February 26th, 2013
in Gary's blogging
Opening Market Commentary For 02-26-2013
Premarkets were off their lows and trading sideways and when the markets opened the averages melted up a 'tad' (0.50%) on low volume. Investors are spooked from yesterday's market fall and are sitting out the early opening trading while weakness is showing up again
By 10 am the averages had melted up in choppy volume conditions with one very large green spike caused by some 'BTFD dippers'. All in all still too early in the session to see how Mr. Market is going to react to the continuing fallout emanating from the EZ. Now we wait for Dr. Ben's words of infinitive wisdom.
With the market moving down on high volume and up on lighter volume, it’s hard to justify being long. . . I’d still be surprised if the market just dropped and dropped and dropped and didn’t make at least one rally attempt to the highs. Tops usually don’t form in single days, which is how bottoms often form.
The RRR** has been narrow at the opening bell for the past several months but has improved greatly over the past several sessions. If this continues we will have some wiggle room for quick trades in the coming days. The continuing trend of low volume 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 in fact we have already been there, and still may be too early to start shorting if this is a bear trap, be patient.
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 13866 up 82 or 0.59%.
The SP500 is at 1493 up 5 or 0.35%.
SPY is at 149.60 up 0.56 or 0.38%.
The $RUT is at 898.96 up 3.09 or 0.34%.
NASDAQ is at 3124 up 8.23 or 0.26%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been mixed and the current bias is down.
WTI oil is trading between 91.75 and 94.40 this morning. The session bias is bulish and is currently trading up at 93.01.
Gold rose from 1575.00 earlier to 1600.99 and is currently trading down at 1586.78.
Dr. Copper is at 3.55 rising from 3.51 earlier.
The US dollar rose from 81.20 earlier to 82.01 and is currently trading sideways at 81.94.
** RRR = Risk Reward Ratio
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Written by Gary