Closing Market Commentary For 08-09-2012
Markets closed flat and mixed after rising up from the averages low at noon. Volume remained low through out the morning and afternoon trading and was generally another lack luster day. Hopefully we will see some action tomorrow as the Chinese and European financial calendar has several high and medium reports to make and could move the markets. The US has only the Import Price Index (low) and the medium rated Monthly Budget Statement at 2 pm. Otherwise be prepared to take the day off early or have a 2 hour lunch like I did today.
The averages do have a little wiggle room to melt up without triggering a full blown ascent to new highs, so I would be careful not to be drawn into a bull trap. The 500 could ease up to 1415 and not violate the high of May 1, 2012. We had the same slow down at the end of April where the markets finally decided to turn down. Interestingly, the same domestic and International problems that plagued the market back then are still here and equally mordacious. The Friday session will probably be more of the same boredom if China and Europe doesn’t report some really negative financial numbers. Next week will probably start the melting down as the fundamentals do not support this rally.
The RRR** was never wide enough for trading today. Swing trading is still on the fence as the market could go either way depending whether you short or go long. I still remain bearish, but would prefer to wait for a while longer and see if we can see a trend.
The DOW at 4:00 is at 13165 down 10.45 or -0.08%.
The 500 is at 1402 up 0.58 or 0.04%.
The $RUT is at 802.90 up 2.74 or 0.34%.
SPY is at 140.65 up 0.17 or 0.12%.
The trend is neutral and the current bias is slightly bearish at the close.
WTI oil is at 93.52 trading between 93.05 and 94.07 and the bias is negative.
Brent crude is at 113.24 trading between 111.65 and 113.43 and the bias is positive.
Gold is at 1617.57 trading between 1618 and 1609 with a positive bias.
Dr. Copper is at 3.42 down from 3.44 earlier.
Earlier the USD climbed from 82.27 to 82.86 and fell to 82.70.
Like Rom Badilla says in the article below, “. . . there is a fair amount of uncertainty on the details”. The devil is always in the details.
Dark Cloud Looms Over Economy As Fiscal Cliff Approaches by Bondsquawk
As stocks rise fueled by positive corporate earnings and waning concerns over the European debt crisis, little attention has been given by the markets to the impending Fiscal Cliff. Given the magnitude of spending cuts, coupled with lackluster support by the American consumer, the fiscal cliff may weigh heavily on growth, sinking the economy into another recession.
The ‘what we lose in margin, we’ll make up for in volume’ strategy is failing. And for the NYSE it is failing large.
The decision to ‘enable’ HFT – for its ‘liquidity-provision’, which after all has done nothing but expose the dismal reality of a market structure designed to nickel-and-dime retail til the last penny drops, has had the absolute opposite unintended consequence of driving the only real liquidity provider – the retail trader putting his real money to work – out of the market.
As Securities Technology reports, the NYSE Euronext reports daily volume of trading stocks down 16.9% from a year ago (and down 17.8% YTD compared to last year) and down 9.9% from June alone.
NYSE/Arca/MKT’s share of trading in NYSE-listed stocks is down 34.3% from a year ago as the dark pools rise, and with volumes collapsing it is only likely that we will see far more ‘incidents’ such as Knight – where companies whose top-line explicitly stems from flow trading – increasingly find themselves redundant; whether or not this is due to a self-inflicted algo, or other, potentially more sinister, reasons.
** RRR = Risk Reward Ratio
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Written by Gary