February 22nd, 2013
in Gary's blogging
Midday Market Commentary For 02-22-2013
The averages have been trading sideways in a narrow range on low volume throughout the morning session. What this means as far as determining a direction I don't have a clue as to what this casino market is going to do in the near term. Much weakness throughout the Eurozone, the US and BRICS still remains and financial outlooks are still undetermined.
By noontime the $VIX had melted down a 'tad' and the SP500 resumed its sideways movement after a very brief downturn. Oh, how I wish my crystal ball wasn't so cloudy! I still see weakness and believe today was just a correction to more downside – we will see.
The US indicators may be mixed to some, but they look downright scary to me.
The US economic indicators have remained broadly mixed with some evidence of a slowdown in consumer spending growth due to tax changes while the PMI readings continue to suggest moderate expansion. The Federal Reserve will remain committed to an expansionary monetary policy and will be extremely reluctant to tighten policy given fears that any premature move could push the economy back into recession. The dollar should still gain support from expectations of longer-term out-performance and an improving trade situation.
The dollar pushed higher during the week with a significant advance against the Euro and notable gains against Sterling with the trade-weighted index at a five-month high.
The headline US housing data was slightly weaker than expected as starts retreated to an annual rate of 0.89mn from a revised 0.97mn previously, but there was a modest increase in permits which helped maintain underlying confidence in the sector.
A warning over weaker sales from Caterpillar increased unease surrounding the global growth outlook and also helped spark a sharp decline in commodity prices with some rumours of a major fund liquidating positions which helped underpin the dollar.
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. 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 13943 up 64 or 0.46%.
The SP500 is at 1509 up 7 or 0.49%.
SPY is at 151.25 up 0.82 or 0.55%.
The $RUT is at 912.63 up 7.22 or 0.80%.
NASDAQ is at 3149 up 18 or 0.57%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral and the current bias is up.
WTI oil is trading between 94.76 and 92.45 this morning. The session bias is bearish and is currently trading down at 92.71.
Gold fell from 1586.00 earlier to 1570.00 and is currently trading down at 1573.46.
Dr. Copper is at 3.53 falling from 3.59 earlier.
“The equity market for its part appears to be banking on a full, and fairly speedy, recovery for the global economy”, according to Charles Schwab.
Copper thus far isn't showing the same economic luster. Strikingly, copper inventories tracked by the London Metal Exchange have risen noticeably since mid October, which has helped keep prices in check.
Read more: http://www.briefing.com/investor/our-view/the-big-picture/copper--a-lagging-leading-indicator.htm
The US dollar rose from 81.26 earlier to 81.69 and is currently trading down at 81.62.
Something I read this morning and it made me wonder just how we got to where we are today.
From Armen A. Alchian’s “Property Rights” in “The Concise Encyclopedia of Economics” (2008):One of the most fundamental requirements of a capitalist economic system—and one of the most misunderstood concepts—is a strong system of property rights. For decades social critics in the United States and throughout the Western world have complained that “property” rights too often take precedence over “human” rights, with the result that people are treated unequally and have unequal opportunities. Inequality exists in any society. But the purported conflict between property rights and human rights is a mirage. Property rights are human rights.The definition, allocation, and protection of property rights comprise one of the most complex and difficult sets of issues that any society has to resolve, but one that must be resolved in some fashion. For the most part, social critics of “property” rights do not want to abolish those rights. Rather, they want to transfer them from private ownership to government ownership. . . .Any restraint on private property rights shifts the balance of power from impersonal attributes toward personal attributes and toward behavior that political authorities approve. That is a fundamental reason for preference of a system of strong private property rights: private property rights protect individual liberty.
** RRR = Risk Reward Ratio
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Written by Gary