Opening Market Commentary For 07-24-2012
Premarket were down 30 points for the DOW and 3 points for the 500. At the opening the market was up with low green volume and quickly turned red as the market flip-flopped and started melting down. Weakness is apparent but Mr. market isn’t quite sure yet on what to do during this mornings opening session. The ‘BTFD dippers’ are far and few between as it appears they are sitting on their hands waiting for a divine signal from above.
By 10 am the red volume started taking on some meaningful color as it moved from low to moderate but the markets remaining in a tight narrow range making trading impossible. Mixed markets in the EU are making decisions here difficult in this decoupled market place.
The DOW at 10:15 is at 12655 down 63 or 0.51%.
The 500 is at 1344 down 6 or 0.46%.
The $RUT is at 775 down 4 or 0.51%.
SPY is at 134.44 down 0.66 or 0.49%.
The trend is neutral and the current bias is down.
WTI oil is at 88.64 trading between 88.96 and 87.45 and the bias is positive. It recent highs is at 91.65
Brent crude is at 103.86 trading between 104 and 102 and the bias is positive although it fell from 106 yesterday..
Gold is up today at 1581 trading between 1573 and 1588 with a positive bias.
Dr. Copper is at 3.37 up from 3.36 earlier. (Its high this morning was 3.39 and fell after the opening.) Current bias is negative.
The USD tumbled from 84.03 to 83.82 earlier and recovered to 83.84. Further declines are expected to cover a gap made yesterday at 83.62. This usually means the US markets will rise as the USD falls. Look for this gap covering to start setups for shorts in the US equity markets.
Leavitt commentary below is one I agree with as caution is warranted. He only makes a brief mention of the Russell 2000 making new lows and it should be noted that this is a VERY alarming trend and preceded the last market pullback.
He also makes a weak case for going long in that my regular readers know I recommend caution going short as I am bearish on the markets continuing rise. The procedure I use for long swing trades is ONLY if the RRR** is wide enough to warrant it which hasn’t been signaled far enough in advance to even attempt a trade. From the setups I have been able to see through have been very risky from the onset and any profits were marginal at best. Long swings were most definitely the worst to try for the past several months.
“The market got hit hard yesterday [07-23-2012]. It wasn’t the total disaster it could have been, but stiff losses along with Friday’s sell off adds up fast. The Dow and S&P made higher highs last week; the Nas and Russell did not. That was one warning out of many flashed last week that told us to be very careful with longs. Now the Russell has made a lower low.
I still don’t like this market…mostly because for the last two months, the market has either gone straight up or straight down, and every reversal is a sudden reversal that has often involves a gap.
We have no opportunity to let a position go for an extra day just to see what will happen. In several instances, this would have caused a chunk our your gains to be wiped out.
It’s 5 steps forward, 4 steps back – not fun for a swing trader who wishes to ride a trend for everything it’s worth.”
** RRR = Risk Reward Ratio
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Written by Gary