April 12th, 2013
in Gary's blogging
Opening Market Commentary For 04-12-2013
Premarket numbers were down 20% to 30% depending who you received you information. Not surprisingly (sarcasm), the futures recovered some after the disastrous report on the Advanced Retail Sales and other financial reports (chart below).
By 9:55 am the markets had melted up to flat status and then the highly rated University of Michigan Confidence number came out at 72.3 biggest miss on record than the 78.5 expected and the averages fell back to opening levels again.
Markets opened down about 0.30% on relatively low volume while my proprietary indicators shot up to mid level 3 digit bearish numbers, second day in a row. Unusual in light of many analysts pointing out that we are in a VERY strong uptrend and should not fight it. OK advise if you are long, but I wouldn't take on any new positions at this time plus I would raise the red flags of caution.
Early morning indicators lead us to believe today's session action will be light with a melting up into the green numbers with the small caps remaining in the red. The remaining survivors should be flat, for the most part, for the rest of the session. Several heavy volume spurts of BTFD 'dippers' have kept the averages from falling further during the first half hour and have provided a slight positive path upwards but trend was quickly reversed and the bears took control around 10 am.
US Advance Retail Sales (March) – rated HIGH in importance - dropped from 1.0% to -0.4% while expecting 0.0%, the largest drop in 9 months.
Prices at the producer level dropped 0.6% in March (rated medium) from February, the biggest drop since last May, and steeper than the 0.2% decrease economists expected. Excluding the food and energy components, prices rose 0.2%, matching forecasts.
U.S. retail sales dropped 0.4% in March from February, compared to expectations that they would hold steady. Excluding the auto segment, sales were down 0.4% for the month, also falling short of forecasts of no change.
Wells Fargo posted first-quarter profits of 92 cents a share, topping estimates of 88 cents. Revenues of $21.3 billion came in shy of expectations of $21.6 billion. Shares dropped more than 1% in pre-market trading.
J.P. Morgan Chase revealed first-quarter profits of $1.59 a share, topping estimates of $1.39. Revenues came in at $25.8 billion, which matched expectations. Shares fell 0.6% in pre-market trading.
The first column is what was reported this morning. The second column is what analysts were expecting and the third is the last report.
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and this morning appears to be a light one as well. This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable. As of right now in our opinion, 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 but I would wait until Monday's numbers come out. 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 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 14849 down 15 or -0.10%.
The SP500 is at 1588 down 5 or -0.30%.
SPY is at 158.79 down 0.41 or -0.25%.
The $RUT is at 942.83 down 4 or -0.45%.
NASDAQ is at 3291 down 9 or -0.28%.
NASDAQ 100 is at 2853 down 6 or -0.22%. (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 bullish and the current bias is down.
WTI oil is trading between 93.50 and 91.20 today. The session bias is bearish and is currently trading down at 91.25.
Brent crude is trading between 106.25 and 102.01 today. The session bias is bearish and is currently trading down at 102.13.
Gold fell from 1591.18 earlier to 1527.50 and is currently trading down at 1535.65.
Dr. Copper is at 3.37 down from 3.43 earlier.
The US dollar is trading between 82.17 and 82.57 and is currently trading down at 82.38, the bias is currently negative.
The chickens WILL come home to roost eventually as this interesting read suggests.
The chart [shown in the article] may be the best one-chart summary of all that is wrong with the US financial system. It is a very simple chart - it shows total JPMorgan deposits, loans and the excess difference of deposits over loans.
And that is precisely the jist of all that is broken in the US financial system, and why the Fed is in fact making things worse, not better, and is progressively destroying the wealth of the middle class, stunting any growth opportunities the US may have, and all the residual wealth is pumped into the hands of those benefiting solely from rising asset prices.
** RRR = Risk Reward Ratio
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Written by Gary