Markets Open Higher, But Run Out Of Steam

Opening Market Commentary For 10-11-2012

Premarkets were up this morning and continued to melt up after the opening bell. Volume turned red by the 10 minute market signaling more weakness ahead. As I have reiterated many times, investors should not expect to see wide or exaggerated moves in this market place while volume levels remain low. I suspect the less than 2% moves will remain the ‘new normal’ for some time to come. By 10 am the averages paused for air while deciding which way to go next. Volume has remained red, but the ‘dippers’ are obviously keeping the morning markets from descending too quickly.

The S&P downgrades Spain’s credit rating by two notches and U.S. Weekly Jobless Claims Unexpectedly Show Steep Drop helping the averages to maintain the opening rise. A Labor Department spokesman cautioned that “the weekly applications can be volatile, particularly at the start of a quarter”.

Leavitt is correct in that the small caps need to start leading as he mentioned yesterday and that the new highs must hold a level much higher than they have been doing.

@leavitt:

I will only believe the market can leg up again if new highs bounce back up to 300ish. The intermediate term trend is up. When the trend is up, I’m either long or on the sidelines (never short), and it’s all based on the opportunities the market is offering and how easy trading is. Right now I’m mostly on the sidelines. I see no reason to be aggressive here. There are too many headwinds and the charts aren’t acting technically well anyways. More after the open.

The RRR** was again very narrow at the opening bell. Although a bit wider at the opening, it didn’t last long. Any trades will probably end up on the unprofitable side as long as this market has low volume or 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. Guessing where the market is going to be tomorrow or next week is a foolish endeavor at this point in time.

The DOW at 10:15 is at 13402 up 55 or 0.41%.

The 500 is at 1441 up 8.70 or 0.61%.

The $RUT is at 833.15 up 6.39 or 0.77%.

SPY is at 144.22 up 0.94 or 0.68%.

The longer trend is up, the past week’s trend is neutral to bearish and the current bias is down.

Oil prices up amid escalating Turkey-Syria tension

WTI oil is up today and is at 92.38 trading between 92.75 and 91.10 and the bias is negative.

Brent crude is up today and is at 115.17 trading between 114.40 and 115.60 and the bias is negative.

Gold was up then back down this morning. Currently trading down at 1769.32, trading range is between 1759.45 and 1774.80 with a negative bias.

Dr. Copper is at 3.75 up from 3.70 earlier.

The US dollar fell from 80.30 earlier to 79.80 and is currently trading at 79.81.

The numbers game concerning the BLS continues with severe criticism from many corners of the financial world. We probably won’t know the real story until after the elections if ‘fudging’ is in fact being done.

@zerohedge:

Data Massaging Continues: Initial Claims Tumble To 339K Lowest Since 2008, Far Below Lowest Expectation

This is just getting stupid. After expectations of a rebound in initial claims from 367K last week (naturally revised higher to 369K), to 370K (with the lowest of all sellside expectations at 355K), the past week mysteriously, yet so very unsurprisingly in the aftermath of the fudged BLS unemployment number, saw claims tumble to a number that is so ridiculous not even CNBC’s Steve Liesman bothered defending it, or 339K.

Ironically, not even the Labor Department is defending it: it said that “one large state didn’t report some quarterly figures.” Great, but what was reported was a headline grabbing number that is just stunning for reelection purposes.

This was the lowest number since 2008. The only point to have this print? For 2-3 bulletin talking points at the Vice Presidential debate tonight.

Everything else is now noise. It is also sad that the US “economy” has devolved to such trivial data fudging on a week by week basis, which makes even the Chinese Department of Truth appear amateurish by comparison.

Needless to say, Not Seasonally Adjusted initial claims jumped by 26K to 327K in the past week but who’s counting. Finally, what is the reason for ongoing QEternity if the employment situation is now back to normal.

Finally, in completely ignored news, because who needs global trade when you have toner cartridge, and generally ink, the US trade deficit in August rose by 4.1% to $44.2 billion, on expectations of a deterioration to $44.0 billion. Then again nobody talks about the US trade deficit during presidential debates so all good here.

** RRR = Risk Reward Ratio

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Written by Gary