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Market Briefly Opens Up Then Melt Down

March 13th, 2013
in Gary's blogging

Opening Market Commentary For 03-13-2013

Premarkets were down and then rose to yesterday's closing numbers. At the opening the indices climbed into the green (+0.08) and then started to melt down and level off to trade sideways.

By 10 am all of the major averages were in the red, but flat, on moderate to low volume. It appears we are going to go through another consolidation period before the next market move.

Follow up:

It is all in the details.

@zerohedge:

Adjusted February Retail Sales Rise More Than Expected As Actual Retail Sales Post First Decline In Three Years

In a news release that would have been blamed on delayed tax refunds and "the weather" if it was a miss, but confirms a stronger consumer if it beat . . .

All of this of course was on a seasonally-adjusted basis (more on this shortly). This was the biggest beat of expectations since October 2011, and the biggest monthly rise in five months.

The number was driven by a 5.0% jump in gasoline station sales, a 1.8% increase in Miscellaneous store retailers, a 1.6% rise in non-store retailers and a 1.1% increase in the broad retail and food services category.

Declines were noted in Furniture stores (-1.6%), Electronics and Appliance stores (-0.2%), and Sporting goods and music stores (-0.9%).

So on the surface all was good. The seasonally adjusted surface. because the unadjusted headline number in February actually posted the first sequential decline since 2010, as retail sales declined from $382.4 billion to $381.0 billion: this was the first sequential decline in retail sales in the month of February in three years.

Yet somehow the decline actually translated into a growth of $4.4 billion on an adjusted basis, meaning the entire beat was, once more, purely in the calendar adjustment.

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 87% 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 much 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 14424 down 25 or -0.17%.

The SP500 is at 1550 down 2 or -0.13%.

SPY is at 155.48 down 0.19 or -0.12%.

The $RUT is at 939.66 down 0.58 or -0.06%.

NASDAQ is at 3236 down 6 or -0.19%.

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 90.95 and 93.40 today. The session bias is bullish and is currently trading down at 92.96.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading between 108.24 and 108.96 today. The session bias is bullish and is currently trading down at 108.64.

Gold rose from 1575.85 earlier to 1598.95 and is currently trading down at 1594.50.

Dr. Copper is at 3.54 down from 3.57 earlier.

The US dollar is trading between 82.60 and 83.30 and is currently trading up at 83.29, 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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