February 25th, 2013
in Gary's blogging
Opening Market Commentary For 02-25-2013
Premarkets were up substantially this morning with the SP500 up over 1523 surprisingly after the UK lost its AAA rating. By 9:40 the averages mostly leveled out at those higher numbers on low and falling volume. The DOW topped out at a previous resistance of 15055 along with the 500 at 1523, but by 10 am they rose again to another morning high and backed off. There is an abundance of market weakness in the air and would not be surprised to see the bottom fall out ant any time.
The NASDAQ and QQQ each left a large gap at the opening that probably will be closed in the next few days as it drops to 3162 and 67.10 respectively. Opening volume was red and moderate falling off as profit taking petered out. One spike of green wasn't enough to hold off the bears that have effectively kept the averages from taking off.
Our trading partner the UK just lost its triple A rating, the EZ is in shambles and now China is falling apart, yet the US markets continue to rise. Anyone else smell the stink of manipulation?
CHINA'S MANUFACTURING SECTOR STUMBLES
A key gauge of momentum in China's manufacturing sector fell unexpectedly in
February, raising concerns about the strength of recovery in the world's
second largest economy. READ FULL STORY
Last week the market suffered its biggest single down day since the November bottom and also its biggest 2-day losing streak, but by the time the dust settled on Friday, the indexes weren’t down very much.
If a top is in place, I expect it to be tested at least once, possibly twice, over the next several weeks. Tops don’t typical form in a single day. They take time. There are usually several up and down moves that act to give the pros a chance to dump stocks on the lay public.
This is if a top is forming, and there’s no guarantee of that. Last week’s selling pressure was news induced, and although some technical damage was done, the news can quickly change. I personally would not be surprised to see the high taken out. One or two down days does not change the trend.
Sorry, Wall St. operates much slower than the hysterical media wants us to believe.
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: Rises to 85% 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 10:15 is at 14069 up 68 or 0.49%.
The SP500 is at 1523 up 8 or 0.53%.
SPY is at 152.55 up 0.68 or 0.45%.
The $RUT is at 916.14 up 0.00 or 0.00%.
NASDAQ is at 3182 up 21 or 0.66%.
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 93.38 and 94.45 this morning. The session bias is bearish and is currently trading down at 93.53.
Gold rose from 1575.80 earlier to 1593.95 and is currently trading up at 1586.86.
Dr. Copper is at 3.56 down from 3.57 earlier.
The US dollar fell from 81.74 earlier to 81.16 and is currently trading up at 81.40.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary