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Averages Rise On Anemic Volume, Be Careful

March 22nd, 2013
in Gary's blogging

Opening Market Commentary For 03-22-2013

Premarket was up slightly this morning suggesting a gap up at the opening. The overnight Cyprus news was insignificant as investors wait for the Monday deadline the EU has set for 'Plan B'.

Markets opened up followed by a brief melting down to the opening numbers on low volume. By 10 am, the now anemic volume seemed to have activated the HFT computers in pushing the averages upward some more while the human traders sat on their hands.

Anemic volume and the market manipulators make poor justification for a rising market.

Follow up:

I have been saying lately that it is too late to jump in to catch the highs and still may be too early to start shorting. The following article express's my views.

Don't Jump Back Into Stocks - Unless You Plan To Stay by Howard Gold

People don't buy umbrellas until it rains. They don't buy overcoats until the thermometer plunges below freezing. And many don't buy stocks until the market is up. Way up. We've seen that dramatically this year, as retail investors emerged from their bond-market cocoons and jumped back into stocks.

Investors appear to have gotten back into stocks again for three reasons: equity markets' huge rallies to all-time highs, the decline in volatility (as measured by the VIX) over the past year, and the resolution of that great non-issue the fiscal cliff, which created a noisy but ultimately meaningless brouhaha in the financial media late in 2012.

But really, this is exactly the wrong way to invest. And I'd recommend if you're going to get in now, don't put more than 25% to 30% of your money in equities.

I mentioned last week that I was 70% cash and ready to pull the trigger on getting rid of more of my portfolio as we watch this house of cards getting shakier. I too, am a VERY patient investor just waiting for the right time. The next article explains why 'Cash is King'.

Cash Is King, Yet Everyone Hates It - And It's Driving Every Asset Class Too High by The Capitalist Manifesto

I have recently been moving a lot of my investments to cash. Not bonds. Not stocks. Not real estate. Cash. . . the more cash you have to assure a transaction, the better off you will be . . . it's sometimes OK to just have cash sitting on the sideline . . . I don't have the ability to get deals that Buffett gets, so I am sticking my money in cash.

One of these days, whether it's next week or next year or 4 years from now, I will feel comfortable investing in stocks when valuations are better. I have the ability and patience to wait for the right buying opportunity and that's precisely what I will do.

@leavitt:

Research over the last 24 hours tells me my bias should still be to the upside, but the quality and quantity of good set ups are not as high as one would expect for a strong market. The market needs a little more time to digest its gains and set itself up for another leg up. I would be very surprised if the S&P did not [rise to] a new all-time high.

The DOW at 10:00 is at 14500 up 79 or 0.55%.

The SP500 is at 1454 up 8 or 0.54%.

SPY is at 155.19 up 0.85 or 0.55%.

The $RUT is at 947.01 up 3 or 0.33%.

NASDAQ is at 3239 up 16 or 0.51%.

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

How Oil Really Gets Priced

WTI oil is trading between 92.30 and 93.16 today. The session bias is bullish and is currently trading up at 93.10.

More Widening For The Brent/WTI Spread Ahead?

Brent crude is trading between 105.50 and 107.33 today. The session bias is bullish and is currently trading up at 107.23.

Gold fell from 1515.70 earlier to 1603.37 and is currently trading up at 1608.83.

Dr. Copper is at 3.47 rising from 3.44 earlier.

The US dollar is trading between 83.01 and 82.52 and is currently trading down at 82.54, the bias is currently bearish.

** 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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