April 9th, 2013
in Gary's blogging
Opening Market Commentary For 04-09-2013
Premarket SP500 futures were up +0.25 and started to melt down from there. The markets opened up and within minutes a downtrend began putting most of the major indices into the red. By 10 they were back into the green, but flat and directionless as the volume started to ease off to the more recognizable anemic levels.
There were spikes of green volume during the first half hour as the ever present BTFD 'dippers' jumped in helping the continued market weakness.
It appears that we are going to have another 'quiet' day with nothing in the way of surprises to jolt the market one way or the other.
Here’s an update of the daily charts. From a technical standpoint, I don’t like how the Nas and Russell fell out of small consolidation patterns and then penetrated longer term trendlines while the Dow and S&P held up. Breaking down and correcting is fine – perfectly normal activity for a strong and healthy market. But I don’t like the divergence.
Money should be flowing into the small caps and tech stocks, not out of them.
Also, there are several breadth indicators which have cycled down. Again, this is perfectly fine as long as they now bottom and move up.
Failure to do this would have me question the market’s upside potential. In the short term anything goes, but over the intermediate term, those indicators matter.
A declining AD line can exist in the near term, but it cannot continue if the market is to leg up and make a new high..
“There are many people who just can’t “see” anything wrong with our country. People continue to cling to the notion that our leaders are working for us, not for themselves. So people sit on their butts watching “American Idol” or reading about celebrity baby bumps. Can the U.S. economy crash? Nah. It can’t happen here.”
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and this morning was as narrow as yesterday. 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 second quarter, 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: Unchanged at 89% and Secondaries Confirm "Tradable" This might be true, 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.
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 14611 down 0.28 or -0.00%.
The SP500 is at 1563 up 0.12 or 0.01%.
SPY is at 156.23 up 0.02 or 0.01%.
The $RUT is at 930.47 down 1 or -0.11%.
NASDAQ is at 3223 up 2 or 0.06%.
NASDAQ 100 is at 2789 up 4 or 0.14%. (A lot of analysts are currently watching the 100.)
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral to bearish and the current bias is sideways.
WTI oil is trading between 92.55 and 93.79 today. The session bias is neutral and is currently trading up at 93.21.
Brent crude is trading between 103.68 and 105.56 today. The session bias is neutral and is currently trading up at 104.93.
Gold rose from 1570.50 earlier to 1583.80 and is currently trading up at 1581.45.
Dr. Copper is at 3.43 rising from 3.33 earlier.
The US dollar is trading between 82.81 and 82.48 and is currently trading up at 82.66, the bias is currently bullish.
** RRR = Risk Reward Ratio
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Written by Gary