Low Volume, Narrow Trading Markets Melting Up

July 8th, 2013
in Gary's blogging

Opening Market Commentary For 07-08-2013

Markets opened up 0.40%, but down from premarket highs.

Before the opening the oils were down, gold was up, copper was down and the USD was down which one would expect an up day for Mr. Market. The SP500 gaped up on opening 2.29 points which will most likely be covered during today's session. If the gaps made are not covered today we can expect the markets to fall back sometime in the near future.

By the 15 minute mark, the large caps eased up to 0.60% marking the premarket highs and making investors wondering where the session is going to go today. Volume is light, $VIX is trending down at 14.79 and other indicators are wavering. The $RUT has set a new historical high this morning and a 2.35 point gap.

Follow up:

Back from vacation on the Oasis of the Seas last week and I can attest that life on the merry go round of life after a week of grandeur, in a word, sucks. The good news is that after a few good trades and we will book our next passage.

The RRR** was moderate at the opening bell today and it doesn't look like it is going to expand any in today's session. The continuing trend of low volume and narrow trading sessions makes session movements nearly impossible to gauge, but they are improving somewhat. If you like trading gaps, this market continues to be your playground.

As of right now, it is too late to jump in to catch the highs, safely anyway, as the caution flags are waving. A week ago I suggested that it might be a good time to buy for a swing trade. That prediction proved to be correct, however, the time to sell might be close at hand as there are several heavy resistance areas coming up. Short term is a sell, some pundits are calling for a buy on the medium term, I am not so sure. My indicators show a 10% buy overall and a 70% sell.

Traders also need to be especially cautious how close you set your stops as we have seen several corrections that unnecessarily wiped out a lot of investment profits. As for shorting, it still may be too early to start picking out your best candidates as the market trend is still up, but I you will not have to wait much longer.

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. 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.

I also have continuing issues with some pundits, writing continually, that there are good setups for day trading. Best Stock Market Indicator Ever: At 85% Rises From 81% Last Week and Secondaries Also Slip From Confirm "Tradable" to Negative. 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. However, according to this system, the market is now Un-tradable.

There is a wedge between perception and reality that has been going on for some time now where the reality doesn't match this continued bull run.

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 12255 up 117 or 0.77%.

The SP500 is at 1643 up 11 or 0.69%.

SPY is at 164.17 up 1 or 0.65%.

The $RUT is at 1009.90 up 5 or 0.45%.

NASDAQ is at 3489 up 10 or 0.30%.

NASDAQ 100 is at 2972 up 9 or 0.30%.

The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is trending higher.

How Oil Really Gets Priced

WTI oil is trading between 103.98 and 102.14 today. The session bias is negative and is currently trading down at 102.40.

More Widening For The Brent/WTI Spread ahead?

Brent crude is trading between 108.01 and 106.80 today. The session bias is negative and is currently trading down at 106.91.

Gold rose from 1214.51 earlier to 1237.00 and is currently trading up at 1232.45.

Here’s why copper has lost its indicator role

Dr. Copper is at 3.079 rising from 3.058 earlier.

The US dollar is trading between 84.83 and 84.43 and is currently trading down at 84.47, the bias is currently bearish.

** RRR = Risk Reward Ratio

To contact me with questions, comments or constructive criticism is always encouraged and appreciated:


Written by Gary

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