Opening Market Commentary For 09-28-2012
Welcome to the Market world of ups and downs. Around and around we go and where we stop, no one knows. Premarket was down and the markets opened down on low red volume. News out of the EU is sad and dismal, China is still headed for a landing of some sort and Japan Heads for GDP Contraction as South Korea Weakens.
Market opened lower and by 10 am took a breather of sorts. Volume is low and mostly red. At this point in time it is still impossible to tell where the market is going, although I see more bears than bulls. The big thing is no one is trading except that 2% crowd that always seems to be playing.
There is more bad news than good news, so I’ll bet on the market declining.
Cue Stagflationary Recession: Chicago PMI Huge Sub-50 Miss, Back To September 2009 Levels; Prices Paid Spikes
QE1, QE2, Operation Twist 1, Operation Twist 2, a Fed balance sheet that is now expected to be $5 trillion in 2 years, and all we get is a lousy manufacturing economy that according to the Chicago PMI just dipped into contraction, or for all intents and purposes, recession, printing its first sub-50 print, 49.7 specifically, on expectations of a 52.8, and down from 53.
This was the lowest since September 2009 and the biggest miss in 4 months. Specifically, the employment index came at a two and a half year low, New Orders, Backlogs and Deliveries had their 3 month moving averages at the lowest since Mid 2009, and Capital Equipment printed at a 17 month low.
But not all hope is lost: at least prices paid soared for the third consecutive month to 63.2 from 57. Cue not just recession, but stagflationary recession. It also means that both the Manufacturing ISM and Q3 GDP will be a total disaster. Time to start pricing in QE X to be followed 24 hours later by QE X+1.
The RRR** was very narrow at the opening bell and any trades will probably end up on the unprofitable side as long as this market has low volume and remains flat. Swing trading is at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly.
The DOW at 10:15 is at 13393 down 93 or -0.69%.
The 500 is at 1438 down 8.73 or -0.60%.
The $RUT is at 837.66 down 5.91 or -0.70%.
SPY is at 143.72 down 0.92 or -0.64%.
The longer trend is up, the past week’s trend is bearish and the current bias is down.
WTI oil is down today and is at 91.96 trading between 91.40 and 92.70 and the bias is negative.
Brent crude is mixed today and is at 112.48 trading between 112.07 and 113.40 and the bias is negative.
Gold is down today at 1773.90, trading between 1769.15 and 1782.95 with a negative bias.
Dr. Copper is at 3.76 down from 3.77 earlier.
The US dollar rose from 79.42 earlier to 79.95 and is currently trading at 79.93.
** RRR = Risk Reward Ratio
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Written by Gary