Markets Melt Up Into The Green, Will It Continue?

February 22nd, 2013
in Gary's blogging

Closing Market Commentary For 02-22-2013

Averages closed up on light volume largely in part of the HFT computer doing their dirty work and not because of a great economy. The SP500 closed at 1515 just above Wednesday's closing of 1512. I see nothing that sends out warm fuzzy feelings of an expanding market, quiet the opposite in fact. Today's markets generally melted up through out the afternoon on anemic volume witch is the HFT algo's mantra. Nothing to see here, keep on moving!

Follow up:

I would be reluctant to call today's rise 'zooming', but it did close up.


The markets are zooming higher on the heels of Wall Street’s worst two-day slide of the year as traders scoop up beaten-down stocks and respond to upbeat global economic data. The Dow is up 110 points, or 0.79%, while the broader S&P 500 is up 0.7%. The materials sector is leading the way higher, followed by technology and financials.”

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 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 4:00 is at 14000.57 up 119.95 or 0.86%.

The SP500 is at 1515 up 13 or 0.88%.

SPY is at 151.85 up 1.43 or 0.94%.

The $RUT is at 916.15 up 10.75 or 1.19%.

NASDAQ is at 3161 up 30 or 0.97%.

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

How Oil Really Gets Priced

WTI oil is trading between 94.76 and 92.45 this morning. The session bias is bearish and is currently trading up at 93.40.

Gold fell from 1586.00 earlier to 1570.00 and is currently trading down at 1579.55.

Is Dr. Copper Warning Of Slower Growth Ahead?

Dr. Copper Sends A Deja Vu Warning Signal

Dr. Copper is at 3.54 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:

The US dollar rose from 81.26 earlier to 81.69 and is currently trading sideways at 81.55.

The 500 at the close.

The DOW at the close.

Something I read this morning and it made me wonder just how we got to where we are today.

Alchian: In Defense of Property Rights and Liberty

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

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

Written by Gary

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