SP500 Continues To Test 1800 And Fails

Midday Market Commentary For 02-11-2013

For a short while the SP500 eased up to its previous high Friday and the USD took a dive about the same time. This could be good or bad news depending where you have invested monies. The good news for me is that these two are in sync for a change. About 11:30 the 500 eased off the 1518 line in the sand and started to melt downward, albeit VERY slowly and without any conviction.

Around noon the averages appeared to not to have the needed strength to move any higher. In fact the DOW has been in a declining mode since the opening of Friday’s session while most of the other averages has been mimicking the 500 by bobbing along the resistance line and testing it continually. Without a doubt we are at a crossroads of sorts.

I mentioned last week the markets could simply be at a staging point preparing to make a grab at the ‘gold ring’ and send the averages higher. It kind of did that when the 500 briefly reached new highs and has stayed there.

This shows basically that no one is selling off the highs but potentially there are few that have any more cash to buy more. The HFT computers have been quiet in that they have not pushed the numbers past the new resistance. Interesting dilemma for interested investors. To buy or not to buy, that is the question! The 500 continues to test and retest the 1518 zone remaining in a very narrow zone of movement of 4 points only once melting up to 1517.83 a few cents below its opening bid.

At this point I would be VERY cautious about calling for a market direction. Even good financial news over the next several days could spark a decline as we have seen before and there are an equal number of financial forecasters predicting the markets ascent and demise. The direction of the US markets is in dispute.

The RRR** has been narrow at the opening bell for the past several months and continued the trend into the midday session. This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable. It is too late to catch the highs and may be too early to start shorting.

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 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 several years.

I also have continuing issues with some pundits, writing almost every day, that there are setups for day trading. Best Stock Market Indicator Ever: Unchanged at 87% and Secondaries Confirm “Tradable” 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. I keep hoping for increasing volumes to signal improved trading.

Swing trading is also at your own risk for all the reasons mentioned above although guessing overnight trades would have been most profitable. Again, guessing where the market is going t

The DOW at 12:15 is at 13960 down 32 or -0.23.

The SP500 is at 1515 down 2.22 or -0.15%.

SPY is at 151.63 down 0.17 or -0.11%.

The $RUT is at 910.92 down 2.72 or -0.30%.

NASDAQ is at 3188 down 5.71 or -0.18%.

The longer trend is up, the past months trend is bullish and the current bias is neutral with a slightly bearish slant.

How Oil Really Gets Priced

WTI oil was down this morning and recently rose to make new highs for the day and is currently trading down at 96.69 trading between 96.92 and 94.98 and the bias is positive.

More Widening For The Brent/WTI Spread Ahead?

Brent crude was down earlier and is currently trading up at 118.35 trading between 119.08 and 117.54 and the bias is positive.

Gold was down this morning. Currently trading down at 1646.76, trading range is between 168.75 and 1643.59 with a negative bias.

Dr. Copper is at 3.72 falling from 3.77 earlier.

The US dollar rose from 80.17 earlier to 80.47 and is currently trading up at 80.31 after having recently falling to 80.24.

** RRR = Risk Reward Ratio

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Written by Gary