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DOW Sets New High – Low Volume – HFT Computers?

February 27th, 2013
in Gary's blogging

Closing Market Commentary For 02-27-2013

Scary is the word many investors are using right now as the DOW sets a new high (14104) on falling volume. My proprietary indicators are still swinging towards the bearish side as this hot air balloon melts higher and higher.

By 4 pm a lot of traders were scratching their heads wondering what the heck is going on. More investors raise prices NOT fewer of them so this house of cards is really getting wobbly. Stay tuned for the coming fireworks.

Follow up:

A very interesting read. I am not sure I would call it a crash, a correction maybe, but not a 1929 disaster and recession either.

@Businessinsider:______

THE NEXT STOCK MARKET CRASH: Why Many Pros Think It Has Already Begun

After coming within points of an all-time high, stocks have begun to stumble, and volatility appears to be returning to the markets.

This has led some market pros to declare that an amazing four-year rally in stocks is over and that we're on the precipice of a new crash.

The RRR** has been narrow at the opening bell for the past several months and expanded somewhat into the closing 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 costly endeavor.

The DOW at 4:00 is at 14075 up 175 or 1.26%.

The SP500 is at 1516 up 19 or 1.27%.

SPY is at 151.99 up 1.95 or 1.30%.

The $RUT is at 909.91 up 10 or 1.10%.

NASDAQ is at 3162 up 32 or 1.04%.

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 sideways 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 1596.46.

Dr. Copper is at 3.55 down from 3.57 earlier.

The US dollar fell from 82.03 earlier to 81.55 and is currently trading down at 81.61.

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.
More...

The 500 at the close.

The DOW at the close. I thought we would have a sell off towards the close but we didn't. Is this a fake run-up, skewing the chart, because of the HFT computers manipulation?

** RRR = Risk Reward Ratio

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

gary@econintersect.com

Written by Gary









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