April 22nd, 2013
in Gary's blogging
Opening Market Commentary For 04-22-2013
Premarkets were up +0.30 at 8 am and started to trend down by 9 am. The USD Chicago Fed Nat Activity Index (MAR), rated medium in importance, fell from 0.76 to -0.23 while analysts were expecting 0.35 and that softened the futures somewhat moving them down to +0.14%. Most investors are waiting for the existing home sales at 10 am and put little importance on the Fed Nat Activity.
Markets opened up on very light volume and traded withing a narrow zone for the first few minutes as the bears and bulls traded insults as the bears finally win pulling the averages down to Friday's closing numbers. The small caps remained in the green as the large caps led the way down.
By 10 am the averages were weak and descending.
The first shoe dropped (further) this morning when CAT missed expectations along with IBM and GE. Not a good sign for what the Fed's say is an improving economy. “Is there any doubt that this 'market' is disconnected not just from current reality but that 'priced-in' hopes for a hockey-stick-recovery seem improbable at best and exuberant at worst?”, writes Zerohedge.
Caterpillar posted first-quarter profits of $1.31 a share, shy of estimates of $1.40. The heavy-machinery giant said its revenues came in at $13.21 billion for the quarter, also missing expectations of $13.7 billion. The company also said it expects its full-year profits to come in at $7 a share, down from a previous forecast of $7 to $9 a share.
U.S. existing home sales dropped 0.6% in March from February to a 4.92-million unit annualized rate, less than the estimates of a 5.01-million unit rate, according to the National Association of Realtors.
As of right now, it is probably too late to jump in to catch the highs and still may be too early to start shorting. Risk is raised to a point where investors are nervous about the markets being on the edge of a cliff. Will Mr. Market back off or will he decide to descend? The averages are in that neutral zone where decisions are difficult to make. Are we now in a correction of a correction or are we going to see more upside that I have been seeing possible?
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and looks to be this way all week. This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable.
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: Falls to 84% Down From 90% and Secondaries Confirm "Tradable" This might be true, but still above 75% where I think it should be? Difficult to believe and challenging to deal with considering current events. 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 14498 down 49 or -0.34%.
The SP500 is at 1551 down 4 or -0.26%.
SPY is at 155.07 down 0.40 or -0.26%.
The $RUT is at 901.94 down 10 or -1.15%.
NASDAQ is at 2303 down 2 or -0.06%.
NASDAQ 100 is at 2788 up 7 or 0.27%. (A lot of analysts are currently watching the 100 for a heads and shoulder formation.)
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bearish and the current bias is down.
WTI oil is trading between 87.10 and 89.15 today. The session bias is bearish and is currently trading down at 87.94.
Brent crude is trading between 98.30 and 101.05 today. The session bias is bearish and is currently trading down at 99.70.
Gold rose from 1402.95 earlier to 1438.88 and is currently trading down at 1420.55.
Dr. Copper is at 3.13 rising from 3.09 earlier.
The US dollar is trading between 82.74 and 83.03 and is currently trading down at 82.92, the bias is currently neutral.
** RRR = Risk Reward Ratio
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Written by Gary