Closing Market Commentary For 08-01-2012

The 2:15 meeting of the Fed’s basically repeats the old message that it stands ready to ease as needed. And for now, there are no additional easing moves planned, nor an extension of the low-rate pledge past late-2014. But as we all know this could be changed in a heart-beat. The first response was a massive selloff, O.K. sort of massive compared to the past several sessions, with relative heavy red volume to confirm that investors are at least nervous about current conditions. As SA wrote, “. . . there’s no new candy for now.“

The BTFD ‘dippers’ jumped right in and provided some green volume of moderate proportions but failed to bring the markets back up to the mid-morning highs. After oscillating back and for 30 minutes the DOW settled at 12995 down 13 points and the 500 at 1378 down a paltry 1.28. Unreal, now we have to wait until Friday and Non Farms Payroll for another movement of non-proportions as the can is kicked down the road.

Well the markets FINALLY closed down as ‘some’ investors are taking the prospects of a real decline is in progress and it is time to move on to ‘safe’ investments. O.K. having said that I would continue to be cautious as radical reversals are to become the norm like we saw 6 months ago. Trading will become more difficult as I believe as the swings will be unpredictable and dangerous if you guess wrong. The continued trend is bearish and swing trading will be the safest stance, but watch out for Friday!

A VERY interesting daily chart for the Russell 2000 as it shows a triangle in the making. I think a breakout to the downside is more likely with all the negative news from the EU, growing concerns about China and the BRICS. Unfortunately, I think the charts have been trashed and next to useless. This is because of the financially meddling that has been going on since the initiation of QE1 keeping the market levels at an artificial high and not showing the ‘real’ values. So take it for what it may or may not be. Click on chart for a larger view.

The RRR** is remains questionable profitably or untradeable at this time. Everything is a ‘guess’ and I don’t work that way.

The DOW at 4:00 is at 12976 down 32.55 or -0.25%.

The 500 is at 1375 down 4.00 or -0.29%.

The $RUT is at 771.13 down 15.81 or -2.01%. (The big loser.)

SPY is at 137.67 down 0.04 or -0.03%.

The trend is down and the current bias is down.

WTI oil is at 88.79 trading between 87.49 and 89.42 and the bias is positive.

Brent crude is at 105.61 trading between 104.10 and 106.86 and the bias is positive.

Gold is down today at 1601 trading between 1618 and 1592 with a negative bias.

Dr. Copper is at 3.36 down from 3.42 earlier this morning.

Earlier the USD tumbled from 82.90 yesterday to 82.54 this morning and shot up to 83.08 after the Fed announcement. Unlike the markets it moved further upwards and settled at 83.22.

The 500 at the close.

The DOW at the close.

@marketwatch:

Gold extends losses for a second day

Oil ends higher on supply drop, brushes off Fed

Treasurys extend losses after Fed

The bullish pundits have built quite a case for continuing market climbing and it is quite convincing by itself. If I had no other information at hand I would certainly jump on their band wagon. But, and that is a BIG BUT, in light of continuing negative financial reports from around the World I am keeping my guard up. Report like this one below are keeping me on the cautious side and very reluctant to commit to either side.

Sorry Mario, Here’s Why The EU Is Finished by Cliff Wachtel

“Here’s a helpful reminder, after ECB President Draghi’s latest attempt to jawbone markets higher and restore calm about the EU. Cut past all the talk, pundits, and spin control. Unless the 5 issues below are resolved, the EU in its current form is still a dead man walking.

As I’ve written for months, the EU and euro can’t survive in their current form. Forget all the verbiage written on it.

It all boils down to the following inability of the EU to reconcile the two conflicting fundamental needs of most debtor and creditor nations in the very limited time remaining before the sovereign and bank default dominoes start to fall.

What To Do

In short, this is a market for either very short term traders or very long term investors. The rest of us will likely do well to stand aside in the coming weeks.

Agreed….The END IS NEAR….VERY NEAR….!!”

Federal Reserve issues FOMC statement

http://www.federalreserve.gov/newsevents/press/monetary/20120801a.htm

Released by the Board of Governors of the Federal Reserve System.

** RRR = Risk Reward Ratio

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Written by Gary