.30 and 1639.08 with a neutral bias.
Dr. Copper is at 3.74 up from 3.72 earlier.
The US dollar fell from 80.59 earlier to 80.23 and is currently trading further down at 80.20.
** RRR = Risk Reward Ratio
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Written by Gary