Volume Is Dropping, Markets Look Tired

Midday Market Commentary For 06-19-2012

Markets appeared to peaked around 10:30 going on into the noon hour. The market volume turned into a low to moderate green run for the brass ring but these runs usually don’t last and the decent is usually swift and decisive leaving the uninformed wondering what just happened. I am torn whether the markets have enough steam to continue further up today or fall off towards the end of the day. The volume is falling off and the markets are beginning to look tired.

Even the pros won’t touch this one as the RRR (Risk Reward ratio) spread is too small in light of a potential important announcement in tomorrow’s FOMC meeting. The swing traders might have a better go at it, but they have to remain in for several days and that is dangerous in this market. Unless we have a ‘Black Swan” moment like a war action against Iran or Southern California falling off into the Pacific, any market movement will be measured and probably never exceeding 1.5% on any day. The DOW is at 12856 up 114 or 0.90% and ready for a fall.

The 500 is at 1358 up 13.93 or 1.04%.

The $RUT is at 785 up 13.03 or 1.69%.

SPY is at 135 up 1.40 or 1.05%.

The trend is up and the current bias is up.

WTI oil is at 83.97 and leveling out like the markets are doing.

Brent crude is at 96.18 currently trading in the 96 dollar area.

Gold is steady today at 1623, trading between 1633 and 1621 with a neutral bias.

These small projected market movements could be a blessing for the swing traders allowing smaller losses if they guess incorrectly. At this point however, there is very little to lose going short as the next several months going into September do not not look especially bullish. A far as ‘Banana Ben and his dovish monkeys upping the ante with a QE3 tomorrow and increasing the Nations debt is slim to none. However, Christopher Vecchio, Currency Analyst at DailyFX, believes the Federal Reserve will launch more QE tomorrow:

“Despite the terrible Spanish debt auction figures – a clear sign that borrowing costs are rising sharply and that a bailout will be necessary soon if relief does not come.”

I personally think he has bats in his belfry as the American taxpayers are going to scream VERY loudly if the EZ thinks we are going to help the liberals in the Eurozone out of their collective mess. Helicopter Ben might say the concept is still on the table, as he hints at at every FOMC meeting, but he isn’t going to announce that any easing is is now in the making. What I do expect him to say is that there is only so much he can do and that the US MUST do more to clean up the financial mess we are in and that the European’s MUST also do more to reduce their debt and NOT to make it larger. The German’s have already said as much and are deeply against making their own debt problem any worst.

This brings up the question on how the market will react with this news and there are so many variables to look at and question how they REALLY affect the Nations finances.

This morning, for example, the housing permits were way up because builders are hoping that the economy is turning around and they want to be ready. On the other hand the housing starts were lower because there aren’t enough buyers out there ready to sign papers. Believe me when I tell you that housing developers are not in the business of speculative building as they once were. If they don’t know up front that they can sell what they are building, it isn’t going to get built. Until the employed of this nation get back to the point where they can buy a home, this Nation is in a rut, a really big rut; maybe even a recession.

This nations recovery into solvency is projected not get better as we move forward from here for at least 12 months. Our economy WILL get worse before it gets better as many analysts are predicting. With the US debt getting larger, the US unemployed numbers not improving and the Global finances falling deeper into recessionary values further QE at this point will experience only diminished returns and will most likely create a falling market soon after implementation and Ben Bernanke knows this full well.

Assuming there is no QE in the works, the markets will fall off as predicted, but in a warm molasses sort of way that any adept trader can outrun. So there isn’t any hurry to take a front row seat only to have it jerked out from under you should a QE be announced. I am playing it conservatively at this point with a wait an see. At the end of today’s sessions we will inform our premier subscribers what they might want to do.

@zerohedge:

What Happened Into The Last FOMC Meeting?

The hopes and prayers of a legion of long-only managers, stock-brokers, retiring boomers, and TV personalities rest heavily on the shoulders of one Ben Bernanke and just as into the last FOMC meeting in April, equity markets are surging on self-delusion (amid fading volumes and plunging average trade size) – while Treasury markets remain far less sanguine. Will it be different this time?

Average trade size is not confirming the start of a sustained uptrend here – in fact quite the opposite…

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Written by Gary