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Markets Flat, Lackluster And Low Volume

February 28th, 2013
in Gary's blogging

Opening Market Commentary For 02-28-2013

The premarket was about as flat as I have ever seen it just before the financial's were reported. After the 8:30 reporting they remained flat and tended to be slightly on the bearish side.

The markets opened down on the -0.01% to -0.06% red side with the DOW at -0.17%. Volume was low at the opening with some profit taking being recorded as the averages lumbered along sideways.

By 10 am the averages were just in the green on low volume. The DOW tried to slip by yesterday's high and backed off at least for now, while the other major averages traded in a narrow range.

Follow up:

Weakness prevails and it will take the HFT computers to push this market up as the human traders have left the building.

@SA:

Stock futures remain about flat following the 8:30 data. The GDP number was a big miss, but it's from 2012 Q4 and the calendar says its 4 weeks to 2013 Q2. Initial jobless claims is at least somewhat of a coincident indicator and may turn more heads at the Fed than the GDP print. The long bond gives up some gains, but is still a quarter-point higher on the day.

The RRR** has been narrow at the opening bell for the past several months and has continued the trend again this morning. 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 14075 down 1.23 or -0.01%.

The SP500 is at 1518 up 3 or 0.17%.

SPY is at 152.14 up 0.24 or 0.16%.

The $RUT is at 911.60 up 1.71 or 0.19%.

NASDAQ is at 3175 up 12 or 0.39%.

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

How Oil Really Gets Priced

WTI oil is trading between 94.40 and 92.40 this morning. The session bias is neutral and is currently trading up at 92.88.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading at 112.26.

Gold fell from 1620.49 earlier to 1584.74 and is currently trading down at 1588.07.

Dr. Copper is at 3.56 down from 3.60 earlier.

The US dollar fell from 81.83 earlier to 81.54 and then climbed back to 81.83 is currently trading up at 81.81.

Interesting views from Levitt 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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