Averages Cut Monday's Loss In Half On Low Volume

February 27th, 2013
in Gary's blogging

Midday Market Commentary For 02-27-2013

By noon the averages had melted up and cutting Monday's decline by half on low volume of course. This continued climb on meager volume is not what I would constitute a valid bull run but it is a rise never the less. Much care and deliberation should go into taking any position, long or short; like all sand castles the tide will eventually take it away.

Follow up:

Much weakness prevails as the US financial sequestration looms as Italy flounders and the EZ and BRICKS struggle. Typically this leads to one conclusion, but I have been wrong outguessing Mr. Market.


Stocks have moved modestly higher in early trading on Wednesday, continuing to recover from the sharp pullback that was seen on Monday. The major averages have all moved to the upside, although buying interest has remained somewhat subdued.

The early strength on Wall Street comes following the release of the Commerce Department's report on durable goods orders in the month of January.

While the report showed that durable goods orders fell by more than anticipated, orders actually rose by much more than expected when excluding orders for transportation equipment.

Excluding a 19.8 percent drop in orders for transportation equipment, durable goods orders rose by 1.9 percent in January compared to economist estimates for a 0.2 percent increase.

The report also showed a 6.3 percent jump in orders for non-defense capital goods excluding aircraft, which is seen as an indicator of business spending.

The sharp increase by the reading on business spending has offset some of the recent concerns about the impact of the looming sequester.

Traders are also likely to keep an eye on Federal Reserve Chairman Ben Bernanke's testimony before the House Financial Services Committee, although the Fed chief's prepared remarks are likely to be the same as in his appearance before the Senate Banking Committee on Tuesday.

The RRR** has been narrow at the opening bell for the past several months and has continued the trend into the midday session, Monday was a welcome change but it didn't last. 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 costl

The DOW at 12:15 is at 14008 up 108 or 0.78%.

The SP500 is at 1510 up 13 or 0.91%.

SPY is at 151.36 up 1.35 or 0.90%.

The $RUT is at 910.59 up 10 or 1.175%.

NASDAQ is at 3163 up 34 or 1.090%.

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

How Oil Really Gets Priced

WTI oil is trading between 94.40 and 91.75 this morning. The session bias has turned positive and is currently trading up at 93.15.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is reporting 113.09.

Gold rose from 1577.00 earlier to 1620.49 and is currently trading down at 1603.06.

Dr. Copper is at 3.55 down from 3.57 earlier.

The US dollar fell from 82.03 earlier to 81.64 and is currently trading up at 81.76.

Dominic is reflecting my thoughts too in the following article. Did Monday's sell off merely reduce the oversold aspect or is it the start of a correction?

Major Correction or Bear Trap?

Dominic Cimino

There are presently many analysts and commentators warning about an imminent market top and the potential for a significant correction. Numerous potential stumbling blocks stand ready to inhibit any further market gains, and according to the Bespoke Investment Group, this current S&P 500 rally is the 10th longest in days without a 10% market correction. [Monday's] big sell-off could be the beginning of a large correction. But maybe it has set the foundation for a bear trap instead.

** 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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