February 14th, 2013
in Gary's blogging
Midday Market Commentary For 02-14-2013
By noon the markets have calmed down remaining flat and directionless. Volume has been declining since 10 am with an occasional spurt of profit taking.
Like yesterday, I suspect the averages will melt down by the close.
The RRR** has been narrow at the opening bell for the past several months and has continued the trend into the midday session. 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 12:00 is at 13965 down 17 or -0.12%.
The SP500 is at 1519 down 0.92 or -0.06%.
SPY is at 152.10 down 0.06 or -0.04%.
The $RUT is at 922.12 up 1.56 or 0.17%.
NASDAQ is at 3194 down 2.40 or -0.08%.
The longer trend is up, the past months trend is bullish and the current bias is neutral with a bearish slant.
WTI oil was fluctuating this morning and is currently trading up at 97.53 trading between 95.04 and 98.02 and the bias is positive.
Gold was down this morning. Currently trading down at 1641.25, trading range is between 1668.25 and 1638.35 with a negative bias.
Dr. Copper is at 3.74 up from 3.73 earlier.
The US dollar rose from 80.12 earlier to 80.70 and is currently trading up at 80.61.
Leavitt has some good advise from this morning.
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