Opening Market Commentary For 11-14-2012
Premarkets shot up earlier and fell to yesterday’s closing prices after the negative mornings financial news came across the wires. Producer prices and Retail Sales fell unexpectedly souring the apparent higher than normal opening gap up.
Markets did open up, but flat and on low volume. Indecision of traders was apparent in the very low opening green volume which turned negative by the 15 minute mark but the averages remaining in the green.
By 10 am the markets had melted in the negative territory leaving investors wondering where what Mr. Market was going to do next. My feeling is that we are going to have another exciting lackluster session. Too much guesswork here to make intelligent investment decisions.
The markets by 10 am had fallen to similar lows witnessed during the past 3 sessions indicating a support that if broken will certainly mean lower numbers in the near future.
Several analysts have suggested that hurricane Sandy may have contributed the lower numbers. “Sandy had an effect, but it’s unclear if it was more negative or positive”, said Yohay Elam.
Producer prices fell 0.2% in October from September, surprising economists who were expecting a 0.2% gain. Excluding the food and energy components, prices were down 0.2%, the biggest drop since October 2010. Economists were expecting a 0.1% gain.
U.S. retail sales fell 0.3% in October from September, more than the 0.2% decline expected, and the first drop since June. Excluding the auto segment, sales were unchanged from September. Economists were expecting a 0.2% gain.
Then we still have Greece: Here’s the Good News and the Bad News. It is going to be another interesting month or two.
The RRR** was very narrow at the opening bell, just as it has been for the past several months. Any trades today will probably end up on the unprofitable side as long as this market remains flat or continues to have low volume.
I have issues with some traders in that they are saying there are setups for day trading. This is true enough, but the trading range is so narrow that way too money has to be put on the table just to get back meager gains.
Swing trading is also 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 as the markets are currently untradable. Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
While it ‘appears’ the trend is down, this market could explode one way or the other and selling now to avoid ‘possible’ increase taxes is full of problems for the unwary.
The DOW at 10:00 is at 12753 down 4.26 or -0.03%.
The 500 is at 1375 up 0.95 or 0.07%.
The $RUT is at 788.24 down 0.75 or -0.10%.
SPY is at 137.90 up 0.13 or 0.09%.
The longer trend is up, the past week’s trend is bearish and the current bias is down.
WTI oil was up today and is now trading down at 85.24 trading between 86.00 and 84.90 and the bias is negative.
Brent crude was up today and is now trading down at 108.72 trading between 109.00 and 107.80 and the bias is neutral.
Gold was down this morning then rose to 1731.24. Currently trading down at 1725.98, trading range is between 1731.24 and 1720.44 with a negative bias.
Dr. Copper is at 3.46 down from 3.49 earlier.
The US dollar rose from 80.98 earlier to 81.18 and is currently trading up at 81.13.
The ‘fiscal cliff’ is the mainstay of investor worries along with increasing capital gains from 15% to 20%. It is unclear what President Obama is ‘really’ going to do in this new administration.
The market has traded in relatively tight range the last three days. In fact, on a closing basis, the last four S&P closes have been within a 6-point range. But if you look at the intraday action, you’d see each rally attempt has gotten sold into…each attempt at pushing prices higher is met with selling pressure soon after. The bulls make little attempts, but they can’t get any traction.
My bias remains to the downside. The market can turn at any time, but for a move to be sustainable, I’d like to see intense selling pressure for a couple days to push the breadth indicators to extreme levels. Otherwise a move is not likely to go far or last long…except for one influence. That influence is news surrounding the so-called fiscal cliff. If an agreement is reached, Wall St. will breathe a huge sigh of relief. Whether the fiscal cliff is or is not a big deal doesn’t matter. People are obsessed with it. If an agreement is reached, the market could easily jump.
** RRR = Risk Reward Ratio
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Written by Gary