Opening Market Commentary For 01-03-2013
Premarket numbers was were where we left them yesterday; neither up or down, just flat and unappealing. The financial reporting this morning was mixed and the premarkets didn’t react which was unexpected.
The markets opened down slightly on low volume and remained directionless for the first half hour as Mr. Market takes a rest from yesterday’s monster move upwards.
I have some thoughts where the markets are and where they are going.
For those who are still long, watch for bumps in the road until we get up close and personal with upper resistances. Although I hate to be the ‘grench’ but any sort of a ‘Black Swan’ event could upset the entire apple cart and send the averages tumbling.
The DOW has a way to go to reach previous highs, the SP500 is closing in on its highs and the $RUT and SPY are bumping into their resistances. Several markets are revealing double and triple tops ($RUT 7-2007 & 5-2011) in the making signaling a VERY tough road ahead. Apple (AAPL) and McDonalds (MCD) are up against their down trend lines and failing to break up and through is a serious bear signal.
Then there are the gaps made yesterday that have to be closed. There many, many bearish signs including the US Governments failure to address its ceiling debt problems in any meaningful way. I have retained a sizable cache of cash to take advantage of any serious dips and protection insurance of a possible market collapse. Yes, I think one is overdue and it won’t take much to tip over the cliffs edge.
Remember, most of the ‘free’ or available investor cash was dumped into the markets during the past 2 sessions and I do not expect the old, long gone, ma and pop investor to add anything So what is left is a sideways market waiting for the only trend that is available which is down.
Information like Foxnews reported this morning would have moved the markets up, but because the averages were pushed so far up yesterday I would expect a correction of some sort today.
“The ADP national employment report shows the private sector added 215,000 jobs in December. Analysts had expected an increase of 133,000 jobs for the month.”
The initial jobless claims and continuing claims are much higher than expected as seen in the graphic below. That news would temper any upward movement of the markets. The first numbers column is what was reported. The second is what was expected and the third is the last report.
The RRR** has been narrow at the opening bell for the past several months and continued the trend again this morning. This continuing trend 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 2012 ends and 2013 begins, but a lot of guessing 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 the past year. Almost every good trade lately required staying overnight, but it was also a giant leap of faith.
I also have continuing 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 10:15 is at 13383 down 30 or -0.22%.
The SP500 is at 1460 down 1.64 or -0.11%.
SPY is at 145.89 down 0.17 or -0.12%.
The $RUT is at 873.14 down 0.28 or -0.03%.
NASDAQ is at 3110 down 2.48 or -0.08%.
The longer trend is up, the past months trend is bullish and the current bias is down.
WTI oil was up this morning and is currently trading down at 93.04 trading between 92.50 and 93.18 and the bias is negative.
Brent crude was trading sideways earlier and is currently trading down at 112.04 trading between 111.64 and 112.45 and the bias is negative.
Gold was down this morning. Currently trading up at 1681.10, trading range is between 1689.35 and 1675.25 with a positive bias.
Dr. Copper is at 3.74 down from 3.76 earlier.
The US dollar rose from 79.90 earlier to 80.34 and is currently trading down at 80.24.
** RRR = Risk Reward Ratio
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Written by Gary