Averages Slide Down The Slippery Slope Of The Fiscal Cliff

Closing Market Commentary For 12-19-2012

Markets closed trending down with a burst of sellers at the closing. Looks like we had a consolation day where the markets could continue their march upward tomorrow – or maybe not.

The DOW was down 98 points just about the amount gained yesterday. While the markets opened at yesterday’s high, or just above, the end result was a long slide towards the closing where the small caps ended up green or not much in the red. Actually, this is bullish, but I am not going to guess this outcome for now as there are way too many variables in this equation.

The RRR** has been narrow at the opening bell for the past several months and was a bit wider than usual this morning. By the closing it had reduced it width to nearly zero. However, this continuing trend, in spite of this morning, makes predictions of session movements nearly impossible making trading 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 less than optimal 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 meager 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 4 pm is at 13251 down 99 or -0.74%.

The SP500 is at 1435 down 11 or -0.76%.

SPY is at 144.39 down 0.98 or -0.67%.

The $RUT is at 847.89 up 0.20 or 0.02%.

NASDAQ is at 3044 down 10.17 or -0.33%.

The longer trend is up, the past months trend is bearish and the current bias is down.

How Oil Really Gets Priced

WTI oil was up early this morning and has been very choppy. It is currently trading up at 89.51 trading between 89.60 and 87.80 and the bias is positive.

Brent crude last report was 109.15 .

Gold was down this morning. Currently trading down at 1668.36, trading range is between 1676.95 and 1664.00 with a negative bias.

Dr. Copper is at 3.61 down from 3.66 earlier.

The US dollar fell from 79.56 earlier to 79.02 and is currently trading up at 79.37.

The 500 at the close. It is possible in my estimation of the upper limits of the resistance zone was a bit higher than the 1443 I suggested previously. A truly bull market should have at least melted higher than the 1448 recorded yesterday. The next few days will be instrumental in determining the livelihood of any Santa Claus Rally.

The DOW at the close. The DOW is still lagging behind and needs to forge ahead if the SC rally is to be extended.

** RRR = Risk Reward Ratio

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Written by Gary