Midday Market Commentary For 11-12-2012
Risk-off is the by-word of the past month and though today’s selling pressure has remained relatively subdued the concerns of global financial unrest pose a real threat in containing further decline in the averages. The lingering concerns regarding the looming ‘Fiscal Cliff’ and the EU’s continuing financial woes are weighing on investors far and wide with little good news to help bolster the markets.
Today the markets closed mixed, flat and lower than normal volume. Tomorrow could have more volatility.
The subsequent pullback by the markets came as traders expressed continued concerns about whether President Barack Obama and members of congress will be able to come to an agreement to avert the fiscal cliff looming at the end of the year.
While members of both parties have called for compromise on the issue, recent statements suggest that a continued disagreement over taxes on the wealthy could lead to continued gridlock on Capitol Hill.
Without action by Congress, the end of the year will see the expiration of the Bush-era tax cuts as well as the automatic spending cuts that were part of last summer’s debt ceiling deal.
Lopsided Risks by John Hussman of Hussman Funds
The recent sequence of overvalued, overbought, overbullish, technically exhausted setups followed by a clear technical breakdown is of greatest concern here, because we often observe that sequence at the beginning of deep and extended market losses.
The RRR** was very narrow at the opening bell and remained that way until the closing 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 as the markets are currently untradable. Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 4:00 is at 12815 down 0.23 or -0.00%.
The 500 is at 1380 up 0.15 or 0.01%.
The $RUT is at 793.87 down 1.15 or -0.14%.
SPY is at 138.45 up 0.29 or 0.21%.
The longer trend is up, the past month’s trend is bearish and the current bias is bearish.
WTI oil remained neutral from Friday’s close and is trading even at 85.62 trading between 85.28 and 86.46 and the bias is bearish.
Brent crude was up today and is now trading even at 108.96 trading between 108.55 and 110.39 and the bias is bearish.
Gold also remained in a tight neutral zone after Friday’s close this morning. Currently trading down at 1727.83, trading range is between 1726.50 and 1737.50 with a negative bias.
Dr. Copper is at 3.47 up from 3.43 earlier.
The US dollar fell from 81.16 earlier to 81.01 and is currently trading up at 81.12.
The 500 at the close. The downtrend line is being tested and flirting with more bearish divergences remain a possibility and much caution should be observed. Long positions are not advised at this time, but be aware we could witness a nice Santa Claus Rally towards the end of the year.
The DOW at the close.
The $RUT at the close. The Russell remains below its downtrend line which I foresee as the trend to watch for the next few weeks anyway.
(Click on chart to see larger view)
** RRR = Risk Reward Ratio
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Written by Gary
