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Markets Close Down Late Session Profit Taking

February 28th, 2013
in Gary's blogging, syndication

Closing Market Commentary For 02-28-2013

Well no rumors or late breaking news about the sequestration to spook the markets one way or another. From a traders standpoint that is disappointing as we do not care which way the market moves so long as it does something. The DOW did managed to melt up to another new high of 14,149.15 while the other averages snuggled up close to previous highs, nice try, but no banana.

By 4 pm the markets closed at the same levels as the morning lows without so much as a whimper; flat, no volume, some profit taking and directionless. Ah, but tomorrow is another story, stay tuned.

Follow up:

Monday's 'Big Decline' has been totally erased and now rests in the history book as 'just' another movement in the stock market for most. For me I see continued weakness in a market propped up by government intervention and artificial manipulation from the HFT computers that will result in a steep decline. Some pundits are talking about such a decline in the May – June time frame, while I recognize the possibility of it happening much sooner, maybe tomorrow.

The RRR** has been narrow at the opening bell for the past several months and has continued the trend into the closing 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 4:00 is at 14054 down 20.88 or -0.15%.

The SP500 is at 1514 down 1.31 or -0.09%.

SPY is at 151.70 down 0.20 or -0.30%.

The $RUT is at 911.11 up 1.197 or 0.13%.

NASDAQ is at 3160 down 2.07 or -0.07%.

The longer trend is up, the past months trend is bullish, the past 5 sessions have been somewhat bearish and the current bias is sideways and slightly negative.

How Oil Really Gets Priced

WTI oil is trading between 94.40 and 91.58. The session bias is negative and is currently trading down at 91.88.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading at 112.26.

Gold fell from 1620.49 earlier to 1574.86 and is currently trading up at 1580.15.

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 82.07 is currently trading up at 82.03.

 

Interesting views from Leavitt this morning.

@leavitt:

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

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

gary@econintersect.com

Written by Gary









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