May 29th, 2013
in Gary's blogging
Midday Market Commentary For 05-29-2013
The morning melt-up didn't last but for a few minutes before the melt-down began. By noon the markets were showing the familiar sea-saw narrow trading range and falling volume. In other words, not a very exciting session and certainly not one to bet on – long or short.
The bias is slanting downwards and may continue the trend until the trading day ends.
Today, and all of last week, is not the type of trading I like to see. Much more investor unrest lies ahead I am afraid.
Profit taking has contributed to the early weakness on Wall Street, with some cashing in on Tuesday's gains, which lifted the Dow to a new record closing high.
Lingering concerns about the outlook for the Federal Reserve's asset purchase program are also weighing on the markets following the upbeat home price and consumer confidence data released yesterday.
Recent comments from Fed officials have suggested that upbeat economic data may lead the central bank to scale back its asset purchase program within the next few meetings.
Negative sentiment has also been generated by news that the Organization for Economic Co-operation and Development, or OECD, lowered its forecast for global economic growth in 2013, citing a further deterioration in Europe.
The DOW at 12:15 is at 15290 down 119 or -0.77%.
The SP500 is at 1647 down 12 or -0.76%.
SPY is at 165.13 down 1.16 or -0.72%.
The $RUT is at 985.58 down 12 or -1.18%.
NASDAQ is at 3467 down 22 or -0.63%.
NASDAQ 100 is at 2995 down 17 or -0.57%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been mixed and the current bias is bearish.
WTI oil is trading between 93.240 and 95.22 today. The session bias was bullish and has turned negative and is currently trading down at 93.60.
Brent crude is trading between 104.37 and 102.75 today. The session bias is negative and is currently trading down at 102.97.
Gold fell from 1394.30 earlier to 1380.49 and is currently trading up at 1390.05.
Dr. Copper is at 3.292 falling from 3.318 earlier.
The US dollar is trading between 84.43 and 83.53 and is currently trading down at 83.67, the bias is currently bearish.
Interesting read from Doug Short.
The above chart reflects that 100% of the time, when lumber hit the top of its trading channel, it has fallen at least 50% in value, over and over for the past 20 years. I doubt that many of you trade lumber and many of you might be saying "Why should I care about Lumber? I don't own it!"
Let's look at lumber a little closer. The bottom of the channel was hit in 1995, 2001 and 2009, not bad times to be looking to buy stocks at low prices. The last serious decline by lumber took place in early 2011. What did the S&P 500 do after this lumber decline? SPY declined 17%, peaking in May of 2011.
Lumber is not the "Holy Grail" of stock market indicators, yet often times it has paid to respect it at the top and bottom of this 20-year channel and its message for the stock market.
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Written by Gary