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Markets Melt Down Off New Highs Under Low Volume

March 7th, 2013
in Gary's blogging

Midday Market Commentary For 03-07-2013

Interesting morning as the SP500 made what was best described as a rising wedge. An attempted breakout to the top was soon stopped in its tracks and reversed as the bears jumped in for some profit taking. The DOW just got tired and rounded off its high and started melting downward. The NASDAQ simply took a nose dive along with the Russell 2000.

Volume is falling and there is no immediate indication of direction while the averages remain flat.

Follow up:

The RRR** has been narrow at the opening bell for the past several months, over a year actually, 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 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 12:15 is at 14336 up 40 or 0.28%.

The SP500 is at 1544 up 2.73 or 0.18%.

SPY is at 154.81 up 0.31 or 0.21%.

The $RUT is at 931.48 up 1.54 or 0.17%.

NASDAQ is at 3228 up 5.65 or 0.18%.

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

How Oil Really Gets Priced

WTI oil is trading between 89.58 and 91.70 today. The session bias is positive and is currently trading down at 91.11.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading between 110.04 and 108.80 this morning. The session bias is neutral with a bullish flavor and is currently trading down at 109.11.

Gold rose from 1567.00 earlier to 1585.50 and is currently trading down at 1577.78.

Dr. Copper is at 3.52 up from 3.49 earlier.

The US dollar is trading between 82.65 and 81.99 and is currently trading down at 82.10, the bias is currently negative.

** 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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