February 28th, 2013
in Gary's blogging
Midday Market Commentary For 02-28-2013
By noon the markets have gone nowhere. Trading in a narrow range and not exceeding yesterday's highs amid anemic volume. Investors obviously waiting for sequestration news tomorrow, but be ready for a news leak or rumor that will send the markets one way or another. I am expecting a rumor to leak out around 2 pm as it is the way it usually happens.
Everything is in the green, flat and directionless.
I have repeatedly written that most of the mom and pop investors left the stock market circus some time ago and probably will never return for one reason or another. One reason being that they have lost a great percentage of their investment to the crooks and other investment criminals. Then we hear about how the crony capitalism works. “Firms take care of their cronies so they can screw their investors”, says Larry Doyle below.
The auction-rate securities market freezes, and tens of thousands of our fellow citizens’ lives are forever changed as that simple American virtue of “trust” goes out the window never to return.
The Federal Reserve has its printing press running full speed 24/7. Markets are flush with liquidity. Raymond James could issue debt or equity TODAY and make this investor and every other investor whole. So why don’t they? Because they do not have to.
See, this is how crony capitalism works. Firms take care of their cronies so they can screw their investors. Read More Here:
The RRR** has been narrow at the opening bell for the past several months and has continued the trend into the midday session. 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 12:15 is at 14088 up 13 or 0.10%.
The SP500 is at 1519 up 3 or 0.20%.
SPY is at 152.17 up 0.26 or 0.17%.
The $RUT is at 911.70 up 1.77 or 0.19%.
NASDAQ is at 3171 up 9 or 0.28%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is sideways.
WTI oil is trading between 94.40 and 92.17 this morning. The session bias is neutral and is currently trading down at 92.47.
Brent crude is trading at 112.26.
Gold fell from 1620.49 earlier to 1576.13 and is currently trading down at 1575.58.
Dr. Copper is at 3.55 down from 3.60 earlier.
The US dollar fell from 81.83 earlier to 81.54 and then climbed back to 82.00 is currently trading up at 81.87.
Interesting views from Levitt this morning.
Last week when the market started to drop, I stated I would be very surprised if the market just dropped without testing the high at least one time. Here we are a week later. The high is not being tested yet, but the action of the last two days tells us the bulls are not going to give up easily.
Tops take time to form, and we don’t even know if a top is forming. There will be lots of up and down movement, lots of sudden reversals, lots of action that makes no sense.
The market will shake out as many market participants as possible in both directions before officially starting its next leg. That’s just the way things work. The invisible hand of the market wants to make sure as few people as possible participate.
In the near term anything goes. We could get another trend up day and a sudden reversal down.
On an intermediate term basis, the evidence points towards a top forming. But a top could take two months to form, and there’s no guarantee it’ll be anything more than a 2-month drop that takes the S&P down 150-200 points. This would be a playable move but far from the catastrophe some bears are expect.
** RRR = Risk Reward Ratio
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Written by Gary