Opening Market Commentary For 10-22-2012
Premarkets were about where they were on closing Friday. Soon they began to melt slightly lower as we approached the opening bell where most averages were flat in the red on low volume. Interestingly, after such a market fall on Friday one would expect (pre 2008) Monday to be an up day at least for the opening. But when the opening bell sounded NOTHING happened as the averages were simply not reacting. Thus making a SWAG investment decision very difficult and in this case impossible.
By 10 am the averages remained flat, bearish and mostly sideways. The averages were trading below the 50 day MA which is not a good sign. However, they are not all that far below the 50 day MA and could very easily rise once again and make a grab for the gold ring.
I do not see where there has been any good news over the week end, either the same financial positions of the World or indecision of traders of where they want to go next.
Euroarea 2011 Debt/GDP Rises To Record, Set To Rise Further
Hardly news to anyone who has not been living in a Santorini limestone cave over the past 4 years, but as was reported overnight, official Euroarea debt to GDP (excluding trillions in contingent liabilities of course: these will only be considered in due course) rose in 2011 to a record 87.3% from 85.4% in 2010.
The RRR** was very narrow at the opening bell, just as it has been for the past month. Any trades today will probably end up on the unprofitable side as long as this market remains flat or continues to have low volume.
I have issues with some traders in that they are saying there are setups for day trading. This is true enough, but the trading range is so narrow that way too money has to be put on the table just to get back meager gains.
Swing trading is also at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly. Eric Parnell said it correctly “all of the prevailing economic forces today point to a stock market that should be in decline” and “unstable economic and market conditions are becoming increasingly tumultuous”. He goes on to say in his article, 50 Shades Of Stock Market Grey, “How can you best participate in any further upside while keeping things as clean and risk controlled as possible?”.
Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 10:00 is at 13334 down 9 or -0.07%.
The 500 is at 1431 down 1.69 or -0.12%.
The $RUT is at 819.92 down 1.16 or -0.14%.
SPY is at 143.31 down 0.09 or -0.06%.
The longer trend is up, the past week’s trend is bearish and the current bias is down.
WTI oil was up today and has descended to 89.75 trading between 89.50 and 90.80 and the bias is negative.
Brent crude was up today then crashed to its earlier numbers, rose again to its previous morning highs and then started to melt downwards once more. Currently it is at 110.37 trading between 109.48 and 110.90 and the bias is positive.
Gold is up this morning but has consolidated moving mostly sideways. Currently trading down at 1726.17, trading range is between 1713.90 and 1727.20 with a positive bias.
Dr. Copper is at 3.62 down from 3.65 earlier.
The US dollar fell from 79.74 earlier to 79.64 and is currently trading at 79.67.
** RRR = Risk Reward Ratio
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Written by Gary
