Written by Gary
Opening Market Commentary For 11-22-2013
Premarkets were up +0.10% but slowly melted towards the opening bell. The SP500 opened up at 1797 and quickly started melting downward while the DOW fell -0.10% at the opening. The small caps did gap up almost +0.20%, but they too started melting downwards. Volume at the opening was subdued and low by normal opening standards, but mostly red.
By 10 am the averages had recovered and had moved higher on anemic volume, thanks to the HFT computers. I can't locate any investor or trader I know that is playing in today's session.
I too have seen parallels but not ready to stake a claim.
"Bubbles are breaking out everywhere," exclaims outspoken former-insider David Stockman in this brief FoxTV clip, warning that "its like 2007/2008 all over again."
Of course, we have heard 'bubble' talk before but Stockman steps methodically from the broad market (exposing the incredible numbers behind the Russell 2000) to junk bonds (and the record-breaking issuance and risk ignorance) and Fannie Mae (as an example of the idiocy).
Crucially, Stockman explains to Neilo Cavuto who tempers the bubble-talk with aggregate measures, "bubbles don't form at the heart of the Dow, they form on the speculative periphery of the economy and work their way in," - something that is very evident in today's 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 cryptic utterances in hinting when the taper will begin and 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 much. 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 (shooting star) to verify a top along with heavy volume.
The DOW at 10:30 is at 16016 up 6 or 0.04%.
The SP500 is at 1798 up 2 or 0.10%.
SPY is at 180.09 up 0.19 or 0.10%.
The $RUT is at 1119 down 1 or -0.09%.
NASDAQ is at 3980 up 11 or 0.29%.
NASDAQ 100 is at 3414 up 11 or 0.32%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been mixed and sideways and the current bias is positive.
WTI oil is trading between 95.55 and 94.07 today. The session bias is negative and is currently trading down at 94.36.
Brent Crude is trading between 111.30 and 109.72 today. The session bias is negative and is currently trading down at 110.22.
Gold rose from 1240.51 earlier to 1248.22 and is currently trading down at 1246.10.
Dr. Copper is at 3.201 rising from 3.180 earlier.
The US dollar is trading between 81.13 and 80.75 and is currently trading up at 80.83, the bias is currently negative.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary