Opening Market Commentary For 07-17-2013
Premarkets were up close to 30% this morning with poor US financial being reported (chart below). Housing starts are way down along with building permits but I guess Bernanke is going to pull some free ice cream out of his butt and that explains the markets rise. By 9:00 the futures had melted up another 5% setting the stage for a colossal pull back.
The SP500 gaped up at the opening leaving a bear hole to be filled later (along with another below at 1652). By 10 am the averages had pulled back from the morning opening highs to flat and lackluster status. What happen next depends on how investors like or dislike Bernanke’s views.
It became clear to me 2 years ago that we were in a conundrum of sorts trying to figure out when this market house of cards is going to collapse. Because of the QE, the markets continued to rise unabated making the problem even larger. Now, as then, most investors are scratching their heads wondering where this train is going to stop.
The following article is a must read.
Below, technical overviews and analysis for key stock indices, commodities and currency pairs, based on market activity at the end of the 16 July 2013 U.S. session. This information is a comprehensive summary derived from simple and exponential moving averages along with key technical indicators shown for specific time intervals.
Then there is this article that goes along with my thinking. My problem is that I am always too early as the market moves more slowly, but the pull back is coming.
As for the market outlook, I believe the potential is rising that we could eventually enter an extended bear market correction sometime over the next 12 months as the markets go through the final cleansing process that will finally bring us to the beginning of the next secular bull market. Such a correction could last 1 to 2 years if not longer, but whether it happens sooner or later will depend on what policy makers allow to play out, which is why Bernanke's testimony tomorrow will be important to watch.
The RRR** was narrow at the opening bell today, but overnight long swings would have resulted in the most profits. The continuing trend of low volume and narrow trading sessions makes predictions of session movements nearly impossible, thus making trading futile and unprofitable.
As of right now, it is really too late to jump in to catch the highs, safely anyway. Traders also need to be especially cautious how close you set your stops as we have seen lately 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, but I feel you will not have to wait much longer.
Correctly 'guessing', of course, is the tricky part of the successful trading equation. I also have continuing issues with some pundits, writing continually, that there are good setups for day trading. Best Stock Market Indicator Ever: At 92% Rises From 85% Last Week and Secondaries Confirm "Tradable" from 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 like this morning.
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.
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.
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 first column is what was reported this morning. The second is what analysts were predicting and the third is the last report.
The DOW at 10:00 is at 15461 up 10 or 0.06%.
The SP500 is at 1681 up 4 or 0.25%.
SPY is at 168.04 up 0.51 or 0.30%.
The $RUT is at 1043 up 4 or 0.41%.
NASDAQ is at 3606 up 8 or 0.22%.
NASDAQ 100 is at 3083 up 6 or 0.21%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is sideways.
WTI oil is trading between 104.80 and 105.89 today. The session bias is bullish and is currently trading down at 105.62.
Brent crude is trading between 107.30 and 108.41 today. The session bias is bullish and is currently trading down at 108.11.
Gold flew from 1282.42 earlier to 1297.90 and is currently trading down at 1296.25.
Dr. Copper is at 3.162 rising from 3.136 earlier.
The US dollar is trading between 82.91 and 82.46 and is currently trading down at 82.72, the bias is currently negative. (There is still a gap at 83.67 that needs to be filled indicating a general stock market pull back in the future. Another one this morning at 82.75. Forex markets are generally the first to cover gaps.)
** RRR = Risk Reward Ratio
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Written by Gary