Midday Market Commentary For 08-09-2012

Markets melted up fractionally and barely staying in the green. This obvious slowing down and thin trading zones usually signal a top formation is in progress. However, these markets are not the same as they were in pre 2008 and could very well be a ‘breather’ preparing for another leg up. All I know at this point is that taking any position is dangerous as the RRR** is way to thin to count on a profitable trade.

One interesting thing I noticed this morning are the 10 minute candle formations looking like ‘shooting stars‘. The volume would run up green and then the bears would jump in reducing the green bar up to a shooting star formation. The SP500 finally reached 1405.88 at 10:50 and then began to descend leaving the MACD going negative. The daily view indicates a spinning candle indicating a change of direction in the making if confirmed tomorrow. However this is all babble as not much else is happening and I am more interested in lunch right now.

Many financial analysts feel we will stay at this level until November while the election process is underway with positive or negative swings being muted.

I would agree with that analysis to a point keeping in mind the August 20^th Greece’s lack of payment to the ECB may lead to a default which I am expecting. Spiegle reports, “Athens needs to repay a maturing bond worth €3 billion ($3.7 billion) to the ECB by Aug. 20. The solution to that problem seems paradoxical: The ECB itself is pumping money into Greece, so that the country can in turn repay the ECB”.

Then you have Germany’s Constitutional Court that won’t make a decision on whether to suspend legislation for the euro bloc’s permanent bailout fund and fiscal treaty until September 12th. Either of these events could move the markets dramatically one way or the other and it won’t be ‘muted’.

By 11:50 the markets melted down enough to be in the red once again except for $RUT. Volume was light and negative market movements were not very convincing of a trend starting. By noon the long red line was gathering steam as volume levels moved towards moderate levels. The ‘BTFD dippers’ set up camp and began to nibble away at the bears and stopped the decent in its tracks for a minute or so. Red volume continued building and was now getting my full attention as the decent was looking more and more like it could turn into something. But, alas silly me I should have known DaBoyz were just playing around.

The DOW at 12:15 is at 13138 down 35.80 or -0.27%.

The 500 is at 1400 down 2.17 or -0.15%.

The $RUT is at 801.25 up 1.11 or 0.14%.

SPY is at 140.32 down 0.15 or -0.11%.

The trend is neutral and the current bias is neutral.

WTI oil is at 93.62 trading between 93.05 and 94.07 and the bias is negative.

Brent crude is at 112.55 trading between 111.65 and 112.85 and the bias is negative.

Gold is at 1614 trading between 1617 and 1609 with a negative bias.

Dr. Copper is at 3.42 down from 3.44 earlier.

Earlier the USD climbed from 82.27 to 82.85 and settled at 82.81.

Interesting article in the continuing battle of are we in a recession, headed for a recession or we are on the road to recovery. Michael Panzner paints a convincing picture in that we may be heading for another recession.

‘The Last Time’…

Notice a pattern here?

“The Last Time Wall Street Was This Negative, We Were In A Recession” (Business Insider)

As second quarter earnings season begins, companies are slashing earnings guidance at rates not seen in the last three years.

Exports appear to be collapsing around the world. Data out of Germany this morning showed exports falling 1.9 percent, and South Korea, the canary in the coal mine has seen exports crumble.

. . . the declining pattern of ISM export orders – which declined from 59.0 in April, to 53.5 in May, 47.5 in June, and 46.5 in July – is naturally worrisome.

In fact, Rosenberg points out that there is an 81 percent correlation between annual growth in U.S. exports and ISM new orders, and that this level of new export orders coincided with the last two recessions.

** RRR = Risk Reward Ratio

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Written by Gary