Midday Market Commentary For 07-31-2012

The morning action looked similar to yesterday’s albeit a bit more choppy as investors churn the numbers awaiting the FOMC meeting. That Fed meeting is, of course, now in doubt to whether or not more QE is on the way because of this mornings better than expected US financial news. But U.S. markets are treading water in anticipation of this Friday’s unemployment report. The markets settled down by 10:30 but remained mixed and directionless with moderate red volume and low green volume. The trend, if you can call it that, is bearish in a tight narrow trading zone. Looking more and more like the lull before the storm as we can expect more market moving news this week. The market place is on VERY shaky ground for continuing last weeks run up looking weak and bearish.

Investors are obviously reluctant to take any significant positions, just a lot of churning as DaBoyz do their thing. The RRR** is terrible for trading with any sort of confidence and is completely out the window. Even profitable swing trading is doubtful at this point. Having said that, the market action is acting very bearish unable to top Friday’s action and news that Germany spanked the hand of Draghi telling him that Beggars Can’t Be Choosers. Hollande also received notice that he is not welcome on Draghi’s ‘cloud nine’ either.

My feeling is that we are about to see more downside in this roller coaster market of late. The sounds of a coming US recession is getting louder like thunder coming down from the hills as many pundits are questioning this directionless market and questionable market rise on Draghi’s ridiculous statement last week. Steven Hansen, my Econintersect cohort, says, “the images in my head are one of an economic roller coaster with an abyss in the distance.” This has been my feelings for sometime now.

Economic Rollercoaster: Some Days Good, Others Not So Good by Steven Hansen

This past week has seen many economic ups and downs:

• consumer sentiment worsens (bad)

• initial unemployment claims down significantly (good)

• Spain debt financing at Post-Euro high, all while further evidence Europe / UK in recession (bad)

• European Central Bank President Mario Draghi says he will save the Euro (good)

• soft existing home sales and pending home sales (bad)

• durable goods new orders strong (good)

• GDP at 1.5% (I don’t know if it is good or bad – the data is mixed and the BEA reset the baseline).

Read more »

The markets are still within the tight trading zone started on Monday’s session and moving steadily sideways under anemic volume. Currently the markets have a slight bearish tone but not moving far as investors sit on their hands.

The DOW at 12:15 remains directionless and is at 13047 down 25.24 or -0.19%.

The 500 is at 1382 down 2.63 or -0.19%.

The $RUT is at 791.26 down 0.32 or -0.04%.

SPY is at 138.42 down 0.27 or -0.19%.

The trend is neutral and the current bias is neutral.

WTI oil is at 88.65 trading between 90.30 and 88.40 and the bias is negative.

Brent crude is at 105.37 trading between 104 and 106 and the bias is negative.

Gold is mixed today at 1619 trading between 1616 and 1627 with a negative bias.

Dr. Copper is steady at 3.43 up from 3.42.

Earlier the USD climbed from 82.72 to 82.94 fell again to 82.64 and recovered to 82.86.

@SA

European shares fall for the first day in 4 as the battle between Mario Draghi and the Germans over bond purchases heats up (ECB policy meeting on Thursday). Stoxx 50 -0.6%, Germany flat, France -0.9%, Italy -0.7%, Spain -0.9%, U.K. -1.1%. The euro +0.4% to $1.2311.

** RRR = Risk Reward Ratio

To contact me with suggestions or deserved praise:

[email protected]

Written by Gary