February 14th, 2013
in Gary's blogging
Opening Market Commentary For 02-14-2013
Premarkets were down about as much as they were up the past several sessions, so there is not much to get worried about – today anyway. Markets were expected to gap down at the opening for the cash crowd tempered by the better than expected continuing claims report – which will be revised - again.
Markets opened down further than expected but bounced back up again on moderate green volume. By the 10 minute mark the averages were generally down, flat and directionless as volume started to fall off.
By 10 am markets remained flat and profit taking was evident but market direction was less evident.
Dailyfx reports, “Despite the upward revision in last week's continuing claims print, the 3114K reading is the lowest since July 2008.”
New claims for U.S. unemployment benefits fell to 341,000 last week from an upwardly revised 368,000 the week prior. Claims were expected to fall to 360,000 from an initially reported 366,000.
The number of people seeking unemployment benefits fell by 27,000 last week, an indication that hiring could improve. The Labor Department said Thursday that weekly applications dropped to a seasonally adjusted 341,000, the lowest level in three weeks.
The four-week average, a less volatile measure, ticked up to 352,500 from a five-year low of 351,000 the previous week. The snowstorm that hit the Northeast this weekend had limited impact on the latest figures. The report covers the week ended Feb. 9, before the storm hit.
The Labor Department said it estimated figures for two states, including Connecticut where the storm closed state offices. Illinois also didn't provide data. The broader trend has been favorable.
The four-week average has fallen nearly 5 percent in the past three months. Applications are a proxy for layoffs. As they fall, net hiring typically rises.
The first column in the chart below is what was reported. The second is what analysts were expecting and the third is the last report. The reports have increasingly lost their importance with investors and a selloff could be the norm. This is because of how they are compiled skewing the real unemployment situation which is a lot worse than generally known by the 'sheeples'.
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 10:00 is at 13972 down 10 or -0.07%.
The SP500 is at 1518 down 2 or -0.14%.
SPY is at 151.99 down 0.17 or -0.11%.
The $RUT is at 920.64 up 0.11 or 0.01%.
NASDAQ is at 3188 down 8 or -0.26%.
The longer trend is up, the past months trend is bullish and the current bias is neutral.
WTI oil was fluctuating this morning and is currently trading up at 97.44 trading between 95.04 and 98.02 and the bias is positive.
Gold was down this morning. Currently trading up at 1646.80, trading range is between 1668.25 and 1638.35 with a negative bias.
Dr. Copper is at 3.75 up from 3.73 earlier.
The US dollar rose from 80.12 earlier to 80.70 and is currently trading down at 80.62.
Leavitt has some good advise.
By itself, the extent of the rally off the November low is not a surprise – the market is fully capable of such upside progress. The surprising thing is the steadiness and consistency. Other than a move down on very light volume at the end of 2012, the market has barely pulled back. Every little dip gets bought.
If you’ve been waiting for a buy-able dip, you are probably pretty frustrated right now because one hasn’t materialized. If this describes you, send me a quick email when you decide to throw all caution to the wind and buy because that’s when the market will top.
Is this harsh? Yeah. Sorry, that’s the way Wall St. works. Rallies don’t let you in; sell-offs don’t let you out. Sooner or later you’ll realize playing guessing games is not wise. Read the charts and trust them.
Given this, the risk/reward for chasing stocks higher right now is not good. Building gains on top of gains is hard. I get the sense a decent move is coming. We could get a blow-off top that brings the last of the bears over to the bull’s side or a quick move down that catches the “market never drops” bulls by surprise. Be on your toes.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary