Opening Market Commentary For 08-05-2013
Premarkets were down around -0.16% and fell off sharply at the opening where some indices dropped to a -0.30%.
At 10 am the ISM Non-Manufacturing Composite for July came in at 56.0 rising from 52.2 helping the averages melt back up flat status on low to moderate volume. This could turn out to be a day for narrow trading ranges. I expect the afternoon session to remain in a narrow band until towards the session closing where it might fall off – hate this guessing.
Here is more in the ISM Non-manufacturing Composite numbers.
Just like the incredulous surge in last week's Manufacturing ISM which exploded higher from 50.9 to 55.4 (as we predicted following the Chicago PMI plunge hours before that), so today its non-manufacturing cousin soared in a desperate attempt to give the "all clear" on the US second half economy (at least until the inevitable hangover of course): at 56.0, up from 52.2, and smashing expectations of 53.1.
(supposedly the weather was neither too hot nor too cold this time), this was the biggest beat of expectations since January 2012, pushing the index to the highest since February 2011 (when as we now know GDP was negative) and the biggest sequential jump since April 2009.
Those part-time workers must really be putting their shoulder into it even though the employment index actually declined from 54.7 to 53.2. New orders soared although at the expense of Backlogs which dropped sharply into contraction mode: pulling activity forward again to telegraph momentum?
Long story short - until reality returns and the surge in various global PMIs is moderated, as happened in 2012 and 2011 before it - the Taper once again appears to be on. We expect the September number to plunge just to keep the Baffle with BS theme going strong.
The RRR** was narrow at the opening bell today continuing a recent trend. It has been like this 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. This trend of low volume and narrow trading sessions makes any predictions of session movements nearly impossible, thus making trading futile and mostly unprofitable.
As of right now, it is too late to jump in to catch the market 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.
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 third and fourth quarters, unfortunately a lot of guessing remains.
Correctly 'guessing', of course, is the tricky part of the successful trading equation lately.
I also have continuing issues with some pundits, writing continually, that there are good setups for day trading. Best Stock Market Indicator Ever: At 91% Stays At 91% From Last Week 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.
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. 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 10:30 is at 15618 down 38 or -0.25%.
The SP500 is at 1707 down 2.50 or -0.15%.
SPY is at 170.74 down 0.21 or -0.12%.
The $RUT is at 1060 up 0.12 or 0.01%.
NASDAQ is at 3687 down 3 or -0.07%.
NASDAQ 100 is at 3140 down 4 or -0.12%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is positive.
WTI oil is trading between 107.68 and 105.71 today. The session bias is bearish and is currently trading up at 106.03.
Brent crude is trading between 109.43 and 107.58 today. The session bias is bearish and is currently trading up at 107.84.
Gold fell from 1319.85 earlier to 1303.40 and is currently trading down at 1304.95.
Dr. Copper is at 3.160 falling from 3.188 earlier.
The US dollar is trading between 81.81 and 82.15 and is currently trading up at 82.11, the bias is currently bullish.
** RRR = Risk Reward Ratio
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Written by Gary