Markets Close Down After Sideways Trading While Consolidating

February 21st, 2013
in Gary's blogging

Closing Market Commentary For 02-21-2013

Markets generally drifted down until 2:30 when the HFT algo computers started melting the averages upward on low volume of course. Overall, the averages are below the lows of yesterday's session, but that does not make trend. Just look at the charts towards the end of this missive and one can see where this has occurred before in recent history. I am done guessing this casino market.

The markets closed about midway from the opening and low points of the day and were melting even lower as the final bell rang.

Follow up:

What happen tomorrow is anyone's guess but I suspect we will see more weakness. The question is how long is this 'correction' going to last!

The RRR** has been narrow at the opening bell for the past several months and has continued the trend into the closing 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, if there are anymore, and still may be too early to start shorting. If you were able to jump on the train yesterday afternoon you could have cashed in on a good scalp.

Yesterday had relatively heavy volume, however 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. 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 4:00 is at 13880 down 47 or -0.34%.

The SP500 is at 1502 down 9.53 or -0.63%.

SPY is at 150.59 down 0.75 or -0.50%.

The $RUT is at 905.40 down 8.10 or -0.89%.

NASDAQ is at 3131 down 32.92 or -1.04%.

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 bearish.

How Oil Really Gets Priced

WTI oil is trading between 97.11 and 92.64 this morning. The session bias is bearish and is currently trading down at 92.96.

Gold rose from 1554.57 earlier to 1584.96 and is currently trading sideways at 1576.37.

Dr. Copper is at 3.56 falling from 3.74 earlier.

The US dollar rose from 80.68 earlier to 80.61 and is currently trading down at 81.46.


"I am as bearish on stocks as I have been in some time," writes Doug Kass. "Much of the current investor optimism expressed in a rising stock market is not consistent with the underlying economic and profit data," he continues, saying the exact same thing David Einhorn said on the GLRE earnings call yesterday.

The 500 at the close.

The DOW at the close.

** 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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