Averages Melt To New Highs, Profit Taking Apparent

February 19th, 2013
in Gary's blogging

Midday Market Commentary For 02-19-2013

The 500 banged up against 1526 for most of the morning and even with some moderate profit taking the 500 did manage to sneak up to 1528.17 for a brief moment. I have been saying for several weeks that I believe that the market could (and has) melt up higher. However, as the market has been melting up my proprietary indicators have been increasingly moving to the bearish side.

I am not sure we have seen the last melt up, but it is becoming increasingly clear it won't take much to reverse this upward trend to something looking like a cliff, perhaps even a waterfall.

Follow up:

There isn't much to add to the already deluge of bearish predictions being opined from various well respected authors, so I won't try to upstage them. What I do see is extreme caution at this juncture even with minor positions. A correction right now could very well take any profits you may have realized.

What is perplexing is that gold is falling rapidity to new lows along with the US dollar indicating weakness for the day. Oil's have remained 'calm' for the most part and everything on low volume. If no one is trading then the current movements smack of heavy manipulation by the HFT algo computers and DaBoyz. Be careful.

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 jump in to catch the highs and still may be too early to start shorting.

As long as market volume remains light or the trading range is narrow, one can expect successful, or at least profitable, trading to remain elusive. The RRR** has been wider on some volatile sessions lately and is expected to become more so as 2013 enters the first quarter, but unfortunately 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: Drops to 82% 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 12:15 is at 14024 up 43 or 0.31%.

The SP500 is at 1526 up 6.89 or 0.45%.

SPY is at 152.84 up 0.74 or 0.49%.

The $RUT is at 927.12 up 3.98 or 0.43%.

NASDAQ is at 3201 up 9 or 0.28%.

The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is neutral to bullish.

How Oil Really Gets Priced

WTI oil is trading between 95.31 and 96.15 this morning. The session bias is neutral and is currently trading sideways at 95.77.

Gold fell from 1618.00 earlier to 1602.25 and is currently trading down at 1602.73. The bias is very bearish.

Dr. Copper is at 3.65 fell from 3.70 earlier. The bias is bearish.

The US dollar fell from 80.76 earlier to 80.52 and is currently trading down at 80.57. The bias is beaish.

** RRR = Risk Reward Ratio

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:


Written by Gary

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