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Markets Gap Up On Opening With Heavy Volume

March 8th, 2013
in Gary's blogging

Opening Market Commentary For 03-08-2013

Premarket had move up considerably prior to the US Nonfarm Payroll report and when it was announced at 8:30 am the futures moved even higher. There was a 0.30% spike above the 'normal' premarket trading and is solely contributed to the HFT algo computers.

Markets opened up, several averages with a serious gap, making new historical highs in the process. Green volume was higher than normal followed by some serious profit taking melting the indices off their opening highs and descending down to yesterday's highs.

By 10 am many of the averages had slipped back to their closing numbers from yesterday's session. The red volume is about as heavy as I have seen it in a year and it is persistent with the bulls coming in at distant second.

Follow up:

It remains to be seen if the bulls can push the markets any higher today. Most of the gaps created at the opening have now been closed by the respective averages falling below yesterdays closing numbers.

Financial reporting this morning was a bit of a surprise as to its higher than expected levels particularly the nonfarms payroll printing came in at 236K while analysts were expecting 165K.

@dailyfx:

US CHANGE IN NONFARM PAYROLLS (FEB) ROSE 236K VS 165K EXPECTED AND REVISED TO 119K FROM 157K.”

Labor Force showed a slight contraction by roughly 130K. . . Likely to have artificially pushed down the headline unemployment rate. . .”

Participation rate also fell to 63.5% from 63.6%. . . . “

I can see the headlines now. Either "S&P surges on strong jobs" or "S&P falls as markets price in early end to QE". “

@cnn:

The U.S. government said Friday that the economy added 236,000 jobs in February much stronger than the prior month.

Meanwhile, the unemployment rate fell to 7.7% from 7.9%. A total of 12 million people remain unemployed.

Going forward, it remains to be seen what impact the recent forced budget cuts in Washington will have on the economy. Experts have forecast the cuts will cause a loss of jobs and a slowdown in growth, but for the most part the spending reductions have not yet kicked in.

@ino:

The RRR** has been narrow at the opening bell for the past several months, over a year actually, and has continued the trend again today. 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 14337 up 10 or 0.07%.

The SP500 is at 1543 down 0.55 or -0.04%.

SPY is at 154.80 up 0.02 or 0.01%.

The $RUT is at 935.77 up 1.20 or 0.13%.

NASDAQ is at 3230 down 2 or -0.05%.

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 91.71 and 90.85 today. The session bias is actually neutral as it is bouncing from its lows and highs and is currently trading down at 91.42.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading between 109.76 and 107.99 this morning. The session bias is negative and is currently trading down at 108.33.

Gold fell from 1585.00 earlier to 1562.50 and is currently trading up at 1580.57.

Dr. Copper is at 3.51 falling from 3.53 earlier.

The US dollar is trading between 82.00 and 82.94 and is currently trading down at 82.76, the bias is currently bullish.

** 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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