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Indices Mark New Highs On Continued Low Volume

March 14th, 2013
in Gary's blogging

Opening Market Commentary For 03-14-2013

Premarkets were up with SPY up +0.34% indicating a gap up for the cash crowd at the opening bell. Financial reporting was O.K. and the markets opened with a big surge up courtesy of the BTFD 'dippers'.

Today's low opening green volume was not all that convincing of the new historical highs made by the major averages this morning. The DOW climbed to 14523, the SP500 marked 1561 as its morning high while the NASDAQ soared to 3258.

By 10 am there was a lot of red volume as profit taking marked the bears position as the bulls rise was in check, at least for the moment.

Follow up:

The NASDAQ, $RUT and SPY all had large gaps at the opening and considering the low volume I wouldn't be surprised to see these averages, including the major indices, decline closing these gaps in the near future. This market is running on a lot of hot air as the perma-bulls continue to promote higher market levels. In my opinion it won't take much to deflate it either as this house of cards is getting shakier as each day passes. The continuing problem with declining volume over the past months is also indicative of a decline in the near future.

There has been talk of April 15th being the date for a market correction start. Has to do with corporation's 401K contribution deadline. Also, talk of the SP500 reaching a maximum of 1665 before it turns around. Who knows at this point?

@marketwatch:

NEW YORK (MarketWatch) - U.S. stocks rallied Thursday, lifting the S&P 500 SPX +0.35% within four points of its record close of 1,565.15 set on Oct. 9, 2007, after an unexpected drop in weekly jobless claims.

The S&P 500 rose 6.72 points, or 0.4%, to 1,561.24. Extending gains into a 10th straight session, its longest run in 16 years, the Dow Jones Industrial Average DJIA +0.41% climbed 64.49 points, or 0.5%, to 14,519.77. The Nasdaq Composite added 12.84 points, or 0.4%, to 3,257.95.

"While the stock market appears somewhat extended short-term and ripe for a minor pullback, the positive economic data flow and dollar strength appear to be encouraging investors to put money to work in stocks," noted Fred Dickson, chief investment strategist at Davidson Cos

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 14501 up 43 or 0.30%.

The SP500 is at 1558 up 3 or 0.23%.

SPY is at 156.24 up 0.33 or 0.21%.

The $RUT is at 947.47 up 3.56 or 0.38%.

NASDAQ is at 3250 up 6 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 93.45 and 91.98 today. The session bias is bullish and is currently trading up at 92.78.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading between 107.35 and 108.57 today. The session bias is bullish and is currently trading down at 108.29.

Gold rose from 1577.25 earlier to 1588.00 and is currently trading up at 1586.38.

Dr. Copper is at 3.54 up from 3.52 earlier.

The US dollar is trading between 83.02 and 83.41 and is currently trading down at 83.18, 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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