Written by Gary
Opening Market Commentary For 11-19-2013
Premarkets were down some -0.10% early this morning and slowly melted up to yesterday's close just before the market opening. Lack of morning financial news, positive or negative, left most traders sitting on their hands towards the opening bell.
Markets opened flat with the DOW up 15 points and the other averages in the red. By the 15 minute mark the averages were off -.030% and sinking on moderate red volume. By 10 the averages had reversed itself to a positive positive movement upwards but on falling volume.
Yesterday evening on a news channel I won't mention by name, the anchor responding to the new historical highs by making the comment that he was going all-in using his savings and any other cash he could dig up. Hard to believe he was serious, but it seemed he wasn't kidding. The dead man walking of the 'Sheeples' begins.
I was going to post this article yesterday morning as it reflects many of my current thoughts. I have written endlessly that this house of cards, that Ben has built, is shaky enough in the normal daily market winds but just about any 'Black Swan' moment could send the averages tumbling. Just yesterday, one negative market comment from Carl Icahn melted the averages down. So the question remains to what 'moment' is going to be catalysts?
However, the data suggests that the risk of a more meaningful reversion is rising. However, it is necessary to note that "reversions" do not occur without a catalyst.
What will that catalyst be?
I have no idea and nor does anyone else. Things that we are already aware of, like the upcoming debt ceiling debate, are already factored into the market.
The RRR** has been very narrow at the opening bell for months and 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 long as market volume remains light or the trading range is narrow, one can expect successful, or at least profitable, trading to remain elusive. Correctly 'guessing', of course, is the tricky part of the successful trading equation.
The problem facing traders is that the trading range, which has been so narrow during the trading day lately, that way too much money has to be put on the table just to get back meager gains.
The short term indicators are still leaning towards the sell side at the opening, but I would advise caution in taking a position because of the Fed's reluctance to give any hints of when the taper will begin. I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does. Yesterday was a red candle and if confirmed today as a direction change, with another red candle, we will most likely see several more sessions melting downward.
The longer 6 month outlook remains 40-60 sell until we can see what the Fed is going to do, simple as that. If we get Fed tapering in December, highly unlikely now, the markets will certainly react in a negative fashion. If the tapering begins in March 2014, like many believe it will, the markets are going to price that in by declining sooner. I am expecting weak to negative markets for the foreseeable future as light volume suggest a lack of comment from investors. Also, many pundits have stated that we may have seen the top - but I wouldn't count it as long as the Fed continues to hand out 'Market Viagra'! I would like to see a blowout candle to verify a top along with heavy volume.
The DOW at 10:15 is at 1609 up 32 or 0.20%.
The SP500 is at 1793 up 2 or 0.11%.
SPY is at 179.62 up 0.20 or 0.11%.
The $RUT is at 1110 up 2 or 0.21%.
NASDAQ is at 3955 up 6 or 0.14%.
NASDAQ 100 is at 3394 up 5 or 0.16%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been positive and the current bias is positive.
WTI oil is trading between 93.50 and 93.22 today. The session bias is mixed with a positive slant and is currently trading down at 93.77.
Brent Crude is trading between 108.62 and 107.59 today. The session bias is negative and is currently trading down at 107.97.
Gold rose from 1268.54 earlier to 1278.20 and is currently trading up at 1276.90.
Dr. Copper is at 3.168 rising from 3.125 earlier.
The US dollar is trading between 80.60 and 80.87 and is currently trading down at 80.72, the bias is currently sideways with a negative slant.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary