March 1st, 2013
in Gary's blogging
Opening Market Commentary For 03-01-2013
Premarkets were down (surprise, surprise) about -0.35% (SPY) in light of the sequestration not being resolved, but I would not hold my breath for the Indices to waterfall today. The averages ended up close to their previous highs and that remains a problem for the various pundits each describing where they think they will go (good luck).
Markets opened lower (-0.60% to -1.00%) and continued the decline for the first 15 minutes on heavy volume after which the averages paused to take a breath. By 10 am the decline was reversed and the Indices began to melt back up and by 10:15 it appears that the rest of the day will be quiet.
Several small caps left gaps at the opening and so we can be sure of the markets rising and closing them in the near future. Exactly what is on Mr. Market's platter for this session remains a mystery to us mere mortals, but I know that the MSM (main stream media) has reported the sequestration in sensational rhetoric painting a scenario 'possibly' dooming the Nation and its inhabitants. The truth is that we are talking about 2.5% of a MUCH larger problem and 98% of the issue is political posturing. Financially speaking, we probably won't see much happening today concerning the markets to fall into a deep chasm of no return. Whatever DOES happen will be recovered next week. Maybe we should join the 'BTFD dippers' club.
Yes, this market is built on a house of cards, one that gets more unstable each month, but it has continued to climb and reaching new highs despite those claiming impending doom. (Yes, I am one of those.) The EU is in terrible shape along with the BRICKS about to tumble and yet the market climbs. My advice is to be VERY careful for the next 2 months and have a lot of cash on hand.
Warning: Stocks Likely To Crater From Here by Chris Martenson
I don't relish the job of constantly pointing out the risks to the equity markets. But since few on Wall Street seem willing (or able) to do this, I'm "making the call" for a market correction, as enough variables have aligned to indicate a high likelihood of stocks heading downwards from here.
I've only given one other such warning about equities before, and that was in March of 2008, when I warned of the possibility of a 40% to 60% decline in stock prices by Fall. I am making a similar call today . . .
. . . the broad outline is that I see a case where speculative fevers, propelled by the Fed's $85 billion thin-air money printing program, have more or less run their course, with the Dow and S&P indexes stalled near their all-time highs. That is, $85 billion a month is what it takes to merely keep the Dow near 14,000 and the S&P 500 near 1,500.
On a fundamental basis, I see numerous signs of consumer weakness, political in-fighting and paralysis in DC, high insider selling, and the return of the retail investor (a.k.a. "greater fool") to the stock market.
On a technical basis, there are numerous tell-tale signs of a market top, including too much bullish sentiment, waning momentum on multiple time frames, and too many NYSE stocks being above their 200-day moving average (at least until recently; that's begun to correct).
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and has continued the trend again this morning but may open up as the morning session progresses. 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 14013 down 42 or -0.30%.
The SP500 is at 1509 down 6 or -0.38%.
SPY is at 151.18 down 0.43 or -0.28%.
The $RUT is at 903.88 down 7 or -0.80%.
NASDAQ is at 3144 down 16 or -0.53%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bearish and the current bias is down.
WTI oil is trading between 93.20 and 90.50 this morning. The session bias is bearish and is currently trading down at 90.64.
Brent crude is trading at 108.45.
Gold fell from 1615.75 earlier to 1665.40 and is currently trading up at 1580.43.
Dr. Copper is at 3.50 falling from 3.55 earlier.
The US dollar is trading between 81.85 and 82.53 and is currently trading up at 82.53, the bias is currently bullish.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary