February 20th, 2013
in Gary's blogging
Opening Market Commentary For 02-20-2013
Premarket numbers were flat to slightly negative with some predicting the DOW to melt up to 14098 before declining (closed yesterday at 14035).
The majority of the averages melted down about 0.06% to 0.11% at the opening on low volume but no hints of direction from Mr. Market.
By 10 am it appears the market is going to take a breather and trade in a narrow range just below yesterday's closing. That is, unless the HFT computers decide to continue to melt the averages up later in the day.
US financial numbers reported this morning were mixed indicating equal weakness and strength, tread carefully. According to INO, Stocks slip following homebuilding slowdown.
U.S. Housing starts fell 8.5% in January from December to an annualized rate of 890,000 units, shy of the 925,000 expectation. Permits to build new homes rose 1.8% to an annualized rate of 925,000, better than the 915,000 Wall Street anticipated, and the highest since 2008.
Prices at the producer level rose 0.2% in January from December, a slower pace than the 0.4% economists expected. Excluding the food and energy components, prices were also up 0.2%, matching forecasts.
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 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 10:00 is at 14021 down 14 or -0.11%.
The SP500 is at 1526 down 4 or -0.26%.
SPY is at 152.90 down 0.33 or -0.22%.
The $RUT is at 930.11 down 1.87 or -0.20%.
NASDAQ is at 3206 down 7.44 or -0.23%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is down.
WTI oil is trading between 95.30 and 97.08 this morning. The session bias is up and is currently trading down at 96.67. The session bias is moderately positive to neutral.
Gold fell from 1618.22 earlier to 1585.79 and is currently trading down at 1586.54. The bias is very bearish.
Dr. Copper is at 3.63 down from 3.74 earlier.
The US dollar rose from 80.35 earlier to 80.74 and is currently trading down at 80.69. The bias is neutral to bullish.
** RRR = Risk Reward Ratio
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Written by Gary