Opening Market Commentary For 07-26-2013
Premarkets were down this morning as the University of Michigan confidence reported higher numbers, highest since July 2007. The U of M confidence came in at 85.1 beating out what was expected and higher that the last report of 83.9.
But then the markets seriously gaped down at the opening on moderate volume which wasn't expected. By 10 am the markets had settled and further losses are expected.
The official reason for today's drop is appears to be an overall disappointment and concerns of China, the EU and Amazon.com reporting a loss.
Stocks mostly dropped Friday on concerns that a brusque overhaul of China's industry could slow down the world's second-largest economy and after retailer Amazon.com reported a surprise loss.
Beijing has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy.
That move followed weak manufacturing data on Wednesday. Communist leaders are trying to reduce reliance on investment and trade.
But a slowdown that pushed China's economic growth to a two-decade low of 7.5 percent last quarter had earlier prompted suggestions they might have to reverse course and stimulate the economy with more investment to reduce the threat of job losses and unrest. China's Shanghai Composite dropped 0.5 percent to 2,010.85.
Interestingly, the RRR** was narrow at the opening bell today continuing a recent trend. One would think the range would expand with such a gap down, but on further examination this is bullish and I expect the averages to push higher next week.
As of right now, it is too late to jump in to catch the highs, safely anyway. Traders 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 in this casino market.
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 and I urge caution in trading today's markets.
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 and that isn't right. Do not fall into the trap of money burning a hole in your pocket, sit tight better days are coming.
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 and especially last night. 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 10:45 is at 15424 down 131 or -0.85%.
The SP500 is at 1678 down 13 or -0.74%.
SPY is at 167.71 down 1.22 or -0.71%.
The $RUT is at 1043 down 11 or -1.02%.
NASDAQ is at 3585 down 20 or -0.56%.
NASDAQ 100 is at 3048 down 13 or -0.43%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral and the current bias is bearish.
WTI oil is trading between 105.61 and 104.11 today. The session bias is bearish and is currently trading down at 104.23.
Brent crude is trading between 107.81 and 106.63 today. The session bias is bearish and is currently trading down at 106.64.
Gold fell from 1338.77 earlier to 1320.89 and is currently trading down at 1323.65.
Dr. Copper is at 3.104 falling from 3.193 earlier.
The US dollar is trading between 81.92 and 81.65 and is currently trading up at 81.78, the bias is currently neutral.
** RRR = Risk Reward Ratio
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Written by Gary