Markets Melt Up In Early Trading, Remain Lackluster

February 27th, 2013
in Gary's blogging

Opening Market Commentary For 02-27-2013

Premarket was flat and quiet after the morning 'not so good' financial's were reported indicating more waiting to see if Dr. Ben has any earthshaking comments on his last day of testimony.

Markets opened down -0.05% and shortly began melting up on low volume which could be attributed to the HFT computers. The SP500 melted up to 1500 area and paused leaving investors wondering what to do.

By 10 am the averages were still melting up, albeit very slowly, finding further advancement difficult. I would expect the averages to coast along sideways in a narrow trading range again today with the HFT computers trying to melt everything back up.

Follow up:

There has been a gradual recovery since Monday's contraction, but not like previous 'contractions' where recoveries have been swift and convincing. The general feeling we will continue to see market weakness for a short while longer before any further gains can be considered.


Orders for long-lasting goods fell 5.2% in January from December, a bigger slide than the 4.4% expected. Excluding the transportation segment, durable goods orders rose 1.9%, a much larger jump than the 0.2% expected and the biggest increase since December 2011.

The RRR** has been narrow at the opening bell for the past several months and has continued the trend again this morning, Monday was a welcome change. 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 13950 up 51 or 0.37%.

The SP500 is at 1502 up 5 or 0.37%.

SPY is at 150.57 up 0.56 or 0.36%.

The $RUT is at 905.01 up 5 or 0.55%.

NASDAQ is at 3139 up 9 or 0.30%.

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 is negative and is currently trading up at 92.55.

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 1603.96.

Dr. Copper is at 3.56 down from 3.57 earlier.

The US dollar fell from 82.03 earlier to 81.64 and is currently trading down at 81.72.

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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