May 15th, 2013
in Gary's blogging
Opening Market Commentary For 05-15-2013
Premarkets were down a 'tad' (-0.05%) for most of the pre-trade crowd until the financial reports started to come in at 8:30 am where SPY eased down to -0.20% because of the 'not so good' reporting.
The markets opened down about -0.25% and quickly rose to being just flat and mixed. By the 15 minute mark the averages were showing signs of softness again as Mr. Market couldn't get his act together as the volume also started to fall.
By 10 am the markets once again turned red but flat and directionless as investors mull over the prospects of this market becoming more bullish than it already is.
The Energizer Bunny market as some call it, continues to surprise many as it grinds its way to new daily highs via Dr. Ben's infernal snake oil medicine. The question working it way through the financial ranks now is when is this artificial medicinal high is going to wear off and send the markets in a downward spiral of depression REGARDLESS of David Tepper's bullish comments yesterday.
As I have mentioned many times, this is a scary market as it continues to rise in face of increasingly poor financial reports in the US and continuing financial issues in Europe and China.
One of these days we might just get a positive economic print, of the kind that the meandering [David] Tepper was saying is visible everywhere now. Just not yet. Moments ago we got the releases of the May PPI and the Empire Fed, the first of which dropped -0.7%, on expectations of a -0.6% drop, the lowest MoM PPI since July 2009.
Technically, this is bullish for the E-Trade baby as it gives the Fed carte blanche to continue QEternity as long as needed. But it was the Empire Fed index that was even more disappointing, as it crushed hopes for an increase from 3.05 to 4.00 in May, instead posting the first contractionary print since January, printing at -1.43.
It gets worse when one digs through the data: New Orders dropped from 2.20 to -1.17, Shipments also slid into negative from 0.75 to -0.02, Unfilled Orders deteriorated even more from -3.41 to -6.82,
Inventories contracted from -4.55 to -7.95, Prices Paid and Received both contracted, but worst of all, the Average Employee Workweek dropped from 5.68 to -1.14.
Meaning the collapse in the average workweek persists, and even if the BLS reports a positive print for May, the report will once again mask the declining aggregate end demand for labor.
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and it looks like it is going to be this way all week, like last week (and the week before that). 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, safely anyway. As for shorting it may be too early to start shorting, but I feel you will not have to wait much longer.
As long as market volume remains 'below average' 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: Rises to 96% up From 92% and Secondaries Confirm "Tradable" This might be true, but still above ~60% where I think it should be! Hard to believe and challenging to deal with considering 'not so good' current events here and abroad. There is a wedge between perception and reality going on right now where the reality doesn't match this bull run.
The trading range has been 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 15206 down 9 or -0.06%.
The SP500 is at 1648 down 2 or -0.11%.
SPY is at 165.10 down 0.12 or -0.08%.
The $RUT is at 984.55 down 1.45 or -0.15%.
NASDAQ is at 3458 down 4 or -0.12%.
NASDAQ 100 is at 2991 down 5 or -0.15%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is neutral with a slight bullish slant.
WTI oil is trading between 94.43 and 92.52 (and falling) today. The session bias is bearish and is currently trading down at 92.61.
Brent crude is trading between 102.66 and 101.35 today. The session bias is bearish and is currently trading down at 101.44.
Gold fell from 1428.63 earlier to 1403.01 (and falling) and is currently trading down at 1405.00.
Dr. Copper is at 3.239 falling from 3.311 earlier.
The US dollar is trading between 83.66 and 84.21 and is currently trading down at 83.98, the bias is currently bearish.
** RRR = Risk Reward Ratio
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Written by Gary