April 4th, 2013
in Gary's blogging
Opening Market Commentary For 04-04-2013
The SP500 futures were up to 1556 early this morning only to start melting down after the big miss in the initial jobs and continuing claims. At the opening bell the averages were mixed and flat with the small caps leading the way down.
By 9:45 am the markets had reversed and started melting up (surprise, surprise) on low volume as the HFT computers and DaBoyz 'juiced' the numbers up to early premarket figures.
By 10 am over half of yesterday's losses were recovered AND on falling volume. Where is Mr. Market going to take us today?
The big miss in reported financials this morning is not to be underestimated in importance. Five out of five misses and the markets melt up.
And the economic (downside) hits keep on coming: PMI, ISM, Non-Mfg ISM, ADP and now Initial claims - five out of five misses as the US economy slowly but surely joins the rest of the world in resuming its downward trajectory. Moments ago initial claims printed a whopping 385K, far above expectations of 353K, and far above the upwardly revised 357K (was 353K before).
This was the biggest miss to expectations since November. Also, excluding the Sandy [aberrations], this was the biggest two week surge in claims since April 2011.
Continuing claims also missed, printing at 3063K, above expectations of 3050K.
Sure enough, the excuses begin: sequester, Easter (two states estimated which means actual number is likely even worse), weather (unclear if warm or hot), Cyprus, and generally, stuff... Just not the economy. Never the actual economy. Because it is unpossible that with $85 billion inject per month into the market economy, that things would be just getting worse and worse.
The RRR** has been narrow at the opening bell for the past several months, over a year actually, but the past several sessions has provided better than normal trading opportunities if you guessed right.
However, it this low volume trend continues it will make 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. Correctly 'guessing', of course, is the tricky part of the successful trading equation. Trades today could end up on the meager side of profitability if you are lucky as most trades have been less than optimal during the past several months.
I also have continuing issues with some pundits, writing almost every day, that there are good setups for day trading. Best Stock Market Indicator Ever: Unchanged at 88% and Secondaries Confirm "Tradable" This might be true to some extent, but challenging to deal with. The trading range remains 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 and then guessing what the next day will bring. Although guessing overnight trades would have been most profitable over the past year, 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 14603 up 52 or 0.36%.
The SP500 is at 1560 up 6 or 0.40%.
SPY is at 155.86 up 0.65 or 0.43%.
The $RUT is at 919.31 up 0.62 or 0.07%.
NASDAQ is at 3219 up 0.46 or 0.01%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral with a bearish slant and the current bias is up.
WTI oil is trading between 97.44 and 92.75 today. The session bias is bearish and is currently trading up at 93.80.
Brent crude is trading between 107.78 and 105.91 today. The session bias is bearish and is currently trading down at 106.82.
Gold fell from 1604.40 earlier to 1541.10 and is currently trading sideways at 1548.92.
Dr. Copper is at 3.34 falling from 3.40 earlier.
The US dollar is trading between 82.82 and 83.66 and is currently trading down at 83.12, the bias is currently bearish.
** RRR = Risk Reward Ratio
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Written by Gary