Market Commentary: Markets Gap Up At The Opening, Trading In Narrow Range

November 21st, 2013
in Gary's blogging, market open

Written by

Opening Market Commentary For 11-21-2013

Premarkets were up +0.25% and remained unchanged after positive US financial reports were published this morning. US first time unemployment benefits fell slightly, wholesale prices fell 0.2% and the Markit US PMI rose 2.5.

The large caps opened +0.30% and the small caps were up +0.55% on low to moderate volume leaving opening gaps that is bearish. By the 15 minute mark market direction was sideways and sea-sawing unable to choose a direction.

Follow up:

By 10 am the averages were melting upwards with the $VIX and volume falling.

Fed Confused As Initial Claims Improve, Producer Price Inflation Most Negative Since April

Adding the claims and PPI reports together: Claims suggest Fed may taper soon if the labor market is indeed improving (with companies hiring part-time workers)

. . . while the PPI confirms that at least according to the BLS, inflation is nowhere to be found, suggesting much more QE in stock.

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.

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 slightly leaning towards the sell side at the opening, but I would advise caution in taking a position because of the Fed's cryptic utterances in hinting when the taper will begin or by how much. I would also take chart and other technical indicators with a grain of salt for the time being and watch what the Fed does WHEN it actually does something.

The longer 6 month outlook remains 40-60 sell until we can see what the Fed is actually going to do, simple as that. If we get some Fed tapering in December the markets will certainly react in a negative fashion, how much of course depends on the total amount of bond purchases. 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.

Members of the FOMC believe the US economy has shown signs of improvement, but they have assured short-term interest rates would remain low for quite some time to come. Alpari Market Analyst, Craig Erlam, said: "Many members of the Fed now appear eager to start winding down its asset purchases and are looking for ways to do it that will create the least disruption in the financial markets, such as setting simple thresholds for reductions, or even more simply, providing a timetable for tapering that is not data dependent."

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 10:30 is at 15965 up 67 or 0.42%.

The SP500 is at 1789 up 8 or 0.46%.

SPY is at 179.27 up 0.80 or 0.45%.

The $RUT is at 1110 up 11 or 0.96%.

NASDAQ is at 3952 up 31 or 0.80%.

NASDAQ 100 is at 3391 up 24 or 0.72%.

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

How Oil Really Gets Priced

WTI oil is trading between 93.46 and 94.81 today. The session bias is positive and is currently trading up at 94.77.

Brent Crude is trading between 107.62 and 108.67 today. The session bias is positive and is currently trading up at 108.67.

Gold fell from 1249.44 earlier to 1236.29 and is currently trading up at 1239.30.

Here's why copper has lost its indicator role

Dr. Copper is at 3.167 rising from 3.147 earlier.

The US dollar is trading between 81.33 and 80.99 and is currently trading down at 81.14, the bias is currently sideways.

** 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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