Opening Market Commentary For 03-05-2013
Premarkets were up significantly indicating the indices were going to gap up for the cash crowd and indeed they did. However, the volume was not exactly overwhelming. Moderately higher yes, but after the green volume spiked at the opening the profit takers stepped in and the volume started to fall. This is beginning to look more and more like a market top is forming as the averages climb and the volume falls off.
By 10:15 am the party was still in full swing with the major averages still trying to melt up higher with the volume levels still falling.
The SP500 and the DOW made new highs this morning, but what does it mean and how does it compare with the last run to the top?
"Mission Accomplished" - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables): "we all know it's going to end badly, but in the meantime we can make some money" - ZH translation: "just make sure to sell ahead of everyone else."
GDP Growth: Then +2.5%; Now +1.6%
Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
Labor Force Particpation Rate: Then 65.8%; Now 63.6%
Americans On Food Stamps: Then 26.9 million; Now 47.69 million
Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
US Deficit (LTM): Then $97 billion; Now $975.6 billion
Total US Debt Outstanding: Then $9.008 trillion; Now $16.43 trillion
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. 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 86% and Secondaries Confirm "Tradable" This might be true (for last week anyway), but difficult to deal with. 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 14241 up 114 or 0.81%.
The SP500 is at 1538 up 13 or 0.84%.
SPY is at 154.13 up 1.18 or 0.77%.
The $RUT is at 925.47 up 8.73 or 0.95%.
NASDAQ is at 3214 up 33 or 1.03%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is up.
WTI oil is trading between 91.00 and 89.35 this morning. The session bias is sideways and is currently trading up at 90.62.
Brent crude is trading between 107.80 and 109.17 this morning. The session bias is slightly bullish and is currently trading up at 109.04.
Gold rose from 1569.00 earlier to 1586.31 and is currently trading down at 1580.89.
Dr. Copper is at 3.54 up from 3.48 earlier.
The US dollar Index is trading at 82.19, down -0.03.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary