March 25th, 2013
in Gary's blogging
Opening Market Commentary For 03-25-2013
Premarkets were up as expected as Cyprus bailout terms have been accepted.
Markets opened up with several of the major averages making new highs, primarily the DOW and the SP500. The small caps are not enjoying new highs but are up on low moderate volume. Appears to be another day of HFT computers pushing the numbers around so don't get excited just yet.
There is a lot of noise coming out of various parts of Europe and time is needed to sort it out.
For the second straight week Monday morning’s trading will be in reaction to bailout news from Cyprus. Last week’s bailout was rejected. . . Deposits of less than 100,000 euros will be protected. Over 100,000 will be seized. . . Essentially, instead of getting bailed out by the EU or Germany. . . Cyprus will be bailed out by its depositors. This is beyond unbelievable. The precedent that is being set – that your money is not really your money, it can be taken at any time – is beyond comprehension.
Those of us in the US are shocked the government can just step in and steal money from accounts, but if you add up all the money we’ve lost as a result of not earning any interest the last 4+ years, we might be getting screwed worse than the large depositors in Cyprus.
Markets all over the world have reacted positively to the news. Not a surprise. If 1) Cyprus gets bailed out and 2) you don’t have to pay the bill, you’re happy and life goes on.
Hours before a possible financial meltdown in Cyprus, the eurozone has agreed to a €10B bailout in which the country's second-largest bank, Laiki, will be closed and its operations folded into Bank of Cyprus.
Deposits of over €100,000 will be hit with a large tax, perhaps 30% or more, while those below that level will be left untouched. Laiki's senior bondholders will be wiped out, while Bank of Cyprus's creditors will also be affected.
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.
I also have continuing issues with some pundits, writing almost every day, that there are setups for day trading. Best Stock Market Indicator Ever: Fell to 88% Down From 91% and Secondaries Confirm "Tradable" This might be true (and difficult to believe), but challenging 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.
The DOW at 10:15 is at 14556 up 45 or 0.31%.
The SP500 is at 1565 up 8 or 0.52%.
SPY is at 156.24 up 0.65 or 0.42%.
The $RUT is at 953.50 up 7.24 or 0.77%.
NASDAQ is at 3263 up 18 or 0.56%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral to bullish and the current bias is up.
WTI oil is trading between 93.70 and 94.95 today. The session bias is bullish and is currently trading down at 94.86.
Brent crude is trading between 107.20 and 108.39 today. The session bias is bullish and is currently trading down at 108.23.
Gold fell from 1612.70 earlier to 1589.68 and is currently trading down at 15978.09.
Dr. Copper is at 3.46 down from 3.49 earlier.
The US dollar is trading between 82.29 and 82.86 and is currently trading up at 82.80, the bias is currently flat to bullish.
** RRR = Risk Reward Ratio
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Written by Gary