Midday Market Commentary For 12-05-2012
At 11 am the markets reached the morning lows when the ISM non-manufacturing indicated an increase to 54.7. The ‘BTFD Dippers’ were once again in fashion as they pushed the averages up beyond the opening numbers on relatively heavy green volume.
Here is where I expected increased volatile conditions where the bulls are hell-bent believing the markets are on their way up to 25,000. Conversely, the bears solidly believe the World is going to hell in a hand basket. Almost all of the volatility is news driven and little is based on fact and that will allow the bears to take control in a few days as I predicted.
First, a Santa Claus rally and then back to the doldrums.
Fox news reported, “The latest ISM reading on the non-manufacturing sector shows a small increase to 54.7 in November from 54.2 in October. Readings above 50 indicate expansion while those below 50 indicate contraction.”
The RRR** has been narrow at the opening bell for the past several months and continued the trend again this morning. It was wider as the morning moved on, but very unpredictable. This trend makes predictions of movements during any session nearly impossible and trading becomes futile and unprofitable.
As long as market volume remains light or the trading range is narrow, one can expect successful trading to remain elusive. The RRR** has been wider on volatile sessions lately and is expected to become more so as the year ends, but a lot of guessing still remains. Correctly ‘guessing’, of course, is the tricky part of the successful trading equation. Any trades today will probably end up on the meager side of profitability if you are lucky as most trades have been during this past year.
I also have issues with some pundits writing almost every day that there are setups for day trading. This may be true enough, but the trading range is so narrow that way too money has to be put on the table just to get back scrimpy gains. Do not fall into the trap of money burning a hole in your pocket, sit tight better days are coming. Watch for increasing volume to signal improved trading.
Swing trading is also at your own risk for all the reasons mentioned above. Because the market is at a crossroads of sorts, I would prefer to sit on my hands as the markets are currently untradable. Guessing where the market is going to be tomorrow or next week, at this time anyway, can be a foolish and costly endeavor.
The DOW at 12:15 is at 13068 up 117 or 0.90%.
The SP500 is at 1413 up 6.17 or 0.44%.
The $RUT is at 822.96 up 0.84 or 0.10%.
SPY is at 141.93 up 0.67 or 0.47%.
The longer trend is up, the past months trend is bearish and the current bias is up.
WTI oil was down today and is currently up at 83.23 trading between 89.10 and 87.46 and the bias is negative.
Brent crude was down today and is currently trading up at 109.42 trading between 110.55 and 106.67 and the bias is positive.
Gold gaped down several times this morning. Currently trading up at 1694.28, trading range is between 1706 and 1685.20 with a positive bias.
Dr. Copper is at 3.69 up from 3.66 earlier.
The US dollar rose from 79.56 earlier to 79.84 and is currently trading down at 79.74.
** RRR = Risk Reward Ratio
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Written by Gary